Socialism and communism have always led to economic failure, but there are problems with capitalism as well.
For example, competition makes capitalism work. But at the same time every capitalist seeks to eliminate his competition. In other words, if a company grows without bounds, it will eventually destroy its competitors. And there are other problems with capitalism like “too big to fail” and “too big to jail”.
Another problem relates to regulation. That is, a capitalist economy works well only if the capitalists act as entrepreneurs and not as manipulators. And that requires regulation. But in our current system, companies easily gain control of the agencies designed to regulate them. They do that through “regulatory capture”, as I will detail in my next post.
But basically the problem is that the regulator and the capitalist have every incentive to work together for their mutual gain. And on the other hand, you and I have no incentive to go to the colossal effort and expense needed to stop them. Furthermore, activities that are illegal for you and me are wide open to the politically connected. That’s because politicians control the law.
And there are still more problems with capitalism, like the “low road” problem:
[T]he capitalist is always trying to cut down what his servant demands, and in doing so is cutting down what his customer can spend. (Chesterton 1927, II.9)
One way a company can profit is by taking the “high road”, which means paying its employees well to ensure their hard work. That allows the employees to buy that company’s (and other companies’) products. However, a company can also profit by taking the low road and squeezing its employees to lower its costs.
If all companies take the high road, then all employees are able to buy many companies’ products. But if one company takes the low road, its employees cannot afford many products, even though that company can sell its products cheaper. And then competition with that company forces other companies into the low road. This causes a “race to the bottom”. In the worst case, then, no employees can afford anything and the economy collapses.
Moreover, our grossly overgrown public debt and tax code are both obviously the result of manipulators and their crony politician friends.
I am shocked and stunned by people who don’t understand that government debts will eventually obliterate our economy if they continue to grow faster than the economy. Likewise, John Adams, Thomas Jefferson, and James Madison all warned us against public debt:
The consequences arising from the continual accumulation of public debts in other countries ought to admonish us to be careful to prevent their growth in our own. (Adams, John 1797) – John Adams
Funding I consider as limited, rightfully, to a redemption of the debt within the lives of a majority of the generation contracting it…. (Jefferson 1816) – Thomas Jefferson.
War is the parent of armies; from these proceed debts and taxes; and armies, and debts, and taxes are the known instruments for bringing the many under the domination of the few. (Madison 1795) – James Madison
How can we prevent too-big-to-fail companies? And what kinds of incentives would drive companies to follow the high road? Moreover, is there a way to bring our government debts under control? In addition, hat policies would encourage entrepreneurs and discourage manipulators? Please believe me that answers exist. Unfortunately, they’re not simple.
This site is for discussing how to improve our political system. It is NOT for discussing party politics or political figures. So if you have a non-partisan question or comment, feel free to leave it below.
Next post
Sources:
Adams, John. 1797. “State of the Union Address”. Everything2. https://everything2.com/title/John+Adams%2527s+1797+State+of+the+Union+Address (Accessed July 4, 2017).
Chesterton, G. K. 1927. The Outline of Sanity. G. K. Chesterton. http://www.gkc.org.uk/gkc/books/Sanity.txt (Accessed Oct. 6, 2016).
Jefferson, Thomas. 1816. Letter to Samuel Kercheval on Jul. 12. American History. http://www.let.rug.nl/usa/presidents/thomas-jefferson/letters-of-thomas-jefferson/jefl246.php (Accessed Feb. 11, 2019)
Madison, James. 1795. “Political Observations”. Founders Online. https://founders.archives.gov/documents/Madison/01-15-02-0423 (Accessed Jul. 4, 2017).
I have read your article carefully and I agree with you very much. This has provided a great help for my thesis writing, and I will seriously improve it. However, I don’t know much about a certain place. Can you help me?
Thanks for sharing. I read many of your blog posts, cool, your blog is very good.
Can I just say what a aid to search out somebody who really is aware of what theyre speaking about on the internet. You positively know easy methods to bring a problem to light and make it important. More individuals need to read this and understand this facet of the story. I cant imagine youre no more popular because you definitely have the gift.
Thanks for sharing. I read many of your blog posts, cool, your blog is very good. https://accounts.binance.com/en/register?ref=OMM3XK51
Wow, incredible blog structure! How lengthy have you been blogging for?
you made running a blog look easy. The overall look of your web site is great, as smartly as the content!
You can see similar: sklep internetowy and here ecommerce
Your article helped me a lot, is there any more related content? Thanks!
There’s noticeably a bundle to find out about this. I assume you made sure good factors in features also.
This design is spectacular! You definitely know how to keep a reader entertained. Between your wit and your videos, I was almost moved to start my own blog (well, almost…HaHa!) Wonderful job. I really loved what you had to say, and more than that, how you presented it. Too cool!
I went over this web site and I think you have a lot of wonderful information, saved to favorites (:.
My spouse and I stumbled over here by a different website and thought I should check things out. I like what I see so now i am following you. Look forward to checking out your web page for a second time.
Thanx for the effort, keep up the good work Great work, I am going to start a small Blog Engine course work using your site I hope you enjoy blogging with the popular BlogEngine.net.Thethoughts you express are really awesome. Hope you will right some more posts.
I gotta bookmark this web site it seems invaluable very helpful
As I site possessor I believe the content material here is rattling excellent , appreciate it for your efforts. You should keep it up forever! Good Luck.
you have got a fantastic blog right here! would you like to make some invite posts on my weblog?
Very interesting points you have remarked, appreciate it
for posting.Blog money
Thanks for sharing. I read many of your blog posts, cool, your blog is very good.
Can you be more specific about the content of your article? After reading it, I still have some doubts. Hope you can help me.
Your point of view caught my eye and was very interesting. Thanks. I have a question for you.
I don’t think the title of your article matches the content lol. Just kidding, mainly because I had some doubts after reading the article. https://accounts.binance.com/en-ZA/register-person?ref=JHQQKNKN
Can you be more specific about the content of your article? After reading it, I still have some doubts. Hope you can help me.
Thank you for your sharing. I am worried that I lack creative ideas. It is your article that makes me full of hope. Thank you. But, I have a question, can you help me?
a fantastic read afdas uk
The pathogenesis of AECOPD varies and the aetiology includes air pollution, smoking, climate change, and infection priligy canada SIGNS OF PROGRESS
2021 Jul 3; 1 3 103 109 priligy buy At minimum these dogs need to be kept separated from puppies including puppy training classes and away from unvaccinated or immunosuppressed dogs for a full 4 months following recovery or until confirmed negative by RT PCR
I don’t think the title of your article matches the content lol. Just kidding, mainly because I had some doubts after reading the article.