We're not all capitalists, but we could be!
The economic system in the United States is not so clear as it is usually reported to be. We claim to be a capitalistic economy, but that is not entirely true. The upper levels of social strata tend to be capitalistic, but the lower levels tend to be socialistic. I say 'tend' because there is a little socialism in the upper class and a little capitalism in the lower class.
Another way to view an economy is in terms of markets systems. In the U.S. there are two distinct marketing systems. In one system, the buyer sets the prices for goods sold. Commodities and stocks are often marketed this way. In the other system the seller sets the prices. Processed and manufactured goods are often marketed this way. Both systems work just fine by themselves, but problems can arise when the two are used together.
In the U.S. the two market systems are inter-mixed and problems exist because it tends to be members of the wealthier classes that set the prices in both markets. They buy commodities from producers at the lowest possible prices and sell to consumers at the highest possible prices. The majority of both producers and consumers are in the lower classes. Such market inter-mixing has become an effective tool for pumping wealth and power from the lower classes to the upper classes. The rich get richer and the poor get poorer.
The 'pump' can cause extreme losses in the consumer and producer groups. When such imbalances become obvious, our government has historically attempted to alleviate them with socialist programs. Those programs are called 'welfare' for consumers and 'subsidies' for producers.
Socialist programs are pyramid schemes and like most such schemes they often look attractive in the beginning and are easy for legislators to condone, but they are structurally weak and always produce unwelcome side affects. Socialism works most efficiently when all its participants are as close to the norm as possible so it works well for ants, but human beings were never made to interact that way. Socialist programs require high taxes and impose a plethora of rules that destroy worker incentive and punish creativity.
The situation doesn't have to remain that way. It is possible for wealth and power to be distributed much more democratically and in a way that moves us away from socialism. It seems to me that changes must be made if U.S. citizens want to live, according to Abraham Lincoln's recipe, in a nation "of the people, by the people and for the people."
It is not necessary to upset our entire marketing system to achieve that goal. It is necessary only to disable the pump. In doing so, the wealthy will remain wealthy and through wisdom and planning, their wealth will continue to grow and accumulate. However, their wealth will grow and accumulate at a much slower rate. The suppression of the middle and lower classes will be reduced and their wealth and power will begin to grow.
Several things need to happen to disable the pump. The very first thing that needs to happen is for political representatives to represent all citizens equally and fairly. Without this fundamental change, other necessary changes are impossible.
Another way to view an economy is in terms of markets systems. In the U.S. there are two distinct marketing systems. In one system, the buyer sets the prices for goods sold. Commodities and stocks are often marketed this way. In the other system the seller sets the prices. Processed and manufactured goods are often marketed this way. Both systems work just fine by themselves, but problems can arise when the two are used together.
In the U.S. the two market systems are inter-mixed and problems exist because it tends to be members of the wealthier classes that set the prices in both markets. They buy commodities from producers at the lowest possible prices and sell to consumers at the highest possible prices. The majority of both producers and consumers are in the lower classes. Such market inter-mixing has become an effective tool for pumping wealth and power from the lower classes to the upper classes. The rich get richer and the poor get poorer.
The 'pump' can cause extreme losses in the consumer and producer groups. When such imbalances become obvious, our government has historically attempted to alleviate them with socialist programs. Those programs are called 'welfare' for consumers and 'subsidies' for producers.
Socialist programs are pyramid schemes and like most such schemes they often look attractive in the beginning and are easy for legislators to condone, but they are structurally weak and always produce unwelcome side affects. Socialism works most efficiently when all its participants are as close to the norm as possible so it works well for ants, but human beings were never made to interact that way. Socialist programs require high taxes and impose a plethora of rules that destroy worker incentive and punish creativity.
The situation doesn't have to remain that way. It is possible for wealth and power to be distributed much more democratically and in a way that moves us away from socialism. It seems to me that changes must be made if U.S. citizens want to live, according to Abraham Lincoln's recipe, in a nation "of the people, by the people and for the people."
It is not necessary to upset our entire marketing system to achieve that goal. It is necessary only to disable the pump. In doing so, the wealthy will remain wealthy and through wisdom and planning, their wealth will continue to grow and accumulate. However, their wealth will grow and accumulate at a much slower rate. The suppression of the middle and lower classes will be reduced and their wealth and power will begin to grow.
Several things need to happen to disable the pump. The very first thing that needs to happen is for political representatives to represent all citizens equally and fairly. Without this fundamental change, other necessary changes are impossible.
posted by Sam | 7:01 AM
1 Comments:
I find it difficult to identify 'the pump' in a functional way that lets us address how we could correct it.
One 'pumping' mechanism is the establishment of monopolies or cartels. I would argue that these are a clear perversion of a free market, since it allows the monopolist to extract a 'monopoly tax'. This is the reason that the Sherman Anti-Trust Act was passed. Do you consider this to be Socialist intervention by the government? I tend to view anti-monopoly laws as being firmly based in free market ideas. They prevent one party from gaining an unfair advantage over the other members of the market.
Modern examples of monopoly suppliers include Microsoft. I would also point out that intellectual property laws also establish temporary monopolies, with the justification that the inventor should be able to collect the 'monopoly tax' as a reward for their creative works.
There are also examples of monopoly buyers, which are more properly called a monopsony. In my opinion, grain farmers face this since they only sell to a small number of buyers, like ADM. ADM also acts as a cartel member, they colluded with other companies to manipulate the world lycine prices.
The other possible 'pump' that I can think of is the difference between the way labor is taxed and the way capital is taxed. Currently, the earnings of labor is more heavily taxed that are capital gains. Since most in the lower and middle classes earn money from their labor, while capital gains go predominantly to the upper classes, this is another possible 'pump'. However, raising captal gains does have a risk of drying up investment, which is horrible for everyone involved.
Do you see these as examples of your 'pump' and can you identify others?
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