Topic: Solution to poverty - Socialism or Capitalism? - page 28. (Read 30782 times)

Scandinavian countries are not purely socialist, but rather close to this term in areas of child support and education. And contrary to your opinion, in most ratings these countries took top positions.

Socialist country don't usually do a good job of raising children. Teachers do not really care if they do a good job or not. And the education system do not have accountability.

Lets imagine you live in ultra-libertarian country that doesn't support raising children at all. On its border there are socialist country that acts opposite. After few generations in former country you will see massive population drop combined with lack of young people, so nearby socialist country will have great incentive to simply wipe out your state having army larger by 2..5..10x!

Then you, libertarians, blame prisons for wasting tax money and urge to abolish imprisonment altogether!

I would be very surprised if you pointed me at least one example of hungry homeless child using Coursera or Udacity!

Most African and Asian countries have minimum wages set far below fair price of labor or don't have such laws at all. Nevertheless, these countries are much poorer than ones with such laws.

You realize the anti-trust is to create competition don't you?

Before when AT&T monopolized the telephone system in USA there was no competition b/c barrier to entry is too great.  The break up of Bell is what allowed competition

I effectively believe that without regulation with the help of property right enforcement by the state you will have the best company, product and judgement that win.
There is no cheater, there is contract to be signed, law and state to enforce them.
I don't advocate companies to play without any law. State and law is necessary to enforce property right.

Having a "natural monopoly" that make later player vulnerable is not proved to work on the long term.
Do you think that it is thanks to "anti trust law" that Apple kicked Microsoft's ass ? Apple won with superior products. But this again will not stay.
Technology shift will always scramble a monopoly, or render it insignificant. Innovation and Entrepreneurship from Peter Drucker speaks about that more deeply.

Are you talking about our politicians ? This is the only career where the mistake of one person makes it even more powerful by blaming on others what he has caused.
In a company, such person is kicked out, as, contrary to government, the money would flee from the pocket of the company to better ones shrinking his power over time, a state can just raise taxes or indebt itself, and blame predecessor or "economic conditions"... Not much different than blaming gods for thunder.

You took the decision of indebting yourself and having 4 kids, and now you are asking government and your company to take care of you.
But the government takes care of you with the pockets of people who does not have necessary chance to get a house nor 4 children... but happens to have a good job.
And on thing is sure, I don't want to finance your decision.

And this is true. But in a free market, like I said people like that would destroy their company, maybe go to jail for contract breaching, and loose all long term reputation.
But, in our system, it is for the "public good" that such person are not punished, worse, some of them join government. (cf money laundering scandals of HSBC http://www.theguardian.com/business/2012/dec/14/hsbc-money-laundering-fine-management)
Such scammers are inevitable, but in a free market, they would only get one shot.

What non-sense in the age of internet, with incredible courses from coursera and udacity. (I won't say for area without internet)
I wished I never have gone to school and that such sites were invented before. I don't remember where I have read that : "In the age information, ignorance is a choice".
I speak as someone who earns money only from what I have learned by myself.

For the crappy area, sure it does not help, but it also open other opportunity.
A crappy area have market to be fulfilled, and as long as there is demand, and you have knowledge to meet it, you become wealthy. The area does not matter.
Thinking that just giving money will give a chance to these people is a fallacy. You get wealthy not with money, but with a market. Without a market, money just flees.

And, also, part of the reason these area stay crappy, is, because of wages protection law.
When you are in a crappy area, but can't hire people for your business because and you can't afford the wage, then you get in a situation where you have high demand but restricted supply and unemployment.
If you can't higher the demand for lack of labor, you turn to black market. This is not because people are bad, but because it is the only way economical way to trade in such area.
Milton Friedman talked about it a lot http://www.aei-ideas.org/2013/02/milton-friedman-responds-to-president-obamas-proposal-to-raise-the-minimum-wage-the-most-anti-black-law-in-the-land/ and https://www.youtube.com/watch?v=x-BGi4NIFww

This is not true--not everyone gets the opportunity to succeed.  I agree that there's more opportunity and incentive under capitalism than socialism, but only some have access to it.  If you grow up in a crappy area with a crappy education system, even if you try hard, you may not do well because you aren't given a good set of tools to begin with.  Not to mention that people who grow up in such situations probably don't have a lot of hope.  If, for example, they see their parents work hard but not get very far, it's hard to believe that you stand any better chance.  Sure, some people are given opportunity and blow it, but I think that some people aren't given it in the first place.

Fast forward to age 65 - still making the same salary with four kids, no corporate pension and coming to the stark realization that you don't even get a corporate pension and have to work past retirement age..  no savings as you spent all your money on the mortgage for your McMansion.  Then at age 70 they terminate you for being too old and a liability.  You end up where you began.

http://hereandnow.wbur.org/2013/09/25/retirement-never-comes

I have personally climbed the economic ladder. My family was poor when I was growing up, and there were some days when I was unable to eat. I was able to graduate high school with a 3.9 GPA, get a full scholarship to college, get a scholarship to grad school, worked my way up the corporate ladder and am now making over 6 figures at a major technology firm.

I am wondering, why still exist so naive believers in corporate propaganda!

There is a huge difference between socialism and capitalism. With capitalism you have opportunities to climb the economic ladder if you are smart and work hard. With capitalism everyone has a fair chance to succeed. With socialism everyone gets the same amount of resources (money) regardless of how much/hard you work.

Then who's going to build and maintain things like roads and bridges?  Or create and enforce building codes?  Or create and enforce laws that control pollution?


Do you really believe that if companies were completely free to do whatever they want that the best companies, products, judgement, etc. would be the winners?  That wouldn't be true at all.  The winners would be the biggest cheaters, bullies, seducers, etc.  If you were to take away all regulation, companies would do nothing but play dirty, and all the rich would take away any wealth that the middle class and poor have left.


This may generally be true, but there are a lot of people that run companies and financial institutions that don't care if their firm crashes and burns tomorrow, as long as they can make a lot of money today.

I am not anarchist, because I recognize private property and I believe the goal of government should be limited to one and only one thing : The monopoly of coercion in order to enforce property rights of its citizens.
Except than that, they should get off the way of the market.
What do you mean by "self regulation" ?
If you mean that the market will, by itself, route the money to the hand of the smartest company, to the best product, to the best judgement, then yes, it is self regulated.
Bad short term behavior makes money flee on the long term.
If you mean that the market will, by itself, route the money evenly to all people regardless of their productivity and work, then no, it is not.

I don't want bitcoin to limit greed. And, like I said, I don't think self interest and greediness requires a fix. This is human nature and should be acknowledged as such.
What I say is that Bitcoin use this greed to self sustain itself. No central body is obliged to take money by coercion from tax payer pocket to get Bitcoin running. Bitcoin works by voluntary association, not coercion.
Bitcoin is an incentive system that is using human nature for its own survival, not against its survival.
The only assumption of Bitcoin is that people act selfishly. If it was not the case, there would be no miners and Bitcoin nailed into a coffin.

And yes, there is lots of speculation on Bitcoin, but it is failing to see the potential of services and business idea that can be developed thanks to it.
Bitcoin is the only store of value equivalent to gold by its properties, entirely digital and easier to protect. The bonus is that you know, contrary to gold, that the discovery of a new mine or new method of mining and refining of Bitcoin that would decrease its value is impossible.
I believe my money is safer in the long term in Bitcoin than in a bank account that can get seized, inflated or bankrupt. (cyprus bank)
And I think that, surely enough, most of bitcoin user are speculator, but people and businesses will realize very soon that it is more than a that.

So true, and politician are like that also they tend to favor short term decision, but, the paradox is that the voters, and the stockholders only see short term impact.
Acting against this fact is self destructive for politicians and executives that depend on the approval of short sighted people, so I won't blame them for that.

This is where I disagree.
If such incentives as short term profit preferences and golden parachute is hurting banks, its stockholders on the long term, or even depositors, then the money will flow out of the bank by itself.
No need to prevent that by coercion or regulation. Bad long term policies will make the money flows somewhere else on the long term.
Bitcoin is already an economical response of people that does not trust money to banks and financial institution for the long term.
If you despise banks and financial institution for the shortsightness, then you can vote by storing your wealth in Bitcoin.

Moreover, government is also shortsighted because they depends on short term elections of their voters. Their decision would change nothing, except than adding some incompetence to the mix.
A king would act for its country in a longer term than a government. I am not monarchist, but this is simple application of how incentives leverage the self interest of individuals.

I hope that we will not become is such society that is nothing more than a planned economy, the ideal of the communist society, that would flood the world of people not able to stand by themselves and produce nothing because they would not need for their existence (against self interest).
It would not produce wealth but misery. Money has to come from productivity, works, judgement and trade, not by right, or its meaning is eroded.

This is a quote from Atlas Shrugged, "So money is the root of all evil" from the character Francisco D'Aconia.

But Milton Friedman dreamed about a system which calculate the monetarist policy automatically and openly in place of the fed. (at 52:30 https://www.youtube.com/watch?v=jOO4kPSaD4Y )
But this is not equivalent to money coming from the sky thanks to government at the price of the productive.

I see world of technology where almost everything is decided by software and produced by hardware, biggest class of people would be called "free people" as they will be jobless, got their money from governmets - they will have to work together with owners of hardware (producers). And jobless people paying those money back to the system for products, so HW can be run and upgraded. Technology will have strong ipact imho.

Because companies are self-interested and always trying to maximize profit (usually above all else), they do not self-regulate well in most cases.  This is especially true when short-term results are emphasized over long term and/or the people making the decisions benefit from short-term successes and don't suffer the consequences of poor decisions.  Ideally, financial institutions would look at the risks they take with the idea that too much risk could cause the company to fail, and that that's something that should be avoided at all costs.  But the people running those financial institutions get paid well to take too much risk because it usually pays off well in the short term.  And then when the whole thing comes crashing down, they leave with "golden parachute" plans that guarantee that they'll get paid well, even if they drove the company into the ground.  So there's no way you can let companies regulate themselves.  They have to be regulated.  The government would probably do a better job regulating them if it weren't filled with people that are all buddies of those in charge of the companies.

Deregulating banking rules =/= deregulation or free market.

If you go to the park in a major city and try to sell lemonade - I'll give you two hours tops until the cops show up and slap you with a $500 fine for selling without a permit - got to sell a lot of lemonade just to break even.  

All the regulations in societies means that the only people who can compete are those with capital.  The permit costs alone, if you can get a permit, is going to disincentive small entrepreneurs.  

Ironically products like Coca Colathrived in a time when there were less permits and simply less rules all around.  Today something like Coca Cola would never be allowed because it originally used to contain cocaine and that's how it got people hooked.

Sorry I should have wrote 80s.  Friedman was economic advisor to Reagan.   That generation was when deregulation started.   

Fannie Mae doesn't subsidize mortgages.   They securitize them to expand secondary mortgage markets.  But I agree that securitization contributed to housing bubble.  I also agree that lower interest rates increased incentives for loans.

However,  I also believe deregulation played a big part in the bubbles as well.   

You realize what you described is called subprime lending and that is partly result of deregulation.   Deregulation of finance let the banks create CDO & CDS from the MBS

So assuming individuals/ companies are only self interested.   Is the market self regulating or should regulations come from govt?  What is the role of govt?   Or are you anarchist?

How does bitcoin limit greed?   All I see are greedy speculators buying bitcoin to get rich quick 

I'd like to know the reason why some person thinks that.
What particular policy policy are the talking about ?
What is the reason why a particular policy, would prevent the problem from happening ? but here is my opinion about it.

It comes from Ludwig Von Mises, Interventionism: An Economic Analysis (I did not read the one myself, but I knew his opinion on that matter with his book Theory of Money and Credit).
He explains the cause of boom and bust from the monetary point of view.


So, one explanation is that the essence of the GFC is the previous money expansion caused by the low interest rates granted at the courtesy of the FED, and that provoked such bubble.
Those low interest rates policies accommodate government policies that help government to spend more to "stimulate" the economy, a typical Keynesian cure.
But I don't like this explanation since it is difficult to measure and prove, and not specific to GFC.

Other explanation is that government-sponsored entities like Fannie Mae and Freddie Mac subsidized mortgages for people who, under more-prudent rules of borrowing, would never have qualified for a loan from a conservative banking institution.
In other words, banks would never accepted such risks without subsidize of the state, because it would have not been economically profitable for them.
A subsidy, like I say, is against free market principles.
A
Government encouraged the support of affordable housing, the politically correct. The politics pointed finger at banks for redlining.
And continue to do so http://www.washingtonpost.com/business/economy/obama-administration-pushes-banks-to-make-home-loans-to-people-with-weaker-credit/2013/04/02/a8b4370c-9aef-11e2-a941-a19bce7af755_story.html, and then they think that if they got more power, they would fix the problem.

Here are the reason of the GFC from libertarian point of view, better explained than me : http://mises.org/daily/3263

The quote of Henry Hazlitt, at the end of this article, reflect best the moral of the story on policies of government that created such a mess :

Do not count on banks, and any private companies to act for something else that their self interest, as much as you would not act for mine and I would not for you.
So one thing is sure : all they do are rational action for their own survival and benefit, and you can count that such big companies does not want to commit suicide, does not play Russian roulette with their own life, and is not run by stupid people.
Even if they may be greedy, greediness only follows incentives blindly for maximum individual profits. So the question to ask is where came from these incentives to take risky loan ?
Government knows that and act with price control / taxes and subsidize accordingly.

Why I love Bitcoin is that Satoshi found a response to direct greediness for the self maintenance of its invention, not for its self destruction.
Politics know that people are selfish and greedy, they know how to direct such forces. But they just blame it when something is going wrong instead of revising the incentives, or, better, removing any incentives.
The value of incentives can't be better than the person who decided it. Thinking someone is so smart, and even if it were depending on such person, is a dangerous premise to have for a durable system.

I know you have an admiration for Friedman from our earlier convos.  But looking in hindsight; some people think his influence on deregulation policies in the 90's financial industry led to 2008 GFC.  What's your opinion of this? 

Red herring #1: individuals acting in a voluntary manner always do so to each others benefit, whether or not it's socialistic or capitalistic; this, combined with the willingness to improve one's condition, and our technological advancements, lead to an overall improved quality of life.  Red herring #2: poverty is not always a problem for the impoverished; a man who chooses to be a vagrant should not be dehumanized into being a "problem."  If someone wants to live in poverty, we should not expect them to improve their quality of life for our sake; it's his life and he'll do as he pleases.

This is not a question about left or right.  It is not a question about "which system is best"; the best system is always the one people prefer in the moment, as even the concepts of capitalism and socialism participate in a market of economic systems, as do political ideologies (or lack thereof) participate in a market where they compete with each other for followers.

It's a question about what happens to a man's labor once he has generated it: does he decide what he spends his labor on, or does another?  If he decides, he will always decide to spend it on improving his condition.  If another decides it, he is stripped of parts of his labor, if not all, to pay for the desires of others, which inevitably leads to increased poverty (sometimes to the point of starvation, e.g. USSR.)  The former, we call libertarianism; the latter, authoritarianism.

The short answer is, you "solve poverty" once a nation's wealth is not being diverted to a select few for the purpose of monopoly (patents, subsidies, lobbying, etc.), war, and welfare, all of which can exist in socialistic and capitalistic systems so long as there is a means for wealth extraction, whether it's central planning or taxation or inflation; this is true for rich and poor nations alike.  Remember that nothing is free, and the more money a nation takes from its citizens for non-market purposes (the act itself being anti-market), the less money people will have to create businesses to generate wealth meaning less employment opportunities for the qualified to become experts and for the novices to become qualified, ergo high amounts of unemployment thus impoverishment, not to mention the natural disincentive that comes from punishing success.

You "solve poverty" through voluntary association, as will it solve nearly all other social problems as well.  Through voluntary association, the fruit of your labor is only diverted where you choose it, returning the power which comes from the motor of the world back to its origin where it belongs: in individuals acting from the self.

You are linking the definition of free market to a moral principle, when the definition is an economical one.
Better ask yourself wether you consider a free market moral. But this is another debate.

Whether women are or are not allowed to operate pubs does not impact the market of pubs.
This is not a restriction on the kind of beverage the pub can buy, which price it must sell, at which quantity, not a tax incentive, or subsidy.
No impact on incentives of economical forces is made.
Maybe less pub will be created for sure so it impacts the supply a little bit, but the effect of a licence limit the market way beyond such law would do.

Requiring an alcohol license on the contrary, change the economic incentives greatly, and artificially control the supply and demand of alcohol delivered by pubs and thus indirectly its price.
This is not a free market.



The good of the public is always the motto of government.
But there is an economical law that will never disappear : if you control price below their natural rate, then you create a shortage.
The manipulation, if there is, is nothing but the effect of the policy, not the cause.

There is no greed in that, just an economical law that take its root on the fact that every human behave for their own interest. This is not greed, but selfishness, a forgotten natural virtue that even state bureaucrate have despite saying the opposite.
Here is an interesting talk of Milton Friedman on energy policies https://www.youtube.com/watch?v=hj1974Ek4nw

I know that without government control the price of energy would raise.
But that would develop powerful economic incentives to develop alternative and self sustaining energy sources. This is the power of free market and competition.

What government wants to protect against is the chimera they call "natural monopoly", when a market naturally give rise to a monopoly, without coercion.
As I know that first coming into market have powerful advantages, this is not true that the market tends to stay that way for very long.
If a company abuse on its monopoly, resources will go to alternatives and work around.

The government often use the pretext of "natural monopoly" to loot some big businesses. The so called "anti trust" laws that is, we say, for the public.