Capitalism Fails

[American Badass]

Been reading into this lately. Capitalism fails? What is others thoughts on this? Why does capitalism work (if you think it does?)

Not sure how it is in other countries but IMO they NEED to CUT the full time working hours from 39 to 30 hours a week but NOT cut the wages the workers get. This will encourage these companies making millions to hire MORE staff lowering the unemployment rate and getting more people into work.

39 hours @ $6.15 = $239.85
30 hours to get $239.85 = $8

When you look at the top 500 fortunes rich list for profitable businesses in 2012, it is abysmal that 50 companies earnt over $3,804,000,000 whilst staff for these companies earnt less than minimum wage.

Thoughts

[American Badass]

some reason the forum won't let me use pound signs ????????????

[Dolgil]

Greed does not work whether it is capitalism or socialism or anything else.

[khronosschoty]

Greed does not work whether it is capitalism or socialism or anything else.

I agree with this!

[American Badass]

Everything has its flaws but spreading the money across the working class is surely better that letting the rich keep it. Higher worker pay / less hours means more money down below and more people employed if these big companies want to stay open for more than 20 hours a week.

[goodz]

Everything has its flaws but spreading the money across the working class is surely better that letting the rich keep it. Higher worker pay / less hours means more money down below and more people employed if these big companies want to stay open for more than 20 hours a week.

why is it better?

The wealthy are more likely to donate it to charities to help the poor etc. The working class is just going to get a fancier car or a nicer house or eat out more?

[TommyB]

why is it better?

The wealthy are more likely to donate it to charities to help the poor etc. The working class is just going to get a fancier car or a nicer house or eat out more?

I don't think this is a useful or even true perspective. Give more money to the working class as they are more likely to spend the majority of it to improve their lifestyle, which keeps the money in the system and pays for other people's jobs.

Give more money to the .1% ultra rich people and even if they donate and buy houses and yachts etc. it's not going to be a significant percentage of their total wealth.

Most of it will end up being invested to make them even more money, which has lead to financial investment corporations like BlackRock being in control of thousands of billions of dollars. And that is a problem. That much money in basically one hand, being used with the single purpose to make more money can do a lot of damage. Other than their high-profile customers, a financial investor doesn't have to care about ethics, all the image they need is that they know how to turn cash into more cash. Not to mention that these guys probably have connections and favors to collect in so many places that no one in their right mind would even try to take a piss on them.

I don't want to go into more detail, I'm not an expert on this stuff. But as a final statement, it's not only about being a 'lowly' or average guy on one side and being 'excellent' on the other side. It's also a lot about being completely ruthless and having no problem to do a billion dollars worth of damage to someone, as long as you can make 50 million bucks out of it for yourself.

[JinXy]

I don't think this is a useful or even true perspective. Give more money to the working class as they are more likely to spend the majority of it to improve their lifestyle, which keeps the money in the system and pays for other people's jobs.

Give more money to the .1% ultra rich people and even if they donate and buy houses and yachts etc. it's not going to be a significant percentage of their total wealth.

Most of it will end up being invested to make them even more money, which has lead to financial investment corporations like BlackRock being in control of thousands of billions of dollars. And that is a problem. That much money in basically one hand, being used with the single purpose to make more money can do a lot of damage. Other than their high-profile customers, a financial investor doesn't have to care about ethics, all the image they need is that they know how to turn cash into more cash. Not to mention that these guys probably have connections and favors to collect in so many places that no one in their right mind would even try to take a piss on them.

I don't want to go into more detail, I'm not an expert on this stuff. But as a final statement, it's not only about being a 'lowly' or average guy on one side and being 'excellent' on the other side. It's also a lot about being completely ruthless and having no problem to do a billion dollars worth of damage to someone, as long as you can make 50 million bucks out of it for yourself.

No, keeping money in the system is not the point. When you give money to people and let them spend, they bid up the cost of capital (equipment, office, labour, etc). That is why you don't give politicians so much money, even though the money ultimately 'circulates' in the system. But again, that's not the point. The point is that these people will compete with other people for scarce resources like office space, equipment, labour, etc like i've mentioned.

I don't advocate giving money to the rich through bailouts or money-printing. But there are rich people who get rich legitimately. They provide something useful for the market and the market rewards them.

When investors have tons of money, those money are not 'wasted' as one will imagine. Those money are invested, or saved in banks, which are then loaned out.

You do not have to fear individual investors or corporations. They cannot do anything to you. What you do have to fear are government policies that block these rich people from competitors (money-printing, bailouts, favourable regulations, etc).

[Palem]

You do not have to fear individual investors or corporations. They cannot do anything to you. What you do have to fear are government policies that block these rich people from competitors (money-printing, bailouts, favourable regulations, etc).

+1 (mostly, if you don't include collusion)

[Arrhenius]

If you make every company hire ~30% more workers, so they pay out 30% more wages, you're going to to see a lot of companies go bankrupt real fast. The only companies that would survive are the ones that are already the largest, which are typically the most demonized in these types of discussions. This would in fact eliminate competition and result in monopolies. And then everyone loses.

Also, people in general are greedy, rich and poor. The difference is that in capitalism you must work and provide a service to make money to satisfy that greed. Very people work for purely altruistic reasons.

[Arrhenius]

Also curious of your assertion that the staff at fortune 500 companies make minimum wage, where did you hear that? I'm quite sure that is not true.

[Bishop]

A higher minimum wage is not a solution to anything, its a complete fallacy. You'd just push up inflation.

[John Snowstorm]

A higher minimum wage is not a solution to anything, its a complete fallacy. You'd just push up inflation.

Life before minimum wage and unions was pretty grim for the working class.

There is something to be said for these things, there are some tricks you can do with regards inflation also.

[freemehul]

A higher minimum wage is not a solution to anything, its a complete fallacy. You'd just push up inflation.

actually higher minimum wages decrease unemployment... as for inflation, the price of oil is by far a bigger influence to inflation, than the minimum wage

the main reason why minimum wage works and has positive effects is due to the negative effects of monopsony

There are only two efffective ways to combat the effects of monopsony on the labour market:
1- labour unions
2- mimimum wage

Monopsony causes higher unemployment, lower wages, higher and often obscene profits for large companies, and hence larger income differences, and hence weaker social fabric and greater unhappiness amongst the population. It needs to be stressed though that the biggest monopsonist on the labour market is the government.

Monopsony is why communism fails (see solidarity labour union vs former communist polish government), monopsony is why banana republics fail (no rule of law, means minimum wage and labour unions are ineffective), and is why certain political conservative parties fail (because they want to maintain status quo and hence maintain their own privileged lives at the expense of others)


Of course there are still some economists that say that minimum wage increases unemployment. That's only true in the rare case that minimum wage is higher than the market wage, had it been an open and fair market, which is rarely the case in practice. It also needs to be stressed that many of these economist are definitely not neutral and unbiased, often they have links with governments or said large monopsonist corporations, so their socalled scientific findings should be seen in that light.

[goodz]

A higher minimum wage is not a solution to anything, its a complete fallacy. You'd just push up inflation.

! bishop call the white house! You solved the depression!