|Surviving Human Nature|
Capitalism - Good or Bad
Capitalism is about, making money and hoarding money. It is about investing money to make more money without working. Capitalism is about controlling resources including the human resources needed to make and sell goods so that capitalists have more money to make more money and grow wealthy. This is a good system if you are rich and a bad system if you are poor. The economics of capitalism has become attached to democracy, although the connection is neither inevitable, nor even workable.
In capitalistic theory, every newborn has the opportunity to become rich, even if his or her parents are poor. The trick is to master the techniques of using money to make money, leaving behind any quaint notions of trading time, effort and skill for money. One basic strategy is to buy for less and sell for more. Another is to purchase property and services that others will rent or consume on a continuing basis, so that you make money while you sleep. Another strategy is to use some money or capital assets as leverage to borrow and invest more money, increasing your net worth.
I write from a perspective of a comfortable, safe citizen of a country that combines capitalism and socialism with relatively good results. While Canada is not perfect, it is a country that looks viable in the long term, given stability of its neighbor, the USA. The US in contrast was in recession in 2008 with a failing infrastructure and out of control government spending. The benefits and vices of a capitalist economy are most clearly manifest in the USA. Different economic systems have evolved with the expanding human population. Different economic ideas in the best case compete to influence government policies. In the worst case, economic ideas conflict with disastrous consequences. The battle between the Communist Soviet Union and the Capitalist USA dominated world events in the latter half of the 20th century. The soviet system collapsed, leaving the impression that capitalistic democracies are the best way to run countries, but there serious problems that peaked in 2008 appear to be accumulating. It is likely that capitalistic economies have gone past peak performance, heading for a steady decline.
As major banks failed in 2008, US government intervention became the hope of redemption. Large sums of money borrowed by the government were offered as a solution for the financial institutions, but no-one could say who will pay the escalating government debt? Economist, Krugman, stated:” Old-fashioned voodoo economics — the belief in tax-cut magic — has been banished from civilized discourse. The supply-side cult has shrunk to the point that it contains only cranks, charlatans, and Republicans. But recent news reports suggest that many influential people, including US Federal Reserve officials and bank regulators have become devotees of a new kind of voodoo: the belief that by performing elaborate financial rituals we can keep dead banks walking…What I suspect is that policy makers are attempting a bait-and-switch: a policy that looks like the cleanup of the savings and loans, but makes huge gifts to bank shareholders at taxpayer expense, disguised as “fair value” purchases of toxic assets. Why go through these contortions? The answer seems to be that Washington remains deathly afraid of the N-word — nationalization. The truth is that bankrupt banks are already wards of the state, utterly dependent on taxpayer support; but nobody wants to recognize that fact and implement the obvious solution: an explicit, though temporary, government takeover. Hence the popularity of the new voodoo, which claims, as I said, that elaborate financial rituals can reanimate dead banks. Unfortunately, the price of this retreat into superstition may be high. I hope I’m wrong, but I suspect that taxpayers are about to get another raw deal — and that we’re about to get another financial rescue plan that fails to do the job.” (Paul Krugman. Wall Street Voodoo. NYT January 19, 2009.)
Anderson summarized the analysis of several deep thinkers in his book, Democratic Capitalism and Its Discontents. He stated:” liberal democracy had set loose an egalitarian spirit that it could never fully tame. The notion of the universal equality of man, which liberal democracy claims as its foundation, easily becomes subject to egalitarian overbidding. Equality constantly finds itself undermined by the freedoms that the liberal order secures. The liberty to pursue wealth, to seek to better one's condition, to create, to strive for power or achievement-all these freedoms unceasingly generate inequality, since not all people are equally gifted, equally nurtured, equally hardworking, equally lucky. Equality works in democratic capitalist societies like an imaginary horizon, forever retreating as one approaches it.”