Capitalism

[)O( Hytegia )O(]

Considering that there's quite a few people on here that are either Socialist or some form of near-communist people in this forum, and I KNOW I've encountered a bit of harshness on this board against the subject - maybe it's simply because people don't understand EXACTLY how capitalism works. I've just finished my class in Economics a few weeks ago so I'm willing to discuss the very advanced and dull topic for the sake of education and the freedom of information.

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Crash Course for Discussion:
Capitalism is simply any person who can freely exchange their labor and resources for goods and services. Where the 4 questions of how to distribute scarce resources are answered by public demand towards the supply. The Economy is driven by (as Adam Smith put it) "an invisible hand" of each individual's wants and needs, and as each person buys and sells what they want prices will fluctuate back and forth as needed.
Pure Capitalism is where the government has no dealing in the Economy whatsoever ("Laissez-Faire") but can lead to poor working conditions and other problems such as monopolies and underhanded business practices.
A Mixed Economy is where the government has a medium interference, and basically plays the "referee" to keep the economy running and makes sure everyone is playing fair.

 

[richi1173]

Wow, I log back in just for the lulz and see this again. Brings back old memories hehe.

 

[Aught3]

Yeah I think a lot of the issue might be the misunderstanding that if you want capitalism you automatically want government completely out of the market so that corporation can run riot. For most markets I would say that capitalism is a better way to organise resources.

 

[ImprobableJoe]

The issue isn't capitalism, the problem is the abuses that are encouraged by a hands-off attitude. Mixed economies are just fine by me, because the benefits to corporations or wealthy individuals should not be allowed to outweigh the needs of society as a whole. Some people might be against profits and such, but most of us really are just against the abuses in the name of those profits.

 

[)O( Hytegia )O(]

Exactly.
The thing about Capitalism is that it's the best way to represent the individual and (through the compilation of groups of individuals) the cumulative market structure. Every time you spend a dollar, it adds onto that product's value. As the demand for a product increases more will be made to meet that demand - therefore there will be more on the market.
As the people's wants and needs change, the prices change to suit those wants and needs. This is not only for products, but for labor as well. Infact, it could be for anything you could possibly think of that you could spend money on.

My only problem with government interference is Minimum Wage. Because there is a minimum wage, there is a minimum price for products and a minimum price for living in a certain area - if the minimum wage increases then the price of the product increases and the minimum price for living in an area increases too. Just a bunch of problems.
"YEA WE'RE MAKING MORE MONEY."
"No. Now your apartment costs more and your food is more expensive to buy - so you're about the same as you were before, really."
"... BUT I GOTS MORE NUMBERS ON MY CHECK!"
"You see, when the Market has a price floor it will stabilize itself to compensate for the overall changes - so you're really about the same as before."

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I enjoy capitalism because it's a system that will fix itself if not handled by dumb people. (For example, there was a time when the Farming market in the U.S. fell and the prices kept dropping. The Farmers all went "we're making less money, so let's make more stuff." This flooded the market with useless food, and cost the farmers alot of money).

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@Joe-
I understand this. I enjoy government regulation into unfair trade and working policies... But that's about it. Obama's plans of throwing cash into crashing companies doesn't sit well with me as a taxpayer, but I know that it would be better than paying for the tenfold more cash in welfare.

 

[ImprobableJoe]

I enjoy capitalism because it's a system that will fix itself if not handled by dumb people.

That's not even remotely true. That's the flaw in your thinking right there. Systems involving people only stay afloat when people work to make and keep them the way they want them to be. The economic system only works when it is strictly controlled and regulated, and our current economic mess was caused by idiots who believed that "the market" was self-correcting to the extent that as long as money was being made, everything was A-OK and regulation was unnecessary.

It is a mistake that is perfectly reasonable for YOU to make, because you're not an economist. The real-deal economists should have known better, and instead chose to turn a blind eye to reality as long as they could keep raking in the cash and propping up a failed system as long as possible. You see, the American version of capitalism IS a failed system, and the reason Obama shouldn't have propped up the banks is because it just perpetuates that system so that it can continue to ruin our country.

Of course, some of this is by design: the government runs up deficits by giving tax cuts to the parasitic "capitalists", then decided that deficits need to be fixed by cutting benefits to poor people. Pretty soon, we live in your ideal world where there is no minimum wage and the majority of people are virtual serfs.

 

[)O( Hytegia )O(]

Pretty soon, we live in your ideal world where there is no minimum wage and the majority of people are virtual serfs.

You realize that if there's no minimum wage, the price of living would be lots lower... I mean, seriously lower.
If you were making 12 cents and hour how much would a loaf of bread go for? About a penny or so. That's the thing about Capitalism. If there's lower income on the market there's lower prices - because you don't make money by marketing to rich people (and rich people in such a market would probably be making $4.50 - $7 an hour).
Money/Cash/Greenback is simply a medium of expression of value. Anything can be used to express value, but money is the numeric and expressed value that anyone can easily understand. The lower the average person makes, the less everything costs overall. The more the average person makes, the greater everything costs overall.

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I'm not picking through your argument at a point to attack and ignoring the rest of it... It's just the part I can think of at the moment clearly. My doctor prescribed me Loritabs and I'm surprised that I can still read.

 

[Aught3]

My doctor prescribed me Loritabs and I'm surprised that I can still read.

Do you mean Lortabs? Loritabs are an allergy medication and wouldn't have that sort of effect...

 

[)O( Hytegia )O(]

My doctor prescribed me Loritabs and I'm surprised that I can still read.

Do you mean Lortabs? Loritabs are an allergy medication and wouldn't have that sort of effect...

The narcotic, Lortabs.

Blerg can't even spell it right. But yes, my doctor found it quite alright to prescribe me a narcotic for pharyngitis.

 

[JustBusiness17]

Congrats on passing microeconomics :geek:

Pretty soon, we live in your ideal world where there is no minimum wage and the majority of people are virtual serfs.

You realize that if there's no minimum wage, the price of living would be lots lower... I mean, seriously lower.
If you were making 12 cents and hour how much would a loaf of bread go for? About a penny or so. That's the thing about Capitalism. If there's lower income on the market there's lower prices - because you don't make money by marketing to rich people (and rich people in such a market would probably be making $4.50 - $7 an hour).

:roll: Let me know when you're finished macroeconomics :lol:

 

[)O( Hytegia )O(]

:roll: Let me know when you're finished macroeconomics :lol:

Are you suggesting that food was worth the same price in 1950 that it was worth in 2000?
Oh wait. That's right. Minimum Wage rose, and with it the depreciation of the value of a dollar. Now I have to pay $1.25 for a soda in comparison to 10 cents.

Macroeconomics is simply an extension of microeconomics, except it's not as precise. It's just more broad and it would take a large culmination of people's demands to change the overall output of supply from multiple firms (in comparison to 1 firm and few people in microeconomics).

 

[Aught3]

Er, you don't actually think that 50 years of inflation can be contributed solely to minimum wage increases?

 

[)O( Hytegia )O(]

Er, you don't actually think that 50 years of inflation can be contributed solely to minimum wage increases?

Possibly, but what causes inflation the most?
Higher costs of living caused by a raise in Minimum Wage.

More people get money. More money appears on the market. Value of the dollar goes down. And so on.

What I'm curious of is why doesn't the U.S. Mint stop making bills for 1 or 2 days and raise the value of the dollar?

 

[Aught3]

Possibly, but what causes inflation the most?
Higher costs of living caused by a raise in Minimum Wage.

What about increased taxes, or increased money supply, or increased wages for other wage earners?

 

[)O( Hytegia )O(]

Possibly, but what causes inflation the most?
Higher costs of living caused by a raise in Minimum Wage.

What about increased taxes, or increased money supply, or increased wages for other wage earners?

Bleg. Damned medication's keeping me from thinking all the way through. JB and Aught, forgive me. There's other factors that do cause prices to rise - I've been on Lortabs lately and they've been clouding my judgement / thoughts. I would have thought about that under normal circumstances and we could have better furthered the topic of Capitalism besides petty crap such as inflation due to taxes and the scarcity of resources and other important things. Perhaps some sleep would do me best.

 

[JustBusiness17]

Bleg. Damned medication's keeping me from thinking all the way through. JB and Aught, forgive me. There's other factors that do cause prices to rise - I've been on Lortabs lately and they've been clouding my judgement / thoughts. I would have thought about that under normal circumstances and we could have better furthered the topic of Capitalism besides petty crap such as inflation due to taxes and the scarcity of resources and other important things. Perhaps some sleep would do me best.

Rather than waiting for the meds to wear off, why no just wait until you've spent the time to learn about macroeconomics. Seriously, you're missing a fundamental understanding of national and international markets which is clearly evident.

The value of your dollar is meaningless until you consider it in terms of purchasing power differential. Please, raise the value of your dollar... Canada's exports have been hurting since your country fucked up it's economy. US has one of the worst trade deficits in the world so I'm not sure why you're so eager to make it more expensive to sell your goods.

 

[ImprobableJoe]

US has one of the worst trade deficits in the world so I'm not sure why you're so eager to make it more expensive to sell your goods.

That's because he believes markets magically fix themselves, while not destroying whole countries at the same time. It is a "basic model" view of economics that is almost too wrong to even comment on. It leaves out all of the details of real life, which means it is about as useful as your first semester of Physics where you treat all masses as points in space and don't address friction for the first couple of chapters.

 

[terriblecanyons]

:roll: Let me know when you're finished macroeconomics :lol:

Are you suggesting that food was worth the same price in 1950 that it was worth in 2000?
Oh wait. That's right. Minimum Wage rose, and with it the depreciation of the value of a dollar. Now I have to pay $1.25 for a soda in comparison to 10 cents.

...You're joking, right?
Please, for the love of Sagan, tell me you're joking.

 

[)O( Hytegia )O(]

...You're joking, right?
Please, for the love of Sagan, tell me you're joking.

I was pretty messed up last night.

The value of your dollar is meaningless until you consider it in terms of purchasing power differential. Please, raise the value of your dollar... Canada's exports have been hurting since your country fucked up it's economy. US has one of the worst trade deficits in the world so I'm not sure why you're so eager to make it more expensive to sell your goods.

Because if the value of the dollar was raised then the overall price of goods would lower - it makes us more money when another country hands us off currency that is about equivalent with our own. The only good keeping a shitty value on your dollar will do anyone is other countries - it will never recover until the value of your money rises or you allow the system to fall through and people start bartering because your money is worth less than the paper it's printed on (much like Rome near the end, and Germany before Hitler).

Example (not official - just an example):
1 Euro = 2 Dollars
1 Euro = 2 Double Cheeseburgers
2 Double Cheeseburgers <= 1 Euro

I now have 1 Euro, which can buy me shit in America, and isn't worth that much in Europe anyway. Now I've probably made pennies on a cash exchange.

HOWEVER:
1 Euro = 1 Dollar
1 Euro = 1 Double Cheeseburger
Cheeseburger <= 1 Euro

I now have 1 Euro, which is now worth about the same as the currency I currently have. I break it even, or go to the Burger King down the street that (for some fucking reason?) takes Euros. I don't really have to do much to trade my Euros for cash, and it's not a big of a headache when they're about the same value (they DO take Euros down at that Burger King - but not Pesos, even though this is Alabama).

 

[JustBusiness17]

Everything

Do you know what your country's inflation target is? Do you understand why inflation targeting is essential for an economy? Any idea what happens when you have a volatile inflation rate? Do you know how inflation affects interest rates and vice versa? Can you explain how a change in your interest rate changes the supply and demand of real GDP on the foreign exchange market? Have you ever heard of cost push or demand pull inflation? Can you tell me the effects of cyclical unemployment and over-employment? Do you know what sticky wages are? Do you even know the difference between short run and long run aggregate supply?

If you want, I can crack open my textbook :lol:

While I admit there are problems with the way the world is run, one thing I can't say is that its unintentional. One of the most important requirements for capitalism to function properly is predictable inflation rates. Between monetary policy and fiscal policy, the government spends huge amounts of money to ensure that the economy grows at a steady rate. What you're suggesting is so fucking radical that it would destroy a nation inside of a year.

But please, don't let me hold you back. I encourage you to add 'microeconomics 101' to your resume and apply for a government position. You couldn't possibly do worse than those "supply siders" -Ben Bernake and Tim Geightner.

PS:

I could have done better but there were opportunity costs involved