Some thoughts on socialism and capitalism

This post has been rattling around in my head for a while, and was finally prompted by a post left in sterno‘s journal.

Now, before we get started, let me make one thing abundantly clear. I am a capitalist. I am probably the biggest capitalist you will likely ever meet. For more than a decade, I have made money directly from the work that I do, without relying on an outside business for my full support. Even now, as a salaried employee, I am a minority partner in the company which employees me, and I have at least two other business ventures running at any given time, one of which typically pays my rent.

I am not a socialist, nor do I believe socialism is anything but a broken and inherently unworkable economic system which does little besides deprive those citizens who live under it from benefitting from their own labor.

However, I am also a fan of government oversight of business, and of environmental and social restrictions on the actions of business.

“But Franklin,” you say, “how can that be? Isn’t that a form of socialism? Isn’t the whole point of capitalism the notion that market efficiencies work best when unencumbered by government intrusion?”

And the answer is “no,” because without such oversight, businesses tend to adopt a weird sort of pancake socialism–an inverted socialist system where profit is concentrated, but the costs of doing business and the risks associated with business practices are socialized.

There are tangible risks associated with environmentally or socially negligent behavior. Take, for example, a hypothetical chemical business that produces acetic acid, and as a byproduct produces methylmercury. Methylmercury is difficult and expensive to contain and to get rid of safely, so let us assume that the business disposes of it by dumping it into a lake. (This is not entirely hypothetical; a company doing just that in the Japanese city of Minamata in 1956 caused the largest case of mass mercury poisoning on record.)

The business that pumps methyl mercury into a lake is increasing the risk of serious health consequences for the people living round that lake. Those risks come with a significant dollar value attached; in this hypothetical case, the dollar value may be the cost associated with medical treatment, the cost incurred by lost productivity, and the cost inflicted on the local fishing industry as the industry collapses.

These costs are not borne by the business that did the dumping. The business is not really a capitalistic enterprise; it keeps the profits from its various activities, sure, but it does not pay the costs associated with the risks incurred by its business methods. Those risks are socialized–spread across the population.

In a conventional socialist arrangement, the one everyone thinks of when they think “socialism,” a worker works but does not keep the profits from his work. The profits–the results of his labor–are distributed across the population.

In the inverted socialism that comes along with lax regulation of environmental and social practices, a business keeps the profits from its work, but the costs associated with doing business are distributed across the population. This artificially increases the business’ profit; the socialization of risk means that some of what would otherwise be the business’ expense are paid by the community–even those who do not work for that business–and by other businesses impacted by the first business’ practice. Profit is not distributed, but cost and risk are.

This socialization of risk amounts to a subsidy paid by the people surrounding the business which inflates the business’ worth and increases its profits without increasing production or efficiency. Because the risks are subsidized and the costs associated with those risks are socialized, businesses which operate in a manner that socializes risk end up at a competitive advantage over businesses which shoulder the full costs of doing business.

It need not even be something as blatant as dumping toxic byproducts into the environment, and thereby socializing the risk and forcing others to assume the costs associated with that risk. This kind of “pancake socialism,” or inverted socialization of risk, may happen even in the service sector. For example, when an independent mortgage writer writes a mortgage, he is paid a percentage of the value of that mortgage, and at that point he’s done. The company who underwrites the mortgage, which may or may not own the mortgage throughout its entire life, shoulders the risk associated with the mortgage, but the guy who initially sold it has a different set of motivations. He is paid for every mortgage he writes, regardless of whether or not the underwriter profits from it or it goes into default. Therefore, his incentive rests only with writing the maximum number of mortgages possible, for the highest dollar value possible. He has very powerful incentive to issue risky mortgages, to artificially inflate the ability of the person buying the mortgage to pay, and to minimize the apparent costs associated with the mortgage. In fact, absent any kind of oversight, he may even have incentive to intentionally mislead his clients about the cost, and even to write mortgages which he knows damn well his clients can not afford. He does not bear the costs associated with the risk incurred by the mortgage underwriter.

The mortgage underwriter is in a similar position. It profits from writing mortgages; obviously, if the number of mortgages which go into default reaches a certain threshold, the underwriter will fail, but the more mortgages it underwrites in the short term, the more profit it generates, Particularly when it socializes its own risk by then turning around and selling those mortgages to others.

The total amount of money available to finance mortgages is finite. If a large number of mortgages go into default, this can diminish the pool of money available, which ends up dragging down much of the rest of the economy. A society which permits mortgage lenders to operate with little oversight is a socialist society; it encourages the socialization of risk by separating the risk from the profits. If the housing industry fails…well, the mortgage agents and the owners of mortgage issuing companies still made their millions; they’re set. The costs of the failure are not born by those individuals; the costs are socialized, and end up being paid by everyone, regardless of whether or not they benefitted from the mortgages.

“Socialism” is something of a dirty word in American culture. The best way to defeat any policy is to label it “socialist.” Yet we are a highly socialist society; it’s just that we socialize risk, and we socialize cost, but we don’t socialize profit. Businesses that work without oversight are socialized businesses; they expect everyone else to pay for their operational costs, while still concentrating profits internally.

This imposes significant barriers to entry into many industries; the socialization of risk benefits large businesses over small businesses. It makes up a hidden cost subsidy for businesses in areas where oversight is poor when they compete with businesses in areas where those businesses must pay the full cost of doing business, including the cost of waste management and risk management.

And you know what? As a capitalist, I think that’s fucked up.

Google Poetry

Stolen blatantly from Greta Christina’s blog: Google poetry!

If you have a Web site or a blog and you can see your stats, put together a free-verse poem using only Google keyword searches that folks used to find your site. This one comes from Google queries that ended up on my personal site. Ready? Here we go!

kinky sex ideas
piqued my interest
bdsm + polyamory
bdsm tube
sex scenarios
polyamorous relationships
put me in bondage
dealing with jealousy
intj compatibility
whet my appetite
being a dom
evil overlord
orgasm denial techniques
two girlfriends
low and behold meaning

So today I updated my ecommerce software, updated the blogging software and created a new theme for Whispers which I think makes it easier to read (let me know what you think!), and started work on a new section for the Symtoys site. Not a bad day’s work, considering I still feel like crap.

Apparently, I kept joreth awake all night last night, and not even in the fun way. Seems I was stuffed up enough to be snoring all night. And this after she was kind enough to let me copy her entire Firefly collection–I still, to this very day, haven’t seen every episode.

And filed under too-cool-for-words…

This…is a tripod-mounted, twin-rotor Gatling gun that shoots rubber bands.

I know it’s almost impossible to absorb that much cool all at once, so sit back, relax for a second, and then read that again.

It’s a tripod-mounted, twin-rotor Gatling gun. That shoots rubber bands.

For the love of God and all that is holy, someone has built a rubber band minigun.

I mention this only because my birthday is fast approaching…in a strange twist of irony, it falls on Easter Sunday this year. Just so you know.

Valentine’s Day and stuff

Valentine’s Day is not usually a day I pay a great deal of attention to.

It’s not just that I’m an insensitive bastard who pays little attention to holidays, anniversaries, and other such things in general (though I am), nor that I resent the cynical manipulation of cultural stereotypes about romance and love for the purpose of profit (which I do), nor even that I’m perpetually broke these days (though I am). It’s just that, with all my partners being long-distance these days, Valentine’s Day is nothing if not…impractical.

dayo, not to be deterred by the wildly impractical, decided that she and I should spend Valentine’s Day together…

…in San Francisco, a town I haven’t been to in years.

Issues with delayed flights and bad weather in Atlanta aside, it was absolutely delightful. I got to spend some time with feorlen for the first time in way too long. I also met aiyume and even got a chance to chat briefly with altenra, who I likewise haven’t seen in years.

And I got to meet some of dayo‘s friends, who turned out to be thoroughly delightful (even though the cake is a lie!), go to a Necessary Response concert, visit Power Exchange (always good for that delightfully seedy atmosphere), and just generally have one hell of a good time.

And when I got home, another delightful surprise: figmentj was in Atlanta, and I got to spend some time with her, too.

On one of the mailing lists I belong to, someone proposed a challenge: Write the history of your romantic life, in exactly six words. It’s a fun challenge; reducing the complexities of a lifetime to a handful of words is an interesting exercise in minimalism. I chewed on it for a while, and finally came up with “Much love, only a few mistakes.”

I am profoundly cynical about Valentine’s Day, that mass-market testimony to romance-as-a-consumer-product, but I am not cynical about love. And as much as I whine and bitch about moving to Atlanta and being separated from all of my sweeties, I do feel blessed, and much loved.

I’ve been sick as the proverbial dog the last several days; Thursday and Friday I spent almost the entire day in bed miserable, Saturday I struggled out of bed long enough to play WoW for a little bit; that ended up being too taxing, and Sunday I spent the day in bed again.

joreth came up to visit Sunday night; she’s been feeling poorly too, so the two of us make quite a pair. She’ll be here through Wednesday, and this pleases me.


This is the “town” of Venango, Nebraska:

I put the word “town” in quotes because this particular town, the small cluster of houses and roads on the left-hand side of the image, has a population of around 170, no paved roads, and a single stop sign. If you like, you can click on the picture in order to see a larger view of the horror.

The house in the middle right, which I’ve enlarged in the inset, is the place I spent a number of my formative years.

Looking at the picture now, it’s amazing how little has changed in the twenty-six years since I left there. There used to be a barn just above the house, in the place where the rust-colored scar in the dirt is now, and the town used to have a few more people in it (at the time I lived there, the population was 242). Other than that, it looks pretty much exactly as it did back then.

I went to elementary school in a class of eight people–the largest the town had seen in a decade. The class one grade ahead of me had two people in it. If one were to plot a map of the popularity of the handful of kids at the school, I’d be at the bottom of it, no question about it. I was the only person in the entire school whose parents weren’t long-time Nebraska natives, and the only kid who didn’t much care for football. I was the only kid with a computer (a Radio Shack TRS-80). This, in an environment that prized conformity above all things–conformity of speech, of action, of thought.

Now, American schools are not, and never will be, places that reward anything but conformity. In this tiny town, though, it was as if someone had taken all the need for conformity, all the closed-minded intolerance, and all the petty asshattery you can imagine dredging up from the lowest strata of the human condition, and refined it, distilled it down to its purest and most elemental essence. The drive toward conformity permeated every part of the town, to where one could scarcely tell its citizens apart. It expressed itself even in the casual, offhand racism that made up the sum of the town’s attitude toward others–despite that fact that not one of the people I knew, not one single one, had ever even met any person whose skin was not white. Not once in their entire lives.

I survived the years in Nebraska by keeping to myself and by doing things that nobody else in the town could even understand, much less relate to. I built and flew model rockets (and occasionally lost them in the wheat fields surrounding the house), and I used antique bulletin board systems with a crude, slow 300-baud telephone modem that set my parents back some $600 (at the time, there were only a handful of such systems out there, CBBS Chicago and Magnetic Fantasies in California being the two I most strongly remember using). I read a lot, mostly science textbooks and fantasy novels.

And I developed a very strong, cast-iron case of don’t-give-a-fuck-what-other-folks-think.

Even back then, as the least popular kid in class, the one who was regularly bullied and beaten by the other kids at school (I particularly remember two rather obnoxious meatbags, both named Mike, who everyone called Mike A. and Mike C.; I don’t remember their last names, though I distinctly remember a number of thrashings at their hands), I would not even for a second have traded lives with any of them.

At the time, living in that benighted hellhole was the worst, most miserable thing I could possibly imagine. I came away from it with an ironclad belief that my life belongs to me and it simply does not matter what anyone else thinks of that, and that’s really not such a bad place to be.

I’m curious whatever became of Mike A. and Mike C. I suspect they didn’t escape.

Another day, another iPowerWeb security breach

Last December, I was monkeying around on the Internet doing a Google search for my name, and I discovered a massive security breach at a major Web hosting company that eventually made it to The Register.

So today, I was monkeying around on the Internet doing a Google search for my name, and…

…wait for it…

…discovered that iPower has been hacked again, and hundreds more Web sites hosted by iPower have been penetrated by Russian organized crime and used to spread computer viruses. Want to know more?