Posts Tagged ‘socialism’

Economics, and the Best Economic System

April 26, 2015

So many curse the idea of ‘socialism’, but have no idea of what that means.
Look at the history of the Great Depression; it was caused by unrestrained capitalism, and only socialism was beginning to reverse the economic disaster. Things like the CCC, the WPA, others, where the government became the employer of last resort.
Consider for a moment what would happen if we made the government the employer of last resort now and paid those employees a living wage, not a punitive wage? Say, for example, $15 an hour.
No more unemployment insurance, or the taxes to pay for it.
No more minimum wage. What the government paid becomes de-facto the ‘minimum wage’.
Food stamps and disability insurance only for the truly disabled. Yeah, they exist; and if we expect to be called a civilized nation, we have to take care of our own. My son drew disability from Social Security for about five years. Before dying of the disease that rendered him unable to work, at age 44.
No more ‘booms’ and ‘busts’ from gambling capitalists. No more bailouts. Let the banks go broke, no golden parachutes left, take over those failed businesses and make them part of the ‘socialist’ government employment of last resort.
Use it as a governor for the economic system, in other words. When labor is needed, employers will have to pay more, hence fewer people on direct government employment. When a downturn comes, automatically pump more money in and employ more people.
About the people employed: they have to spend the money, buying food, housing, clothing, appliances. No foreclosures. No default on education loans. All that spending generates economic activity in the private sector. That’s why I consider socialism the governor for a mature economic system.
Private enterprise? Absolutely. Capitalism, where invested money earns income? Absolutely. Regulated private enterprise/capitalism (gas service, phone service in some cases, insurance when ownership of insurance is made mandatory), absolutely.
The best economic system is a mix of private enterprise, regulated private enterprise, capitalism, and socialism.

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Failures of Capitalism in a Depression

September 27, 2012

I’ve argued before that we’ve really been in a depression for a long time. It could be called a ‘recession’ only because borrowed money artificially supported parts of the economy, but that’s only a short term solution.
Manufacturing jobs have fallen precipitously. Some were offshored, others were eliminated by mechanization of manufacturing. The relentless drive for efficiency also included loss of jobs in offices and in such departments as design and accounting because computers now could do what was formerly done by people. Even cleaning machines reduced the need for janitorial services. Bottom line, fewer humans needed as machines took over. Fewer humans, fewer jobs…and no other jobs to go to. At this point there are jobs, but only for the well educated. And not simply for any college graduate, but only for those with a master’s or higher in business, engineering, science, and math. A degree in liberal arts or humanities simply won’t provide the qualification that employers are looking for.
And only government expenditures, supported by taxes on the wealthy and creation of new money, can reverse the decline. Capitalism won’t do that, and this is the failure of capitalism. Capitalists invest not to take risk, but to receive profit. No guaranteed profit, no expenditure; the more perceived risk, the less likely the chance of investment by capitalism.
Only government can spend without expectation of profit.
An ideal system consists of government (e.g., socialist) development where there’s not enough profit potential for capitalism; capitalism to increase efficiency and extract profit after this initial development.
Control of capitalism to prevent abuse after the opportunity has stabilized. That’s what capitalists hate, the idea that as risk is reduced, they also must restrain their urge to profit.
Monopolies are one way that capitalism reduces risk. Microsoft/Bill Gates understood that. As competition increases, risk also increases, and profit opportunity declines. Industries and companies now actively exploit the political sector to decrease competition by a variety of strategies; tax abatement, even subsidies, other political moves that favor some over others. Pure capitalism doesn’t include those things, but capitalists are quick to involve them to lessen risk while increasing profit.