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.

106 thoughts on “Some thoughts on socialism and capitalism

    • My take is that having the ability to incorporate is valuable. For example, I’m considering trying to start a side business as a photographer. With that comes a crap load of legal liability related to copyright, etc. By incorporating I can protect myself from the legal ramifications of that.

      The challenge, as I see it, is limiting the scale of corporations. The bigger they are, the more prone they are to the abuses we so commonly associate with them.

      • Well, I make my living without a “real job” so I hearya on that sort of thing.

        I probably WILL incorporate at some point because the laws favor it — just like the fact that not having a formal job is financially beneficial tax-wise. (Home office deductions, getting all your computer toys pre-tax, and getting some of your travel pre-tax as well is da bomb).

        That being said, just because I directly benefit from something personally does not necessarily make it “good”.

        • I think it is good for society more broadly though. It makes it safer to start a small business and my sense is that the system works better when there’s lot of small businesses. I think though maybe what we need is more than one classification of business so that small businesses get more benefits than larger ones.

    • How do you think things might change if one may run a business, and that’s encouraged, but corporations were made illegal?

      I’m of two minds about that.

      Ambrose Bierce said that a corporation is a mechanism for personal profit without personal responsibility. To some extent, that’s true. A corporation exists for the purpose of shielding people from liability, and that makes a mechanism that’s easy to exploit. I once worked for a couple of men who would set up a bunch of corporations, make a great deal of money very quickly by selling Web design services, and then fold the company before they delivered the services. At any given time, they had five or six corporations running from the same office, and they would fold and then re-start two or three a week. (How much money? On average, about $30,000 per week per company. They both drove very nice cars.)

      On the other hand, I’m a corporation–a Subchapter S corporation, to be specific. You’d have to be a fool to go into business without incorporating. The flip side of the responsibility issue is that individual citizens are no better than companies at taking personal responsibility (and why would they be? Companies are made of people). If a company does anything, and I do mean anything, that offends or upsets anyone, or inflicts any injury real or imagined on anyone, the first thing that person is likely to do is sue. A businessman who is not incorporated exposes himself to potentially ruinous lawsuits every single day, even if he does nothing wrong; only a madman would start a company without some mechanism to shield himself from that.

      Running a company involves risk, some of which is within the scope of control of the businessman and some of which isn’t. The failure of a business should not mean the financial ruin of the person who runs it. Without corporations, no sane people would start businesses; if nobody starts businesses, the economy doesn’t work.

      What I think might be helpful is a system whereby people are shielded from civil, but not from criminal, liability by corporate structures. If a corporation knowingly and intentionally violates the law, well, the company is made of people, and that means people broke the law, and when people broke the law, criminal consequences should be in place even if the people involved were doing the wrongdoing while engaged in a corporate enterprise. The folks I worked for were committing fraud, plain and simple, but they could not be touched; when they dissolved one of their corporations, the entity against which people had complaints no longer existed, so the people they defrauded were left unable to do anything about it.

    • 😉

      Seriously though, very well written. Interesting points. I’d not really considered that sort of business practice in those terms.

  1. 😉

    Seriously though, very well written. Interesting points. I’d not really considered that sort of business practice in those terms.

    • I haven’t! Fascinating reading. It draws a lot of conclusions I’d come to already, one of them being that environmentalists who are anti-capitalist and anti-business are doing themselves a profound disservice, and deeply, truly Don’t Get It.

  2. Very good post. One of the best descriptions of how things actually work in American business I have seen. You should turn this into an article and get it published. Seriously!

    I am a capitalist, too. A left leaning nutjob by Republican standards, but a capitalist.

    I have noticed the socialism angle when it comes to business failures and bankruptcy. Businesses large and small can go through a process to have their debts wiped clean and almost entirely written off by their creditors (paid pennies on the dollar). They get to continue to operate and start all over again, usually with a relatively small amount of new capital investment by someone Very socialist when you think about it. Think about MCI Telecom or any of the airlines… much of the risks of these very large businesses were socialized (yes, indeed, the previous shareholder/investors did loose the most). Of course, individuals can do this as well — but it is interesting now that it is now far harder for a person to discharge all of their past debts than it is for a corporation.

    One the other issues is that corporations now pay so little income tax compared to what they did 50 years ago. They get to collect an increasingly disproportionate amount of benefits from government provided infrastructure and those socialized “off balance sheet” risks and costs as you pointed out.

    • “A left leaning nutjob by Republican standards…”

      Oh, so you’re a normal person? 🙂

      As for the bankruptcy thing, the biggest problem I see is basically unfolding right now. For the last 7-8 years, our financial system has been building itself up on a house of cards based on ill considered loans to buy real estate. Ultimately the people who made those decisions will not suffer for them. The banks will get bailed out because of the fear of economic collapse if they aren’t. So there is no moral hazard to them for taking risky actions and we all pay for it in the end.

      There will always be recessions, that’s a normal and healthy part of the business cycle. But really bad recessions are caused by this kind foolish behavior indirectly encouraged by our governments refusal to properly regulate and mitigate the worst behaviors of the system.

    • You know, it kind of irks me that I paid more corporate income tax last year than Microsoft did. In fact,t hat’s a whole ‘nother rant altogether…

      Businesses do often benefit disproportionately from social structures they do not carry their full share of, no doubt about it. In many ways, small businesses subsidize large businesses in this regard; large businesses can more effectively take advantage of a number of financial structures that reduce their overall contribution to social infrastructure, which are unavailable to small businesses.

    • “One the other issues is that corporations now pay so little income tax compared to what they did 50 years ago.”

      One of life’s great misconceptions. Corporations don’t pay any income tax. Never did, never will. Sure they collect it and submit it to the government, but the only payers of income tax are people. We either pay it through lower wages if we work for the corporation, income on profits if we own it, or higher sales prices if we are customers.

      Don’t be fooled by politicians without the backbone to admit they are raising your taxes by saying “we’ll tax the corporations”. The worst part is that corporate taxes are the most regressive tax we impose because its a part of everything we buy from food, to housing, to clothes and has no relationship to ability to pay. Poor people spend more of their income than do wealthy who invest or save a share so poor people pay comparatively much higher corporate taxes.

      P.S. I was pointed to this discussion by a friend so i don’t have a user name. that’s why its posted anonymously

      • There are also mechanisms by which public corporations can pay little or no corporate tax; my own corporation, a Subchapter S corp with only one employee (me), pays more income tax each year than Microsoft. the world’s second most profitable corporation.

        It is true that all tax, whether individual or corporate, is paid by people, It’s not necessarily true that corporations pass the cost of their taxes along to the general public int he form of higher prices, nor that prices for goods and services would be lower if the corporate tax burden were decreased; the prices of goods aren’t necessarily that closely coupled to the expenses of running a business, as odd and non-intuitive as that seems.

        For example, in 1986, General Electric saw a huge and unexpected windfall when the corporate capital gains tax was cut. It did not use this windfall to lower the prices on consumer goods; instead, it used the money to buy out competitor RCA.

        • “There are also mechanisms by which public corporations can pay little or no corporate tax; my own corporation, a Subchapter S corp with only one employee (me), pays more income tax each year than Microsoft. the world’s second most profitable corporation.”

          This is true, but misrepresents what happens economically in this situation. I didn’t look up their financials, but I would guess that if you look at Microsoft’s income statement it would say they owe about $2 billion in taxes. How do they not pay it? Because Microsoft gives everyone from the CEO down to the night janitor stock options. The gain on stock options are income for employees and a deduction for employers. So what happens is that stock options exercised by employees last year wiped out Microsoft’s debt, but the taxes didn’t go unpaid. All those employees paid income tax on that money. So really it was relatively nuetral for the government since in the end they collected the tax money. They actually probably collected more. Here’s the better part. This doesn’t effect consumers at all since no real money actually changes hands. The entire cost is borne by shareholders in the form of diluted holdings. So essentially we are moving wealth from the investor class to the worker bee class all with no government intervention. Isn’t capitalism great!!
          By the way Subchapter S corps don’t pay any taxes. All net income is carried over to the owner’s personal income statement.

          • In the case of my corporation, since I am the company (it has one and only one individual working for it), I don’t make a distinction between “corporate tax” and “inidividual tax.” The tax I pay as an individual on corporate earnings is, for all intents and purposes, corporate tax. (I actually end up, as an individual, paying more than I would if I were an employee making the same gross salary.)

  3. Very good post. One of the best descriptions of how things actually work in American business I have seen. You should turn this into an article and get it published. Seriously!

    I am a capitalist, too. A left leaning nutjob by Republican standards, but a capitalist.

    I have noticed the socialism angle when it comes to business failures and bankruptcy. Businesses large and small can go through a process to have their debts wiped clean and almost entirely written off by their creditors (paid pennies on the dollar). They get to continue to operate and start all over again, usually with a relatively small amount of new capital investment by someone Very socialist when you think about it. Think about MCI Telecom or any of the airlines… much of the risks of these very large businesses were socialized (yes, indeed, the previous shareholder/investors did loose the most). Of course, individuals can do this as well — but it is interesting now that it is now far harder for a person to discharge all of their past debts than it is for a corporation.

    One the other issues is that corporations now pay so little income tax compared to what they did 50 years ago. They get to collect an increasingly disproportionate amount of benefits from government provided infrastructure and those socialized “off balance sheet” risks and costs as you pointed out.

  4. Excellent article! When most people complain about US “corporate welfare,” they’re usually only considering the direct monetary benefits the US government grants corporations, in the forms of (for example) tax breaks and bailouts. Environmental and economic collateral damage from irresponsible business practices doesn’t even register on their radar. Superfund and the S&L bailout of the 1980s are two spectacular examples.

    I second the suggestion that you submit this for publication.

  5. Excellent article! When most people complain about US “corporate welfare,” they’re usually only considering the direct monetary benefits the US government grants corporations, in the forms of (for example) tax breaks and bailouts. Environmental and economic collateral damage from irresponsible business practices doesn’t even register on their radar. Superfund and the S&L bailout of the 1980s are two spectacular examples.

    I second the suggestion that you submit this for publication.

  6. The Daily Show had a guy on a month or 2 back who’d done an extensive analysis of Adam Smith’s book where the phrase “invisible hand of the free market” was coined.
    He pointed out that very few people have actually read & understand the whole book, and that Smith is generally VERY cynical about businesses, especially large corporations, being GOOD.
    The “invisible hand” idea basically came down to “if a company fucks up enough it will be forced back in to line.” He also stated that Smith basically thought the market was needed to control business because government was even MORE corrupt.

    It was verrrrrry interesting.

  7. The Daily Show had a guy on a month or 2 back who’d done an extensive analysis of Adam Smith’s book where the phrase “invisible hand of the free market” was coined.
    He pointed out that very few people have actually read & understand the whole book, and that Smith is generally VERY cynical about businesses, especially large corporations, being GOOD.
    The “invisible hand” idea basically came down to “if a company fucks up enough it will be forced back in to line.” He also stated that Smith basically thought the market was needed to control business because government was even MORE corrupt.

    It was verrrrrry interesting.

  8. tit for tat

    “socialism (is) a broken and inherently unworkable economic system which does little besides deprive those citizens who live under it from benefitting from their own labor”

    capitalism is a morally bankrupt and inherently unfair and unsustainable economic system which does little beside deprive hard working citizens of the “excess value” of their work and concentrate it the hands of those who already have lots of capital, at the same time raping the planet in an orgy of greed and acquisitiveness, thereby fostering ever increasing levels of inequality, poverty, misery and war.

    ok… so what now

    • Re: tit for tat

      That’s why you have government. Unchecked socialism doesn’t work. Unchecked capitalism doesn’t work. Broadly speaking, the best system is one where the wealth of the system is most broadly distributed.

      It seems that the best systems are ones that are broadly speaking capitalist but that tax the system relatively heavily to redistribute wealth. People at the top can still make plenty of money, but people at the bottom have plenty of support to insure they don’t become alienated from the system.

    • Re: tit for tat, part 1.

      capitalism is a morally bankrupt and inherently unfair and unsustainable economic system which does little beside deprive hard working citizens of the “excess value” of their work and concentrate it the hands of those who already have lots of capital, at the same time raping the planet in an orgy of greed and acquisitiveness, thereby fostering ever increasing levels of inequality, poverty, misery and war.

      Sounds nice, doesn’t it? Let’s unpack that notion one part at a time, though.

      “Capitalism is morally bankrupt” is an intersting thing to say. Capitalism is an economic system; economic systems do not, and can not, have morals. Only people have morals. People can be moral or immoral regardless of the economic system they endorse; socialists like Fidel Castro and Hugo Chàvez are arguably as morally bankrupt as Enron CEO Ken Lay. (Chàvez is a particularly interesting example; he spends billions of dollars of his country’s oil wealth on anti-poverty programs, yet despite this there is still a rising gap between the richest and poorest of Venezuela’s citizens, and the poorest people in his country have not benefitted in terms of social mobility, longevity, or education.)

      One of the major problems I see with critics of capitalism–and these critics often, unfortunately, extend into environmentalist groups–is the emotional response to the word “capitalism” that conjures up visions of huge, faceless organizations bent on crushing everyone. The more realistic image of capitalism is the single mom who sells handcrafted jewelry on eBay to make her living, or the kindly guy who makes wooden toys in his basement workshop for kids. There’s sort of this sense that if that kindly woodcrafter makes toys that lots of kids really like, and starts hiring people to help him make toys, and then moves out of his basement into the warehouse down the street, he will suddenly become evil, despite the fact that he’s now giving people jobs and making toys that delight a large number of kids. Why is that? When did being good and successful at something become evil?

      It’s particularly distressing, and ironic, to see environmentalists adopt an anti-capitalist attitude, because capitalism represents a very powerful tool to accomplish their goals. Environmentalists are correct that current ways of doing business are a problem (though it’s interesting, and also ironic, that environmental damage is actually more prevalent in Third World countries, which often lack any sort of environmental regulation whatsoever), but where they miss the boat is in seeing the opportunity that represents.

      We need cleaner fuel, cleaner infrastructure, better and cleaner transportation,a nd we need to change our current infrastructure. Guess what? That’s EXACTLY the kind of challenge capitalism excels at! Someone’s got to develop these new clean power sources. Someone’s got to build and sell the new high-efficiency light bulbs and gizmos that reduce our environmental impact. Someone’s got to build this new, clean infrastructure. There’s a lot of profit to be had in doing that! Some of the hottest Silicon Valley startups right now are clean-tech and alternative-energy businesses. If environmentalists would quit seeing capitalism as The Evil Enemy and start seeing it for what it is–a system, nothing more–maybe they’d actually do some good.

      • Re: tit for tat, part 1.

        Actually, the moral problem I have with capitalism is not related to corporations, although I certainly do have other arguments about the value of those entities.

        My difficulty has always lain in a basic tenet of capitalism, which more or less goes ‘to each according to his merit’. I find it repugnant that individuals who are, through accident of birth or nurture or just plain accident, less able to perform in the competitve mileu of captialism are consigned to a lower life quality as their due. (Individual results may vary but taken as a whole the rule holds true for the mean) I just think that is wrong, morally. Social Darwinism sucks ass.

    • Re: tit for tat, Part 2.

      Let’s go on, shall we?

      “Capitalism is inherently unfair.” Why so? I’m a capitalist; I’m a business owner. What’s unfair about that? You can be, too, if you like! Capitalism works because it provides opportunities for anyone who wants to profit from his own labor. Ever sell anything on eBay? You’re a capitalist! Ever had a garage sale? You’re a capitalist!

      What’s unfair is the notion that if I do something or make something, that someone else should be free to take away my benefit from it. What would you say if you sold your old kayak on eBay and then the government took the money you made from it and gave that money to your neighbor down the street? I be you’d say it was unfair. After all, it was your kayak, right?

      I think folks see capitalism as “unfair” because they see that economic and legal systems in capitalist countries unfairly favor the rich over the poor. It’s a lot easier to start a business if you’re rich than if you’re poor. If you have a lot of money, you can more easily manipulate the system to take advantage of opportunities.

      Problem is, the same is true in all countries. Do you believe that it is possible to create a society in which that isn’t true? What would that society look like? Can you point to a socialist society where that isn’t the case? There is no society that is a perfectly level playing field, and I doubt there ever will be, as long as we’re recognizably human.

      The advantage of capitalism is that anyone can play. Some folks come into the game with more chips than others, but anyone can play. I haven’t worked as an employee in a company I don’t either own outright or own a stake in for more than a decade. Is that unfair?

      “Capitalism is unsustainable.” Can that statement actually be supported? Certainly many current systems are unsustainable. Dependence on fossil fuels as a primary source of energy is unsustainable, no doubt about it. Large-scale exploitation of things like coal is unsustainable.

      But these things are not capitalism. There are capitalists involved in the fossil fuel industry, but fossil fuel is not capitalism. There are socialists involved in the oil industry as well (see reference to Mr. Chàvez above)…and there are capitalists involved in sustainable energy as well.

      I think that conflating “capitalism” with “current social infrastructure” is a very dangerous thing to do.

      • Re: tit for tat, Part 2.

        I say capitalism is unsustainable based on basic mathematics. For capitalism to function properly (basing this on what the capitalist thinkers and economists say about what is best) eternal ongoing growth is necessary, economic contractions cause huge and widespread misery. I believe the thinkers assess the necessary rate of growth to be in the 2% – 3% range. Finite planet. Infinite growth. Captitalism is a Malthusian epitome. I believe that enlightened social engineering is required to avoid complete collapse.

        • Re: tit for tat, Part 2.

          “Finite planet, infinite growth” is a bit of an oversimplification. Economic systems are not zero-sum; a person who creates something adds value to the whole of the economy by his actions. A closed system with finite population and no population growth can still have an expanding economy, because economic systems are not zero-sum.

          Now, granted, any finite planet has finite carrying capacity and finite resources. I don’t think we’re anywhere even close to reaching the limits, though, although we are close to the limits with our current systems–fossil fuels and so on.

          But the current system is not the only way there is to do things. One of the places where capitalism shines as an economic system is in times of stress–because it rewards people who solve problems.

          Of course, any solution to a problem brings with it new problems of its own. The advent of the automobile was seen as a huge boon to cities, which had tremendous problems in the days of horse-drawn carriages with infrastructure and pollution–a lot of horses create a lot of horse droppings. Automobiles solved many problems, and created new ones. The next new ideas will solve those problems, and no doubt create more. But at each stage, things improve.

          • Re: tit for tat, Part 3.

            Hey, I am as big a fan of science as anyone. I agree that if we are to get ourselves out of this impending collapse (which has happened to multiple civilizations in the past) that science and innovation will have to play a big role. I will even concede that some capitalist organizations and structures can be great innovation producers. However, it is also very true that often, when you find yourself in a deep deep hole your first, best and most important step is STOP DIGGING.

          • Re: tit for tat, Part 2.

            And your zero sum comment is taken, but you also should acknowledge that some very sensible and sound economic measures to enhance sustainability don’t work with standard measures of capitalist growth.

            Energy conservation, smart, right? save money, go easy on the planet, win-win right? Actually, energy conservation effectively lowers GDP… if you have successful, substantial and widespread energy conservation you actually have to use up even larger quantities of other resources to gain back the lost ground in growth.

            Same deal for recycling.

            Planned obselesence? Disposable consumer goods? All very good for the GDP.

          • Re: tit for tat, Part 2.

            Energy conservation, smart, right? save money, go easy on the planet, win-win right? Actually, energy conservation effectively lowers GDP… if you have successful, substantial and widespread energy conservation you actually have to use up even larger quantities of other resources to gain back the lost ground in growth.

            Same deal for recycling.

            That’s actually an oversimplification.

            The oversimplification is easiest to see in the case of recycling. The economics of recycling depend heavily on what’s being recycled and the costs of that recycling. Aluminum is an example of a material where recycling makes sense; it’s just so goddamn expensive to extract from ore that even aluminum producers benefit materially from recycling, and companies such as Reynolds Aluminum are heavily involved in recycling.

            Glass, on the other hand, not so much. Raw glass is made from sand, and the logistics of recycling glass–which is more cumbersome than producing virgin glass–don’t make economic sense.

            With things like energy conservation, again, it depends. The relationship between energy consumption and revenue isn’t linear; it’s not necessarily true that more energy consumption directly means more growth for the producer. The producer benefits from greater energy consumption right up to the point where the producer’s capacity is reached–and just a little bit beyond that, the producer suffers, because now it has to invest in a new power plant that won’t, initially, be running at full capacity. It gets even more complicated when you consider that in the US, electrical production ad electrical distribution are separated economically; a producer that builds power lines is legally obligated to allow other producers to distribute on those power lines, so a producer who pays all the cost of new infrastructure reaps only part of the reward.

            In one of the supreme ironies of recent American history, our voracious appetite for coal and oil-fired power plants, with all their attendant inefficiencies, environmental destruction, and political issues, can be laid at the footstep of the environmental movements in the 60s and 70s. The early organized environmentalists had such an unreasoning, knee-jerk fear of nuclear power, and were so successful at spreading this fear, that we are now wedded to inherently dirty, unsafe power generation that relies on fossil fuels.

          • Re: tit for tat, Part 2.

            “That’s actually an oversimplification” … haha, pot meet kettle much?

            Of course it is oversimplified as this is a quirky little LJ blog and not an economics textbook. However the principle stands and your retort misses the point entirely. Yes recycling aluminum is smart, makes great economic sense and can be very profitable… for some companies… however, the bauxite miners and bauxite ore refineries and all the companies that service them and make the heavy mining equipment and transport the ore and on and on… all of those companies take a hit every time an aluminum can is recycled. And the loss to those companies far outweighs the enhancement to the bottom line of the aluminum goods producers. That is the nature of the problem, the GDP suffers as a result of this inarguably good idea.

            When you dig into it things get really crazy. Disposable goods are a benefit to the GDP, right down the line, to an insane extent. Even once their useful life is over they keep on giving. It costs money to landfill them, thereby adding to the GDP by incurring tipping fees at the dump. If that dump leaks and contaminates the water supply of a nearby community? Good for the GDP, the resulting clean up is HUGE economic activity.

          • Re: tit for tat, Part 2.

            Yes recycling aluminum is smart, makes great economic sense and can be very profitable… for some companies… however, the bauxite miners and bauxite ore refineries and all the companies that service them and make the heavy mining equipment and transport the ore and on and on… all of those companies take a hit every time an aluminum can is recycled. And the loss to those companies far outweighs the enhancement to the bottom line of the aluminum goods producers. That is the nature of the problem, the GDP suffers as a result of this inarguably good idea.

            Well…no,.

            The aluminum miners suffer, sure. But it’s a mistake to think of the aluminum mining industry as the whole of the economy. Any economy benefits from inexpensive raw materials. Everybody from the makers of aluminum cookware to airplane manufacturers benefit. The value in an aircraft turbine is greater than the value of the aluminum it’s made of; the more labor steps involved, the greater the value of the finished product.

            When aluminum is not recycled, miners benefit. But aircraft makers, automobile manufacturers, and consumer goods manufacturers all benefit.

          • Re: tit for tat, Part 2.

            Maybe you are getting tired of this thread? your last paragraph here is a bit muddled.

            Not only that but you come within a hair of making my point for me too! You said “…the more labor steps involved, the greater the value of the finished product.” So does that mean an aircraft component made of virgin aluminum sourced from a bauxite mine/refinery process has a higher value than the same part made from recycled cans? Of course not, the parts have the same monetary “value”. However, like I said you are within a hair of what my point is, that the more labour steps involved the greater the value ‘added to the GDP’ of the finished product.

            Lower prices and costs for aircraft and car manufacturers and consumers are great, however those lower prices actually shrink the GDP… (however that process ends up being more or less zero sum because the money saved at a retail level ends up being cycled into the economy immediately anyway when the consumer uses the saved funds to buy something else, thereby adding the lost economic activity back to the GDP) On the front end, in mining and refining, the hit to the GDP remains. Other measures are used to account for that, productivity being the main number used by economists to describe how efficient an economy is, so recycling can be good for productivity.

            It gets really complicated when trying to incorporate productivity into the assessments of economic growth. Way beyond me. Part of the problem for fundamentalist capitalists though, is that some socialist policy actually serves to enhance productivity, so they might get a bit antsy about allowing those numbers to contribute to their holy grail of eternal growth.

          • Up and atom

            “our voracious appetite for coal and oil-fired power plants, with all their attendant inefficiencies, environmental destruction, and political issues, can be laid at the footstep of the environmental movements in the 60s and 70s”..!! now that wouldn’t be an oversimplification would it? There were a lot more forces at work than merely the howling of a few greenies in the 70s.

            If the greenies in the 70s really had that much pull to effect such sweeping change, how is it that all their ranting about conservation and reducing consumption came to naught? Do you think it is at all possible, just maybe, that the hugely powerful petroleum and coal producing corportations, with all their bought and paid for congresscritters and senators, might have effected a bit more change in policy direction than a disparate and mostly ineffective group of howling long haired granola crunchers? Just a thought. I am certain that Exxon Mobil has a thousand times more fingerprints on US policy than Greenpeace or the Sierra Club could ever hope to have.

            Nuclear power, even when it is cost effective compared to fossil fuel generation (almost never) and even when it is run safely and securely (almost always thankfully, but with 100x the plants that we have now odds might start to tip the wrong way) even then it still causes huge problems that you are ignoring.

            Most plants eventually leak some level of radioctive substance into their surroundings, amounts that authorities are quick to label “safe” or “within tolerances” or “of no significant danger to the public” and they are probably right as far as that goes… but if the amounts were multiplied many fold in a production regime that was majority nuclear supplied… even I, as a nominal nuke power supporter, I would be reluctant to call it not a problem when little leak starts to pile up on top of little leak again and again. Radioactive pollution is a bugger.

            Also uranium mining and refining is a filthy business and all too often results in massive environmental devestation and human health nightmares for neighbouring and downstream communities. Once the uranium fuel is spent then disposal becomes a problem, although it seems that you folks down there have come up with a great way to get rid of depleted uranium… a very inventive recycling program wherein you shoot it at Arabs.

            We use a lot of nuke power here in Ontario. We run into another difficulty with it that bears mentioning, and that is the reliability issue. All too often our plants have to shut down one or more of their reactors for repairs, maintenance or precautionary assessment of possible problems. Then the coal plants get cranked up to full blast to take on the load. If cracks are discovered in the structural elements at a coal plant the decision can be made to put off dealing with it until a seasonal peak demand ebbs, or conservation plans can be developed and put into place or what have you… with nuke, any structural faults result in immediate shut down, ASAP and we fire up the coal, and if that’s not enough we buy power at a premium price from Ohio or Michigan or Quebec.

            Nuke is good in many ways, but it isn’t the panacea for our woes by a long shot.

    • Re: tit for tat, Part 3.

      Okay, deeper into the fray!

      “Capitalism does little beside deprive hard working citizens of the “excess value” of their work and concentrate it the hands of those who already have lots of capital.” That’s another common complaint…but what, exactly, does it “deprive” workers of? If this is true, then why is it that workers in capitalist societies invariably, and without exception, enjoy a higher standard of living than workers in non-capitalist societies?

      When we talk about old-school capitalism vs. old-school socialism, essentially what we’re doing is talking about who gets the excess value of a worker’s work. In a capitalist system, the value goes to whoever owns the business. In a socialist system, it goes to “everyone,” for some value of “everyone.”

      But here’s the thing. In a capitalist system, a worker trades work for personal gain. Now, he doesn’t gain all the value of his work, to be sure…but he gains some of it. In a socialist system, he gains none of it. In a capitalist system, if I put in more work, I get some gain from it; in a socialist system, if I put in more work, I don’t gain materially from it. That’s a powerful disincentive to work; one individual’s total amount of work does not materially affect his standard of living, so there’s not any really compelling reason to work.

      And hey, if you don’t like the excess value thats profiting your employer in a capitalist system, you can always go into business yourself! It really isn’t that hard to do. Did I mention that for the last decade of my life, I have only worked for businesses I either own outright, or own a stake in?

      “Capitalism rapes the planet in an orgy of greed and acquisitiveness, thereby fostering ever increasing levels of inequality, poverty, misery and war.” This is the same knee-jerk emotional response that blinds folks who claim to be environmentalists to the tool that could advance their cause.

      It’s important to distinguish between current infrastructure, which has a rather bad history of raping the planet in both capitalist and socialist countries, and economic systems themselves. And in fact, capitalist societies actually have stronger environmental regulation than socialist countries…why is that, do you suppose?

      As for poverty, misery, and war…well, I gotta say, socialist nations like Somalia, Ethopia, and North Korea don’t make that point very well… 🙂

      • Re: tit for tat, Part 3.

        Okay, gonna start at the end first, because it is just so egregious.

        Somalia? you gonna pin that mess on socialism? give me a friggin break, seriously. Much of Africa is a social basket case as a direct and ongoing result of European and to some extent American imperialism. Capitalism can eat all of Africa’s troubles for the next century as far as I am concerned.

        Ethiopia? The place was ruled by a cannibal, who was propped up by various capitalist powers and weapons dealers. They have been at war, hot and cool, with Eritrea for decades. Also see above re. imperialism in Africa.

        North Korea? They’re just lonely.

        How about Sweden, Finland, Canada, Iceland?

        How about Saudi Arabia? Very socialist, but just for the Saudis of course, their cultural bigotry allows them to, for all practical purposes, enslave lesser humans. But serfs aside, Saudis themselves all and sundry enjoy enormous quality of life and wealth…

        Anyway, as you will note in my original comment, I wasn’t extolling socialism, I was denouncing capitalism and for every socialist hellhole you want to name I will name three capitalst hell holes to take them to the dance.

        • Re: tit for tat, Part 3.

          How about Sweden, Finland, Canada, Iceland?

          How about Sweden, Finland, Canada, and Iceland? All of those countries are predominantly capitalist; for-profit companies are the dominant form of enterprise in all four places.

          And how about Saudi Arabia? Not a paragon of socialism, I’m afraid. With vast amounts of money pouring into the Saudi economy from the outside–nearly a trillion dollars a year, all told, from outside revenue for the Kingdom–the House of Saud is probably one of the single greatest examples of the concentration of wealth in one place (the Saudi royal family owns an astonishing forty percent of the nation’s entire net worth(!!). Yet those trillions of dollars pouring in from the outside have not benefitted the nation as a whole; it still has appallingly poor infrastructure, extremely poor public education, and a surprisingly large number of people living in poverty. For all its vaunted socialism, the kingdom of Saudi Arabia is still dependent on outside revenue, has almost no social or business infrastructure, has very little industry save for oil, and is arguably the single greatest example of the concentration of wealth vertically in the hands of a small number of people. I’m not quite sure why you cite them as a socialist society; to my eye, they represent all the worst of capitalism with none of the benefit. The entire economy is sustained by outside investment.

          I’m curious about something, though. If you believe that capitalism is inherently destructive, what would you advocate in its place?

          • Re: tit for tat, Part 3.

            Well, first off, I think you can tell from my comment that I am not super fond of the Saudis. However, the fact is that if you are a Saudi in Saudi Arabia you are automatically qualified for a high paying, low skill, low stress job. It is nominally capitalist, but really it is quite socialist in end result. But again, socialist only for Saudis, the east and south Asians that are employed as the underclass there are treated like dogs and paid worse.

            And as for the question at the end. I thought you would never ask! … just kidding… Anyway, I have no easy answers, I mainly took exception to your blanket dismissal of socialism and felt that capitalism had some of that sauce coming too. Socialist policy performs some functions of society very admirably. I will be happy to concede the same about capitalism.

            In my own personal ethical stand, I believe that it is right and good to provide the basic necessities of a decent, dignified life to as close to a universal standard and unanimous access as possible. Medical care, education, basic nutrition, water, legal advocacy, housing, these things are too important to leave to the vagaries of merit and ability and luck. Frankly, every one of us benefits, materially and in very real ways, when misery and despair are reduced, when cycles of ignorance and poverty and illness are broken. You, as a dyed in the wool entrepreneur, will be more successful in your pursuits living in a peaceful and just society. Why should you have to give up some of what you make to redistribute and raise the greater whole up? Enlightened self interest.

            That leaves plenty of ground to fiddle about with the pursuit of wealth if that is your thing. In the end I oppose monoculture… in farming, in ethnicities, in social engineering… don’t dismiss socialism out of hand, don’t dismiss capitalism out of hand… take from each of their strengths and build something that works for as close to the whole of us as possible.

            Or not though, because there is a better than 50/50 chance that the whole shooting match is toast anyway…. when the polar ice caps go, all bets are off… human society may be set all the way back to pure, small tribal communism before that ride ends. Always like to end on a happy note! 🙂

          • Re: tit for tat, Part 3.

            In my own personal ethical stand, I believe that it is right and good to provide the basic necessities of a decent, dignified life to as close to a universal standard and unanimous access as possible. Medical care, education, basic nutrition, water, legal advocacy, housing, these things are too important to leave to the vagaries of merit and ability and luck. Frankly, every one of us benefits, materially and in very real ways, when misery and despair are reduced, when cycles of ignorance and poverty and illness are broken.

            Yep, I agree absolutely, though I see no connection between this and capitalism or socialism.

            I think it’s a fascinating tribute to the power of words that systems designed to, for example, ensure universal access to health care are called “socialized medicine,” even when the medical care in question is provided by for-profit, competitive businesses. I’m a purist; if an economy, or a segment of an economy, is dominated by independent business entities competing with one another for profit, it isn’t socialism. By definition!

            Nobody in the US complains about, say, “socialized military” or a “socialized air force.” Everything from fighter planes to infantry entrenching tools is purchased by a single-payer system–the US government–but nobody calls these things “socialism.” Fighter planes and backpacks are manufactured by for-profit enterprises that compete with one another.

            Now, if we had a single-payer system for health insurance, with every US citizen guaranteed some minimum standard of health coverage, that would not be “socialized” any more than our current system of building fighter planes is “socialized.” The entities providing the services are still for-profit, independent businesses. Universal access to health care, or education, or any other basic service is not “socialism” until and unless the services are provided by entities owned and controlled by the State.

            As a capitalist, it is in my interests to have an affluent, healthy, well-educated populance. In fact, our current system of patchwork, ramshackle employer-provided health care is a drain on American businesses, and businesses in other countries have an “invisible subsidy” that increases their competitive position over American businesses because they do not have to pay those costs. General Motors spends billions per year providing health insurance for their employees; this represents a business expense that drags them down when they go to compete against Japanese car makers.

            One of the reasons I don’t like Libertarian philosophy is that it seeks to benefit from public infrastructure without paying for it. Libertarians want to benefit from an educated population without paying for it (“if I don’t have any kids in public school, I shouldn’t have to pay taxes to support public education” is one cry I hear from Libertarians). They want health care for themselves, but don’t want to pay for it for others–even when paying for a basic level of health care for others actually benefits them financially in the long term. Folks complain about “socialized medicine” when in fact we’re not talking about any such thing; those same folks generally don’t complain about “socialized military” or “socialized police forces,” even though those things are closer to “socialism” in its purest form.

            Shortsightedness is not a trait of capitalism, or socialism, or any economic system. Its a trait of human beings, many of whom can’t see past the end of their nose even when talking about their own economic self-interest. We all benefit from a fit, healthy, educated population–economically and in other ways. But folks who call themselves “capitalist” often fail to see that benefit, and attach the emotionally-charged label of “socialized” to it even when these services are provided by capitalistic entities and represent opportunity for economic growth.

      • Re: tit for tat, Part 3.

        The year my father started working at General Motors he was earning about $3,600 annually. That year the corporation registered a profit equal to just shy of $35,000 per wage earning employee.

        You ask “why is it that workers in capitalist societies invariably, and without exception, enjoy a higher standard of living than workers in non-capitalist societies?”

        First of all it isn’t “invariably true”… there are plenty of hard core capitalist places that are rife with abject poverty. And more interesting to ask – why is it that countries with a high degree of socialist policy, compared to say the USA, seem to always be at the top of quality of life indeces? Seems, for a broad swath of the capitalist/socialist policy continuum, that less capitalism equals better life quality.

        There is also another factor to consider and that has to do with active hostility and sabotage perpetrated by capitalist entities against any socialist movement. Cuba is a miracle by any (non-American) reckoning. A tiny country which has been the target of the world’s largest economic and military power, a power which has used tactics ranging from economic blockade, state approved (and no doubt sponsored) terrorism, outright invasion, strong arming of potential friends… it goes on. See, I am a Canadian so I know lots of people who have been there, talked to people, moved around the countryside, broken bread with families. For an American to point to Cuba as a socialist failure makes my gorge rise. Cuba has a higher literacy rate, lower infant mortality, higher doctors per capita and lower obesity rates than their big, bad next door neighbour. Is it heaven on earth? no, far from it, but then…. IT HAS BEEN AT WAR WITH THE WORLD’S LARGEST SUPERPOWER FOR OVER 50 YEARS!!!!

        When the province I live in, Ontario, elected an NDP government (social democrats, think sort of along the lines of Kuccinich or Nader) the American bond rating agencies immediately lowered the provinces credit rating thereby making the service on our debt (rung up by a long running Conservative government) much more expensive. This handcuffed the socialists and jammed one of two knives into the very idea of ever electing an NDP government again. It was a blatant move by fundamentalist capitalist power brokers, true believers, to sabotage a somewhat socialist government. We, the people of Ontario, were no less likely to pay our debts with a sort-of-socialist party in power. In fact, historically, the further left a provincial government is the more likely it is to keep debt moderate and under control.

        For a capitalist to point to socialist experiments and say, “see? it just doesn’t work” is akin to a 6′ 5″ bruiser throwing a shoulder into someone, knocking them off their bike and then saying “see? I told you that you would fall off if you tried to ride that thing!”

        • Re: tit for tat, Part 3.

          Ask your friends who went to Cuba where they stayed, and what they did.

          I’m sure they had a great time and went away with a very positive impression of the place. I bet they stayed in hotels reserved for foreigners only, and paid their bills in American dollars. Cuba is a nation with two separate, and not equal, economies. Foreigners stay in areas that are off-limits to natives, and pay in Western currency for goods and services run for profit. Citizens don’t use Western currency, and live under a system of strict government economic control and rationing.

          They haven’t been at war with the US for years; they’ve merely been cut off from trade with the US for years. Big difference; ask Iraq! Yet even when they had the world’s second biggest superpower subsidizing their economy, pouring billions of dollars into a very small society for decades, they still never rose above poverty.

          Well, most of them did. Fidel himself is listed as among the world’s 100 richest people; the Cuban government controls a portfolio of real estate throughout central and south America estimated to be worth billions. *shrug* No matter how you slice it, a few people end up with disproportionate wealth. Tat disproportionate wealth can be awarded via personal connections or personal control of the government, as is the case with Castro, or by being born into the right family, as is the case with the House of Saud, or by the virtue of one’s own work, as is the case here. If wealth is distributed disproportionately, I’d personally rather it be by merit than by anything else.

          But then, I am a businessman. 🙂

          • Re: tit for tat, Part 3.

            For the most part Americans should really try not to talk about Cuba. You have been fed lies with your breakfast cereal since you grew your first tooth. You guys are the black hats in this story.

            My father, his partner and several of their friends have been to Cuba many times. They generally have stayed at privately owned beachfront cabana type hostels. The one place they stayed the owner (well really the owner’s husband, Senora was the big boss) would come and drink rum with them and complain all night about the bastardo Americans and the war they were perpetrating on brave little Cuba.

            They travelled extensively among the people. Most times they went there they brought suitcases full of stuff for the schools. Donated computer equipment, tools, pencils and pens, etc… they really took a lot of computer stuff down, my sis works in a head office in downtown Toronto so perfectly good but slightly outmoded equipment was being tossed yearly… My dad’s sisters were both school teachers so tons of surplussed school supplies made their way down there too. Anyway, my dad got real joy breaking the American embargo on advanced electronic as often and as soundly as he could.

            He told me a very moving story of talking to a group of professionals, medical workers, architects, engineers, electricians, about the post Soviet Union collapse time, when the embargo caused fuel supplies to dry up almost entirely. These urban, more or less white collar people were required by the government to head out to the countryside and work the fields manually because there was no fuel for the tractors and the agricultural workers couldn’t do it all during busy times… planting, harvest etc… my dad did some time as a farm hand when he was a teenager, before he apprenticed as a tradesman, so he knows how hard that work can be, particularly without mechanical help, so with this first hand knowledge in mind he noted to these Cubanos that it probably didn’t make them too happy to have to do this backbreaking work. He said every one of them reacted the same way, with expressions of pride, national loyalty and fellowship with their countrymen. He said it was obvious from their expressions, their posture, puffed up chests, thrown back shoulders, the glint in their eyes…. not just words mouthed for any government stooges that might be listening… they were glad to have done it, took great pride in the fact that they contributed to the survival and feeding of their nation and all had expressions of disdain and disgust for the Americans that were trying to starve them out of their homes.

            When I did my second stint at college I befriended one of the younger instructors who is a pretty cool guy, about my age. He went down there and rented motorcycles for him and his wife and they cruised through the Sierra Maestra mountains and visited plenty of local people. Again, similar stories of healthy, happy people, proud of the strength of their nation in the face of American terrorism.

            My mom just went there last month, I haven’t had a chance to talk to her about it yet, but I think she stayed at one of those “no locals allowed” resorts.

            A poly group, the core couple of which are long time friends, I went to high school with him (he dated my sister) went there for a week over this past New Years, again, haven’t had a chance to talk to him about it.

            You can talk about the richest people list all you want, but tell me who wrote the list, who set the rules for what qualifies as personal wealth, what are their political leanings? Mr Castro would need access to a great deal of resources, no doubt, just to stay alive, since the biggest superpower in the world has a history of trying to assassinate him.

            Anyway, the picture of Cuba and its history painted by your teachers, your media, your culture, is not a true one. You have been lied to systematically, and I would think that someone as free thinking and intelligent as you would be right ticked about it. The war on Cuba perpetrated by your government has been done in your name. And it gives the ultimate excuse for any criticism levelled at Cuba, no matter how correct… everything is difficult in a time of war.

        • Re: tit for tat, Part 3.

          Nice comment. I do find it interesting how most “main stream” criticism of Cuba seems to essentially boil down to “the people don’t have the income to buy lots of crap they don’t need… from us!”. Oh, and they are communists, so they must be bad.

          I do acknowledge that freedoms are not the same there, and people often don’t have enough food. But I have never understood what Cuba ever did to the USA to earn their treatment. (Well, ok, there was the missile crisis, but that was really the USSR doing that more than Cuba.)

  9. tit for tat

    “socialism (is) a broken and inherently unworkable economic system which does little besides deprive those citizens who live under it from benefitting from their own labor”

    capitalism is a morally bankrupt and inherently unfair and unsustainable economic system which does little beside deprive hard working citizens of the “excess value” of their work and concentrate it the hands of those who already have lots of capital, at the same time raping the planet in an orgy of greed and acquisitiveness, thereby fostering ever increasing levels of inequality, poverty, misery and war.

    ok… so what now

  10. My theory on it:

    In a capitalist system, the primary motivation of a company is to maximize profitability. Any “good” that a company does is always in the service of higher profits. They provide health insurance because healthy employees are more productive. They fund local charities because it’s good PR, etc. Companies that do good for any reason other than the bottom line are a rare and often transient exception, especially as they become larger and more disconnected from local communities, etc.

    So given that premise, I believe the optimum way for government to achieve greater good for the public is through proper regulation of those corporations. That is, make it so that the profit motives of the corporations are in tune with the needs of the public. You make it so that profitability is best achieved when the company is paying good wages, providing good benefits, protecting the environment, etc.

    This works best when companies are not penalized for failure to meet those goals (thus requiring investigation and prosecution by government). Ideally, the government should use various carrots that require companies to prove their success in meeting these goals. This puts the onus on the companies to demonstrate their success rather than creating a motivation to hide their failures.

    Finally, I think that sometimes a private system does not work. A private capitalist system works when there is a guarantee of substantial competition in the market place. Where competition cannot be guranteed, the private market fails. For example, the health care system is broken because nobody competes for the most sick. This is in addition to the fact that medical care is a very complex field requiring years of knowledge that the average consumer cannot hope to understand and thus use to make informed decisions.

    So while broadly speaking I’m all for capitalism and a well regulated market place, I think that a single payer government funded health care system makes sense. I also think that public utilities make sense. However if somebody could demonstrate a way that government could create a health care system that was private and yet covered all people and provided competition to keep prices low and quality high, I’d be all for it.

    • In a capitalist system, the primary motivation of a company is to maximize profitability. Any “good” that a company does is always in the service of higher profits. They provide health insurance because healthy employees are more productive.

      Actually, that’s not entirely true. The current system of employer-funded health care is a relatively modern thing, and it’s an artifact of Richard Nixon’s wage and price freeze in 1971.

      Back in the late 60s and early 70s, inflation was a very serious economic issue. Nixon hit on a particularly stupid “solution” to this problem–a mandatory freeze in prices and wages across the board.

      Now, this particular idea was doomed to fail for a whole host of reasons, not the least of which is it’s essentially impossible. A manufacturer of a complex, high-ticket item like a car has a zillion different ways to cut costs–remove features, use inferior materials–which effectively decrease the value of the car, and so increase its price even if the selling price remains unchanged. Makers of toilet paper and plastic spoons can’t really do that. So a price freeze is inherently uneven; it affects commodity goods more than it affects other goods.

      On top of that, a price freeze means that workers are no longer able to move to new, higher-paying jobs, and businesses can not compete for skilled workers by offering more money. So what businesses started doing is finding subtle, off-the-paycheck ways to compete for workers. One of these was offering to pay for their employees’ health insurance.

      The unfortunate legacy of Nixon’s brain-dead approach to economic management still lingers with us. Multiple-payer health insurance linked to employment is wasteful, inefficient, and uneven, and it leaves a lot of people uninsured. This makes for an expensive, wasteful, and inefficient health care system in general; Americans spend more on health care than any other nation in the world, yet if you look at indexes of the quality of the health care we receive, such as infant mortality or longevity, we’re the worst in the industrialized world. Linking health insurance to employment is just stupid.

  11. My theory on it:

    In a capitalist system, the primary motivation of a company is to maximize profitability. Any “good” that a company does is always in the service of higher profits. They provide health insurance because healthy employees are more productive. They fund local charities because it’s good PR, etc. Companies that do good for any reason other than the bottom line are a rare and often transient exception, especially as they become larger and more disconnected from local communities, etc.

    So given that premise, I believe the optimum way for government to achieve greater good for the public is through proper regulation of those corporations. That is, make it so that the profit motives of the corporations are in tune with the needs of the public. You make it so that profitability is best achieved when the company is paying good wages, providing good benefits, protecting the environment, etc.

    This works best when companies are not penalized for failure to meet those goals (thus requiring investigation and prosecution by government). Ideally, the government should use various carrots that require companies to prove their success in meeting these goals. This puts the onus on the companies to demonstrate their success rather than creating a motivation to hide their failures.

    Finally, I think that sometimes a private system does not work. A private capitalist system works when there is a guarantee of substantial competition in the market place. Where competition cannot be guranteed, the private market fails. For example, the health care system is broken because nobody competes for the most sick. This is in addition to the fact that medical care is a very complex field requiring years of knowledge that the average consumer cannot hope to understand and thus use to make informed decisions.

    So while broadly speaking I’m all for capitalism and a well regulated market place, I think that a single payer government funded health care system makes sense. I also think that public utilities make sense. However if somebody could demonstrate a way that government could create a health care system that was private and yet covered all people and provided competition to keep prices low and quality high, I’d be all for it.

  12. Re: tit for tat

    That’s why you have government. Unchecked socialism doesn’t work. Unchecked capitalism doesn’t work. Broadly speaking, the best system is one where the wealth of the system is most broadly distributed.

    It seems that the best systems are ones that are broadly speaking capitalist but that tax the system relatively heavily to redistribute wealth. People at the top can still make plenty of money, but people at the bottom have plenty of support to insure they don’t become alienated from the system.

  13. “A left leaning nutjob by Republican standards…”

    Oh, so you’re a normal person? 🙂

    As for the bankruptcy thing, the biggest problem I see is basically unfolding right now. For the last 7-8 years, our financial system has been building itself up on a house of cards based on ill considered loans to buy real estate. Ultimately the people who made those decisions will not suffer for them. The banks will get bailed out because of the fear of economic collapse if they aren’t. So there is no moral hazard to them for taking risky actions and we all pay for it in the end.

    There will always be recessions, that’s a normal and healthy part of the business cycle. But really bad recessions are caused by this kind foolish behavior indirectly encouraged by our governments refusal to properly regulate and mitigate the worst behaviors of the system.

  14. My take is that having the ability to incorporate is valuable. For example, I’m considering trying to start a side business as a photographer. With that comes a crap load of legal liability related to copyright, etc. By incorporating I can protect myself from the legal ramifications of that.

    The challenge, as I see it, is limiting the scale of corporations. The bigger they are, the more prone they are to the abuses we so commonly associate with them.

  15. Well, I make my living without a “real job” so I hearya on that sort of thing.

    I probably WILL incorporate at some point because the laws favor it — just like the fact that not having a formal job is financially beneficial tax-wise. (Home office deductions, getting all your computer toys pre-tax, and getting some of your travel pre-tax as well is da bomb).

    That being said, just because I directly benefit from something personally does not necessarily make it “good”.

  16. I think it is good for society more broadly though. It makes it safer to start a small business and my sense is that the system works better when there’s lot of small businesses. I think though maybe what we need is more than one classification of business so that small businesses get more benefits than larger ones.

  17. How do you think things might change if one may run a business, and that’s encouraged, but corporations were made illegal?

    I’m of two minds about that.

    Ambrose Bierce said that a corporation is a mechanism for personal profit without personal responsibility. To some extent, that’s true. A corporation exists for the purpose of shielding people from liability, and that makes a mechanism that’s easy to exploit. I once worked for a couple of men who would set up a bunch of corporations, make a great deal of money very quickly by selling Web design services, and then fold the company before they delivered the services. At any given time, they had five or six corporations running from the same office, and they would fold and then re-start two or three a week. (How much money? On average, about $30,000 per week per company. They both drove very nice cars.)

    On the other hand, I’m a corporation–a Subchapter S corporation, to be specific. You’d have to be a fool to go into business without incorporating. The flip side of the responsibility issue is that individual citizens are no better than companies at taking personal responsibility (and why would they be? Companies are made of people). If a company does anything, and I do mean anything, that offends or upsets anyone, or inflicts any injury real or imagined on anyone, the first thing that person is likely to do is sue. A businessman who is not incorporated exposes himself to potentially ruinous lawsuits every single day, even if he does nothing wrong; only a madman would start a company without some mechanism to shield himself from that.

    Running a company involves risk, some of which is within the scope of control of the businessman and some of which isn’t. The failure of a business should not mean the financial ruin of the person who runs it. Without corporations, no sane people would start businesses; if nobody starts businesses, the economy doesn’t work.

    What I think might be helpful is a system whereby people are shielded from civil, but not from criminal, liability by corporate structures. If a corporation knowingly and intentionally violates the law, well, the company is made of people, and that means people broke the law, and when people broke the law, criminal consequences should be in place even if the people involved were doing the wrongdoing while engaged in a corporate enterprise. The folks I worked for were committing fraud, plain and simple, but they could not be touched; when they dissolved one of their corporations, the entity against which people had complaints no longer existed, so the people they defrauded were left unable to do anything about it.

  18. I haven’t! Fascinating reading. It draws a lot of conclusions I’d come to already, one of them being that environmentalists who are anti-capitalist and anti-business are doing themselves a profound disservice, and deeply, truly Don’t Get It.

  19. Well, I suppose I could make the journal about nothing but Net memes, discussions of television shows, and amusing pictures of cats….

    Naah. 🙂

  20. Well, I suppose I could make the journal about nothing but Net memes, discussions of television shows, and amusing pictures of cats….

    Naah. 🙂

  21. You know, it kind of irks me that I paid more corporate income tax last year than Microsoft did. In fact,t hat’s a whole ‘nother rant altogether…

    Businesses do often benefit disproportionately from social structures they do not carry their full share of, no doubt about it. In many ways, small businesses subsidize large businesses in this regard; large businesses can more effectively take advantage of a number of financial structures that reduce their overall contribution to social infrastructure, which are unavailable to small businesses.

  22. Re: tit for tat, part 1.

    capitalism is a morally bankrupt and inherently unfair and unsustainable economic system which does little beside deprive hard working citizens of the “excess value” of their work and concentrate it the hands of those who already have lots of capital, at the same time raping the planet in an orgy of greed and acquisitiveness, thereby fostering ever increasing levels of inequality, poverty, misery and war.

    Sounds nice, doesn’t it? Let’s unpack that notion one part at a time, though.

    “Capitalism is morally bankrupt” is an intersting thing to say. Capitalism is an economic system; economic systems do not, and can not, have morals. Only people have morals. People can be moral or immoral regardless of the economic system they endorse; socialists like Fidel Castro and Hugo Chàvez are arguably as morally bankrupt as Enron CEO Ken Lay. (Chàvez is a particularly interesting example; he spends billions of dollars of his country’s oil wealth on anti-poverty programs, yet despite this there is still a rising gap between the richest and poorest of Venezuela’s citizens, and the poorest people in his country have not benefitted in terms of social mobility, longevity, or education.)

    One of the major problems I see with critics of capitalism–and these critics often, unfortunately, extend into environmentalist groups–is the emotional response to the word “capitalism” that conjures up visions of huge, faceless organizations bent on crushing everyone. The more realistic image of capitalism is the single mom who sells handcrafted jewelry on eBay to make her living, or the kindly guy who makes wooden toys in his basement workshop for kids. There’s sort of this sense that if that kindly woodcrafter makes toys that lots of kids really like, and starts hiring people to help him make toys, and then moves out of his basement into the warehouse down the street, he will suddenly become evil, despite the fact that he’s now giving people jobs and making toys that delight a large number of kids. Why is that? When did being good and successful at something become evil?

    It’s particularly distressing, and ironic, to see environmentalists adopt an anti-capitalist attitude, because capitalism represents a very powerful tool to accomplish their goals. Environmentalists are correct that current ways of doing business are a problem (though it’s interesting, and also ironic, that environmental damage is actually more prevalent in Third World countries, which often lack any sort of environmental regulation whatsoever), but where they miss the boat is in seeing the opportunity that represents.

    We need cleaner fuel, cleaner infrastructure, better and cleaner transportation,a nd we need to change our current infrastructure. Guess what? That’s EXACTLY the kind of challenge capitalism excels at! Someone’s got to develop these new clean power sources. Someone’s got to build and sell the new high-efficiency light bulbs and gizmos that reduce our environmental impact. Someone’s got to build this new, clean infrastructure. There’s a lot of profit to be had in doing that! Some of the hottest Silicon Valley startups right now are clean-tech and alternative-energy businesses. If environmentalists would quit seeing capitalism as The Evil Enemy and start seeing it for what it is–a system, nothing more–maybe they’d actually do some good.

  23. Re: tit for tat, Part 2.

    Let’s go on, shall we?

    “Capitalism is inherently unfair.” Why so? I’m a capitalist; I’m a business owner. What’s unfair about that? You can be, too, if you like! Capitalism works because it provides opportunities for anyone who wants to profit from his own labor. Ever sell anything on eBay? You’re a capitalist! Ever had a garage sale? You’re a capitalist!

    What’s unfair is the notion that if I do something or make something, that someone else should be free to take away my benefit from it. What would you say if you sold your old kayak on eBay and then the government took the money you made from it and gave that money to your neighbor down the street? I be you’d say it was unfair. After all, it was your kayak, right?

    I think folks see capitalism as “unfair” because they see that economic and legal systems in capitalist countries unfairly favor the rich over the poor. It’s a lot easier to start a business if you’re rich than if you’re poor. If you have a lot of money, you can more easily manipulate the system to take advantage of opportunities.

    Problem is, the same is true in all countries. Do you believe that it is possible to create a society in which that isn’t true? What would that society look like? Can you point to a socialist society where that isn’t the case? There is no society that is a perfectly level playing field, and I doubt there ever will be, as long as we’re recognizably human.

    The advantage of capitalism is that anyone can play. Some folks come into the game with more chips than others, but anyone can play. I haven’t worked as an employee in a company I don’t either own outright or own a stake in for more than a decade. Is that unfair?

    “Capitalism is unsustainable.” Can that statement actually be supported? Certainly many current systems are unsustainable. Dependence on fossil fuels as a primary source of energy is unsustainable, no doubt about it. Large-scale exploitation of things like coal is unsustainable.

    But these things are not capitalism. There are capitalists involved in the fossil fuel industry, but fossil fuel is not capitalism. There are socialists involved in the oil industry as well (see reference to Mr. Chàvez above)…and there are capitalists involved in sustainable energy as well.

    I think that conflating “capitalism” with “current social infrastructure” is a very dangerous thing to do.

  24. Re: tit for tat, Part 3.

    Okay, deeper into the fray!

    “Capitalism does little beside deprive hard working citizens of the “excess value” of their work and concentrate it the hands of those who already have lots of capital.” That’s another common complaint…but what, exactly, does it “deprive” workers of? If this is true, then why is it that workers in capitalist societies invariably, and without exception, enjoy a higher standard of living than workers in non-capitalist societies?

    When we talk about old-school capitalism vs. old-school socialism, essentially what we’re doing is talking about who gets the excess value of a worker’s work. In a capitalist system, the value goes to whoever owns the business. In a socialist system, it goes to “everyone,” for some value of “everyone.”

    But here’s the thing. In a capitalist system, a worker trades work for personal gain. Now, he doesn’t gain all the value of his work, to be sure…but he gains some of it. In a socialist system, he gains none of it. In a capitalist system, if I put in more work, I get some gain from it; in a socialist system, if I put in more work, I don’t gain materially from it. That’s a powerful disincentive to work; one individual’s total amount of work does not materially affect his standard of living, so there’s not any really compelling reason to work.

    And hey, if you don’t like the excess value thats profiting your employer in a capitalist system, you can always go into business yourself! It really isn’t that hard to do. Did I mention that for the last decade of my life, I have only worked for businesses I either own outright, or own a stake in?

    “Capitalism rapes the planet in an orgy of greed and acquisitiveness, thereby fostering ever increasing levels of inequality, poverty, misery and war.” This is the same knee-jerk emotional response that blinds folks who claim to be environmentalists to the tool that could advance their cause.

    It’s important to distinguish between current infrastructure, which has a rather bad history of raping the planet in both capitalist and socialist countries, and economic systems themselves. And in fact, capitalist societies actually have stronger environmental regulation than socialist countries…why is that, do you suppose?

    As for poverty, misery, and war…well, I gotta say, socialist nations like Somalia, Ethopia, and North Korea don’t make that point very well… 🙂

  25. In a capitalist system, the primary motivation of a company is to maximize profitability. Any “good” that a company does is always in the service of higher profits. They provide health insurance because healthy employees are more productive.

    Actually, that’s not entirely true. The current system of employer-funded health care is a relatively modern thing, and it’s an artifact of Richard Nixon’s wage and price freeze in 1971.

    Back in the late 60s and early 70s, inflation was a very serious economic issue. Nixon hit on a particularly stupid “solution” to this problem–a mandatory freeze in prices and wages across the board.

    Now, this particular idea was doomed to fail for a whole host of reasons, not the least of which is it’s essentially impossible. A manufacturer of a complex, high-ticket item like a car has a zillion different ways to cut costs–remove features, use inferior materials–which effectively decrease the value of the car, and so increase its price even if the selling price remains unchanged. Makers of toilet paper and plastic spoons can’t really do that. So a price freeze is inherently uneven; it affects commodity goods more than it affects other goods.

    On top of that, a price freeze means that workers are no longer able to move to new, higher-paying jobs, and businesses can not compete for skilled workers by offering more money. So what businesses started doing is finding subtle, off-the-paycheck ways to compete for workers. One of these was offering to pay for their employees’ health insurance.

    The unfortunate legacy of Nixon’s brain-dead approach to economic management still lingers with us. Multiple-payer health insurance linked to employment is wasteful, inefficient, and uneven, and it leaves a lot of people uninsured. This makes for an expensive, wasteful, and inefficient health care system in general; Americans spend more on health care than any other nation in the world, yet if you look at indexes of the quality of the health care we receive, such as infant mortality or longevity, we’re the worst in the industrialized world. Linking health insurance to employment is just stupid.

  26. Re: tit for tat, part 1.

    Actually, the moral problem I have with capitalism is not related to corporations, although I certainly do have other arguments about the value of those entities.

    My difficulty has always lain in a basic tenet of capitalism, which more or less goes ‘to each according to his merit’. I find it repugnant that individuals who are, through accident of birth or nurture or just plain accident, less able to perform in the competitve mileu of captialism are consigned to a lower life quality as their due. (Individual results may vary but taken as a whole the rule holds true for the mean) I just think that is wrong, morally. Social Darwinism sucks ass.

  27. Re: tit for tat, Part 2.

    I say capitalism is unsustainable based on basic mathematics. For capitalism to function properly (basing this on what the capitalist thinkers and economists say about what is best) eternal ongoing growth is necessary, economic contractions cause huge and widespread misery. I believe the thinkers assess the necessary rate of growth to be in the 2% – 3% range. Finite planet. Infinite growth. Captitalism is a Malthusian epitome. I believe that enlightened social engineering is required to avoid complete collapse.

  28. Re: tit for tat, Part 3.

    Okay, gonna start at the end first, because it is just so egregious.

    Somalia? you gonna pin that mess on socialism? give me a friggin break, seriously. Much of Africa is a social basket case as a direct and ongoing result of European and to some extent American imperialism. Capitalism can eat all of Africa’s troubles for the next century as far as I am concerned.

    Ethiopia? The place was ruled by a cannibal, who was propped up by various capitalist powers and weapons dealers. They have been at war, hot and cool, with Eritrea for decades. Also see above re. imperialism in Africa.

    North Korea? They’re just lonely.

    How about Sweden, Finland, Canada, Iceland?

    How about Saudi Arabia? Very socialist, but just for the Saudis of course, their cultural bigotry allows them to, for all practical purposes, enslave lesser humans. But serfs aside, Saudis themselves all and sundry enjoy enormous quality of life and wealth…

    Anyway, as you will note in my original comment, I wasn’t extolling socialism, I was denouncing capitalism and for every socialist hellhole you want to name I will name three capitalst hell holes to take them to the dance.

    • It is!

      That’s one of the problems of being an early adopter, of course. I love the idea of having this sense, and I can’t express in mere words how badly I want it, but when you’re dealing with what is essentially version 0.1 alpha 2 of a technology being pioneered by people with no formal medical training, there are likely to be…bumps along the way.

      I would not get this particular body mod (and I haven’t), but when the process matures a bit, you can be sure I’ll be standing in line.

      • Oooh! I’ve just thought of an interesting (to me, but hopefully to you as well) question.

        If you’re game, put together a list of desired augmentations. Let’s limit this to a reasonable time frame; say a decade in the future. Assume cost isn’t a limitation. For bonus points, explain why you want the particular augment.

  29. Re: tit for tat, Part 3.

    The year my father started working at General Motors he was earning about $3,600 annually. That year the corporation registered a profit equal to just shy of $35,000 per wage earning employee.

    You ask “why is it that workers in capitalist societies invariably, and without exception, enjoy a higher standard of living than workers in non-capitalist societies?”

    First of all it isn’t “invariably true”… there are plenty of hard core capitalist places that are rife with abject poverty. And more interesting to ask – why is it that countries with a high degree of socialist policy, compared to say the USA, seem to always be at the top of quality of life indeces? Seems, for a broad swath of the capitalist/socialist policy continuum, that less capitalism equals better life quality.

    There is also another factor to consider and that has to do with active hostility and sabotage perpetrated by capitalist entities against any socialist movement. Cuba is a miracle by any (non-American) reckoning. A tiny country which has been the target of the world’s largest economic and military power, a power which has used tactics ranging from economic blockade, state approved (and no doubt sponsored) terrorism, outright invasion, strong arming of potential friends… it goes on. See, I am a Canadian so I know lots of people who have been there, talked to people, moved around the countryside, broken bread with families. For an American to point to Cuba as a socialist failure makes my gorge rise. Cuba has a higher literacy rate, lower infant mortality, higher doctors per capita and lower obesity rates than their big, bad next door neighbour. Is it heaven on earth? no, far from it, but then…. IT HAS BEEN AT WAR WITH THE WORLD’S LARGEST SUPERPOWER FOR OVER 50 YEARS!!!!

    When the province I live in, Ontario, elected an NDP government (social democrats, think sort of along the lines of Kuccinich or Nader) the American bond rating agencies immediately lowered the provinces credit rating thereby making the service on our debt (rung up by a long running Conservative government) much more expensive. This handcuffed the socialists and jammed one of two knives into the very idea of ever electing an NDP government again. It was a blatant move by fundamentalist capitalist power brokers, true believers, to sabotage a somewhat socialist government. We, the people of Ontario, were no less likely to pay our debts with a sort-of-socialist party in power. In fact, historically, the further left a provincial government is the more likely it is to keep debt moderate and under control.

    For a capitalist to point to socialist experiments and say, “see? it just doesn’t work” is akin to a 6′ 5″ bruiser throwing a shoulder into someone, knocking them off their bike and then saying “see? I told you that you would fall off if you tried to ride that thing!”

  30. “One the other issues is that corporations now pay so little income tax compared to what they did 50 years ago.”

    One of life’s great misconceptions. Corporations don’t pay any income tax. Never did, never will. Sure they collect it and submit it to the government, but the only payers of income tax are people. We either pay it through lower wages if we work for the corporation, income on profits if we own it, or higher sales prices if we are customers.

    Don’t be fooled by politicians without the backbone to admit they are raising your taxes by saying “we’ll tax the corporations”. The worst part is that corporate taxes are the most regressive tax we impose because its a part of everything we buy from food, to housing, to clothes and has no relationship to ability to pay. Poor people spend more of their income than do wealthy who invest or save a share so poor people pay comparatively much higher corporate taxes.

    P.S. I was pointed to this discussion by a friend so i don’t have a user name. that’s why its posted anonymously

  31. There are also mechanisms by which public corporations can pay little or no corporate tax; my own corporation, a Subchapter S corp with only one employee (me), pays more income tax each year than Microsoft. the world’s second most profitable corporation.

    It is true that all tax, whether individual or corporate, is paid by people, It’s not necessarily true that corporations pass the cost of their taxes along to the general public int he form of higher prices, nor that prices for goods and services would be lower if the corporate tax burden were decreased; the prices of goods aren’t necessarily that closely coupled to the expenses of running a business, as odd and non-intuitive as that seems.

    For example, in 1986, General Electric saw a huge and unexpected windfall when the corporate capital gains tax was cut. It did not use this windfall to lower the prices on consumer goods; instead, it used the money to buy out competitor RCA.

  32. “There are also mechanisms by which public corporations can pay little or no corporate tax; my own corporation, a Subchapter S corp with only one employee (me), pays more income tax each year than Microsoft. the world’s second most profitable corporation.”

    This is true, but misrepresents what happens economically in this situation. I didn’t look up their financials, but I would guess that if you look at Microsoft’s income statement it would say they owe about $2 billion in taxes. How do they not pay it? Because Microsoft gives everyone from the CEO down to the night janitor stock options. The gain on stock options are income for employees and a deduction for employers. So what happens is that stock options exercised by employees last year wiped out Microsoft’s debt, but the taxes didn’t go unpaid. All those employees paid income tax on that money. So really it was relatively nuetral for the government since in the end they collected the tax money. They actually probably collected more. Here’s the better part. This doesn’t effect consumers at all since no real money actually changes hands. The entire cost is borne by shareholders in the form of diluted holdings. So essentially we are moving wealth from the investor class to the worker bee class all with no government intervention. Isn’t capitalism great!!
    By the way Subchapter S corps don’t pay any taxes. All net income is carried over to the owner’s personal income statement.

  33. In the case of my corporation, since I am the company (it has one and only one individual working for it), I don’t make a distinction between “corporate tax” and “inidividual tax.” The tax I pay as an individual on corporate earnings is, for all intents and purposes, corporate tax. (I actually end up, as an individual, paying more than I would if I were an employee making the same gross salary.)

  34. Re: tit for tat, Part 2.

    “Finite planet, infinite growth” is a bit of an oversimplification. Economic systems are not zero-sum; a person who creates something adds value to the whole of the economy by his actions. A closed system with finite population and no population growth can still have an expanding economy, because economic systems are not zero-sum.

    Now, granted, any finite planet has finite carrying capacity and finite resources. I don’t think we’re anywhere even close to reaching the limits, though, although we are close to the limits with our current systems–fossil fuels and so on.

    But the current system is not the only way there is to do things. One of the places where capitalism shines as an economic system is in times of stress–because it rewards people who solve problems.

    Of course, any solution to a problem brings with it new problems of its own. The advent of the automobile was seen as a huge boon to cities, which had tremendous problems in the days of horse-drawn carriages with infrastructure and pollution–a lot of horses create a lot of horse droppings. Automobiles solved many problems, and created new ones. The next new ideas will solve those problems, and no doubt create more. But at each stage, things improve.

  35. Re: tit for tat, Part 3.

    How about Sweden, Finland, Canada, Iceland?

    How about Sweden, Finland, Canada, and Iceland? All of those countries are predominantly capitalist; for-profit companies are the dominant form of enterprise in all four places.

    And how about Saudi Arabia? Not a paragon of socialism, I’m afraid. With vast amounts of money pouring into the Saudi economy from the outside–nearly a trillion dollars a year, all told, from outside revenue for the Kingdom–the House of Saud is probably one of the single greatest examples of the concentration of wealth in one place (the Saudi royal family owns an astonishing forty percent of the nation’s entire net worth(!!). Yet those trillions of dollars pouring in from the outside have not benefitted the nation as a whole; it still has appallingly poor infrastructure, extremely poor public education, and a surprisingly large number of people living in poverty. For all its vaunted socialism, the kingdom of Saudi Arabia is still dependent on outside revenue, has almost no social or business infrastructure, has very little industry save for oil, and is arguably the single greatest example of the concentration of wealth vertically in the hands of a small number of people. I’m not quite sure why you cite them as a socialist society; to my eye, they represent all the worst of capitalism with none of the benefit. The entire economy is sustained by outside investment.

    I’m curious about something, though. If you believe that capitalism is inherently destructive, what would you advocate in its place?

  36. Re: tit for tat, Part 3.

    Ask your friends who went to Cuba where they stayed, and what they did.

    I’m sure they had a great time and went away with a very positive impression of the place. I bet they stayed in hotels reserved for foreigners only, and paid their bills in American dollars. Cuba is a nation with two separate, and not equal, economies. Foreigners stay in areas that are off-limits to natives, and pay in Western currency for goods and services run for profit. Citizens don’t use Western currency, and live under a system of strict government economic control and rationing.

    They haven’t been at war with the US for years; they’ve merely been cut off from trade with the US for years. Big difference; ask Iraq! Yet even when they had the world’s second biggest superpower subsidizing their economy, pouring billions of dollars into a very small society for decades, they still never rose above poverty.

    Well, most of them did. Fidel himself is listed as among the world’s 100 richest people; the Cuban government controls a portfolio of real estate throughout central and south America estimated to be worth billions. *shrug* No matter how you slice it, a few people end up with disproportionate wealth. Tat disproportionate wealth can be awarded via personal connections or personal control of the government, as is the case with Castro, or by being born into the right family, as is the case with the House of Saud, or by the virtue of one’s own work, as is the case here. If wealth is distributed disproportionately, I’d personally rather it be by merit than by anything else.

    But then, I am a businessman. 🙂

  37. Re: tit for tat, Part 3.

    Nice comment. I do find it interesting how most “main stream” criticism of Cuba seems to essentially boil down to “the people don’t have the income to buy lots of crap they don’t need… from us!”. Oh, and they are communists, so they must be bad.

    I do acknowledge that freedoms are not the same there, and people often don’t have enough food. But I have never understood what Cuba ever did to the USA to earn their treatment. (Well, ok, there was the missile crisis, but that was really the USSR doing that more than Cuba.)

  38. Re: tit for tat, Part 3.

    For the most part Americans should really try not to talk about Cuba. You have been fed lies with your breakfast cereal since you grew your first tooth. You guys are the black hats in this story.

    My father, his partner and several of their friends have been to Cuba many times. They generally have stayed at privately owned beachfront cabana type hostels. The one place they stayed the owner (well really the owner’s husband, Senora was the big boss) would come and drink rum with them and complain all night about the bastardo Americans and the war they were perpetrating on brave little Cuba.

    They travelled extensively among the people. Most times they went there they brought suitcases full of stuff for the schools. Donated computer equipment, tools, pencils and pens, etc… they really took a lot of computer stuff down, my sis works in a head office in downtown Toronto so perfectly good but slightly outmoded equipment was being tossed yearly… My dad’s sisters were both school teachers so tons of surplussed school supplies made their way down there too. Anyway, my dad got real joy breaking the American embargo on advanced electronic as often and as soundly as he could.

    He told me a very moving story of talking to a group of professionals, medical workers, architects, engineers, electricians, about the post Soviet Union collapse time, when the embargo caused fuel supplies to dry up almost entirely. These urban, more or less white collar people were required by the government to head out to the countryside and work the fields manually because there was no fuel for the tractors and the agricultural workers couldn’t do it all during busy times… planting, harvest etc… my dad did some time as a farm hand when he was a teenager, before he apprenticed as a tradesman, so he knows how hard that work can be, particularly without mechanical help, so with this first hand knowledge in mind he noted to these Cubanos that it probably didn’t make them too happy to have to do this backbreaking work. He said every one of them reacted the same way, with expressions of pride, national loyalty and fellowship with their countrymen. He said it was obvious from their expressions, their posture, puffed up chests, thrown back shoulders, the glint in their eyes…. not just words mouthed for any government stooges that might be listening… they were glad to have done it, took great pride in the fact that they contributed to the survival and feeding of their nation and all had expressions of disdain and disgust for the Americans that were trying to starve them out of their homes.

    When I did my second stint at college I befriended one of the younger instructors who is a pretty cool guy, about my age. He went down there and rented motorcycles for him and his wife and they cruised through the Sierra Maestra mountains and visited plenty of local people. Again, similar stories of healthy, happy people, proud of the strength of their nation in the face of American terrorism.

    My mom just went there last month, I haven’t had a chance to talk to her about it yet, but I think she stayed at one of those “no locals allowed” resorts.

    A poly group, the core couple of which are long time friends, I went to high school with him (he dated my sister) went there for a week over this past New Years, again, haven’t had a chance to talk to him about it.

    You can talk about the richest people list all you want, but tell me who wrote the list, who set the rules for what qualifies as personal wealth, what are their political leanings? Mr Castro would need access to a great deal of resources, no doubt, just to stay alive, since the biggest superpower in the world has a history of trying to assassinate him.

    Anyway, the picture of Cuba and its history painted by your teachers, your media, your culture, is not a true one. You have been lied to systematically, and I would think that someone as free thinking and intelligent as you would be right ticked about it. The war on Cuba perpetrated by your government has been done in your name. And it gives the ultimate excuse for any criticism levelled at Cuba, no matter how correct… everything is difficult in a time of war.

  39. Re: tit for tat, Part 3.

    Hey, I am as big a fan of science as anyone. I agree that if we are to get ourselves out of this impending collapse (which has happened to multiple civilizations in the past) that science and innovation will have to play a big role. I will even concede that some capitalist organizations and structures can be great innovation producers. However, it is also very true that often, when you find yourself in a deep deep hole your first, best and most important step is STOP DIGGING.

  40. Re: tit for tat, Part 2.

    And your zero sum comment is taken, but you also should acknowledge that some very sensible and sound economic measures to enhance sustainability don’t work with standard measures of capitalist growth.

    Energy conservation, smart, right? save money, go easy on the planet, win-win right? Actually, energy conservation effectively lowers GDP… if you have successful, substantial and widespread energy conservation you actually have to use up even larger quantities of other resources to gain back the lost ground in growth.

    Same deal for recycling.

    Planned obselesence? Disposable consumer goods? All very good for the GDP.

  41. Re: tit for tat, Part 3.

    Well, first off, I think you can tell from my comment that I am not super fond of the Saudis. However, the fact is that if you are a Saudi in Saudi Arabia you are automatically qualified for a high paying, low skill, low stress job. It is nominally capitalist, but really it is quite socialist in end result. But again, socialist only for Saudis, the east and south Asians that are employed as the underclass there are treated like dogs and paid worse.

    And as for the question at the end. I thought you would never ask! … just kidding… Anyway, I have no easy answers, I mainly took exception to your blanket dismissal of socialism and felt that capitalism had some of that sauce coming too. Socialist policy performs some functions of society very admirably. I will be happy to concede the same about capitalism.

    In my own personal ethical stand, I believe that it is right and good to provide the basic necessities of a decent, dignified life to as close to a universal standard and unanimous access as possible. Medical care, education, basic nutrition, water, legal advocacy, housing, these things are too important to leave to the vagaries of merit and ability and luck. Frankly, every one of us benefits, materially and in very real ways, when misery and despair are reduced, when cycles of ignorance and poverty and illness are broken. You, as a dyed in the wool entrepreneur, will be more successful in your pursuits living in a peaceful and just society. Why should you have to give up some of what you make to redistribute and raise the greater whole up? Enlightened self interest.

    That leaves plenty of ground to fiddle about with the pursuit of wealth if that is your thing. In the end I oppose monoculture… in farming, in ethnicities, in social engineering… don’t dismiss socialism out of hand, don’t dismiss capitalism out of hand… take from each of their strengths and build something that works for as close to the whole of us as possible.

    Or not though, because there is a better than 50/50 chance that the whole shooting match is toast anyway…. when the polar ice caps go, all bets are off… human society may be set all the way back to pure, small tribal communism before that ride ends. Always like to end on a happy note! 🙂

  42. Re: tit for tat, Part 3.

    In my own personal ethical stand, I believe that it is right and good to provide the basic necessities of a decent, dignified life to as close to a universal standard and unanimous access as possible. Medical care, education, basic nutrition, water, legal advocacy, housing, these things are too important to leave to the vagaries of merit and ability and luck. Frankly, every one of us benefits, materially and in very real ways, when misery and despair are reduced, when cycles of ignorance and poverty and illness are broken.

    Yep, I agree absolutely, though I see no connection between this and capitalism or socialism.

    I think it’s a fascinating tribute to the power of words that systems designed to, for example, ensure universal access to health care are called “socialized medicine,” even when the medical care in question is provided by for-profit, competitive businesses. I’m a purist; if an economy, or a segment of an economy, is dominated by independent business entities competing with one another for profit, it isn’t socialism. By definition!

    Nobody in the US complains about, say, “socialized military” or a “socialized air force.” Everything from fighter planes to infantry entrenching tools is purchased by a single-payer system–the US government–but nobody calls these things “socialism.” Fighter planes and backpacks are manufactured by for-profit enterprises that compete with one another.

    Now, if we had a single-payer system for health insurance, with every US citizen guaranteed some minimum standard of health coverage, that would not be “socialized” any more than our current system of building fighter planes is “socialized.” The entities providing the services are still for-profit, independent businesses. Universal access to health care, or education, or any other basic service is not “socialism” until and unless the services are provided by entities owned and controlled by the State.

    As a capitalist, it is in my interests to have an affluent, healthy, well-educated populance. In fact, our current system of patchwork, ramshackle employer-provided health care is a drain on American businesses, and businesses in other countries have an “invisible subsidy” that increases their competitive position over American businesses because they do not have to pay those costs. General Motors spends billions per year providing health insurance for their employees; this represents a business expense that drags them down when they go to compete against Japanese car makers.

    One of the reasons I don’t like Libertarian philosophy is that it seeks to benefit from public infrastructure without paying for it. Libertarians want to benefit from an educated population without paying for it (“if I don’t have any kids in public school, I shouldn’t have to pay taxes to support public education” is one cry I hear from Libertarians). They want health care for themselves, but don’t want to pay for it for others–even when paying for a basic level of health care for others actually benefits them financially in the long term. Folks complain about “socialized medicine” when in fact we’re not talking about any such thing; those same folks generally don’t complain about “socialized military” or “socialized police forces,” even though those things are closer to “socialism” in its purest form.

    Shortsightedness is not a trait of capitalism, or socialism, or any economic system. Its a trait of human beings, many of whom can’t see past the end of their nose even when talking about their own economic self-interest. We all benefit from a fit, healthy, educated population–economically and in other ways. But folks who call themselves “capitalist” often fail to see that benefit, and attach the emotionally-charged label of “socialized” to it even when these services are provided by capitalistic entities and represent opportunity for economic growth.

  43. Re: tit for tat, Part 2.

    Energy conservation, smart, right? save money, go easy on the planet, win-win right? Actually, energy conservation effectively lowers GDP… if you have successful, substantial and widespread energy conservation you actually have to use up even larger quantities of other resources to gain back the lost ground in growth.

    Same deal for recycling.

    That’s actually an oversimplification.

    The oversimplification is easiest to see in the case of recycling. The economics of recycling depend heavily on what’s being recycled and the costs of that recycling. Aluminum is an example of a material where recycling makes sense; it’s just so goddamn expensive to extract from ore that even aluminum producers benefit materially from recycling, and companies such as Reynolds Aluminum are heavily involved in recycling.

    Glass, on the other hand, not so much. Raw glass is made from sand, and the logistics of recycling glass–which is more cumbersome than producing virgin glass–don’t make economic sense.

    With things like energy conservation, again, it depends. The relationship between energy consumption and revenue isn’t linear; it’s not necessarily true that more energy consumption directly means more growth for the producer. The producer benefits from greater energy consumption right up to the point where the producer’s capacity is reached–and just a little bit beyond that, the producer suffers, because now it has to invest in a new power plant that won’t, initially, be running at full capacity. It gets even more complicated when you consider that in the US, electrical production ad electrical distribution are separated economically; a producer that builds power lines is legally obligated to allow other producers to distribute on those power lines, so a producer who pays all the cost of new infrastructure reaps only part of the reward.

    In one of the supreme ironies of recent American history, our voracious appetite for coal and oil-fired power plants, with all their attendant inefficiencies, environmental destruction, and political issues, can be laid at the footstep of the environmental movements in the 60s and 70s. The early organized environmentalists had such an unreasoning, knee-jerk fear of nuclear power, and were so successful at spreading this fear, that we are now wedded to inherently dirty, unsafe power generation that relies on fossil fuels.

  44. It is!

    That’s one of the problems of being an early adopter, of course. I love the idea of having this sense, and I can’t express in mere words how badly I want it, but when you’re dealing with what is essentially version 0.1 alpha 2 of a technology being pioneered by people with no formal medical training, there are likely to be…bumps along the way.

    I would not get this particular body mod (and I haven’t), but when the process matures a bit, you can be sure I’ll be standing in line.

  45. Oooh! I’ve just thought of an interesting (to me, but hopefully to you as well) question.

    If you’re game, put together a list of desired augmentations. Let’s limit this to a reasonable time frame; say a decade in the future. Assume cost isn’t a limitation. For bonus points, explain why you want the particular augment.

  46. Re: tit for tat, Part 2.

    “That’s actually an oversimplification” … haha, pot meet kettle much?

    Of course it is oversimplified as this is a quirky little LJ blog and not an economics textbook. However the principle stands and your retort misses the point entirely. Yes recycling aluminum is smart, makes great economic sense and can be very profitable… for some companies… however, the bauxite miners and bauxite ore refineries and all the companies that service them and make the heavy mining equipment and transport the ore and on and on… all of those companies take a hit every time an aluminum can is recycled. And the loss to those companies far outweighs the enhancement to the bottom line of the aluminum goods producers. That is the nature of the problem, the GDP suffers as a result of this inarguably good idea.

    When you dig into it things get really crazy. Disposable goods are a benefit to the GDP, right down the line, to an insane extent. Even once their useful life is over they keep on giving. It costs money to landfill them, thereby adding to the GDP by incurring tipping fees at the dump. If that dump leaks and contaminates the water supply of a nearby community? Good for the GDP, the resulting clean up is HUGE economic activity.

  47. Up and atom

    “our voracious appetite for coal and oil-fired power plants, with all their attendant inefficiencies, environmental destruction, and political issues, can be laid at the footstep of the environmental movements in the 60s and 70s”..!! now that wouldn’t be an oversimplification would it? There were a lot more forces at work than merely the howling of a few greenies in the 70s.

    If the greenies in the 70s really had that much pull to effect such sweeping change, how is it that all their ranting about conservation and reducing consumption came to naught? Do you think it is at all possible, just maybe, that the hugely powerful petroleum and coal producing corportations, with all their bought and paid for congresscritters and senators, might have effected a bit more change in policy direction than a disparate and mostly ineffective group of howling long haired granola crunchers? Just a thought. I am certain that Exxon Mobil has a thousand times more fingerprints on US policy than Greenpeace or the Sierra Club could ever hope to have.

    Nuclear power, even when it is cost effective compared to fossil fuel generation (almost never) and even when it is run safely and securely (almost always thankfully, but with 100x the plants that we have now odds might start to tip the wrong way) even then it still causes huge problems that you are ignoring.

    Most plants eventually leak some level of radioctive substance into their surroundings, amounts that authorities are quick to label “safe” or “within tolerances” or “of no significant danger to the public” and they are probably right as far as that goes… but if the amounts were multiplied many fold in a production regime that was majority nuclear supplied… even I, as a nominal nuke power supporter, I would be reluctant to call it not a problem when little leak starts to pile up on top of little leak again and again. Radioactive pollution is a bugger.

    Also uranium mining and refining is a filthy business and all too often results in massive environmental devestation and human health nightmares for neighbouring and downstream communities. Once the uranium fuel is spent then disposal becomes a problem, although it seems that you folks down there have come up with a great way to get rid of depleted uranium… a very inventive recycling program wherein you shoot it at Arabs.

    We use a lot of nuke power here in Ontario. We run into another difficulty with it that bears mentioning, and that is the reliability issue. All too often our plants have to shut down one or more of their reactors for repairs, maintenance or precautionary assessment of possible problems. Then the coal plants get cranked up to full blast to take on the load. If cracks are discovered in the structural elements at a coal plant the decision can be made to put off dealing with it until a seasonal peak demand ebbs, or conservation plans can be developed and put into place or what have you… with nuke, any structural faults result in immediate shut down, ASAP and we fire up the coal, and if that’s not enough we buy power at a premium price from Ohio or Michigan or Quebec.

    Nuke is good in many ways, but it isn’t the panacea for our woes by a long shot.

  48. Re: tit for tat, Part 2.

    Yes recycling aluminum is smart, makes great economic sense and can be very profitable… for some companies… however, the bauxite miners and bauxite ore refineries and all the companies that service them and make the heavy mining equipment and transport the ore and on and on… all of those companies take a hit every time an aluminum can is recycled. And the loss to those companies far outweighs the enhancement to the bottom line of the aluminum goods producers. That is the nature of the problem, the GDP suffers as a result of this inarguably good idea.

    Well…no,.

    The aluminum miners suffer, sure. But it’s a mistake to think of the aluminum mining industry as the whole of the economy. Any economy benefits from inexpensive raw materials. Everybody from the makers of aluminum cookware to airplane manufacturers benefit. The value in an aircraft turbine is greater than the value of the aluminum it’s made of; the more labor steps involved, the greater the value of the finished product.

    When aluminum is not recycled, miners benefit. But aircraft makers, automobile manufacturers, and consumer goods manufacturers all benefit.

  49. Re: tit for tat, Part 2.

    Maybe you are getting tired of this thread? your last paragraph here is a bit muddled.

    Not only that but you come within a hair of making my point for me too! You said “…the more labor steps involved, the greater the value of the finished product.” So does that mean an aircraft component made of virgin aluminum sourced from a bauxite mine/refinery process has a higher value than the same part made from recycled cans? Of course not, the parts have the same monetary “value”. However, like I said you are within a hair of what my point is, that the more labour steps involved the greater the value ‘added to the GDP’ of the finished product.

    Lower prices and costs for aircraft and car manufacturers and consumers are great, however those lower prices actually shrink the GDP… (however that process ends up being more or less zero sum because the money saved at a retail level ends up being cycled into the economy immediately anyway when the consumer uses the saved funds to buy something else, thereby adding the lost economic activity back to the GDP) On the front end, in mining and refining, the hit to the GDP remains. Other measures are used to account for that, productivity being the main number used by economists to describe how efficient an economy is, so recycling can be good for productivity.

    It gets really complicated when trying to incorporate productivity into the assessments of economic growth. Way beyond me. Part of the problem for fundamentalist capitalists though, is that some socialist policy actually serves to enhance productivity, so they might get a bit antsy about allowing those numbers to contribute to their holy grail of eternal growth.

  50. “Wow,” it is really nice to read a post from someone that knows a subject well and is able to get their point across. I am really
    looking forward to your next post.

    Done a brilliant job and Best of luck for your upcoming one!

  51. “Wow,” it is really nice to read a post from someone that knows a subject well and is able to get their point across. I am really
    looking forward to your next post.

    Done a brilliant job and Best of luck for your upcoming one!

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