What is Socialism?

You are right that it is hard to defend capitalism when you are practicing it selectively. But that isn't the core of the issue. Even if we stopped bailing out corporate fat cats when things go poorly, young people would not be fans of capitalism as conceived by the far right.

Young people (and many not-so-young people) think that the income flowing to the corporate fat cats is unfair and economically irrational. In theory, management answers to the board of directors, and the board answers to shareholders. In reality, though, management essentially gets to decide how much it wants to make and shareholders have little to no say. Senior managers make huge salaries and bonuses that are unconnected with performance (and then, as a slap in the fact, they complain about the taxes they have to pay).

In the Wealth of Nations, Adam Smith was concerned that joint-stock companies (the predecessor to modern corporations) separate ownership from management, which inherently corrupts market forces and leads to profusion. Smith could not possibly have foreseen the extent to which ownership and management would be separated by the 21st century, and the amount of profusion that would result.

I don't know what the answer is, but it has to address the escalating concentration of wealth in fewer and fewer hands. On the other hand, it has to leave profit motive in place as the primary driver of the economy. Nothing that is close to either extreme (pure capitalism or pure socialism) is tenable.

 

OK, I am not here to defend the "corporate fat cats" you deride, but those are few and far between. You only hear about them as if they are everywhere because the MSM hates capitalism and holds up a few selected executive salaries as exorbitant. Most executives, even the very wealthy ones, gave up A LOT to get to that place. They did not just land in the big office at the top. They live lives that are consumed almost entirely by their career, they spend most of their nights in a hotel, away from their families, and it is very high stress. I know they make a lot of money, in some cases, but mostly they have worked their butts off to get to that place.

Just talking about how much money they make and "that ain't right" is usually done by folks who do have no clue what it would take to get there.

Legislators who go to Washington in a 20-year old Dodge Diplomat and come home billionaires is a much bigger concern to me than how much the CEO of GE makes.

 

I beg to differ. The fat cats are not few and far between. Skimming from the public by means of fraud and cronyism is systemic and it effects people in daily transactions. You can begin with the health care and pharmaceutical industries where monopolistic practices have run amok. And then there is massive insurance fraud where claims are wildly inflated. You have accounting practices in corporations that obfuscate the books. You have the offshore shelters recently publicized about the Panama papers. You have the wave of financialization of mortgages that enriched the banking sector while nearly destroying the economy. We don't have free market capitalism. The economy is now dominated by financialization, fraud, and crony capitalism.

 

The biggest factor is ... youth.

Inexperience, relatively no assets (skin in the game) ...

there was a George Will/esque line about:

if your 20 and not a liberal, you don't have a heart, if your 30 and not a conservative you don't have a brain.

I won't speak to the first part, but the latter part is what's developing in these folks ...

which is why I support a revision to voter eligibility:

US CITIZEN, proven status on vote day.
21 years old
EITHER be a veteran of the military at least 4 years and an honorable discharge, or be a land-owner.

 

Excellent points as anyways, NJ.

Three issues on this. First, I shouldn't have focused on the bailouts, because it's only part of the problem. I think it would be easier to defend capitalism on the merits if everybody played by the same rules in general. That issue is far bigger than just bailouts. In fact, we could have a whole à separate topic on that.

Second, I think even most young people are OK with senior managers with big companies making big money if they make it fair and square and if the rest of the country is doing reasonably well. Some of us might envy the guy who owns the private jet, but the envy usually doesn't turn into resentment and hatred if we're not driving a '76 Chrysler Cordoba with a busted AC that we can't afford to fix to a job at Burger King while servicing $80K in student loan debt. Basically, I think we should focus on upward mobility more than on income inequality.

Third, I wouldn't call it "as conceived by the far Right." Certainly since the '90s, the Democrats have been very corporate and pro-fat cat. Even when they have the power to rein in the worst abuses of the business world (which usually aren't capitalistic and instead involve some sort of collusion with government), they don't. They also don't do much for the middle class, which they've mostly written off. Hell, when was the last time you heard a Democrat make a serious pitch to repeal Taft-Hartley or do anything substantial for labor unions? They don't. That's why a guy like Bernie Sanders is doing as well as he is. In fact, in this election I'd consider Hillary Clinton to be the most pro-fat cat candidate from either party, and if Trump is the GOP nominee, it won't even be a close call. (Trump will still lose.)

In theory, a progressive tax system is supposed to at least blunt this, but it's no where near as progressive as the federal income tax rates suggest. Personally, I think we should lower tax rates but tax everything the same way - no preferential treatment for capital gains. We should also eliminate the cap on FICA taxes. Both of those changes would help a lot, even if rates got lowered.

I also think we need to overhaul public and higher education to make them more driven by economic demand. People should leave high school with a marketable skill that leads to a middle class job. It shouldn't be college or working the night shift at Wendy's.

 

Does this get at Socialism's inherent flaw?

"Bernie Sanders was asked to leave a hippie commune in 1971 for “sitting around and talking” about politics instead of working, according to a forthcoming book."

http://freebeacon.com/politics/bernie-sanders-asked-leave-hippie-commune/

 

Deez,

I agree with you almost up and down the line. In particular, the following is near and dear to my heart:

I don't think everyone needs to leave HS with a marketable skill. But the option should be available to everyone, and it shouldn't be stigmatized as inferior to taking the college route.

 

^this.
And I'd venture to guess that in today's market place it largely isn't.

 

Ukrainians in the US celebrate in 1953

 

The thing about internet speeds and the internet market in the US is that it's inefficiency or low performance compared to other countries is an example of how socialism doesn't work. The internet business is built on top of the cable tv business which is built on the telephone business which has been highly regulated forever. It used to be a monopoly and only recently has some competition been introduced. That is why we now have Netflix, Hulu, Cricket, etc. being so successful. it is also why now you are hearing about the government wanting to regulate it more using the old template of treating phone and cable as a public utility.

 

The IMF's outlook for Venezuela this year:
-8% GDP
480% inflation
Default likely

http://www.bloomberg.com/news/artic...efault-likely-pdvsa-may-go-first-moody-s-says

 

Yes, Obamacare being the best example.

 

Like most people, you equate Wall St with major corporations like Exxon, Caterpiller, 3M, etc. I work for a Fortune 500 company. Managing directors make $200-250k, Vice Presidents make $400-550k. It is only the c-suite (10-12 people total) that make 6 figures with stock options, etc. This is within a company of >10,000 employees. How the "wealth at the top" of companies such as mine can be equated with Wall Street is a red herring argument in my opinion.

 

Why do they think that is unfair and economically irrational?

Capitalism doesn't endorse fraud any more than socialism does.

Explain how monopolistic practices are bad.

Opportunity is missed by most people because it is dressed in overalls and looks like work." - Thomas A. Edison

 

Yeah, don't get me started with fraud in government that rarely gets corrected or shutdown. There is an Enron everyday in our government.

 

Quite a few ways. Let's start with the banking sector.

A relatively small number of banks (JP Morgan Chase, Goldman, Bank of America, Wells Fargo) have grown so large they are systemically important. How important? So important that they nearly brought down the world financial system in 2008 and had to be bailed out with public funds. Not only that, but laws were passed changing accounting rules so that they would not appear to be insolvent. The federal reserve made policy (QE, ZIRP) to ensure they do not fail. These policies have implications for everyone.

Moving to health care and pharmaceuticals where you have monopolies and cartels, the norm is to pay 10 times as much for prescriptions in America than you would pay elsewhere. When you enter the hospital, you generally have no idea how much the charges will be until you receive a bill.

In health care, finance, or the agri-chemical industry, as a corporation attains monopoly status, they have the clout to influence/bribe government to pass regulation that favor themselves while at the same time barring entrance to competition.

Bottom line is that monopolization leads to more power and control for the monopoly/cartel and less choice and influence for the general public or competition.

 

All those things you cited are a direct result of government intervention in the free market. Banks were forced to make loans they ordinarily would not make, then were forced to take TARP money to keep them afloat whether they felt like they needed it or not. The cost of pharmaceuticals is borne by the country that makes it cost the most to bring a new drug to market due to govt. regulation. Big business has found it more cost-effective to buy politicians who then keep competitors out.

 

The first statement "All those things you cited are a direct result of government intervention in the free market" is kind of a chicken and the egg scenario. Why does government intervene in the free market? The last sentence in your paragraph contains a partial answer: "Big business has found it more cost-effective to buy politicians who then keep competitors out."

So what we have is kind of fascism.

As far as the banks being forced to make loans they ordinarily would not make, that's the narrative we were fed, and while there is some truth to it, by and large its inaccurate. Because of the financial innovation of bundling of mortgages into securities, the focus was to create as many loans as possible because they would be resold (passed on) to other parties. This is why there have been billions of fines leveled at most of these banks. It was proven the banks fully knew they were making bad loans, but suppressed the information and encouraged the practices to continue.

There has never been a truly free market, but now that is more the case than ever. We live in a fully centrally managed economic system. Government is too big and corporate power is too great. Globalization means American industry is fully dependent on trade, international movement of capital, global wage arbitrage, and debt expansion to continue growth/profit. To keep the machine alive, the dollar must continue to be the world reserve currency and the US military must suppress any opposition to US hegemony. That's a recipe for debt expansion and continual war. We are in the late stages of empire.

 

The banks were not monopolistic. The government should have let them fail. There were plenty of banks that were not in trouble. Companies don't control Federal Reserve actions.

Paying more for a drug that is sold by one pharmaceutical company means that that company was the only firm willing or able to make the drug. Under those circumstances,
you're lucky to have the drug at all. You should thank them.

Not knowing what your hospital bill will be is not an example of a monopoly.

Bribes are illegal. That is an example of criminal activity. That exists in every facet of society.

Influencing legislation is how our system works. Is LULAC a monopoly?

Barring entrance to competition? Give an example.

You give me one example of this and I'll give you two showing you are wrong.

 

Common sense tells you it's true. My God, look who's likely going to be the next President. The Clinton Foundation is nothing more than a slush fund which corporations and foreign powers flood millions of dollars in order to access power and control policy. Please don't insult my intelligence by arguing that this is free speech working as intended.

 

Regarding barring entrance. ZIRP allows privaledged entities such as the banking cartels and mega corporations access to nearly free loans that smaller players cannot get.

The past several years, it's been proven that these same banks have manipulated LIBOR rates, copper prices, and more. Is that your idea of free market, virtuous monopoly?

 

I thought we were talking about monopolies.

I do agree that the Clinton Foundation is more corruption by a very corrupt family.

 

When AT&T was broken up, competition opened up and prices fell. Was this bad?

Carlos Slim is among the worlds richest men having a monopoly of the Mexicam communications industry. Is this good for its citizens?

When NAFTA opened up Mexico to US Agribusiness, millions of small farmers were left with no income and fled north to the US. More goodness from corporate monopoly.

 

Dude, those mortgages weren't created out of thin air. It takes two to do a deal. What about all those dunces who signed mortgages that they couldn't pay?

 

Loan officers know what they are doing. In some cases, they even conspired with the buyer to create false applications. This doesn't happen if the bank has to hold on to the note for the duration.

As far as the unqualified buyer that knowingly went along with this, it wasn't such a bad deal. Many lived rent free for several years, and after they faced eviction, Bush passed an exemption where the debt was forgiven so that they did not have to report the forgiveness as income on their tax return.

The banks who managed to offload their mortgages made big bucks, the dead beats lived free for several years, the loan officers made big commissions as accomplices to these scams, the ratings agencies made it all possible by rating piss poor securities AAA in order to secure business from the banks. Only the US tax payer got screwed.

 

Without AT&T, you wouldn't have had a nationwide (actually worldwide) telecommunications company. You should thank them for building a worldwide network that Judge Harold Greene ****** up.

I think you are confusing hard work, ingenuity, and success with a monopoly. Slim does not have a monopoly of the telecommunications industry in Mexico.

Even if I assume you are correct, no company has a monopoly on agribusiness.

 

The point is that one or a small few small players that dominate an industry acquire great wealth. Generally, a portion of that wealth is directed toward government to protect their stake. This might include tax breaks, regulatory changes, favorable zoning laws, etc. Eventually you wind up with a cycle: Profits buy favors, which lead to more profits, which allows more money to buy favors. One example of this is what is referred to as the revolving door, where industry players many times wind up as heading government agencies intended to regulate the very industry they came from. Then they return back to the industry.