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#capitalism is not...
* ... large corporations
* ... greed
* ... the rich taking advantage of the poor
* ...unfair labor wages
capitalism is...
*... fair market prices determined by value
*... markets that are not and can not be manipulated
*... fair wages for fair work based on the value contributed
*... poor people having equal chance as rich to market their skills
*.... a free market, a fair market.
I'd add to that list:
*... value determined by the market participants
Also, "free" as in "freedom", (or free beer, too, if that brings in more customers).
(clarification - no need to respond)
I just had a brewery favorite my "free beer" toot and thought others might have misunderstood the metaphor also.
"Free beer" in the economics context means something like UBI or other similar transfer to the general population so wealth is more evenly distributed and more people can participate in markets so the markets function better ("more customers").
Kind of like "Build Back Butter", something like that.
@Pat UBI sounds like a wonderful idea. My proposal for an UBI implementation is where we take 75% of the money from every worker's pay check and give it with no conditions asked backed to their employer. That way the employer has more money to pay wages with and naturally will give everyone a raise!
The idea is to provide a mechanism whereby the effects of concentrated wealth, as we discussed elsewhere in this thread, could be mitigated, so that there will be more participants and then the markets and price discovery would function better.
Your proposal (facetious, I assume) would do the opposite, making fewer participants.
Just a few basis points on all gross income, no deductions, no exemptions, would be enough to fund such a thing. If the tax is a flat tax, no loopholes, and the UBI is distributed in a similar manner with no favoritism, and so as to increase market participation, that's a good thing. And the government can't muck things up. It's automatic. Everybody pays a tiny fraction of income.
It's better than "Build Back Better" where all the polititians and government cronies decide who gets the money in a corrupt fashion.
@Pat yea my example was facetious.
As I said earlier concentration of wealth is not an issue as it doesnt reduce the participants as you suggest. Wealth is counter intuitive because the second you start thinking of it as a fixed value that can be redistributed at all is when you fail (IMO) to understand it.
When you distribute the wealth artificially the wealth effectively evapoates because you have pushed the wealth from investment vehicles (what the wealthy mostly do with it) to non-interest bearing assets, largely things which have little or no resale value, at least in part. You effectively move the wealth out of investments designed to generate wealth and into designer shoes, or new video games and other things which have little or no value. The companies make some profit off of it, so the wealth doesnt disappear entierly. But ultimately it does far more harm than good.
People buying lots of junk is not a healthy economy. People investing in companies and using a small portion of wealth generated to buy some luxury things is fine however. Thats why when the wealthy have a lot of money, at least in a healthy society, it generates the most wealth and indirectly creates the most prosperity for the people (who tend to share in the profit from these ventures via their 401K or even as an employee by it producing more jobs).
People buying "junk" is bad for the economy but people buying "luxury things" is fine? It's a free market, so none of it is "junk", it all has the value the the market participates have placed on it. It's all worth exactly what the market says it's worth. But that value, that price discovery, happens best when there are more buyers and more sellers. Not all of the UBI recipients will spend the money. Many will use it to get an education, start a small business, etc. The ones who make the right decisions will do better. That's how markets work.
@Pat No people buying luxury things is junk as well. But thats just it, wealthy people do buy luxury things but generally its a VERY small percentage of what they buy. The vast majority of rich people got there not by wasting money but by investing and using a small portion of that to buy luxury things. It just looks like a lot because they have so much, but in terms of percentage of their income its quite small usually. If a rich person was wastefully spending on luxury in terms of being the majority of their income they would have never gotten rich.
Keep in mind rich people who got rich through luck or means other than investment, like some musicians can be the exception rather than the rule.
However poor people generally spend much much higher percentage of their income on "junk" relative to the percentage they invest. In fact most poor or middle class people are wasting their money on cars, fancy shoes, or expensive phones and leave little if any for investment. So their ratio of waste is quite high usually.
As for it all being worth exactly what the market says its worth... worth is not the same as wealth. If I buy brand new shoes for 200$, yes it is worth that... new. The moment I put them on my feet it now drops to being worth what, 50$. That is 150$ that literally goes up in smoke in an instant. So buying those overpriced shoes means you are destroying wealth, not creating it. Buy a stock for 200$ though and while your buying something of the exact same worth it is very unlikely to drop 75% in a day. Yes you might loose money but that is balanced by the fact that you might gain money as well. So it is where the wealth generation lies ultimately.
As for using it to start a business or get an education... well putting aside UBI isnt nearly enough to pay for those things, yes some will. But they will be a small minority. Instead of giving people millions or billions in cash and seeing 0.1% of them use it to tip the scales to go off to college you'd be better served to just use taxes to make college free for everyone. Then you know 100% of that money is going to actually improve someones skills and therefore long term generate real wealth from that money.
Yea this isnt the case here. We arent talking about utilitarian shoes or cars. We are talking about shoes that are "cool" that cost 4x more than they need to and are in no way particularly high quality in terms of the their wearability. They are usually fashionable. In terms of cars these arent cars they need to go to work or practical cars. They tend to be "pimped out" and really serve them no purpose as they live and work int he city anyway.
I am specifically refering to expenses that are obviously wasteful and not good purchases by any measure.
I am talking about the poor, describing the people I grew up with anew well. These people had no jobs, mostly sold drugs to make what money they did have. They had homes paid for by the government with section 8, got their food with food stamps (or sold their food stamps for money) their children went hungry and couldnt afford their child support. Meanwhile what little money they did make from drugs or something else was wasted on shoes or a pimped out car.
I know they were poor because despite the shoes I have been in their homes, been friends with them, and knew well their situation.
Attached is a picture example of the sort of sneakers inner city kids in poverty are often seen wearing... You cant justify a $1,000+ expense on shoes as "it will last longer".
Yes, they would often brag about how much they spent on their shoes. Buying really expensive shoes is a coolness factor among these communities and they would let you know just how much they spent and even be proud of it.
Yea they could. But these kids know the brands and the specific makes. There is usually one very specific brand and model of shoe that is the cool one that month and people know full well if you bought that one or some cheaper model.
That said the shoes are even just one example. I have seen countless examples of bad money management not just from those in poverty but even just the lower-middle class and middle class in some cases. At least in america. Everyone buys a house 3x bigger than they need or own more cars then they need. Very few people outside of the well-to-do have anything that approaches good money management skills honestly.
@freemo @Pat I don’t think these people are poor actually.
Some people may appear to be poor because they are working class, and are not really educated, but they still make money because you can actually make a lot working some manual jobs.