A Capitalist Reformation

History shows that every “ism” is subject to periodic reformation or collapse; capitalism is no exception. 20th century capitalism has exceeded its limits and will now reform or threaten collapse. America is bankrupt; there is no real money, not in the banks and not the Treasury.

In other words, 20th century capitalism has failed by creating more debt than it could write off and promising more benefits than it could deliver. Since we remain the leader of an ever-more-economically homogeneous globe, we will reform capitalism to reflect the values of a world swimming naked at low tide.

 

This reformation is not occurring because Obama is moving into the White House. Rather, his decisive victory is in response to the growing realization that we have ridden the 20th century paradigm to failure. The mathematically impossible social net is manifesting its insolvency while reoccurring financial bubbles threaten capitalism’s ability to survive. The result of the reformation will reconnect our decades-old, borrowed standard of living with economic reality; more than a bit lower than we’ve been sold.

We have been living beyond our means due to the magic of late 20th century capitalism. It convinced us that we could afford both our present over - consumptive lifestyles and our future overly generous social system’s benefits. In reality we have been living larger than the numbers can ever support and financing it with hope, but now things must change. Defining 21st century capitalism will be a hybridization of our public and private healthcare systems as well as an expanding Treasury partnership with essential industries.

Healthcare

The disproportionately high cost of healthcare, both public and private, is untenable. Realizing future growth cannot pull us out will soon lead to an examination of the biggest budget-buster of them all, Medicare / Medicaid. Forty years ago, America inaugurated Lyndon B.J.’s Great Society, with a foundation built on a landfill of faulty assumptions. Projecting the Baby Boom’s birth rates forward made the benefits impossible before the ink dried. Consequently, the unfunded mandates of Medicare & Medicaid have grown to more than three times our annual GDP and continue to accelerate! Increasing longevity, rising costs and millions of missing fresh young workers to keep the system funded has bankrupted the system. Symptomatic of 20th century capitalism, we continue to pretend it’s solvent. But without significant premium increases or big benefit reductions, it’s mathematically impossible to sustain.

Privately, health insurance has become a necessity as health-related incidents are the leading cause of bankruptcy. My personal health premiums have risen 25% a year for the past three years and if they continue to rise I will drop them in favor of carrying catastrophic coverage and self-insuring the large deductible to retain disposable income. 20th century capitalism’s greed precluded any meaningful tort reform because it tried to balance both high-quality healthcare and the option to spin the malpractice wheel of fortune. 21st century capitalism will ditch the wheel and replace it with lower quality care and less, if any, legal recourse.

Healthcare represents an insatiable demand for a painfully finite supply. Simply stated, healthcare must be allocated more cost effectively and efficiently than it is at present. America is not ready for the tremendous drop in service that completely socialized medicine demands but she is ready for an intermediate step. So whether we continue to call it private medicine, while hiding the deficit, or begin calling it social medicine and face the music, benefits will go down and our mortality tables will top out. This is not pretty news because no one (especially me) wants to face the end of their life on a waiting list while trying to do without an organ. The reality is that we have borrowed the past few decades’ high healthcare standard and must now reorient our limited healthcare budget to prevention because we can’t afford the full cost of the cure. It’s probably not the change you hoped for.

Automakers

The inexorable decline of the automakers really bred the financing-uber-alles ethos that brought 20th century capitalism to this ugly conclusion. Automakers represented the single (organic) industry that vaulted and secured America’s position atop the world. When they started to lose market share in the early '80s, they quickly switched to more financing to make up the lost revenue. As their hope of regaining their preeminent status got smaller in the rear-view mirror, the profits from their financing arms increased to eventually eclipse profits from the automobiles themselves.

Nationwide, many industries followed suit and figured out they could manufacture and export “financing” more efficiently than finished goods, and they never looked back. Through the miracle of financial engineering our gross domestic product grew even as our manufacturing (organic) industries continued to contract. Now, however, that music has stopped and all the car manufacturers are utterly bankrupt. Their failure would devastate the economy, perhaps irreparably at this tenuous juncture, and thus they must be sustained. The proposed loan is woefully inadequate because they are no longer competitive. Automakers must be substantially upgraded and that will make the proposed 25 billion dollars look like mere change.

Banking

The big nine remaining major banks have been forced to accept a new (vocal) partner, the US Treasury. The dramatic measure is intended to establish a federal presence in the new, hybridized banking system that is now too big to sneeze. As an equity partner they will internally monitor risk practices to prohibit the creation of another pyramid scheme (hopefully, at least until more confidence is restored) and be in a position to bring sanity to the mutual admiration society that compensation committees have become.

The big nine are now flush with funny money from the Treasury but no one wants it; credit has had a vowel movement and become a four letter word. Criticized for prudently hunkering down, they are just like Japan’s banks post 1990, full of money with no place to go. On Halloween, Jamie Dimon quickly seized the budding 21st century capital bull by the horns and forged a brilliant solution: stop the foreclosures now in process and essentially apply the funny money infusion to help many survive. It was inspired because it provided a conduit for targeted reflation directly to the most important deflating assets. It will be followed by the remaining big eight and force the hand of the government to more prudently indemnify risk, case by case, rather than en masse. Hopefully that will serve to stem the deflation and also institutionalize the process. The music of capitalism will go on but the rhythm has changed forever.

Epilogue / Prologue

20th century capitalism is dead, 21st century capitalism is dawning. The veneer of our assumed growth rate has been lifted and the non-financially-engineered rate is less than prodigious. Although it worked for decades, it was dependent upon ever-more credit to stay alive. Each recession saw a further extension of credit to patch the growing hole created by declining organic growth. The final, desperate chapter was over-mortgaging our most precious asset, our homes, to sustain the illusion of growth. The deflation now occurring is the natural consequence of a failed loose-money paradigm, just as it was in 1929. This reformation will take several years to complete, during which the yellow racing flag will fly; we will survive as the world’s premier economy.

World markets are thrashing because capitalism’s fate is in play. Wiping out decades of growth removes lots of reasons for many to stay in the game and, little reason to help restore a failed paradigm. However, it now looks as if we are past the crisis point. When 21st century capitalism fully emerges it will be radically different with governmentally 1) tempered use of leveraged financing, 2) overseen allocation of finite healthcare resources and 3) partnered manufacturing relationships established with the companies most responsible for mass employment.

21st century capitalism comes with a mandatory GSE insurance rider to aid the sale to a country inching back from the precipice, with a renewed fear of high places. A national landscape littered with the fresh cadavers of our formerly venerable institutions, titans of 20th century capitalism, needs no more company to make the point. Our days of living larger than our means are suspended and we must get back to what made us a great and solvent nation - manufacturing things the rest of the world needs. We held the title for decades and with a little training can reclaim it.

Disclosures: I am a card-carrying Ronald Reagan Republican. I continue to be a seller of most things US dollars buy.

Comments

[rlxdoc:]

I believe there is a change, but the change isn't capitalism, it is our view of capitalism's underpinnings, the fiscal and monetary policy of our government. In the 1930's Keynes upset the prevailing understanding of capitalist economies, which until then had focused only on monetary policy to the exclusion of unemployment. The last big shakeup in economic thought was the early 70s when we realized that Keynes didn't have all the answers and that both fiscal and monetary policy were important.

A large cause of the problems you cite are related to over investment. This over investment was driven by low interest rates. The process of over investment and shake-out, or that every boom is followed by a bust, appears to be as relevant as the "full employment, low inflation, GDP growth" targets of our Federal Reserve. The austrian school of economics and the boom/bust of business cycles seems to explain what is going on.

Capitalism didn't create low interest rates. It took advantage of them.

2008 Nov 06 09:24 AM

[markg:]

"and if they continue to rise I will drop them in favor of carrying catastrophic coverage and self-insuring the large deductible to retain disposable income. 20th century capitalism’s greed precluded any meaningful tort reform because it tried to balance both high-quality healthcare and the option to spin the malpractice wheel of fortune. "

I work in the medical device industry, and while I agree with most of what you said, I would add this:

Two problems with this approach, the self insured pay more than the insurers do. If you doubt this stay a couple days in a hospital, and compare the checks you write with the ones Blue Cross would write. Of course the reason for this is the layers of insurers and health management are what is driving medical care upwards. There is a horrendous layer of money management, and the socialization will only add to it.

The costs of equipment, consumables, and direct labor are flat to lower. It's not the cost of healthcare increasing, it's healthcare management.

2008 Nov 06 09:31 AM

[socrateazz:]

Interesting statements: Seems to me most of what you wrote about is socialism called capitalism. Capitalism is trading goods or services for money which is used to purchase goods and services. I do this . You Buy that. we are both happy. Capitalism has been decreasing over the years because fairness has intervened...I say some socialism is good. The socialism has actually become an infection of the greedy calling others greedy.

2008 Nov 06 09:33 AM

[bricki:]

The Austrian school of Economics is poppycock. They shun even the scientific method and ignore real world data in favor of constructing fairy castles based on the failed Aristotelian pre-scientific form of logic and methodological subjectivism. It would not exist at all if it weren't for a few rich donors who have been conned by Menger's disciples. It is the Creationism of Economics.

2008 Nov 06 09:53 AM

[cgr:]

You are obviously not a Reagan Republican. The system that you are criticizing is socialism not capitalism. Socialism creates public debt. Capitalism is not premised on greed but rather on voluntary mutual exchanges. BTW, the US still produces over 20% of the worlds good with only 4% of the world's population.

2008 Nov 06 10:14 AM

[Romeo Fayette:]

Having just defended our economic system against a nostalgically motivated "American Capitalism is now socialism, especially in the hands of Obama" argument, I rather enjoyed this piece.
Inflexible political/economic models fail. That's the beauty of the American system: it's quick to adapt and revise itself. As an example of adaptation, reference the Chinese economy mesching its political communism with a market-based economy. On the contrary, reference Marxism.
Note that socialism means the government CONTROLS 51%... as opposed to OWNS some %, which is a communist characterization. Control means dictating output levels, influencing supply & demand. Our banking system has been socialist since the creation of the modern Fed, something unopposed by all but Ron Paul. The preferred stakes being taken in banks under TARP does communize the system by definition, although the central govt takes a passive role since there's no voting rights and therefore no controlling interest.
Healthcare needs to be socialized before consumer cost burdens bankrupt the entire middleclass.
The auto industry needs the support of Washington with substantial, collateralized capital injections, however those injections must go directly toward modernizing the industry, not toward amplifying an outdated product portfolio.
The credit crunch should spur us to resolve the outstanding LT issues that we keep deferring by rolling over more and more debt. For example, instead of the government providing larger subsidies for healthcare annually to curb rising consumer costs, socialize the system to control costs.

2008 Nov 06 10:35 AM

[sumosama:]

I think your Reagan Republican card expired...or it needs to be returned.

2008 Nov 06 11:03 AM

[blisterchicken:]

The closing statement of this enlightening piece is the only part that troubles me.

How are we going to reclaim our status as the kings of manufacturing with the Damage NAFTA & China have done to our economy?

Do tell!

2008 Nov 06 11:08 AM

[Randy_H:]

What I missed in this articles is the contribution of innovation and non-linear growth. That Capitalism is changing is a truism. Capitalism is always changing. It is, at the core, Darwinistic. Species within the Capitalist system universe that fail to adapt, die. Eventually. Some are kept on preserves for a while. Some are kept in zoos for study and for spectacle. But only adaptive, progressive species survive and thrive.

The government has a role in the Capitalist universe also. That's the failure of the free market fundamentalists and neolibertarians. Without the government as an arbitrator and referee, the Capitalist game of life degrades rapidly into a kleptocratic thugism.

But the magic is that Capitalism is an emergent system. It is not a deterministic system, nor is it served well by negative utilitarianism (doing the least harm equals doing the greatest good). Capitalism instead is positively utilitarian. The least harm is not always the best outcome. At times, the greater good is indeed served by taking the path of the greater harm for a period. If that is the point of the author, then I agree wholly.

But what's unstated in this article is that the fruits of a positively utilitarian, emergent Capitalist universe is explosive, revolutionary growth. One could have said the same things stated in this article during the periods prior to every "revolution". The Industrial, the Information, the Communication... Odds are, using historical time series, we're approaching another seismic revolution. But, like a big earthquake, exactly when cannot be predicted.

We know the odds are rising. Capitalism ensures that the ground will shake. And when it does, all the linear extrapolations about which services cost what and what opportunity lies where, give way to a new reality for which new equations must be formulated and old ones recalibrated.

2008 Nov 06 11:26 AM

[Jason Rines...:]

Attempting to socialize to fix the Socialism has already been tried in our country in three specific era's and failed. This is not just a hangover from the FDR days although David makes some salient points in this regard, more of a repeated failed experiment with those in power saying that this time is different because it's me running the Socialism.

I would simply say the country is now fully Fascist with the appearance that a free market exists. And I do not want to hear one more time about Bush derangement. The man had some decent plans in term 2 and Democratic majority Congress at 14% approval rating spent it's time hating Bush, creating dissention, investigating baseball and spending all of it's time cozying up to MSM to get reelected. But the American people will very soon see that both parties are morally bankrupt and corrupt, hence a bankrupt nation.

Fascism associated with national pride can work for a time to crank up industrial production which is now what we must do and that we are Fascist is sickening. That creates winners and losers out of responsible citiizens, so to me Capitalism is DEAD right now.

Our Fascism with a smile turning into a dictatorship like pre-WWII Germany is probably unlikely for many reasons.

This is an old story and a repeat of human history and empires. The net out is the younger crowd grows tired of subsidizing those in power playing with there lives and bankrupting them and are thrown out. 'Income inequality' as part of Socialism simply shields the pain for a short time and keeps those in power a tad longer.

This is just another sequence of our American history repeating itself and another giant change cycle occuring. I do believe Obama will do his best, but in the end the impovershed citizens will realize the staged hype was a disservice and cause much anger toward the Democratic party at large. McCain ran a horrible campaign and also was not up to snuff as a leader of the most powerful nation in the world. He showed his blatant disconnect with the citizenship at large when he stated in September that the economy was fundamentally sound. Bush had the mettle term one but entirely neglected the economic realities the country was facing term two. He isolated his own base to the delight of the Democratic party. The election was easy to win. But now the Democratic party will show it's true, yellow nasty teeth. How long can the party keep telling the people it's 'still Bush's fault'?


On Nov 06 10:35 AM hardball22 wrote:

> Having just defended our economic system against a nostalgically
> motivated "American Capitalism is now socialism, especially in the
> hands of Obama" argument, I rather enjoyed this piece.
> Inflexible political/economic models fail. That's the beauty of the
> American system: it's quick to adapt and revise itself. As an example
> of adaptation, reference the Chinese economy mesching its political
> communism with a market-based economy. On the contrary, reference
> Marxism.
> Note that socialism means the government CONTROLS 51%... as opposed
> to OWNS some %, which is a communist characterization. Control means
> dictating output levels, influencing supply & demand. Our banking
> system has been socialist since the creation of the modern Fed, something
> unopposed by all but Ron Paul. The preferred stakes being taken in
> banks under TARP does communize the system by definition, although
> the central govt takes a passive role since there's no voting rights
> and therefore no controlling interest.
> Healthcare needs to be socialized before consumer cost burdens bankrupt
> the entire middleclass.
> The auto industry needs the support of Washington with substantial,
> collateralized capital injections, however those injections must
> go directly toward modernizing the industry, not toward amplifying
> an outdated product portfolio.
> The credit crunch should spur us to resolve the outstanding LT issues
> that we keep deferring by rolling over more and more debt. For example,
> instead of the government providing larger subsidies for healthcare
> annually to curb rising consumer costs, socialize the system to control
> costs.

2008 Nov 06 11:28 AM

[Socialism c...:]

I disagree in some measure: I do not believe "over-investment" is responsible for our problems...rather, large injections of socialism have perverted the economic base upon which we attempt to operate as "capitalists"!! In truth, the socialistic first hurdle is increasing in height, as we are continually taxed more heavily to fund social entitlement programs -- and that has radically skewed individual economics. When consumer spending is 70% of GDP and you mess with those income levels to fund entitlements, bad things are bound to happen.

SS & Medicare are devoid of ties to reality -- they are "warm fuzzy" ideas that are given a "morally correct" spin, when in fact they are morally repugnant because they cause disproportionate pain to the payer, who has no duty to fund the recipient!! Examine the results "on the ground", and one becomes even more incensed at the goings-on: I see all the retired regulars at the local KC hall for weekly bingo, blowing $30 to $40 for bingo cards on a *single* night. Many of them go play elsewhere on other weeknights. One local retiree friend who works with local service organizations as a volunteer has told the story of a particular senior woman she knows of who regularly gets massages paid for to "help with depression"!! That same woman once was bused with others to a casino nearby...and given $50 "spending money" -- at taxpayer expense!!! No, my friends, this is NOT JUST!! It is WELL PAST TIME to END this entitlement FARCE!!!

It is NOT so much capitalism gone awry that is our problem -- it is entitlements, social programs, and Big Government!! We need to ABOLISH the income tax and fund the government solely on sales taxes -- so that the worker can decide when to spend and how much...and retain what is needed. It would be proposed that food & certain essentials not be subject to the sales tax, only discretionary purchases. That way, the truly poor need not pay any tax, until they have reached an ability to buy discretionary items. THIS represents a return to government BY the people and a restoration of personal property rights!! It is the ONLY foundation for a sound capitalist system: one where individuals are not paying for others' lifestyles -- because that is what is crippling our economy at present.


On Nov 06 09:24 AM RLXDOC wrote:

> I believe there is a change, but the change isn't capitalism, it
> is our view of capitalism's underpinnings, the fiscal and monetary
> policy of our government. In the 1930's Keynes upset the prevailing
> understanding of capitalist economies, which until then had focused
> only on monetary policy to the exclusion of unemployment. The last
> big shakeup in economic thought was the early 70s when we realized
> that Keynes didn't have all the answers and that both fiscal and
> monetary policy were important.
>
> A large cause of the problems you cite are related to over investment.
> This over investment was driven by low interest rates. The process
> of over investment and shake-out, or that every boom is followed
> by a bust, appears to be as relevant as the "full employment, low
> inflation, GDP growth" targets of our Federal Reserve. The austrian
> school of economics and the boom/bust of business cycles seems to
> explain what is going on.
>
> Capitalism didn't create low interest rates. It took advantage of
> them.

2008 Nov 06 11:46 AM

[Socialism c...:]

RandyH -- capitalism is *NOT* changing -- our government is injecting socialism into it! Capitalism by definition is based on personal property rights and personal freedom, and the ability to use those in free markets to make money. Socialism is based on the "collective good"...a denial of personal property rights and the belief that individuals are to be cogs in the wheel, producing for others' sake. The fact that capitalism sometimes goes astray due to greed does not mean it is changing, simply that some abuse their freedom -- that is a thwarting of capitalism, not an extension or evolution of it.



On Nov 06 11:26 AM Randy_H wrote:

> What I missed in this articles is the contribution of innovation
> and non-linear growth. That Capitalism is changing is a truism.
> Capitalism is always changing. It is, at the core, Darwinistic.
> Species within the Capitalist system universe that fail to adapt,
> die. Eventually. Some are kept on preserves for a while. Some
> are kept in zoos for study and for spectacle. But only adaptive,
> progressive species survive and thrive.
>
> The government has a role in the Capitalist universe also. That's
> the failure of the free market fundamentalists and neolibertarians.
> Without the government as an arbitrator and referee, the Capitalist
> game of life degrades rapidly into a kleptocratic thugism.
>
> But the magic is that Capitalism is an emergent system. It is not
> a deterministic system, nor is it served well by negative utilitarianism
> (doing the least harm equals doing the greatest good). Capitalism
> instead is positively utilitarian. The least harm is not always
> the best outcome. At times, the greater good is indeed served by
> taking the path of the greater harm for a period. If that is the
> point of the author, then I agree wholly.
>
> But what's unstated in this article is that the fruits of a positively
> utilitarian, emergent Capitalist universe is explosive, revolutionary
> growth. One could have said the same things stated in this article
> during the periods prior to every "revolution"... The Industrial,
> the Information, the Communication... Odds are, using historical
> time series, we're approaching another seismic revolution. But,
> like a big earthquake, exactly when cannot be predicted.
>
> We know the odds are rising. Capitalism ensures that the ground
> will shake. And when it does, all the linear extrapolations about
> which services cost what and what opportunity lies where, give way
> to a new reality for which new equations must be formulated and old
> ones recalibrated.

2008 Nov 06 11:51 AM

[eddie shore:]

the real question is do we want a for profit healthcare system? our healthcare system is the laughing stock of the western world. profit is the sole motivation. once we give up on making $ on other peoples misfortune and eliminate the abyss of absurd lawsuits we can reduce costs in a big way. but nooooo that would be socialism. ooohhhhh. scary! you can raise my taxes and my healthcare is basically paid for or i can spend a quarter of my after tax income on healthcare. what the hell is the difference? personally i dont want any entity making $ off of my families health.

2008 Nov 06 11:57 AM

[Mr.G:]

healthcare = extortion today. The prices will be forced down it should definitely not be a growth industry with the exception that there are more old people than young-

I always thought of the banks as the "house". I never thought they were stupid enough to actually be companies with gambling problems .The only sure thing is death and taxes and banks have definitely not been paying taxes over the last 20 years .

Automakers should have been looking into the future not into how to cut costs and quality while lining their executives pockets -

as for a reformation it will never take place as long as lobbyists and corporatists calling themselves democrats and republicans roam the halls of washington. Corporatism is what has caused all of this and it is now blatantly apparent it will continue until it breaks the bank (US govt) which is funded by its shareholders the taxpayers ..

2008 Nov 06 11:59 AM

[Randy_H:]

Seems it's very hard for some people to think in dynamic terms. Capitalism isn't some cookbook of a few commandments chiseled into stone. Apparently a lot of commenters learned their concepts of Capitalism from neolibertarians. Capitalism is "changing" like the Earth's biosphere is "changing". Change is the only constant. Sometimes that change is slow, other times it is fast. But it is ever present. It is essential. It is pragmatic.

I'm appalled at the lack of historical perspective as well. Never once do we read in the knee jerk attacks on FDR anything that leads us to believe the authors have an appreciation for the historical context in which those events took place nearly a century ago. Viewing history through the lens of current society is less than wrong, it's foolish.

Were we to take a poll requiring every person who utters "Socialism" to define that term, in specific terms, I'm certain we'd find that merely 1-in-10 are even using it correctly. And I'm as far from a Socialist as you'll find. But hear this, true Capitalists in the tradition of Rand are disgusted even more so by neolibertarian cranks than by democratic socialists. One group professes to pursue the greater good. It's just that people like me disagree about how to define "greater good". The other side, due to some serious impairment of sensibility, relishes in deluding themselves into thinking they are more clever than they are -- in reality not much more than cynical, self contradicting hypocrites. (paraphrased from Rand, whom I'm sure at least one neolibertarian whack-a-mole will call a "socialist" just to put a cherry on top of the irony).

2008 Nov 06 12:10 PM

[huangjin:]

Healthcare is the most socialist industry in America, worse than education. Almost all healthcare prices are set based on Medicare, which sets prices based on the whims of bureaucrats. The only industry not covered by government? Cosmetic surgery, where costs have fallen over time. This isn't rocket science, but then again, a lot of people went to public school.

2008 Nov 06 12:13 PM

[eddie shore:]

so the hmo's arent making profits?? wow thats news to me..


On Nov 06 12:13 PM huangjin wrote:

> Healthcare is the most socialist industry in America, worse than
> education. Almost all healthcare prices are set based on Medicare,
> which sets prices based on the whims of bureaucrats. The only industry
> not covered by government? Cosmetic surgery, where costs have fallen
> over time. This isn't rocket science, but then again, a lot of people
> went to public school.

2008 Nov 06 12:29 PM

[akapital:]

Excellent article. Just as the human species evolve over millenia and human beings over the course of their lifetime, economic systems evolve. This is the great value of Marx' theory over other static enconomic theories.

What many people faill to realize is that Marx' was not a critic of capitalism per se. He only saw it's hisotical limits/finitude and that it would eventually exhaust itself. It is the economic precedent to socialism because without an industrial revolution under capitalism there would be productivity or excess capital (just as feudal agrarian societies were precedent to industrial capitalism). China and Russia were not ideal environments for socialism/capitalism because they did not fully mature as industrialized capitalist countries before adopting socialist policies.

America and Europe are ideal mature economies that can progress. Looking at the scandanavian model is a promising indicator.

Also, another commonly misunderstood principal of socialism is that everyone will be wearing the same uniform (as if we don't already all wear Gap and Brooks Brothers) and equal in everyway. In fact, in theory it is quite the opposite. it is step in economic maturity towards creativity of individuals...each according to his ability...but nobody bothers to read through the literature and I am sure this article will elicit the typical "pinko" comments...from the apes who have not evolved yet.

2008 Nov 06 01:02 PM

[Socialism c...:]

eddy, you are forgetting that the *only* reason we have had the medical advances that we have had, is because the individuals & companies involved were able to turn a profit! altruism is fine, but you can't do the advanced type of research required for advanced medical technology without lots of capital -- private investment is the only way.


On Nov 06 11:57 AM eddyshore wrote:

> the real question is do we want a for profit healthcare system? our
> healthcare system is the laughing stock of the western world. profit
> is the sole motivation. once we give up on making $ on other peoples
> misfortune and eliminate the abyss of absurd lawsuits we can reduce
> costs in a big way. but nooooo that would be socialism. ooohhhhh.
> scary! you can raise my taxes and my healthcare is basically paid
> for or i can spend a quarter of my after tax income on healthcare.
> what the hell is the difference? personally i dont want any entity
> making $ off of my families health.

2008 Nov 06 01:25 PM

[notsosmart:]

first & foremost there has never been nor will ever be a free market.a really free market means no regulation,no taxes.now when you begin to regulate or tax the capitalistic defenition changes depending on whose ox is getting gored. a society like ours that doesnt make much anymore & infects the world with phony AAA rated worthless paper cant survive.i dont see how we can get back to making things as the trades have lost the know how people & the "making" is cheaper off shore as those folks dont need the granite counters yet.most of the huge costs of medicare happen in the last 3 mos. of a covered persons life.this included my parents,my wifes parents, & many more i know of.what do we do? shoot them. what do you do with a seriously ill child of an illegal worker that will not be able to pay the bill?shoot it? does anybody mention the billions of $ sent to iraq(then stolen) that had to be weighed instead of counted?a war that made iran the power of the area.the fools,rep.& dem.,are bringing this country down.sadly,nobody can do anything about it.the only thing that save this country is a fuel made from seaweed or like.cheap energy is the only salvation.of course a meeting of a good sized asteroid & our planet will solve the problems.

2008 Nov 06 02:20 PM

[Permacritical:]

Agree wholeheartedly! Another media type afraid to call things what they really are. Capitalism is almost dead and socialism is firmly in place. Hybrid 21st century capitalism is merely creeping deceitful socialism, lets not be cowards and start calling things what they are. Any government program has the paradigm "take from everybody, give to a few, while the bureaucracy takes their 60% off the top. Everybody wants their piece of the action and why not everybody pays for it, the rich, middle class, and poor! When the dollar dies nobody will care about anyone but themselves. As Government jobs increase real private sector and actual production declines. This is why the Feds have systemically blinded our eyes by removing M1 money supply data, secretly entered service and loan data into GDP numbers, and show governments jobs as jobs created. For many years we always looked good with these numbers as our private and public debt was leading us down the primrose path to Hades. They voted themselves pay increases during the so called "boom " years for a job well done. They take credit for the booms and demonize capitalism for any failures. The response is more government control as if they were the only unbiased entity in the economic food chain. When people get punished for saving by paying high taxes on dividend income and rewarded for going into debt, then this is a 100% government created problem. They have masterfully marketed themselves as the saviors once again and the stupid American public has bought into it hook line and sinker. In the end I hope I can keep my wife, family, and home. The true capitalist only needs the gun and gold. To hell with all the liars and those that would use this country's wealth to enrich themselves. Mainland China is more capitalist than this place!


On Nov 06 10:14 AM cgr wrote:

> You are obviously not a Reagan Republican. The system that you are
> criticizing is socialism not capitalism. Socialism creates public
> debt. Capitalism is not premised on greed but rather on voluntary
> mutual exchanges. BTW, the US still produces over 20% of the worlds
> good with only 4% of the world's population.

2008 Nov 06 03:08 PM

[eddie shore:]

what invovative procedures/breakthroug... has blue cross/blue shield come up with recently?? enlighten me....


On Nov 06 01:25 PM Socialism cannot compete! wrote:

> eddy, you are forgetting that the *only* reason we have had the medical
> advances that we have had, is because the individuals & companies
> involved were able to turn a profit! altruism is fine, but you can't
> do the advanced type of research required for advanced medical technology
> without lots of capital -- private investment is the only way.<br/>

2008 Nov 06 04:06 PM

[Third Party...:]

Socialism Cannot Compete:

I'm fairly new to SA, but I have seen many of your comments and I tend to agree with you more than not. But you said: "We need to ABOLISH the income tax and fund the government solely on sales taxes". Now my question for you is what is to stop our esteemed elected ones from setting the fed. income tax at 22% and then raising it to 30%, 40%, or even 110%? Nothing! Be careful what you wish for. This country was able to live within its means before 1913 without the income tax or national sales tax. There is another Constitutional way to fund the government.

To All:
A true Capitalist Free Market is still the best option for America. However, we've allowed our nation to skew far from the Free Market, as some others have pointed out, through corrupt lobbyist and politicians. However, government does have a vital role to play in a Free Market: To prevent crime, fraud, and monopolies in the market. Outside of these three things, it is just unnecessary manipulation, which always comes back to bite us in the back side.

When we expect more (handouts, entitlements) from the government, we get less (overall). When we expect more (morals, scruples) from the government, we get less (people willing/able to fit the bill).

2008 Nov 06 10:29 PM

[CLR:]

Many of the comments above are emotionally charged and do not weigh facts. The US is not now, nor has it ever been, by any definition, socialistic. The fixes that are being proposed for the economy have nothing to do with any definition of socialism I have ever seen. Nor do they resemble any institutional structures of socialist economies.

The primary problem with the US economy right now is that we have tried to maintain a consumer economy by lowering the cost of money rather than by increasing incomes. When the cost of money was lowered as far as it could go the fix collapsed. Incomes must rise if homeowners can afford adjustable rate mortgages, for example.

If we wish to rejuvenate our economy then incomes need to rise, and economic activity that generates growth [manufacturing, agriculture, etc] has to be front and center.

Regarding heath care, most of the comments above ignore the fact that the US spends more on health care than other industrial nations and we get less for it. This is because we do not have a collective risk pool. Put everyone in the same risk pool, do away with middle men in insurance, and the cost of health care as a % of GDP drops dramatically. Don't take my word for it. Talk to any actuary about the impact of community rating on overall costs.

Capitalism was never intended to monetize externalities, like health care. It would be a good idea to re-read Adam Smith. He assumed that externalities only would be addressed by government. And so I agree.

Thanks

Chuck

2008 Nov 18 09:24 PM

[Al-USA:]

Good article and good comments. If Western Civilizaation is to advance, one must consider which model will "deliver the goods", before WWIII comes about.

Civilization or barbarism.... Who is going to choose barbarism?

Feb 27 10:00 PM

[Al-USA:]

"
21st century capitalism is dawning.
"

The S&P 500 has now given up all the gains since 2000, the start of the 21st century so, it seems to me, 21st century capitalism is not dawning but was still-born....

Feb 27 10:03 PM