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[Grakelin]

I suggested we move this out of the G20 thread, so I'll take it upon myself to actually make the thread.

Somebody (I think it was ed boy) was confused that I suggested people don't find Capitalism to be fair. If I interpreted him correctly, it's because he feels that the economic system is fair, but some people suck and so don't get to be as good (a common defense of the flaws in the system).

My response to this:



Not everybody who is rich got their on their own accord. In fact, most people who become rich didn't. Some people inherit vast fortunes from their parents. Those who come from less fortunate backgrounds are at a marked disadvantage. This alone should indicate that the system isn't fair.

But somebody is certain to say "Ha! They can go to university and make a better life for themselves!"


Except that this isn't Sweden, and university costs money. You might be awesome enough to get a full scholarship, but that's the exception and not the rule. If you don't have the money to go to university, you'll have to get a loan, and loans inhibit your ability to succeed later in life.

[nenjin]

Except there are plenty of people who never used college or inheritance as a means of advancing up the economic ladder.

Entertainers.
Athletes (to some degree.)
Inventors.
Scum (The Girls Gone Wild Guy)
Comedians. (Dave Chapelle forevah)
Many business men and entrepreneurs.

And on.

I'm not claiming capitalism is fair....but what it means depends on where you come from. From middle class households, I think we tend to believe it is about college, and degrees and fairness. I think it means something very different to those from other social strata, including the top 10%.

Now, if we want to talk political power....yes, then inherited wealth and capitalism definitely lends itself to an unequal distribution of opportunity.

[DJ]

Yes, but all those got lucky on the talent lottery. An averagely capable guy born to a poor family will die in poverty, though he might spend most of his days hard at work. A completely useless rich brat that contributes nothing to society will remain rich, as long as he leaves management of his assets to people who know what they're doing.

[ed boy]

I think you misunderstood what I meant by fairness and equality. What I originally said in the other thread was:

Capitalism isn't fair? I would certainly say that it isn't equal, but that's because the people within the system aren't equal. If it's working properly, capitalism should be extremely fair.

Firstly, for the purposes of this post, I shall clarify my future use of the word "asset". I will use this word out of its usual meaning in order to communicate a concept that I currently do not know of a more suitable word for. I will use asset to mean any qualities a person has, and any posessions they have (which I will refer to as qualitative and quantitative respectively).

When I said "fair", is meant that all people would be treated the same regardless of their assets. For example, the government would tax richer people to the same degree as poorer people.

A very tricky portion of this matter is that a totally fair society would not differentiate between qualitative and quantitative assets. Many goods and services (such as education) would be best allocated to those with strong qualitative assets, but left to market forces the allocation would be inefficient. Indeed, one of the aims of the government would be to redistribute the quantitative assets (which are a great deal more movable) through methods like subsidising education, to ensure that total efficiency is maximised.

[nenjin]

I know plenty of small business owners that (at least up until the recession) were doing good because they simply saw a need and filled it. They weren't especially talented, but they took action. Capitalism still rewards taking risk and competency, and there is still the 1% path to super riches through that. It's not fair, but it's not a total lie as detractors like to paint it.

And for the record, wealth is not permanent. I say this coming from a family whose head was a self-made millionaire back in the 50s, an orphan who eventually ran three restaurant chains and was a leader in his community. Our family still enjoys reasonably large bankroll. That doesn't make me rich, at all.

It means I enjoy a very nice Christmas every year. The rest of my family, including my father, survives on their own means and doesn't benefit from the family money except in cases of medical or legal emergencies. Maybe I have a different perspective on it because I literally got fed a rag to riches story every year growing up...and had the living proof in front of me.

A very tricky portion of this matter is that a totally fair society would not differentiate between qualitative and quantitative assets. Many goods and services (such as education) would be best allocated to those with strong qualitative assets, but left to market forces the allocation would be inefficient.

The same can be said for distributing goods and services to everyone regardless of the quality of their assets; is that not also a waste of resources, to under feed/serve those that will produce the most? The problem is that we overvalue some assets and undervalue others in our capitalist society; we treat CEOs in this country like they are doing some of the most technical, specialized work ever created. They get paid disproportionately to what they actually do, because at some point in history profits vastly exceeded the work required by executives to achieve it.

We totally under value education at the grade school level. We totally under value manual labor, AND many specialized, scientific skills. We over value lawyers, entertainers, top-level administrators, real estate and investors. But that's all because of the sheer dollar value each returns, while ignoring the fundamentals the rest supply. There's a reason kids today don't care for shit about a basic education, we've taught them that's not where the money gets made. And then we cry bloody murder because we've got some of the stupidest kids on the planet relative to their opportunities.

[Virex]

Yes, but all those got lucky on the talent lottery. An averagely capable guy born to a poor family will die in poverty, though he might spend most of his days hard at work. A completely useless rich brat that contributes nothing to society will remain rich, as long as he leaves management of his assets to people who know what they're doing.

If you like it or not, that's the entire point of capitalism: Enhancing the difference between the haves and the have-nots so that the haves can create as big a flow of value trough the entire economic system as possible without being held down by the have-nots. According to some theories this should increase the flow of value for all people within the economic system ("experiments" conducted in South America in the '70 indicate that this might not be true though, so make of it what you will)


Note that it's usually best to at least reserve a bit of difference between value and money, since value can fluctuate strongly even over short periods of time, while the total amount of money in the world only rises quite slowly. To understand this, think of a diamond mine that suddenly strikes the mother load. Hauling all those diamonds up greatly increases the amount of value the diamond mine company has. They can sell them to accumulate money, but that money has to come from the buyers. So they have created a lot of value but no money has been created. Due to the coupling between the relatively constant amount of money and the fluctuating amount of diamonds, this also causes a price drop for diamonds at least locally and probably across the whole system.
There are other differences as well, such as the high portability of money compared to most kinds of value and the fact that value usually diffuses slower trough the system then money does.

[Cthulhu]

I think you misunderstood what I meant by fairness and equality. What I originally said in the other thread was:

Capitalism isn't fair? I would certainly say that it isn't equal, but that's because the people within the system aren't equal. If it's working properly, capitalism should be extremely fair.

Firstly, for the purposes of this post, I shall clarify my future use of the word "asset". I will use this word out of its usual meaning in order to communicate a concept that I currently do not know of a more suitable word for. I will use asset to mean any qualities a person has, and any posessions they have (which I will refer to as qualitative and quantitative respectively).

When I said "fair", is meant that all people would be treated the same regardless of their assets. For example, the government would tax richer people to the same degree as poorer people.

A very tricky portion of this matter is that a totally fair society would not differentiate between qualitative and quantitative assets. Many goods and services (such as education) would be best allocated to those with strong qualitative assets, but left to market forces the allocation would be inefficient. Indeed, one of the aims of the government would be to redistribute the quantitative assets (which are a great deal more movable) through methods like subsidising education, to ensure that total efficiency is maximised.

The word you're looking for to define qualitative assets, I believe, is cultural capital.

[Renault]

So, it seems we're more discussing the philosophy of resource allocation than the mechanics that drive a market, right? I can't actually figure out what people are discussing. That some people are born with more ability/wealth/whatever than others? That seems self-evident. This thread seems to be a handful of people saying that with a different spin to it.

[If you like it or not, that's the entire point of capitalism: Enhancing the difference between the haves and the have-nots so that the haves can create as big a flow of value trough the entire economic system as possible without being held down by the have-nots. According to some theories this should increase the flow of value for all people within the economic system ("experiments" conducted in South America in the '70 indicate that this might not be true though, so make of it what you will)

I don't think I've ever read that as being the entire point of capitalism. Where did you get that? It's sounds like a deeply-corrupted explanation of supply-side economics, but only barely even that.

As to the diamond analogy, the money supply really isn't what controls the price of diamonds, so much as the classic intersection of supply and demand. But even diamonds aren't a great example to use because thats a constricted market--there is a huge supply, but its dominated by a handful of firms, who only sell a small amount at any given time. Like a cartel, or monopoly. So in that manner, you really don't want to use diamonds as an example.

[DJ]

If you like it or not, that's the entire point of capitalism: Enhancing the difference between the haves and the have-nots so that the haves can create as big a flow of value trough the entire economic system as possible without being held down by the have-nots.

It's counter-intuitive that wealth becomes more fluid as it accumulates into islands rather than being spread out fairly homogeneously. And for large investments, there's ways of pooling together the capital of many less wealthy people (banks, investment funds etc).

[Renault]

If you like it or not, that's the entire point of capitalism: Enhancing the difference between the haves and the have-nots so that the haves can create as big a flow of value trough the entire economic system as possible without being held down by the have-nots.

It's counter-intuitive that wealth becomes more fluid as it accumulates into islands rather than being spread out fairly homogeneously. And for large investments, there's ways of pooling together the capital of many less wealthy people (banks, investment funds etc).

Certainly true. I completely agree with all of that. Almost nobody with finance knowledge would disagree. But this has nothing to do with capitalism. I assure you, there are banks and money in socialist countries, just as there are in capitalist ones.

[Creaca]

Capatalism isn't fair?

Life isn't fair.

Hell, there isn't a government system that is fair. Capatalism is very good at doing one thing. The possibility that if you work your ass off, you shove your nose down to that grinding stone, you give your children a better chance. So that they have more oppertunitys than you. That's the "Well he just inherited that money" idea comes from. As if it just appeared out of thin air.

Hell, sometimes people are very skilled, very smart, and exploit a perfect niche or oppertunity they find - legal or otherwise - and make it rich.


That being said, capatalism isn't a perfect system government. Hell, I'm not convinced that there is a good system of government. Not that I think no government is any better.
It all boils down to trading freedom for safety.

[Criptfeind]

Is capitalism a system of government now?

[Grakelin]

Nope, it's an economic system.

I think an economic system wherein you have to work really hard just to make sure your kids have a fighting chance is flawed, and saying that that is okay because life isn't fair shows a lack of critical thinking ability.

[Nikov]

Cornelius Vanderbilt started his career as a clerk in a New York ferry company with no high school education, broke into a government-enforced monopoly of a company grossly overcharging its passengers, and went on to practically build the East Coast's rail network and become fabulously wealthy. Everything about the system he started in was stacked against him, but by treating his customers more fairly than the shipping monopoly and running a more efficient business he succeeded. That's not just capitalism, that's meritocracy.

[Criptfeind]

Sandra Thusan was a hard working woman who lived in new york as a secretary, she had a two year degree from college. During the depression she was downsized and could not find any work. After the debits started piling up she was forced into prostitution to make ends meet. She died of a STD three years later.

Obviously not a true story but it was the best thing I can think of to say this late to mock your story.