JohnRoberts said:
Ding ding ding... Yes, free markets are the most effective way to allocate resources. Both Adam Smith and Hayek talk about letting markets allocate resources instead of government planners.
In my opinion you're committing a common "mistake" above. You appear to believe that "efficiency" is an inherently positive value. But it is not. "Efficiency" is a "value neutral" description of a process. To use an admittedly crude and often disliked example we could say that the Nazi's were very efficient at killing people. That doesn't make "efficiency" a good thing obviously. In that context it was a bad thing.
In the context we're discussing you're now implying that improved efficiency is what free markets give us, efficiency at allocating resources, and that this efficiency is good. Well, good for whom? It's certainly good for businesses, on that we certainly agree. But businesses, and in fact the whole capitalist system, are intellectual constructs that are meant to serve mankind, not the other way around. So the real question is how do we evaluate whether or not people in general are benefitting optimally by using this system?
Suppose we have a community of 1,000 people, and the capitalist system generates a wealth measured at $1,000,000. So now we look at the distribution of that wealth: the top 10% of people, 100 people, get 75% of the wealth (let's just say they divide that equally), then they all get 7,500 each. The remaining 900 people get about 275 each. Now let's say we compare that society with one that's exactly the same but has a system where all wealth is divided equally, and as a result it's only half as "efficient" and thus generates a wealth of only 500,000: everyone now gets 500, almost twice the wealth for half the efficiency for most people. For the 90% of the people not at the top this system was more efficient at giving them what they want. And it just gets worse if we add another 10-20% to that top.
See my points here? 1: If you want to argue that "efficiency" is good and the most of it can be had in capitalism then you need to put it in a context that is relevant to human beings. 2: Do we choose a system based on what's best for the few or what's best for the majority?
> And just to be 100% clear; I'm not advocating everyone getting exactly the same amount of money regardless of anything.
JohnRoberts said:
PS: I thought about doing my homework on Sweden but got busy... I do notice they are in the news recently for dropping their interest rate to 0% So apparently connected enough to the world economic system to suffer the same malaise
Sweden is a constitutional monarchy organized as parliamentary democracy. According to wiki Sweden is the 9th largest arms exporter, and recognizes the palestinian state. That sounds interesting in juxtaposition but doesn't mean anything special, exports are good, and being liberal is not a crime. I need to do more homework.
I am a Swedish citizen living in the US actually.
Sweden post-WWII did very well and decided to follow what was called a third-way-policy, effectively splitting the economy into one part which was called the "private sector", a capitalist sector where individuals and businesses could do business, and a "public sector", in which the state ran things. The public sector owned and operated education, health care, emergency services, infrastructure (roads, railways, airways etc), IT (television, telecom, internet), mining, energy (nuclear and water mostly), the military, liquor sales, driving licensing etc. A huge sector in other words.
This worked extremely well and was what led Sweden to become an example for a large part of the world since citizens got free health care, free eduaction, good housing, decent pay, unemployment benefits etc. Pretty much all of the population. With the trend of the 80's-90's however Sweden got right of center governments which decided that integration with Europe/the rest of the world and liberalization of trade and financial markets was the sh!t. Ergo the start of selling off public property.
Now, we've seen in recent years scandals where kids show up to school to see a note on the door saying it's out of business, all while the owner is making millions. Politicians act surprised and make statements about the responsibility of business owners and perhaps reviewing regulations etc, but it was all foreseeable. Sweden slipped in the latest global study on education. We see poorly operated infrastructure. What began as modest fees for health care have steadily crept up with no increase in the quality of service. Corporations such as IKEA moved abroad as soon as possible.
As far as I can see Sweden is an excellent example of what happens when you allow market forces to decide what happens with the allocation of resources. Of course Sweden has done well on a national level, but it gets back to my earlier point that it's all relative to what one feel is important. The wealth-gap increased in Sweden while quality of a lot of services stagnated or decreased.
Capitalism is not the only system that produces wealth, and capitalism isn't the best system at distributing resources in a way that benefit people the most. The minimum wage will either slow down or speed up the progress towards an inevitably problematic situation in which we'll have to either do something else or suffer great turmoil first and then still do something else.
