Govt. and Econ. - Capitalism and the Free Market

Capitalism.

It is, by definition, the free market. People make goods, offer services, and exchange them for other goods and services. Don't let money confuse you: It's nothing more than a lubricator for the exchange of those goods and services in a true capitalist, free-market economy.

Capitalism is driven by greed. Not necessarily evil, though, greed means both A ) desiring growth and advancement, and B ) doing whatever it takes to achieve growth and advancement at the expense of others.

By definition, the second definition is [i]impossible[/i] in a moderately regulated capitalistic economy.

I want you to consider this; the rich CEO, the very "1%" billionaire that "Occupy Wallstreet" hates so much. Let's say he walks along the airport in his nice business suit with a briefcase, and enters his private jet. Earlier today he was at his rich mansion estate. The private jet taxiis to the runway, and takes off. He owns everything in that picture (except the airport, though he does use the airport's services).

These few hours of his life, have reached and effected hundreds of people because of his wealth. Keep going on long enough, and you'll find his transactions touched everyone on Earth. His mansion, when he purchased the material, his money went to the company that owned them, and to the paychecks of the workers, simple laborers, who cut the wood, as well as going to other CEO's like him, and many other places. The suit he wears has a similar story, when he bought it, his money went to the company that made it and they made profit, paid employees, and made necessary transactions to stay in business. This applies to the designer and builder of the jet, the flight attendant, the pilots, the workers at the air traffic control, the TSA guards at the airport, etc. etc. And then, back to the woodcutter who part of his paycheck came from that CEO building that mansion, let's say this is the CEO of a steel company. That woodcutter buys a coffee and sausage biscuit from McDonald's every morning. That Mcdonald's uses a stove to cook that meat patty in his sausage biscuit, it's a steel stove, and that steel came from that CEO we originally started with. It's a loose connection, to be sure, but add together all the 6 billion + lives on planet Earth, and every one of them rely on eachother in this exact same way.

Make the rich pay their share? Give back to society? Every time they spend their money, they're doing this exact same thing, "spinning the wheels of society", so to speak, keeping the world going. The only reason our civilized world exists, is because of these CEO's who organize and run corporations that provide goods and services, and in turn, they pay for goods and services, and all the while employees are getting paid for making their corporations run.

It's a beautifully elegant system. And most of all, it's a free system. No human being or single organization could ever achieve the level of efficiency that they all achieve, by pursuing their own interest. Because how they pursue their own interest is by trading with others pursuing their own interest. By definition, nobody will make a trade unless they feel they benefit from it, so in all free-market trades, either someone's being tricked or coarsed, or both parties will benefit. Luckily, because businesses don't want to fail, they hire well-trained professionals and experts to try to ensure they aren't tricked, so 99% of the time, both businesses benefit from a trade, and where the business benefits, employees are paid.


Now, contrary to the opposition of some other forumites here, I am going to group communism and socialism together. They both belong in the category of "command economy", in other words, a system of government controls the economy. In a free market, the most efficient exchanges are achieved, because exchanges only happen when both parties will benefit. If one party does not make the most efficient exchanges, then that business will eventually fail because of competition, and other businesses that do make good, beneficiary decisions will take it's place. But in a command economy, a third party demands exchanges be made at gunpoint, so there is no garuntee that [i]either[/i] party will benefit. Instead of millions of people personally invested in decisions all making the call themselves, a much smaller group of people make decisions for everybody based off the limited information they have. Furthermore, in a command economy, there's no punishment for failing as a company, making inefficient decisions that waste everybody's time and effort: the government will ensure you don't fall out of business.

This is why the U.S. government bailed out banks and car companies, but only bailed out huge corporations and not many small businesses. Big companies are big, because they've made good decisions, so the fact that those corporations are compitent is something that other business professionals already knew. But if they bail out small companies, then other professional businessmen have no way of knowing if that small company was really compitent: it just looks like they'll come to the rescue if any business fails, so there's no need to waste money trying to make good decisions, if big brother will catch you if you fall. That would remove the incentive of efficient trades/transactions, and by definitions, the goal of economics is to make the most efficient allocations of resources.



But here's the biggie: Why does anyone think that government-run x will be any better? I hear so much talk of how big, bad companies will abuse workers, shortcut others, etc. etc. But for some reason, these people then think the government won't. What makes the government so special?

IMO, a command economy of any kind is just a monopoly: The government is the big business that kills all competition. But that's just the start: it would be better if they were a business. A business has to make profit. A government, doesn't. Governments can silence opposition and execute "dissidents", as Soviet Russia and the German Socialist party, the Nazis, did by the millions. A monopoly business can't do that. By keeping the judicial+legislative+execute authority separate from economic entities, you can't have a monopoly that can kill people, deny human rights, silence free speech, etc. etc, anywhere near the level that a government can.


I will admit this, though: A capitalist economy is perfectly just, it's all about justice; you get what you give, and what people need. Perfect economic efficiency, or something very close to it, is achieved. But it's not merciful. If you can't give to society, you don't receive anything from society. Not even food, water, or medicine. It sounds cruel, but in fact, it is the harsh reality of... Reality. People want free health care, for example. Of course, why should the best of medicine be reserved just for people who can pay for it? Quiet simply put, that medicine only exists because of them.

Let me draw an analogy: you have a starving village. 500 people, 50 slices of bread. You can't give everyone a slice of bread. You can give everyone 1/10th a slice of bread, but then [i]everyone[/i] starves. Or, you can give people a slice of bread, based off of how much work they put into making the bread. Some people will starve, some people that didn't do anything to help make the bread may even starve to death, and some people will get a full meal - it will all be very unequal, but it will be far more fair - you get what you give. The same applies to medicine, or anything else.

But, I'm not an extremist in either direction; there are some exceptions. Children should have some things like education and healthcare; they aren't responsible for what their parents didn't do. But if they drop out of high school, and stop being productive to society when they're pefectly capable of it, then it's their own fault if they can't pay for healthcare later on in their life as adults. If they want to climb out of that hole, they can, either by trying to get an education so they can get a better job, joining the military, trying to start a business, or anything else they can think of.

Another exception, is some people simply aren't dealt a hand in life. Everyone's delt a deck of cards, so to speak, some are smarter, some are more socially capable; but ultimately we can't judge every single individual and conform society to them, they'll just have to work past their weaknesses and become as useful as they can be; if everyone works hard enough, there's room for everyone.

But, as I was saying, there are some blatant exceptions. We can't judge someone and give them a boost because their IQ is 2 below average, but in some cases, it's really obvious, maybe someone was born without limbs, or with an IQ 40 below average, to the point where it's simply impossible for them to survive, maybe someone's paralyzed from the neck down. There are these cases. And even some of these people have managed to get by (Stephen Hawking is one example I can think of, his body may be useless to society, but his mind isn't). But it simply wouldn't be fair to expect everyone who becomes paralyzed to become a Stephen Hawking. First, it is the responsibility of family and friends to take care of them. Second, willing people and organizations. And only third, and finally, should it be the responsibility of taxpayers, who are forced to pay taxes by law, through a highly inefficient system, to take care of them.


The sad blatant fact is, no matter what you do, life will never be perfectly fair. We can only hope to get as close to fairness as possible. But in an attempt to address the unfairness at the financial bottom of society, many societies have destroyed the fairness of all other levels.

A free market system has fluctuations that occur due to human psychology in a free market. During the ups, nobody really minds. But during the downs, comes complaints and outrage, because people are used to living in an "up". But hopefully, the society will make it through to the next up without destroying itself before that happens. I believe the failures of real-life command economies are quiet obvious, theory is good, but real-life experimental results are best, and for extreme command economies, these are; Nazi Germany, Soviet Union, China (which switched to free market, btw, later on when they realized it's better), North Korea, North Vietnam, etc. etc. For more moderate command economies, we have Greece, Italy, Spain, France, and England. For moderately regulated free market, I honestly don't know of much other than the United States, which for a very long time has been the most wealthy nation on Earth. Some regulation is necessary, as the industrial revolution showed, simply because cheap labor doesn't understand economics enough to live in it. But, generally speaking, almost always, the freer the better.

And, more on the theory side than example (which is highly debatable: "great depression was caused by government intervention" "no, it was caused by lack of intervention", yackity yackity yack), as I've said before, a powerful command economy is nothing but a single powerful monopoly with legislative, judicial, and executive authority. Even if it's a representative, elected body, that is still too much power for too few individuals. The only reason representative governments have worked so well where they have is because people have played by the rules, and been honest, for the most part; by not rigging elections, not silencing opposition "under the table", striking back-room deals with opposition, etc.

Give the governing body complete economic control, as well, and you'll also give them all the destructive type of greed and corruption that comes with economics, stacked on top of the corruption in government. The result is an authoritarian body that rapidly spirals out of control of the people, into the hands of a select few "representatives", who no longer represent the will of the people. This has happened plenty of times even without economic greed to help it, I'm not prone to want to increase the odds of it happening here, at home in the U.S., by adding that corruptive factor of all the wealth of an entire nation in their hands.