AN ECONOMIC SYSTEMS FIELD GUIDE

Okay, SO tired of people in the Spokaloo region evidencing confusion about what the hell economic system they happen to be living under. Not that any of these fine folk will change their minds – after all, it is America, and we have a right to be ignorant, a right to ignore the facts, and a right to insult, belittle, and threaten those who don’t agree with said facts. But nonetheless, worth a try.

COMMUNISM – That’s where the government owns everything and dispenses goods an services as they see fit.

SOCIALISM – That’s where the citizens as a group own everything. The government just divvies out goods and services according to the wishes of the citizens.

CAPITALISM – That’s where individuals own everything, and can do whatever they damned well please with it.

Each system has its drawbacks, of course.

COMMUNISM – Centrally directed, thus ponderous, slow to change, subject to takeover by self-centered political figures. See North Korea.

SOCIALISM – Citizens disagree with what comprises “the greatest good for the greatest number”. Arguments and paralysis may ensue. Subject to takeover by self-centered political figures.

CAPITALISM – All wealth becomes concentrated in fewer and fewer hands. See USA and the 1%. Subject to takeover by self-centered business figures.

Sometimes the major political players of the various systems have observations to make, and sometimes these observations have much to say, in few words, about the system they are directed at. For example:

COMMUNISM –
“The theory of Communism may be summed up in one sentence: Abolish all private property.” – Karl Marx
“Communism doesn’t work because people like to own stuff.” – Frank Zappa
“Communism is the exploitation of the strong by the weak. In Communism, inequality comes from placing mediocrity on a level with excellence.” – Pierre-Joseph Proudhon

SOCIALISM –
“Under socialism all will govern in turn and will soon become accustomed to no one governing.” – Vladimir Lenin
“Many people consider the things government does for them to be social progress but they regard the things government does for others as socialism.” – Earl Warren
“Socialism is… not only a way of life, but a certain scientific approach to social and economic problems.” – Jawaharlal Nehru

CAPITALISM –
“We are not in business for our health.” Attributed to J.P. Morgan
“What do I care about the law. Ain’t I got the power?”  – Cornelius Vanderbilt
“The public be damned!” Attributed to Cornelius Vanderbilt’s son, William.
“I can hire one half of the working class to kill the other half.” Attributed to robber baron Jay Gould.
“In a Republican district I was a Republican. In a Democratic district, I was a Democrat. But I was always for (my business).” – Jay Gould
“God gave me my money.” Attributed to John D. Rockefeller
“What good is $10 million if you can’t have real money.” Jesse Livermore

Interesting. But I found this quote to be quite revealing:

“Socialism proposes no adequate substitute for the motive of enlightened selfishness that today is at the basis of all human labor and effort, enterprise and new activity.” – William Howard Taft.

Taft, for your info, was the 27th President of the US, from 1909 to 1913. He was known as a progressive, and put some energy into busting the big-business trusts of the era. The phrase “enlightened selfishness…” Hm.

“Enlightened selfishness”, to my mind, means that, in every business, there comes a moment to examine the larger picture as opposed to immediate short-term profits.

Let’s say your business makes millions in the production of basketballs. It costs 20 bucks to produce one basketball. You charge 50 bucks for one basketball at Walmart. So that’s 30 bucks of pure profit. But you want more, so you start charging 75 bucks per ball, to up your profit margin. Meanwhile, because you are offshoring your tax burden, or taking advantage of the many loopholes that Congress has provided because of your “donations” to certain Congresspeople for their election, the money to support public basketball courts and parks-supported recreational leagues is cut, and cut again. Not to mention the fact that public workers have been laid off wholesale, so now no one to oversee these public venues, and they are closed.

Basketball sales are going to inevitably start slipping. An “enlightened” capitalist might see this coming, and take steps to avoid it. But not the short-term-profit, quarterly-reports capitalist, because he doesn’t care about the product, and doesn’t care about the customers – he cares about the money. His fondest dream may well be to sell his basketball business for billions, and thereby retire young to the life he is certain he is entitled to. So, the endgame is one really rich guy doing nothing and a giant basketball corporation that can produce a substandard product because they bought up all the competition. Purchase and enjoy your crappy, out-of-round, puncture-prone basketball, or screw you. So lots of people stop buying basketballs and the basketball business suffers. HOWEVER – said business has DIVERSIFIED, and bought up interests in sneakers and ketchup. To do this, they drained the basketball business of its assets, fired all its workers, and started buying their crappy basketballs from China to sell at inflated prices, because those are now the only choice. Now they can go through the same routine with the sneakers and the ketchup.

Somehow this  process reminds me of endlessly circling a drain. Not helpful to society as a whole, yet that’s where we keep winding up.

As an enlightened pragmatist, I am not willing to just write off the best ideas of communism and socialism just because the names are scary and my Tea Party boss told me to hate them. Certain products and services SHOULD be socialized – basic health care, energy, water, education,and food come to mind. Certain others do not need to be socialized – basketballs, luxury cars and private planes, for example. If everybody has what they need of the survival basics, then society is stable. When you start shorting people is when you get what is politely termed “unrest”. So far as societies go, as a pragmatist, I like stable.

China has figured out a way to combine its communist system of government with certain aspects of our capitalist system. Observe: the greatest economic success story of all time. Why can’t American capitalism do that too?

Oh. I remember.

Money.

 

 

MONEY MONEY MONEY

Here’s a concept that I bet no one ever thought of before – if you want to get rid of poverty, then give poor people some money! Actually, a lot of people HAVE thought of this already, including Milton Friedman. But, despite being as obvious as a black fly on a camel’s butt, most people in America have overlooked the perfect good sense of it.

What we have in America is the official 15 percent of people in poverty, with more than 46 million Americans living below the poverty line. And that’s the OFFICIAL rate, with the functional rate probably much higher, because if you’re poor in, say, New York City, you are WAY poorer than someone in Melodious Flats, Minnesota, because it costs a fortune to cover the basics of rent and food in New York. (For purposes of comparison, apartment rentals in NYC average about 750 square feet and cost $2700 per month.)

Okay, so we have lots of poor people. We also have rich people. Nowhere near as many, but collectively, they are pulling in a huge percentage of the wealth generated in America. It takes money to make money, hence the increasing concentration of wads of dough at the highest levels. Here’s a breakdown for you:

 Income, net worth, and financial worth in the U.S. by percentile,in 2010 dollars
Wealth OR
INCOMe class
Mean household income Mean HOUSEHOLD NET worth Mean household financial (non-home) wealth
Top 1 percent $1,318,200 $16,439,400 $15,171,600
Top 20 percent $226,200 $2,061,600 $1,719,800
60th-80th percentile $72,000 $216,900 $100,700
40th-60th percentile $41,700 $61,000 $12,200
Bottom 40 percent $17,300 -$10,600 -$14,800

And here’s another table from the same source:

Net worth and financial wealth distribution in the U.S. in 2010

So far, so good. Rich people have lots of money to spare. Poor people are strapped, we get it. So what’s the best way to fight poverty? Better sit down, Teabaggers, cuz you aren’t gonna like this:

GIVE POOR PEOPLE MONEY.

As  author Joseph Hanlon remarks, ‘Poverty is fundamentally about a lack of cash. It’s not about stupidity. You can’t pull yourself up by your bootstraps if you have no boots.’

Here’s the basic premise: give every citizen in America some basic amount – say, $1000 a month. The exception is if you are under 18 or in jail. Otherwise, everybody, rich people and poor people. That $1000 is not going to benefit a rich person by any significant amount, but to a poor person, or even a middle-class person, it would be HUGE. There are other names for this program: “social security for all”, “guaranteed minimum income”, “basic minimum income”, whatever whatever. All the same concept, all the same benefits.

Next thing: jettison the army of bureaucrats administering the gobs of programs that allegedly are there to “help” poor people, but have the effect of infantilizing them. If you treat people like children, why wouldn’t they behave like children? You scrap the edifices of Medicaid (you would buy your own insurance off the market out of your allotment), welfare, food stamps, housing vouchers, etc. etc. etc, which are in many cases, meager from the get-go. Smaller government, right? Isn’t that what you WANT, ConservoRepubs? This should DELIGHT you guys!

Before you start scoffing, understand that this theory has actually been exercised in the real world. Enter “Mincome“, a Canadian experiment: “Beginning in 1974, Pierre Trudeau’s Liberals and Manitoba’s first elected New Democratic Party government gave money to every person and family in Dauphin (a small town in Manitoba) who fell below the poverty line. “Under the program…about 1,000 families received monthly cheques.”

All the data from this experiment was BURIED and never analyzed. However, after a 5-year battle to get the Canadian authorities to release the paper trail, this is what the initial analysis shows:
1) People still worked. The only two segments of Dauphin’s labor force that worked less as a result of Mincome were new mothers and students.
2)  Mincome had a significant effect on people’s well being. “In the period that Mincome was administered, hospital visits dropped 8.5 per cent. Fewer people went to the hospital with work-related injuries and there were fewer emergency room visits from car accidents and domestic abuse. There were also far fewer mental health visits.”

I must say, the second point is clear to anybody who thinks. Being poor is not all donuts and sitting around in your pajamas. It is STRESSFUL. You feel STUPID and WORTHLESS. You have to SCUFFLE, and sometimes that means lying, cheating, stealing, dealing drugs, or standing on the corner with a cardboard sign. The conservative choice of beating people with sticks to make them better people doesn’t seem to work. From what I can tell, the conservative goal is to shame and belittle, and force people to beg in order to survive. Some people won’t beg, but they WILL steal your stuff, get in fights, and go to the emergency room after shooting themselves in the feet with their own guns. And the ancillary result is “welfare psychology”, where these behaviors become generational.

Furthermore, there were four identical Mincome experiments in the US during the seventies, and the results were positive. “Several tens of millions were made available to test the effects of a basic income among 10,000 families in Pennsylvania, Indiana, North Carolina, Seattle and Denver. The pilots were the first large-scale social experiments differentiating between various test and control groups. The researchers were trying to find the answers to three questions. 1: Does a basic income make people work significantly less? 2: If so, will it make the program unaffordable? 3: And would it consequently become politically unattainable?”

And guess what? Same outcomes as the Mincome study: people did NOT work less, nor did it make the programs unaffordable. ‘The declines in hours of paid work were compensated in part by other useful activities, such as search for better jobs or work in the home,’ an evaluative report of a Seattle project concluded.  A mother who had never finished high school got a degree in psychology and went on to a career in research. Another woman took acting classes, while her husband started composing. ‘We’re now self-sufficient, income-earning artists’, they told the researchers. School results improved in all experiments: grades went up and dropout rates went down. Nutrition and health data were also positively affected – for example, the birth weight of newborn babies increased.

But the politics became a problem – the results of the Seattle experiment SEEMED to show that the divorce rate went up precipitously in the studies, and “gave rise to the fear that a basic income would make women much too independent”.

OH PUH-LEEZE. This supposed rise in divorces was the result of a statistical error, it was found. When the error was corrected – presto, no rise in the divorce rate AT ALL. But it KILLED the program, which bounced back and forth between the Senate and the House until it finally died.

If you give people the opportunity to LEARN how to handle money by regularly HAVING money – they will figure it out. They can make an effort and get things to work, or not – but it is their CHOICE. And there won’t be any more social programs to bail out the asses of the people who DON’T want to learn how to cope with their own financial life decisions. And once the expensive social programs for the poor have been shown the door, the nation can focus all that monetary firepower on mental health, education and jobs, all of which have demonstrated track records in reducing poverty. Because prison is the default mental-health treatment in America, and poverty significantly contributes to Americans becoming mentally unhinged, the expensive proclivity of throwing people in jail for whatever behavior would be much reduced. At the very least, it would reduce the likelihood of incidents like this: Texas woman denied food stamps shoots children, kills self.

So, how do we pay for a basic minimum income for all? Well, a lot of it would come from the scrapping of the ridiculously complex programs presently in place, which make half-hearted and ineffective stabs at rehabilitating the poorest among us. Furthermore, because these programs are so complicated and overlapping, there’s profit to be made by clever poor people who figure out how to game the system. This pisses off conservatives, right? Another problem solved by the Guaranteed Minimum Income: the profit potential to the cunning is entirely erased.

And a lot of the financing would come from taxing extremely rich people. If you disagree with this, maybe you need to go back to the top to check out the tables provided for your edification. And if you STILL have a problem – well, here’s a video for you: perhaps it will make an impact on your resistance.

People rail about politics all the time. They’re mad because the people THEY placed into Congress “have no common sense”. Well, everything above is common sense personified. WHY DON’T WE GO THERE?