I would add that we wouldn't have many things if it weren't for the size of some of the corporations. A mom and pops car manufacturing company wouldn't do very good. Same with computers and computer parts. Much cutting edge technology for that matter. The economics of scale save us money in many instances as well.

What I'm against is paying the CEO's and upper management so much money. The top of a corporate structure is an autocatalytic feedback loop where, since the CEO is directly responsible for making the board of directors good money indirectly through stocks, they see fit to reward him much more than he deserves.

The worst of the industries, the ones in which almost all of my complaints come from, are food, drug, healthcare, and financial. Financial includes insurance which inflames healthcare. It's interesting to note that these industries are the ones most closely tied to our individual wellbeing, and thus are able to screw us over more personally. Along with wellbeing, you could say these industries supply "needs" rather than "wants". A 30 dollar overdraft fee irks me just as much as a $3,000 ambulance ride.

Wal Mart is a typical, and certainly high profile, example of capitalist workings. In a sense, Wal Mart is successful in what it does. It markets common consumer items through a chain of department stores.

A capitalist might say that it is successful because it creates good value, and because it is embedded in a self-correcting system which elevates companies like this one.

But there tends to be an upside and a downside to any large undertaking. Wal Mart is well known as a tough bargainer with its suppliers, and for that matter, with its employees. In its relentless search for the lowest price, it has found China to be its most important supplier. And so instead of supporting a shoe manufacturer in the US, for example, the supplier is now in China.

We have all heard the story of Chinese workers labouring away in sweatshops for fifty cents an hour. Wal Mart, along with other western firms and Chinese entrepreneurs are factors in these working conditions. Yes, some major companies, including Wal Mart, make noises about supporting better conditions in China, and even send out inspectors now and then. But this is pretty much a sham, because profits are to be made, and there is an oversupply of workers. The situation benefits all except those on the bottom rung of the ladder, and so it endures.

So far we have a double hit; more unemployment in the west, lower wages and hence standard of living in China. And I can already anticipate at this point the capitalists that will soon be hammering on my door, and exclaiming: But wait, that’s globalization! Its creating greater efficiencies by encouraging people to do what they do best. Cheap labour can move to Asia, and back here we will concentrate on higher value products, IT and aerospace for example. Fine to a certain extent, but this is a race that has an end, as we are beginning to find out. “What people do best” is becoming a hazy concept when Brazil has a thriving aerospace industry, China is hoping to sell high-speed rail technology to the US, and India is a major software developer. Where to move to in order to create jobs when we are all coming level? Financial services have become a large sector of the economy. Maybe there will be work selling ever more creative investment products. Ah, on second thoughts, maybe not, that one’s been done. When places like China and India no longer need our technology or our high-value products, markets will shrink, and then we will have some soul searching to do.

Hit number three occurs when those now unemployed get a job at Wal Mart. Their business policy is to hold down wages and benefits, and prevent union organizing by any means short of gunfire. Well, you may say those people aren’t worth much, what do you expect, they just work in a department store. Fair enough, but from the macroscopic viewpoint, a significant decline in wages in an economy means less purchasing power, meaning less sales for companies, and less money for wages and taxes…well, you get the picture: less of the middle class life style that is supported by workers earning mid-range salaries. I think it safe to say that statistics already reflect this; those with middle class incomes are becoming a shrinking segment of society.

Wal Mart delivers a fourth hit, although this one is a little more obscure. One of the factors in its success is the relatively low cost of energy in recent years. That makes it practical to ship products around the world. In a world of depleting energy supplies this may not be the best use of oil and other fuels. From a local perspective too, Wal Marts can be a distorting element in communities. Their pattern is usually to build a huge box store well away from community centers, going for the cheapest land, thereby not only increasing auto use, but also draining business away from traditional stores. I won’t even get into the esthetic arguments of building communities that consist of massive boxes surrounded by endless tarmac and freeways, as apposed to livable, walkable cities.

So what does Wal Mart deliver, on the positive side? It certainly makes money for its owners. I understand that the Walton family are among the richest people in the world. I don’t personally feel that this return fits with the idea that capitalism provides a return equal to one’s contribution to society. I hope I am not being too cynical here in saying that the idea of having department stores to sell knick-knacks to consumers is one that doesn’t require a large volume of creative juices, a high degree of education, or even a lot of experience in the business world. I am sure lesser individuals would take up the mantel if the Walton’s bowed out. Even Cuba has department stores.

Of course there are the low priced consumer goods. The four-dollar T-shirts. But I wonder what the reply would be if people were asked in a survey to weigh the above concerns against the benefits of cheap products. People may shop at Wal Mart, but often there is not much choice from either Wal Mart or something similar. Others, I am sure, are simply uninterested in the issues. I know what my answer to that survey would be.

Corporations were never designed to deliver optimum benefits to societies. They were devised as a way of making money. These are two objectives that don’t always coincide. This idea of self-righting is based on the eighteenth century writings of Adam Smith, who presented the concept of the “invisible guiding hand”. It was a simplistic statement, written in much simpler times. There is no doubt some self-regulation in the market, but it tends toward the trivial. Johnson has touched on this in his post. There may be competition among small businesses with a level playing field (although often the level playing field is provided by government). But the idea that the economy in the world today is a self regulating market place, best free of all interference from government, is about as nutty as saying the crew of a supertanker under way may as well go below, have a few cool ones, and play a few hands of blackjack, because the ship will look after itself.

On a bicycle trip in 1977, I rode through Springfield, Missouri and saw my first Wal Mart. I thought, "what a podunk store and a blatant attempt to copy K Mart. That'll never get anywhere." In the early years of Wal Mart, there used to signs in every store announcing how many U. S. jobs the company was supporting by buying American. Now try to find anything (besides food) in Wal Mart made in the U. S.

Our mania for low prices does have bad effects, I agree.

... by people who don't know what they're talking about. There's no evidence that Obama believes in in socialism, which is defined as follows.

Though Obama is moving the US in the direction of socialism, that doesn't make him a socialist. Similarly, George Bush's polices were closer to fascism that his predecessors' policies, but he wasn't a fascist.

There's a continuum of beliefs between capitalism and socialism, in terms of how much control the government has over the economy. My views are somewhere in the middle, but to the left of Obama's.

Capitalism can fuel a powerful economic engine, and there should be a capitalist component of society. It encourages innovation and hard work. With capitalism, more capable businesses tend to propsper while less capable businesses fail, which is a nice dynamic.

However, capitalism has two major flaws. Whenever feasible, many business will increase profits by raising prices, providing worse products & services, exploiting their workers, or deception. In such situations, government regulation or ownership may lead to better results. Also, capitalism can lead to immoral situations, such as child receiving shitty health care because their parents can't get a decent job.

Considering the impact on a case-by-case basis is the best way to decide what's best. For example, people have high regard for police and firefighters, even though both of those organizations are part of the government. It's hard to argue that privatizing them would be an improvement. It's not practical to have competition between multiple policing and firefighting organizations in a given geographic area, and in the absence of competition a private company would focus on cutting costs, regardless of the consequences.

On the other hand, restaurants are successful institutions under capitalism, because there's intense competition. A restaurant that charges too much or serves low-quality food will go under. However, we still need health inspections, worker safety rules, and a minimum wage, in order to address concerns that competition doesn't resolve.

Ideally, society should have a balance between free-market capitalism and government control. A pragmatic approach leads to much better results than the policies advocated by the extremists at either end of the spectrum.

I'm not sure I would charaterize your views as to the left of Obana's. What you described is what Paul Samulson (mid-20th century Economics Professor and textbook writer) called "Mixed Economy." Meaning a mix of market control and government control. I think that position has become main-stream these days. I doubt any true centerist would have a problem with your position.

This article from National Review Online seems a rather insightful piece. I loved this last line: “But few should want the ref to suit up and play the game.”

http://www.aei.org/article/101956

Capitalism vs. Capitalists

By Jonah Goldberg

Five years ago this week, my former boss William F. Buckley started a column thusly:

"Every ten years I quote the same adage from the late Austrian analyst Willi Schlamm, and I hope that ten years from now someone will remember to quote it in my memory. It goes, 'The trouble with socialism is socialism. The trouble with capitalism is capitalists.'"

Well, Bill is gone now, but his memory lives, and I'm sure he'd forgive me for taking up his request five years early.

Schlamm's point is still relevant, even though the kind of socialism we're dealing with is less doctrinaire. But it also distorts the issue somewhat. One might just as easily say that the problem with socialism is capitalists, too.

If by "capitalist" you mean someone who cares more about his own profit than yours; if you mean someone who cares more about providing for his family than providing for yours; if you mean someone who trusts that he is a better caretaker of his own interests and desires than a bureaucrat he's never met, often in a city he's never been to: then we are all capitalists. Because, by that standard, capitalism isn't some far-off theory about the allocation of capital; it is a commonsense description of what motivates pretty much all human beings everywhere.

And that was one of the reasons why the hard socialism of the Soviet Union failed, and it is why the soft socialism of Western Europe is so anemic. At the end of the day, it is entirely natural for humans to work the system--any system--for their own betterment, whatever kind of system that may be. That's why the black-market economy of the Soviet Union might have in fact been bigger than the official socialist economy. That is why devoted socialists worked the bureaucracy to get the best homes, get their kids into the best schools, and provide their families with the best food, clothes, and amenities they could. Just like people in capitalist countries.

It's why labor unions demanded exemptions and "carve-outs" from Obamacare for their own health-care plans. And why very rich liberals still try their best to minimize their taxes.

The problem with socialism is socialism, because there are no socialists. Socialism is a system based upon an assumption about human nature that simply isn't true. I can design a perfect canine community in which dogs never chase squirrels or groom their nether regions in an indelicate manner. But the moment I take that idea from the drawing board to the real world, I will discover that I cannot get dogs to behave against their nature--at least not without inflicting a terrible amount of punishment. Likewise, it's easy to design a society that rewards each according to his need instead of his ability. The hard part is getting the crooked timber of humanity to yield to your vision.

And it's also why the problem with capitalism is capitalists. Some people will always abuse the system and take things too far. Some will do it out of the hubris of intellect. Some will do it out of the venality of greed.

I bring all of this up because many in Washington seem convinced that the solution to the problem with capitalists is always less capitalism. To be sure, a free-market society is in some sense a government program. The government must prosecute criminality, enforce contracts, and demand that the rules be observed. Few lovers of free markets are so laissez-faire as to want to strip the government of its role as referee.

But few should want the ref to suit up and play the game.

Washington's solution to Wall Street's problems is to get Washington deeply, deeply involved in Wall Street. So involved that the savvier capitalists will recognize--once again--that the safest bets are not to be found in the vicissitudes of a fickle marketplace, but in gaming the system run from Washington. The "reform" coming down the pike will put bureaucrats in charge of investors. If bureaucrats were better than investors, they wouldn't be bureaucrats. The government will decide which firms are worthy--"systemically important"--and which are not. Those that are will use their official "importance" to game the system. Instead of eradicating "too big to fail," we will systematize it.

We are fond of saying that the answer to free-speech problems is more free speech. But we seem incapable of grasping that sometimes--and only sometimes--the solution to capitalism's problems is more capitalism.

Jonah Goldberg is a visiting fellow at AEI.

You can get dogs to do things, including not chasing squirels, probably ball-licking, though i never had the need to attempt this. And you would never want to do that by inflicting a terrible amount of punishment.

This doesn't speak to his points, but it is where i stopped reading. Just like everything else, people have a tendancy to wade right into the middle of things without knowing what it is they are getting into. Dogs are a great example. People get any old dog, for any old random reason with no idea of what kind of dog they are getting, what kind of maintenance they are in for, or what kind of energy level they should expect. They also, very rarely, understand what it is that they need to do to get their dogs to behave the way they want them to behave.

If Mr Goldberg owned a dog, I bet it would be a pit bull. A mean one. After all, why waste time with all that fluffy stuff like relating to animals? No profit in that, so it must go against human nature. Better to have a dog that produces value, like a guard dog.

I thought I might go along with what was being said there, until I reached the end of paragraph five. But then the tired clichés started; the first one says essentially: I don’t really care about anyone else, but if they flick a dollar bill in my face, then I’ll smile for them. Flick a few more in my face, and I’ll do tricks. One could consider this cynicism, but my guess is that Mr Goldberg, if he has lead an academic life away from some of the messier strains of existence, is not all that cynical. He is probably just repeating the mantras of a currently popular philosophy.

Ah yes, and those anemic Europeans. I can just imagine them flopping all over the place with their pasty white faces, slumping over in their chairs in elegant sidewalk cafes, falling over on the front seats of their BMWs, and lying prone against the tracks of their high-speed rail systems. Maybe, if we go over and visit, we should take them a few Starbucks grande size coffees. That would wake them up. Or we could flick some dollar bills in their faces; maybe that would get a good response. A lot of people do visit Europe every year; millions and millions. Most go to see the society they have built over the years, and many come back wishing the place they are from looked more similar. Come to think of it, they have managed to stay awake somewhat anyway. Airbus is giving Boeing a heck of a run for their money, and has been pioneering new forms of aviation technology. Countries like France, Denmark, and Sweden are well on their way to energy self-sufficiency by using nuclear and renewable technologies. Over here, freeways are still popular. Even little Finland has manned the workstations long enough to sell the Nokia brand cell phone all over the world. And they are managing to do these things while receiving subsidized health care, pensions, and taking six weeks vacation a year. Hmm. Maybe they have been taking vitamins while we weren’t looking.

“Hard socialism” i.e. communism certainly has failed. The Soviet Union collapsed under the weight of corruption and cynicism. Mr Goldberg would like government to leave Wall Street alone, but if we gave it some thought, what two terms would be very descriptive of the attitudes of many on Wall Street?

Many are indeed greedy, and see materialism as the only worthwhile value to have. Not surprisingly those who do look on government with distain, because that is definitely one authority that poses a threat of reducing their consumption and excess. If those same individuals could influence the larger public into believing that government is “bad”, and should be strictly limited, now that would be to their advantage, wouldn’t it?