Economics

Capitalism is inherently Self Defeating

2012-10-22T05:42:00.002-07:00

Capitalism is inherently Self Defeating

Capitalism is an inherently self defeating system. The entire basis of the benefit for capitalism is the perception of competition and the belief that it allows for growth; the issue for competition in a business environment is the all or nothing approach. If a business does well, it succeeds and continues to exist; if a business does poorly, it ceases to exist, since running out of money causes the business to go bankrupt, and be unable to buy enough goods for next year's produce. If the goal of competition is to win and therefore make your competition lose, there must be a loser to a competitive system. When the loser is defeated, they cease to exist, due to the all or nothing requirement of resources with no outside system providing resources, thus ending the competition. A business that cannot sell products, or sell enough products to at least break even, and make up the initial cost of business, goes bankrupt. A system that is designed for competition will ultimately have a winner, that is the only remaining candidate, and thus competition will cease to exist, and any potential gains of inventiveness, innovation or freedom of choice as a result of competition will cease to exist as well.

Thus the only way to maintain a capitalistic system is from the outside. In order for perpetual competition to remain the loser of a system must be allowed to persist in some form. Competition must exist arbitrarily and not as a direct survive or fail type of interaction. Various businesses can provide variations of the same product, such as different kinds of foods, and be made available to switch. A company may provide part of a whole, such as software or hardware in computers, in order to allow for the lack of monopolization without removing one or the other system.

But direct competition leads to a loser. Losers go bankrupt. Bankrupt companies stop producing goods. Hence if you actually succeed in the goal of capitalism, you lose your competition. Without competition, according to the basis of capitalism, there is no longer innovation, invention, etc. striving towards the best product. Hence, if capitalism is correct, then it's inherently self defeating, as it always leads to the inevitable monopolization when a successful company is produced; thus, when a well established company, with considerable accessible reserve funds from profits, finds competition, it has no struggle in defeating them unless completely met with an entirely powerful opposing force.

Competition eventually leads to a winner, and monopolies. Without trust busting, de-monopolization, government intervention, etc. capitalism cannot continue.

The degradation of monopolization may be bad in it's own right, however. Splitting up a company may cause problems with the companies capacity to produce. Indeed, working together, not competition, tends to be the best driver of benefit for all.

For Profit
Companies may compete for "profits" without actually directly competing within a given business transaction, such as food suppliers and computers. Both benefit from each other and they may engage in friendly competition to see whom can produce the most profitable of X product proportionally.

What is profitable is also not necessarily what is best. What should be encouraged, ultimately, is the best product, capitalism or not. Therefore unless competition is arbitrary, instead of survival or extinction, the benefits of capitalism are inherently self defeating.

Profit does not always produce the best product. A product that lasts only two years, instead of twenty, may be worse, but it may generate more sales than a twenty year product. Therefore the most profitable product may not be the best product. As well, profit is not everything; the assertion that, profit driven competition will produce the best product, when money, or profit, is not the end all or be all of everything is rather silly. If a person's life as on the line, money would not seem as important; the concept that, therefore, money should be the end all be all of everything, when it's clearly not, or by trying to force money to be everything, is absurd.

The entire point of money is to get things, it's a means to an end. When money becomes your end, what's the purpose of money? When companies compete for profits they are not really competing for what is important anymore, which is to create the best product and help out the world and their respective country's the most.

An zealot is someone who redoubles their efforts while losing sight of their goal. If the goal is to have the best product, than capitalism for capitalism's sake or money for money's sake defeats the intended, over-all purpose of capitalism in the first place, which is to over-all benefit people.

Mutual Exchange
Profit is impossible to sustain in a closed system. For instance, assuming there is 1000 dollars split up among 10 people, and each person starts off with 100 dollars, what happens when someone else makes 10 dollars? One person is short 10 dollars. Or perhaps all people are short 1 dollar. And what happens the next year? And the next? By the time an individual has 300 dollars, everyone else is, on average, short 20 dollars. When a person relies on their consumers, and their consumers rely on their producers, making more money than you return ends up with a destroyed consumer base. When there is a base cost of living, for housing, water, food, etc. a certain amount of money is required every year to live. If a person cannot break even, they starve, lose their house etc., or go into debt. The only way to alleviate debt is to print more money, and forgive the debt, which either results in inflation, or to take the money from the person who is profiting and give it back to everyone else. The only way to have a sustainable economy is with mutual benefits; profit driven economies rely on outside intervention to keep the system going, whether it be growth, printed money, or other such things. Hence a for profit system is ultimately unsustainable.

Not everyone on the planet can make a profit; for someone to profit, someone else must lose out. A person who profits by 10 dollars per year inevitable makes everyone else lose out, in a closed system. Without printing more money to allow people to remain at their previous standard of living, problem occur within the system, which cause it to inevitable collapse. When money is worthless after a collapse, it is both bad for the one in debt and the profiteer.

Workers are consumers; if workers aren't payed well enough, they can't buy the products being produced. If two people, say one producing farming equipment, and the other being a farmer, can't mutually make money, the system begins to shut down. Even over a 300 million people economy, a for profit system drives debt on the other side. Unless money is introduced from an outside system, a closed economic system is impossible to operate if profit is the driving goal.

There's enough competition in real life
There's enough competition in real life, and some products are guaranteed. Some things, that are obtained by money, have to be bought. From food, to water, to housing, and now a days to electricity and transportation, without these things a person simply cannot survive, which all require money. Because of this, many products are guaranteed; the argument that capitalism will reduce the cost, or people will stop buying them if the price goes up is not based on reality. Many products are required to live; this in turn gives a guaranteed product and therefore, eliminates competition in it's own right, if we assume this to be beneficial. If food producers decide to sell milk for 10 dollars per gallon, since people need milk or the equivalent to survive, eventually there is no where else to turn to and food must be bought.

Additionally, a person will always spend a portion of their paycheck, generally a large portion, on survival; housing, living etc. Thus an entity in which people have to spend money

Arbitrary competition doesn't lead to success. People struggle constantly just to get by; this hardly creates a superior economic scenario. When outside competition is designed to press down on them, on top of the real life consequences, it can be devastating. An invented system that doesn't take into account realities and merely asserts that buying things is the equivalent to voting with your dollars, of which some people have more of, is doomed not only to failure but to hurt people.

There is enough competition in real life that forces them to work and buy products, and as a result no more arbitrary competition or "whipping" needs to be done to get people to work, since they're survival already depends on it.

An entity we have no control over
Money forms the basis of all society; in order to get food, clean water, electricity, a place to live, you mean money; this means having a job of some kind. Thus survival itself is based on money; similarly, the governmeant's power comes from money, and how much it can spend; healthcare, the military, social security, all has a cost, in money. Thus the governmeant's strength comes from the economy.

Free markets operate in such a way to remove as much government power as possible; Laissez-faire economics, or a hands off approach. The problem with this is the importance of capitalism; we have literally put the standard of living, living at all, and the power of the government into an entity we can't control. We have to hope that major corporations and businesses have our best interest in mind, of which the winners have profit in mind, thus driving us towards a situation where this largely isn't the case.

It is a monster we've created, responsible for the livelihoods of every American, left up to a few of the most successful companies; .1% of our country has approximately 40% of the money, which means they have, and will continue to have, the largest influence. Thus the economy is ran by a small few; workers make products for rich people so they can buy them back from them, and then are paid enough to afford said products. It's a broken system because anyone can be in charge, and the system encourages those who don't know how to operate in real life, just in the system, which is based on momentary profit, to be in power.

Thus the system controls every aspect of our life, which allows just a few people to do so; and the U.S., the government ,by the people, for the people, from the people, has no control over their livelihoods. It is a monster we have lost control over, that could destroy us at a moment's notice and arguably is already is in the process of doing so.

Some Good things about Capitalism
One benefit of capitalism is however the ability to start a personal business. Small business avoid the monopolization issue, which points a few powerful entities we have no control over in power, and makes it easier to self regulate; 1000 businesses that sell gasoline for instance, at lower prices, say 2.40 a gallon instead of 3.00, forces the other 9,000 businesses to do the same. However 10 companies with little competition, who have all agreed to work together, can agree to set prices as high as they like. Thus not only do we not see monsters with the capacity to take over the entire market, but better self regulation as well.

Despite this, many large companies do well; they in general have the best interest of people in mind, and work together in friendly competition with their partners to produce superior products, always looking for innovation. These are largely self motivated individuals, looking for the best products, simply to constantly be better, and to help people. Working together, and in large organizations, they can generally produce more, superior, and cheaper products, thus providing them with many advantages that can be easily exploited by the right leaders.

But capitalism leaves the leaders up to anyone; you can not always secure the best leaders with the best interests in mind. Just as how we can vote government officials, should we have power over major important things, such as electricity, food, water, and other such things? The elimination of capitalism all together may be a bad idea, but if major aspects are taken care of, then there is a much larger chance of success for focused and directed economies, than one's left up to their own devices, and thus the success of entire Nations.

The Principles of Economics

2012-10-22T04:55:00.001-07:00

The Principles of Economics for a Nation

Taxes are the primary source of revenue for a government or Nation; in order for government procedures to occur, such as policing, defense, regulations, promoting health standards, directing and building infrastructure as well as coming up with scientific advancements and other situations, the government must have money, and the most logical way for this to occur, and the most fair, is for everyone to pitch in a small amount, what they can, proportionally; these are taxes.

Without these said things, business would have a hard time occurring. Roads, bridges, the direction towards transportation, and the maintenance of such things, such as with traffic signals, policing and the rebuilding of such infrastructure when damaged, are all important. The act of policing allows for reliability in a business environment; when an individual can be held responsible for their actions by and outside force, it takes the strain off business. Just as an individual paying for a product can expect a proper product or be capable of receiving their money back for an improper one, a business can be assured that an individuals will inevitably pay for their product. If one individual violates this, the outside system of policing allows for individuals to be held liable and responsible for their actions, creating a consistent and reliable functional business environment.

Education is also considerable in business. Without the subsidization of various businesses that take long times to pay and have variable yields (such as with agriculture) or that are essential for the growth or sustenance of a nation, or merely things that lead business in the right direction providing incentives and capabilities, potentially and hopefully returning more money than was spent, business would have a hard time growing and becoming successful.

Business is important for a nation. The entire welfare of a government or nation depends entirely upon it's economy; without a stable, productive and functioning economy, a Nation is nearly doomed. Considering that nearly all revenue is generated from taxxes and inputs into the system, without these a Nation will be less successful. Individual income taxes rely on business hiring individuals; business taxes rely specifically on business. Sales tax as well rely on business doing well in order to make money, as well. Therefore nearly all the revenue generated rests solely on business creating money to be taxxed in the first place, which in the case of a capitalistic system occurs naturally.

When an economy is bad, more strain is placed upon a government. Not only do they take in less taxes, but their citizens are increasingly more reliant on their government. In this cases of social security and medicare, those who are unemployed and cannot find a job often rely on welfare programs to stay afloat, requiring government spending, while they increasingly are unable to provide their own healthcare costs or insurance costs. This is turn is compounded by a continued lack of taxes, which drives up spending but lowers money taken in. This can lead to exponential debt ballooning quickly if not resolved.

But just as this is possible, it is also possible to make money exponentially as well. When the economy is doing well, programs such as social security and medicare are less strained, while more taxes from workers and business are collected due to increased business and spending as well as increased incomes. Money spent by consumers is recovered in part by taxes, and money generated by business goes back to consumers to consume more to be effective. The process is somewhat cyclical, with money going to workers, whom generally get payed by businesses, whom then buy things, which goes back into business; a certain percentage of government money also comes back in the form of taxes, and assuming all money is spent it's theoretically possible that a proportional amount will be received that's near the money spent.

The question then arises; how does one improve an economy? Since the welfare of everyone rests upon it, for their standard of living, for the government to do well in order to provide necessities for life and even the continuation of stable business, it is pertinent to improve the economy. Operating on some basic principles, combined with some specific ideas, it is possible to improve the economy and return a nation back to near it's potential of growth and capability.

Essentially, if an economy improves, the entire government improves. The basic fundamental principles to be aware of are, that consumers are generally the majority of people, that is poor to upper class, but not the super wealthy. In general, the bulk of them are paid by, and give their money to, large businesses, or business. If a person receives payment in return for their work, they often give their money back into the economy, to pay for goods or necessities, which are produced in the economy. In that way, the poor and middle class, and even the lower upper class, are the primary consumers, predominately responsible for the bulk of the wealth and work within the country. In a capitalistic system, the wealthy are only wealthy because of the consumers.

As such the trickle up theory works in that, the poor invariably shell out their money back to the people whom give them it, for the most part. Thus the rich, and business, only thrives when there is a strong consumer base, and consumers generally tend to be the bulk of workers, as well. If business improves, than the consumer base can theoretically improve even more (as with the trickle down theory, hence, at most, doubling the effect of improving the consumer base). Hence your primary focus has to be on the primary consumers, so as to provide the welfare and well being of everyone.

Tax Cut for poor and middle class is a Tax cut for the Rich
Another fundamental thing to realize is that the government and business are intricately interconnected. Not only do they receive taxes, but mutually benefit each other with goods, welfare, creation, protection, and a host of other things. If the government is removed, reliable business transactions, with things like roads, police, enforced regulations on unfair business practices, and other things, than business cannot thrive as well as it could. If business is decreased, then the government loses not only the bulk of it's business income, but also the bulk of it's individual income tax, since they are only payed by business. In order to improvement the government's capabilities, to help the people, the people need to be in a strong base. Hence, in order to improve the lives of everyone, the consumer base, or, the majority of people, who tend to be poor, middle class, and the lower upper class, need to be helped. Helping out the poor and middle class helps out the upper class, so by focusing on helping them, you end up helping everyone; this is simply the most logistically efficient way to do business.

How to go about this, is another matter. However, it should be noted that a tax cut for the lower class and middle class, and for the lower upper class, or the predominate consumers, is a tax cut for the upper class and business. Since consumers invariably spend the majority of their money, if given massive tax cuts, then the rich and business will in turn, receive their money, assuming that the majority of the super wealthy got that way by business (which we do in general in a capitalistic theory). Hence, if you want the most logistically efficient way to provide a tax cut to the wealthy and the poor, you provide it simply to the poor, who will then spend their money, which will then go to the rich and business. You could theoretically, even increase taxes on the wealthy, and have the government break even with the money, essentially given to the poor, and taken back up when given to the rich.

The rich don't lose over-all take home profits but the poor get more products for the same salary. Salaries do not need to increase while over-all well being increases. If the economy improves as a result, as in if the economy is beneath a certain threshold, this can also increase money, as well.

So, in essence, giving the poor and middle class a tax cut gives the rich and business one. By giving money directly to consumers, who will spend it, presumably in businesses, the consumers will

Taxes do however provide some degree of stability. If the poor and lower class spend their money out of the country, then the current government will still have some money. In addition, if markets change abruptly, then there won't be too much of a shock in either direction. Hence a low tax rate on the poor and middle class, as well as lower upper class, but a significantly higher or, current tax rate on the upper class and large businesses, is an economically sensible action for providing both the government, people, and business, with as much benefit as possible.