Capitalism Is Perfect Or Not?

[NotreDame]

You know, there are areas of economic models beyond Econ 101 that suggest that maybe things are a tiny bit more complicated than some of your posts would suggest.  A tiny bit.  

 

And neither does this ^^^ apply to Winnie, who has exercised the patience of Job in actually reading and trying to converse with the philistines...

 

So people don't exchange money for goods they prefer? The business owner just gets money for nothing? That's odd. Normally it's the State that gets paid regardless of providing service or not.

[CrossCuT]

everyone is a profit center.  if they don't have money to go to college, to bad.  a person comes 2nd to profits. 

 

Thats very true. You see it everywhere though, that judgment.

 

Didnt get an education? That must mean youre stupid and lazy!!! 

No...it means their opportunity was diminished because of how freaking expensive it is.

But in the mindset of capitalism, they are stupid and lazy. Just like all those who work 3 jobs and still require welfare to survive are stupid and lazy...Capitalism reduces human dignity to a profit center. 

[NotreDame]

See like I said before, Capitalism/Freemarket/wathever is a great thing. I benefit from it, you benefit from it, we all benefit from it.

I dont neccesarily want to see a change in how it handles business etc.

 

But I think when it comes to more social things and keeping human dignity as a high priority as is important to Catholics, it does a bad job. I also believe that those who have undying, unflinching support of Capitalism tend to start viewing people in terms of those free market ideals. 

 

Crosscut, specifically, what exactly do you think "capitalism" does poorly?  What system other than "capitalism" would you propose to fix it?

 

If college education is your example, it's a very bad example of "capitalism" failing.  The US was one of the most free-market countries in the world during the 20th century (admittedly a low bar) and we quickly outpaced Europe (in part thanks to wwii, et al) in higher education. 

 

Education costs have greatly outpaced inflation increasingly over the last 25-30 years, but they have done so precisely because of the many byzantine loan and grant programs at both the state and local levels (programs which were all legislated and give the private lenders involved a nice guaranteed return, subsidized by the government in many cases.)

 

As I pointed out early when explaining CDO's and CDS's to you it's not lack of regulation that's causing these problems, it's actually the increased government involvement (increasingly being referred to as crony capitalism) that's giving birth to these excesses.

Edited March 14, 2014 by NotreDame

[CrossCuT]

Crosscut, specifically, what exactly do you think "capitalism" does poorly?  What system other than "capitalism" would you propose to fix it?

 

If college education is your example, it's a very bad example of "capitalism" failing.  The US was one of the most free-market countries in the world during the 20th century (admittedly a low bar) and we quickly outpaced Europe (in part thanks to wwii, et al) in higher education. 

 

Education costs have greatly outpaced inflation increasingly over the last 25-30 years, but they have done so precisely because of the many byzantine loan and grant programs at both the state and local levels (programs which were all legislated and give the private lenders involved a nice guaranteed return, subsidized by the government in many cases.)

 

As I pointed out early when explaining CDO's and CDS's to you it's not lack of regulation that's causing these problems, it's actually the increased government involvement (increasingly being referred to as crony capitalism) that's giving birth to these excesses.

 

Right, so..

The US did indeed outpacedEurope in higher education after WWII, but it did this because higher education was NOT treated as a private investment. In the decades following WWII, state colleges were created and were fully (or almost fully in some cases) funded by the state and federal governments. Which means the reason we outpaced Europe was because higher education in America was essentially free. Obviously it was a good thing.

 

In the last 30-40 years (beginning around the Nixon era, and taken to a new extreme during the Regan years) education has become increasingly less affordable due to many factors (one such example is a lack of regulation on student loan interest rates, another is lack of regulation of tuition rates for state and federally funded educational institutions).

[NotreDame]

Right, so..

The US did indeed outpacedEurope in higher education after WWII, but it did this because higher education was NOT treated as a private investment. In the decades following WWII, state colleges were created and were fully (or almost fully in some cases) funded by the state and federal governments. Which means the reason we outpaced Europe was because higher education in America was essentially free. Obviously it was a good thing.

 

In the last 30-40 years (beginning around the Nixon era, and taken to a new extreme during the Regan years) education has become increasingly less affordable due to many factors (one such example is a lack of regulation on student loan interest rates, another is lack of regulation of tuition rates for state and federally funded educational institutions).

 

 

The US did indeed outpaced Europe in higher education after WWII, but it did this because higher education was NOT treated as a private investment. In the decades following WWII, state colleges were created and were fully (or almost fully in some cases) funded by the state and federal governments. Which means the reason we outpaced Europe was because higher education in America was essentially free.

 

Wow, there are lots of problems with this ^^^, but let's table it for the moment to focus on the following:

 

In the last 30-40 years (beginning around the Nixon era, and taken to a new extreme during the Regan years) education has become increasingly less affordable due to many factors (one such example is a lack of regulation on student loan interest rates, another is lack of regulation of tuition rates for state and federally funded educational institutions).

 

There is not any "lack of regulation on student loan interest rates."  It's exactly the opposite.  Student loans are incredibly regulated, subsidized, there are special rules carved out in bankruptcy law, etc., and almost all methods of paying tuition nowadays are programs that are the direct result of regulation and legislation. 

 

This is not a "lack of regulation", but an abundance of it.  It's also not "capitalism", in the free market sense.  You realize this right? 

[CrossCuT]

 

There is not any "lack of regulation on student loan interest rates."  It's exactly the opposite.  Student loans are incredibly regulated, subsidized, there are special rules carved out in bankruptcy law, etc., and almost all methods of paying tuition nowadays are programs that are the direct result of regulation and legislation. 

 

This is not a "lack of regulation", but an abundance of it.  It's also not "capitalism", in the free market sense.  You realize this right? 

 

None of that is true.

Please link the regulations on student loans that you are referring to.

 

Also please expound on how free higher education didn't improve the number of educated people in america.

[NotreDame]

None of that is true.

Please link the regulations on student loans that you are referring to.

 

I have to run, so I don't have the time this answer deserves, but in a nutshell, not only are student loans regulated, but most the industry was (for lack of a better term) nationalized.  T

 

This means that the majority of student loans came and still come directly from the government.  I assume this qualifies as being "regulated."

 

source: http://www.collegeboard.com/prod_downloads/about/news_info/trends/student_loans.pdf

 

A Ten-Year View

 

In 1996-97, 93 percent of the $38 billion (in 2006 dollars) in loans to undergraduate and graduate students came from the federal government. A decade later, 76 percent of the $77 billion in education loans was federal and 24 percent came from private and state sources.

 

Over the decade from 1996-97 to 2006-07, total federal loans grew 61 percent in real dollars, increasing $23 billion (in 2006 dollars) to $59.6 billion. About two-thirds of these loans went to undergraduates and one-third to graduate students.

 

Subsidized Stafford Loans, on which the federal government pays the interest while students are in school, declined from 54 percent of total education loans in 1996-97 to 32 percent in 2006-07. The volume of these loans was 75 percent higher than the volume of unsubsidized Stafford Loans in 1996-97, but only 3 percent higher in 2006-07.

 

Stafford Loan borrowing through the Federal Direct Student Loan Program (FDSLP) declined by $1 billion in 2006 dollars between 1996-97 and 2006-07. Stafford Loan borrowing through the Federal Family Education Loan Program (FFELP), under which the government guarantees loans that banks and other private lenders make to students, increased by $17 billion in the same time period.

 

Nonfederal Loans

 

Most nonfederal loans come from banks and other private lenders, but a small percentage come through state programs. After growing at a rate of about 27 percent a year in inflation-adjusted dollars for the past five years, borrowing from nonfederal sources increased by only 6 percent in 2006-07, to $18.5 billion.

 

Nonfederal loans to undergraduates grew by 12 percent, but graduate students borrowed 19 percent less from these sources, as they became eligible for federal PLUS Loans. Two billion of the $10.1 billion in PLUS Loans were awarded under this new program for graduate students.

 

The proportion of borrowing that came from private sources in 2003-04 declined with family income, ranging from about 17 percent of the loans taken by full-time students from families with incomes below $40,000 to about 32 percent of the loans taken by those from families with incomes of $100,000 or higher.
 

===

 

In fact the largest originator of student loans was/is a government GSE called Sallie Mae, a la Fannie Mae / Freddie Mac.  It was fully privatized in 2004, but the damage was already done at that point (and continues unabated.)

 

As an aside, the parallels between the current student loan bubble and the previous decades housing bubble (which has yet to be unwound) are uncanny.  

Edited March 14, 2014 by NotreDame

[RC Patriot]

everything is black and white to you republicans.  if someone doesn't agree with you call them a liberal or make stuff up about them being big government supporters.  i mean seriously, do you know anything?

 

But.... before, you said

This:

to be fair republicans want no minimum wage so rich business owners can pay their employees at a wage that is not condusive to live off of.  they also think their should be no unions so a worker can be fired for any reason what so ever or not be hired for any reason what so ever, even the color of their skin.

 

except rich people don't reinvest in new employees, that completely false.  currently unemployement is a disaster and profit continue to go up.  the rich get richer, the poor have to do more work for less pay and there are less good jobs to go around.

 

Generalize much? Wage is an exchange of money for labor. The problem is, you're just starting right in the middle of the circle of economic exchange. You're also putting a price on the value of the person, rather than the value of the labor that person is being paid for.

 

I contend that the value of the person is priceless. I don't equate the value of a human being with the value of the labor they do.

 

So, let's start at the beginning. Let's say I want to put a roof on houses (a job I used to do for less than minimum wage). So, I go off and find a house that needs a new roof. The roof is a product I'm selling to a customer. If I set the price at $20,000, the customer has a choice to accept or reject that. Let's say it's way more than the customer wants to pay, and the offer comes back at $5,000. Being the one offering the product, I can accept or reject that offer. Let's say we settle on $12,000, and I have a month to do it before the seasonal rain comes. After ordering the raw materials, paper, shingles, nails, the hammer, nail gun, etc, everything comes out to $6,000. That's $6k profit. But in order to get the job done in time, I have to hire four experienced roofers, too. They all want $2000 each for the job. Now we enter into another economic circle. The offer for labor is $8,000, my gain after raw material is $6,000. I'd lose $2,000 on this proposition. I counter their price of labor, offering only $1400 each for the month of roofing, since it's a simple job, leaving only $400 for my profit. The experienced roofers refuse to work, and I hire four less qualified roofers, barely getting the job done in time, and only after intense training and doing a lot of the work myself.

If the minimum wage was set to pay $1500, what happens?
- I get $0 profit. I don't want to work in roofing anymore.
- Those people I hired once may or may not find work again.
- Wal-roof moves into town and offers sub-standard roofing for a lower price, because they get a discount on raw materials.
- My customers, who would rather pay me to do a good job for $12,000, are now getting a crappy job for $10,000, it leaks and they have to replace it every two years.
- The experienced roofers, who I would hire for my more complicated jobs, are collecting unemployment, rather than be treated like a Wal-roofer.
- I, however, go apply at Wal-roof because I can't get paid in my own business.
- But luckily, everyone at Wal-roof is getting paid $1500 a month for roofing.
- Yay for minimum wage....

Now I'm no apologist for Republicans, but I would hope they would be the ones who will offer me tax breaks on the people I hire and the goods I buy, so that I can compete with Wal-roof. They will be the ones who allow me to hire roofers outside of the roofing union that price-fixes labor to a price I can't afford.

 

And please, quit demonizing the Tea Party unless you actually know something about them.  I suspect you get upset when people tell you that Hitler was Catholic, and since you are too, you want to kill people. And the Crusades and the Spanish Inquisition? Yep, those were your fault, too. The best thing you can do is not generalize, and try to give people the benefit of the doubt.

[havok579257]

But.... before, you said

This:

 

Generalize much? Wage is an exchange of money for labor. The problem is, you're just starting right in the middle of the circle of economic exchange. You're also putting a price on the value of the person, rather than the value of the labor that person is being paid for.

 

I contend that the value of the person is priceless. I don't equate the value of a human being with the value of the labor they do.

 

So, let's start at the beginning. Let's say I want to put a roof on houses (a job I used to do for less than minimum wage). So, I go off and find a house that needs a new roof. The roof is a product I'm selling to a customer. If I set the price at $20,000, the customer has a choice to accept or reject that. Let's say it's way more than the customer wants to pay, and the offer comes back at $5,000. Being the one offering the product, I can accept or reject that offer. Let's say we settle on $12,000, and I have a month to do it before the seasonal rain comes. After ordering the raw materials, paper, shingles, nails, the hammer, nail gun, etc, everything comes out to $6,000. That's $6k profit. But in order to get the job done in time, I have to hire four experienced roofers, too. They all want $2000 each for the job. Now we enter into another economic circle. The offer for labor is $8,000, my gain after raw material is $6,000. I'd lose $2,000 on this proposition. I counter their price of labor, offering only $1400 each for the month of roofing, since it's a simple job, leaving only $400 for my profit. The experienced roofers refuse to work, and I hire four less qualified roofers, barely getting the job done in time, and only after intense training and doing a lot of the work myself.

If the minimum wage was set to pay $1500, what happens?
- I get $0 profit. I don't want to work in roofing anymore.
- Those people I hired once may or may not find work again.
- Wal-roof moves into town and offers sub-standard roofing for a lower price, because they get a discount on raw materials.
- My customers, who would rather pay me to do a good job for $12,000, are now getting a crappy job for $10,000, it leaks and they have to replace it every two years.
- The experienced roofers, who I would hire for my more complicated jobs, are collecting unemployment, rather than be treated like a Wal-roofer.
- I, however, go apply at Wal-roof because I can't get paid in my own business.
- But luckily, everyone at Wal-roof is getting paid $1500 a month for roofing.
- Yay for minimum wage....

Now I'm no apologist for Republicans, but I would hope they would be the ones who will offer me tax breaks on the people I hire and the goods I buy, so that I can compete with Wal-roof. They will be the ones who allow me to hire roofers outside of the roofing union that price-fixes labor to a price I can't afford.

 

And please, quit demonizing the Tea Party unless you actually know something about them.  I suspect you get upset when people tell you that Hitler was Catholic, and since you are too, you want to kill people. And the Crusades and the Spanish Inquisition? Yep, those were your fault, too. The best thing you can do is not generalize, and try to give people the benefit of the doubt.

 

 

let me ask you a basic question first before I jump into this.  if minimum wage was abolished tomorrow would the majority of business's, some business's, any business's pay thier employees at minimum wage amount which was just abolished, above the minimum wage that was just abolished or below the minimum wage that was just abolished?  essentially would abolishing the minimum wage mean lower wages for workers?

 

i take issues with the tea party politicians because they want to cut essential services to people who need them and have very little regard for the poor class.  Do I think the government right now should being giving as much welfare as it does?  No.  Although I believe the government should be helping those who truely need the help and those who can not help themselves such as the mentally or phsyically disabled.  although in heavy tea party states they want to cut these essential services.  i live in kansas and they did/do/want to cut services to the blind and handicap.  they also make foolish decisions to cut taxes  and then to make up the income they decide to cut essential services instead of tax breaks to rich business owners.  the ones who seem to suffer are the poor in the tea party system.  although its not like i don't have issues with liberals also.  i have just as many issues with liberals.  although being in a heavy tea party state and working in another state which has a lot of tea party candidates I see many issues with which they do or try to do.   

Edited March 14, 2014 by havok579257

[RC Patriot]

let me ask you a basic question first before I jump into this.  if minimum wage was abolished tomorrow would the majority of business's, some business's, any business's pay thier employees at minimum wage amount which was just abolished, above the minimum wage that was just abolished or below the minimum wage that was just abolished?  essentially would abolishing the minimum wage mean lower wages for workers?

 

I have no idea what would happen if the minimum wage was abolished right now. I can tell you that there will probably be havoc until an equilibrium of some kind is achieved. As for me, I'm not for changing the minimum wage at all, either abolishing it or raising it. However, I realize that wages are a small part of a much greater economic whole that thrives on laws of supply and demand. When government intervenes in that system, there are unexpected consequences. You have to understand that this affects more than the worker. It affects employers, tax payers, inflation, raw materials... so much more than what you are considering.

 

 

i take issues with the tea party politicians because they want to cut essential services to people who need them and have very little regard for the poor class.  Do I think the government right now should being giving as much welfare as it does?  No.  Although I believe the government should be helping those who truely need the help and those who can not help themselves such as the mentally or phsyically disabled.  although in heavy tea party states they want to cut these essential services.  i live in kansas and they did/do/want to cut services to the blind and handicap.  they also make foolish decisions to cut taxes  and then to make up the income they decide to cut essential services instead of tax breaks to rich business owners.  the ones who seem to suffer are the poor in the tea party system.  although its not like i don't have issues with liberals also.  i have just as many issues with liberals.  although being in a heavy tea party state and working in another state which has a lot of tea party candidates I see many issues with which they do or try to do. 

 

"Cut essential services" - what is "essential"? What is "services"? What role does the government play in providing any service whatsoever? Where does the government get the money to pay for these services? Why is there not a private company providing these services?

 

Let's take a local example... My local Senator wants to expand bus hours to Sunday so that little old ladies can get to church. Sounds nice, doesn't it? Except that when you consider the cost of running the bus on Sundays to the benefit provided, they'd be saving money by sending this old lady a taxi every Sunday... Not that I'm campaigning, but if I were in his position, I'd call that little old lady's pastor to see what service the church provides. I'd help the church set up a "ride-share" ministry. I'd help the participants get their tax credits for miles driven and gas spent for participating in that ministry. See the difference?

 

So why is the Tea Party so keen on cutting government spending? Because we think that the government spends too much of our money on things we don't need. Because to the government, "essential services" means funding for Planned Parenthood, expanding regulatory organizations, sending condoms to third world countries, paying for "the arts" which recently included funding for a crucifix submerged in a bowl of urine. Taxes, my friend, come from taxpayers. That's you and me. I support services for the blind and mentally ill. I don't support those other things above. If I was able to keep more of my money, I'd be able to donate more to the things that matter most to me. No one should be forced by gunpoint to pay for Planned Parenthood, bus systems that no one rides, or even psychiatric hospitals.

 

If your experience is true, it's nothing like what the Tea Party across the country stands for. I have a feeling that what you're describing is from a media mischaracterization of what they are trying to do. Huffington Post, maybe?

[NotreDame]

let me ask you a basic question first before I jump into this.  if minimum wage was abolished tomorrow would the majority of business's, some business's, any business's pay thier employees at minimum wage amount which was just abolished, above the minimum wage that was just abolished or below the minimum wage that was just abolished?  essentially would abolishing the minimum wage mean lower wages for workers?

Wages are considered sticky, so it's unlikely many current employees would actually get a wage cut.  However, looking at it from a different angle, what you are likely to see over time is the following:

 

- Most entry-level positions will retain the same wage

- Some entry-level positions will lower the wage for new hires

- There will also be new entry-level positions created at these lower wages that did not exist before

 

Keep in mind that most workers stay at minimum wage for less than 6 months before they get a raise.  It's just a way for unskilled employees to get their foot in the door.  Lowering or eliminating the minimum wage is not dooming anyone to a lower wage for life.  In fact, in all likelihood it would mean increased opportunity for low-skilled workers via job creation.

[4588686]

Wages are considered sticky, so it's unlikely many current employees would actually get a wage cut. However, looking at it from a different angle, what you are likely to see over time is the following:

- Most entry-level positions will retain the same wage
- Some entry-level positions will lower the wage for new hires
- There will also be new entry-level positions created at these lower wages that did not exist before

Keep in mind that most workers stay at minimum wage for less than 6 months before they get a raise. It's just a way for unskilled employees to get their foot in the door. Lowering or eliminating the minimum wage is not dooming anyone to a lower wage for life. In fact, in all likelihood it would mean increased opportunity for low-skilled workers via job creation.

Have you worked in a low skill job recently?

[NotreDame]

Have you worked in a low skill job recently?

No, but I worked many in my youth.  How about yourself?

 

[havok579257]

I have no idea what would happen if the minimum wage was abolished right now. I can tell you that there will probably be havoc until an equilibrium of some kind is achieved. As for me, I'm not for changing the minimum wage at all, either abolishing it or raising it. However, I realize that wages are a small part of a much greater economic whole that thrives on laws of supply and demand. When government intervenes in that system, there are unexpected consequences. You have to understand that this affects more than the worker. It affects employers, tax payers, inflation, raw materials... so much more than what you are considering.

 

 

 

"Cut essential services" - what is "essential"? What is "services"? What role does the government play in providing any service whatsoever? Where does the government get the money to pay for these services? Why is there not a private company providing these services?

 

Let's take a local example... My local Senator wants to expand bus hours to Sunday so that little old ladies can get to church. Sounds nice, doesn't it? Except that when you consider the cost of running the bus on Sundays to the benefit provided, they'd be saving money by sending this old lady a taxi every Sunday... Not that I'm campaigning, but if I were in his position, I'd call that little old lady's pastor to see what service the church provides. I'd help the church set up a "ride-share" ministry. I'd help the participants get their tax credits for miles driven and gas spent for participating in that ministry. See the difference?

 

So why is the Tea Party so keen on cutting government spending? Because we think that the government spends too much of our money on things we don't need. Because to the government, "essential services" means funding for Planned Parenthood, expanding regulatory organizations, sending condoms to third world countries, paying for "the arts" which recently included funding for a crucifix submerged in a bowl of urine. Taxes, my friend, come from taxpayers. That's you and me. I support services for the blind and mentally ill. I don't support those other things above. If I was able to keep more of my money, I'd be able to donate more to the things that matter most to me. No one should be forced by gunpoint to pay for Planned Parenthood, bus systems that no one rides, or even psychiatric hospitals.

 

If your experience is true, it's nothing like what the Tea Party across the country stands for. I have a feeling that what you're describing is from a media mischaracterization of what they are trying to do. Huffington Post, maybe?

 

 

essential services are money for for people who can not support themselves or have no one to support themselves.  the mentally or physically handicap who can not completely care for themselves.  would it be ideal if this support could come through church's? absolutely.  although if tomorrow alll government aid stopped, there is no way the church's could help all those in need.  

 

the government has a role in society providing for those who can not help themselves because that is the way government is utilized in america today.  its the way we the people, the majority for years have set up the government.  to help those who can't help themselves.  ideally this help would come from churches but that's not possible today.  so we make do the best we can.  right now that means taxes to help those who can not support themselves and who could not survive without aid.

 

in your example above that's a great idea.  although in the current system we have it would never work.  politicians for the vast majority don't actually look out for the citizens, they look out for themselves and being re-elected.  

 

and here we go with the rehtoric again.  this is why it gets harder and harder to talk to tea party like people.  they just spew rehtoric and make stuff up.  my tag says church militant.  so why on earth would you think i disagree with the church on abortion, contraception, disrespecting our Lord in urine and the such.  your all rehtoric and should run for office. you would fit right in.  its becoming a running joke with tea party like people.  if you don't support all their ideas it means your a liberal, abortion providing, contraception demanding, anti religious person.  although if you go to church, well your not really a christian because political conservatism comes first, religion comes 2nd.  maybe i should be like you and say your evil person because you are a racist, you hate women, you think all blacks are lazy criminals and you only care about the rich.  i mean you obviously don't want to talk, you just want to make stuff up since your making up stuff that i support that goes against church teachings.    

 

also your tea party buddies are for cuts to the blind and handicap.  they are doing this in kansas.  

 

yes, your right, i get all my information from the huffington post.  let's not take into account i live in the state this is happening.  let's not take into account that i see this stuff as i am right here as it happens.  instead let's twist it so i must be a liberal.  an evil liberal who is just out to hurt the honest altruistic tea party people who only want to make this a utopia and would do it if not for those dastardly liberals.  i mean of course anyone

who doesn't support tea party is a liberal.  tea party are good people, all liberals are evil.  if your not with us, your evil.  there are no moderates, not moderate republicans, not moderate democrats.  there is only the good tea party and the rest of the evil dooers of this world.  

[NotreDame]

i mean you obviously don't want to talk

This is the pot calling the kettle black, havok.  All you've done is rant an ignore my very basic questions to you that began with the first reply to your post.