USA Capitalism is no Longer working

Well, the current threat is that of COVID. And because people including Trump want to believe COVID is no big deal, we are now experiencing the predicted surge, but worse than ever, and worse than what other countries are experiencing in terms of rate of increase.

This, and the measures required to deal with it, could easily crash the economy to something that "can be drowned in a bathtub" as Grover Norquist put it.

The driver in this could be the number of people unemployed and underemployed who lack sufficient funds to survive. That would so reduce consumer spending that a huge part of the economy would collapse with companies shutting their doors permanently. People whose families are living on the street and who are watching them starve, become desperate. Crime would increase beyond anything we've ever known. We would be facing a total collapse of society.

People are already losing homes due to lack of income. Home sales are down right now due to the holiday season, so listings are nearly non-existent, but two or three months ago as I daily surfed Zillow listings I was absolutely shocked to find that approximately one third of listings were "pre-foreclosure" listings. I had never seen that before. And when the holidays are over we can expect those listings to return.

Imagine a society with run-away inflation and a huge portion, --maybe most, --people thrust into grinding poverty and reduced to begging to survive. Imagine the crime. And our best chance of avoiding such a fate lies in the hands of scientists in the medical and pharmaceutical industries and our hope for an effective vaccine soon.

But if that doesn't happen and things start to deteriorate, there is one last hope. There is enough wealth in this country to provide a baseline survival for everyone. And if it were to be redistributed equitably, everyone could stabilize as we wait for solutions to develop. The question is, is society primarily for people, or is it primarily for accumulation of wealth and the "right" to hoard it? Vote for the right to accumulate it and hoard it and you would get the worst scenario I've described. Vote for equitable redistribution and you stand an excellent chance of stability and the ability of entrepreneurs to survive now and to profit another day and gain back what they gave up for society.

The forces of capitalism would not be able to provide a solution to what I've described. If worse comes to worst, we must put capitalism aside in order to preserve society for another day and another time. That or lose it altogether. And remember, by his lies and his neglect of preparation and of wise action, Trump is the reason it has gotten as bad as it is today. And he has two more months to make it worse.

 

But like him, you are objectively wrong. It depends on what is taxed, and how. A tax on the value of a factor in fixed supply, like land and other natural resources, for example, cannot, repeat, CANNOT be passed on to consumers or anyone else. It simply reduces the market value of owning the resource. A corporate profits tax does not affect production decisions or pricing, only the return to shareholders. Google "tax incidence" and start reading.

 

The public sector gets it's funding from the private sector via taxation. The private sector does not build roads and railways and airports and bridges, etc. so they pay taxation to have the public sector manage these needs.

Problem is local, county and state governments are not currency-issuing governments. Each of these rely on taxation.

 

EBIT...earnings before interest and taxes.
NOPAT...net operating profits after taxes.

There will always be varying types of jobs from unskilled to highly skilled. Information and technology changes and so will jobs. And people have myriad potentials and interests so you can' force everyone into the same education and jobs.

Taxation for a company becomes a 'cost of doing business'. Most all business costs are passed onto the consumer in the prices of goods and services. When consumers won't pay the prices, many businesses are no longer viable. IMO it's not a good thing to burden business with more costs...

 

All costs, including taxes, are subtracted from revenue...the resulting profit must be acceptable to the business model. Businesses are not going to operate at 0% net profit. Whatever the consumer price might be, this price must pay for all costs (including taxation) and provide appropriate net profits. If the consumer price will not do this, then the business is not viable. Forcing higher and higher taxation on business is not a good thing...

 

That's just objectively and indisputably false. Businesses have to pay their costs whether they have any revenue or not. If they don't have enough revenue, the cost comes out of the owners' capital.

That's just objectively and indisputably false. The business model is merely an ideal, a plan. The universe does not change itself to match someone's plan.

That's just objectively and indisputably false. Businesses often operate at 0% and even negative profits: see Trump's tax returns. The airline industry as a whole has never made a profit.

That's just objectively and indisputably false. A business cannot make people pay more for a product or service than they are willing to pay. Rather, it is the business manager's responsibility to reduce his costs to less than the consumer is willing to pay for his product. If a landlord installs gold toilets in all his apartment buildings and tries to make his tenants pay for them, they will just leave, and he will pay the cost of the toilets himself, with no help from them.

That's just objectively and indisputably false. Many businesses rely on sources of funds other than consumer prices to remain viable: subsidies, financial maneuvers, loans, stock sales, etc.

That's just objectively and indisputably false. It depends entirely on what the taxation is being levied on, and how. Forcing higher and higher taxation of privilege on business up to its full rental value would be a very good thing -- as long as the same tax was levied on non-business owners of the same privileges.

 

But the taxation power COULD be transferred to the sovereign currency-issuing federal government, while states, etc, were reimbursed via federal grants.

As proved by this pandemic:

There is no need for the federal government, which has a currency-issuing monopoly via its treasury and reserve bank, to be saddled by $trillions of debt in order to maintain the economy in hibernation, while the mass of non-essential workers will be unemployed, but must still pay their living expenses.

The issue is the available resources and productive capacity of the nation, and the necessity to constrain TOTAL expenditure - whether public or private - to the limits of that said output.

Read: "The Deficit Myth" by professor Stephanie Kelton.

 

Oh, sure it's a good thing. Capitalism needs to die and you cite one of the reasons why. An economic system that doesn't create the many problems we face, but instead offers the possibility of actually solving them, is what's needed.

 

Put the tax back to 1950 - 1970 and all will be fine. It is that simple, but then the RICH cant Hoard, thus, it wont happen for another 25 years or people are literally starving in the streets. Then they will take the wealth. Sad the greed factor in American Globalists

 

That is just the same GARBAGE message the rich tried to use against FDR. Even back then the RICH had an Argument why their business was MORE important to NOT be taxed. If the business cant be profitable and pay hefty tax, while allowing the owner to POCKET a FAIR share, then someone else will come along willing to di it.

Your Argument comes from a place of the rich and wealthy trying to preserve every penny. Not from a worker willing to run the same business the billionaire is running at 1/100th the profit. These same Dribble arguments and angles have been heard to 100 years now.

The rich argument use to be, I am one man, he is ONE MAN, why should I have to pay more ? Of course that is when one guy made 2M and the other guy made 200k a year. Now, that difference is 2B - 20K and the argument makes no sense.

 

Subjective and disputable diatribe...

 

Federal grants...based on what...cities just ask for anything they need and a check arrives in the mail? It makes no difference since all taxes are paid by the consumers, meaning local tax payers will still be paying taxes but to the federal government. No matter who pays taxes and who receives taxes, deficit spending as SOP must be minimized and/or terminated except for actual emergencies.

Government has 2 choices in economic downturns; One, let all businesses and people work it out among themselves. And two, try to provide some economic relief.

In today's economic system the deficit is no myth...

 

I'm curious what are the problems with our current economic system?

 

How about the Laffer Curve?

 

Go ahead and force more and more taxes on business...try to fathom how this will work out for everyone...

 

PROBLEMS that seem to defy resolution! ....

Inadequate healthcare
Global warming
Reluctance to work for alternative energy
A minimum wage that should have been incremented with inflation
The highest prison population in the world per 100,000 population
Systemic racism which acts as a buffer to keep the worst economic oppression off whites
Extreme wealth and income disparity causing increasing poverty
Citizens United and other barriers to fair elections
Campaign financing laws favor the rich who then buy policies they want
Denial of women's right to control their own reproductivity
Gambling in the economy that contributes nothing to society, like hedge funds and derivatives
No solution available for companies that are "too big to fail"
Failing education with pockets of superior ed. for some who can afford it
College education becoming more and more for only the rich
The insanity of more guns in circulation among civilians than the total population
Continuing growth of a severely bloated defense budget
Inability to secure Social Security
Manipulation of tax cuts vs. program cuts to eliminate an increasing number of socially-beneficial programs, harming the people while benefitting the rich
Crumbling infrastructure
"Fake News" is killing us
Clean water crisis


Does that give you a start? ALL these problems are the result of capitalist economics, as is the inability to solve them.

 

No, that describes your objectively -- and proved -- false claims.

 

And it would be the geoism that China learned (but sadly, very imperfectly) from Hong Kong, not socialism.

 

Huh?
care to make that statement clear? EXACTLY WHAT are you saying? It's unclear to me.

 

No. Based on an assessment of economic conditions, bearing in mind the availability of real resources and the nation's productive capacity.

That's what you were taught. It's nonsense, following on the Powell memo:

https://reclaimdemocracy.org/powell_memo_lewis/#:~:text=In 1971, Lewis Powell, then a corporate lawyer,by President Nixon to the U.S. Supreme Court.

The Powell Memo (1971) did not become available to the public until long after his confirmation to the Court. It was leaked to Jack Anderson, a liberal syndicated columnist, who stirred interest in the document when he cited it as reason to doubt Powell’s legal objectivity. Anderson cautioned that Powell “might use his position on the Supreme Court to put his ideas into practice…in behalf of business interests.”

Note the underlined. Government was no longer required to ensure full employment, rather control of inflation would be uppermost. Hence the triumph of Friedman's neoliberal monetarist orthodoxy, and the subsequent NAIRU nonsense.

The first was the recommended conservative approach to deal with the GFC, ie bring on another Great Depression, to 'solve' the problem...

The 2nd is the progressive approach, except these progressives, like you, erroneously think the economic relief must be paid for by taxing or borrowing from (the money bags in) the private sector, resulting in the huge government deficits we are now witnessing.

But it is: but if you don't want to learn, that's your business.

Hint: In this pandemic, the sovereign currency-issuing government COULD authorize its own treasury and reserve bank to pay for the essential living expenses of unemployed workers, by changing the digits in those workers' bank accounts. No 'government deficit' needed, to deal with the necessary economic lock-down during the pandemic, since all the necessary essential resources/services remain available - with some planning and limitations on the free market - during the enforced lock-down.

 

We haven't had capitalism since we left the gold standard in 1971

 

http://bilbo.economicoutlook.net/blog/?p=46354

"...the Powell Manifesto on August 23, 1971. The US Chamber of Commerce commissioned lawyer, Lewis Powell, to craft a strategy to restore the dominant position of corporate America, which had felt diminished by the gains made by workers and citizens from social democratic policies. The memo was published as the – Attack on American Free Enterprise System. The agenda spelt out by Powell in the memo was wide-ranging and was subsequently implemented with spectacular success. It formed the basis of the neoliberal thrust against the gains made by workers and citizens, in general during the full employment era, which was supplemented by the welfare state of varying coverage and generosity depending on which country we consider. The Powell memo aimed to ensure that corporate interests were dominant in public decision making. The blue print developed by Powell is continually recycled and developments during this pandemic are no different."


You have drawn the wrong conclusions: it is the triumph of neo-liberalism, not the loss of capitalism, which has led to the present inequality emergency.

 

I didn't draw any conclusions.... I made a statement about how currency backed by gold, a gold standard is a requirement for capitalism. You are the one drawing conclusions and incorrectly so.

 

In any case you are wrong to assert "a gold standard is a requirement for capitalism".

In fact, there is not enough gold in the world to distribute and facilitate trade between the world's trading nations, in a manner that will accommodate all trade whether said nations are deficit/surplus trading nations.

[The US was the world's largest creditor nation in 1950, on the way to becoming the world's largest debtor nation now; that's why Nixon was forced to abandon the gold standard].

In making your erroneous claim, you are inferring that out present parlous state is due to the loss of capitalism. It is not. It is due to the triumph of neoliberalism, as identified in my post #97.

"...the Powell Manifesto on August 23, 1971. The US Chamber of Commerce commissioned lawyer, Lewis Powell, to craft a strategy to restore the dominant position of corporate America, which had felt diminished by the gains made by workers and citizens from social democratic policies. The memo was published as the – Attack on American Free Enterprise System. The agenda spelt out by Powell in the memo was wide-ranging and was subsequently implemented with spectacular success. It formed the basis of the neoliberal thrust against the gains made by workers and citizens, in general during the full employment era, which was supplemented by the welfare state of varying coverage and generosity depending on which country we consider. The Powell memo aimed to ensure that corporate interests were dominant in public decision making. The blue print developed by Powell is continually recycled and developments during this pandemic are no different."

 

Of course it is, 100% can't have capitalism if you don't have a gold standard, fiat causes massive inequality this then makes socialist policies necessary.

Going BACK to a gold or Bitcoin standard will take us back to Capitalism. That's what we must do.