c) Production of unskilled people
Good education isn't free, and many of those who call themselves capitalists wouldn't make basic education free.
Since lower class families can't pay for good education, the system will produce a number of unskilled workers.
I have heard something about letting companies pay that education, if they want to, imho that's ridiculous. Many companies could do it right...Primary and Secondary Education is free in Australia - Tertiary education used to be free. Unfortunately the generation (the bastards) that got free University or Trade education abolished it and those of us that go/ have gone to Uni have to pay for it up front or as an additional percentage on our Tax. I have just finished paying mine off and I finished Uni in 1995.
The only problem with the free Tertiary education was that we ended up with an over abundance of lawyers and economists and not enough electricians and plumbers. In Australia tradesmen earn as much as lawyers and economists.
Same thing is happening in the US, dood. Two of my gaming buddies are electricians now, several years younger than me, and able to afford their own apartments in the Bronx. One of them will probably be buying a house soon.
Does that mean I could earn a trade at a cheap school here in the States, and then profit by moving to Australia? Why haven't lots of American tradesmen done this?The only problem with the free Tertiary education was that we ended up with an over abundance of lawyers and economists and not enough electricians and plumbers. In Australia tradesmen earn as much as lawyers and economists.
They do do this - :-)The US is 18th on the list for citizens who were born overseas. If you have a trade your qualifications will need to be accredited in Australia so extra training may be required.
If you want to earn even more and you don't mind living in the dessert thousands of kilometres from the nearest city. You can earn up to 3 times the amount because the mining industry are desperate for workers.
The problem with Australia as one of our Prime Minsters once put it - is that it is at the arse end of the world. We are far away from everybody and our major cities are far away from each other. Distance is the tyrant in Australia if you can handle being days by passenger Jet from the US or Europe then all is good.
It is called kick the can down the road. The voters don't want to see their government handouts cut, so the politicians run up the deficits and kick the can.
But sometime from now, probably between 2015 and 2020, people are going to realize that the government can't keep all its financial promises, most likely when it starts defaulting in some way. Then you will see a lot of people dependent on the government abandoned, especially the elderly and sick.
America is no where near to defaulting. I mean its possible that this will come to pass but your talking 2030's or 2040's before it comes to this. America's credit, rightly or wrongly, is seen as rock solid by most investors and they'll be able to borrow well into the future. In fact America just released a series of bonds that have the unbelievable distinction of loosing the investors money. The US government promises that the bond holders will only loose a little of their money (like a quarter of a percent or some such) and they where actually able to sell billions of dollars of these things to investors. There probably is not another nation in the entire world that could issue bonds that actually loose their investors money but people are so desperate to park their cash in a safe haven that this seemed like a good idea to some.
The US national debt, while rather high is still far below many other industrialized nations, its about half that of Japan and the Japanese have not started defaulting yet so America would still seem to have a lot of room to keep digging deeper for many years to come.
Beyond this straight out defaults are pretty much the last resort of an industrialized nation. Basket cases like Iceland and Greece have not actually gone into default, they've just had to take bailouts with really smelly strings attached. America could probably avoid a default by cranking up taxes by 5% across the board or alternatively make some very big cuts to some cherished programs like social security or national defense.
Really America could save a lot of money just by eliminating national defense. America does not really need an army just missile silo's. New military doctrine is any country in the world can do whatever they want wherever they want...its not our problem. However if you invade the United States of America proper then, 39 minutes after your troops start to land, a 3 megaton thermonuclear weapon will detonate in every one of your major cities.
Think of how much you could save on the army and navy alone.
Forgive me for seeming to abandon the discussion I started - things have been hectic at school, and between lots of classes and homework I haven't wanted to get into yet more economics until the load lightens. I'll respond soon, though.
Well, it might not happen until the 2030's or 40's true, but it will happen, and probably sooner.
First, lenders aren't always going to be willing to lend the US government money at such historically low rates of interest...at some point, interest rates are going up, and when they do, the US is going to hit one wall.
If medical costs stopped rising, and flatlined, then yes, I could see the US government making it to 2030...but that isn't happening either. Costs are skyrocketing, and will continue to skyrocket until the government gets out of the sickness care business. If you want some examples, I will be happy to share...just learned about the chickenpox/shingles debacle today in fact. Medical costs is another wall that is being hit.
The US, is actually worse off then its national debt suggests, because of future obligations which aren't counted, like future Social Security and Medicare payouts. Real accounting amortizes those over 75 years. This economist points out the US is really $200 trillion in debt.
I totally agree with you about the Pentagon, trillions of dollars wasted and nothing to show for it but a lot of shiny toys that can't be used to fight guerrillas in the mountains. But rather than missile silos, let me give you an example of how you could save more money...
If the US had never built missile silos, but kept their ICBMS on train cars and some ships...they could have kept them moving around and make them untargetable. It would take longer to set up to fire...but again, not a problem since they can't be found, certainly not most of them. This would result in the US not needing as many missiles to begin with, which would save more money. On top of that, it would have reduced the worry on the USSR of the US launching a first strike, because the missiles aren't set up to launch a first strike while being transported. The USSR would also see making a first...
Strange. I thought we already did this with respect to our subs, at least with nukes. However, you still raise a good point here with respect to military spending.
Still waiting for feedback on the immunization debate, however.
Well, it might not happen until the 2030's or 40's true, but it will happen, and probably sooner.
First, lenders aren't always going to be willing to lend the US government money at such historically low rates of interest...at some point, interest rates are going up, and when they do, the US is going to hit one wall.
If medical costs stopped rising, and flatlined, then yes, I could see the US government making it to 2030...but that isn't happening either. Costs are skyrocketing, and will continue to skyrocket until the government gets out of the sickness care business. If you want some examples, I will be happy to share...just learned about the chickenpox/shingles debacle today in fact. Medical costs is another wall that is being hit.
The US, is actually worse off then its national debt suggests, because of future obligations which aren't counted, like future Social Security and Medicare payouts. Real accounting amortizes those over 75 years. This economist points out the US is really $200 trillion in debt.
That links a gold mine. I started popping around the net trying to figure out what the hell they meant by Fiscal Gap.
Sources almost always come back to an economics prof at Boston University named Laurence J. Kotlikoff. Can't say I buy it but for fun and entertainment lets follow this guy down the rabbit hole.
Taking stockHow did the United States reach its current state of what could effectively be considered bankruptcy? It spent six decades transferring ever more resources from the young to the elderly, under a variety of different programs described with a variety of labels. Many policies across many administrations from Eisenhower’s to Obama’s—cutting taxes, growing Social Security, enacting Medicare and Medicaid, spending to combat recession, and financing wars—added to the nation’s financial problems.
That is not to say that the policies financed were not worthwhile. Many were. But each left the fiscal gap larger than it had been and redistributed massive sums from future generations to current generations.
The implied lifetime net tax burden on America’s children, if they are forced to cover the fiscal gap on their own, is far beyond their capacity to pay.
The United States is hardly alone. Europe and Japan are also reaching the tipping point thanks to decades-long policies of passing the generational buck (see “The Long Run Is Near,” in this issue of F&D). And China, with its own rapidly aging population, is increasingly following the Western model of taking from the young and giving to the old (see “Building a Social Safety Net,” also in this issue).
But the U.S. situation may be worse than that of other advanced economies—not because of demographics, but because it has been less able to control growth in the benefit levels of government health care programs. Federal Medicare and Medicaid spending that grows for 40 years at a rate that is 4.6 percentage points higher than per capita GDP growth is a prescription for a fiscal nightmare—especially given the impending retirement of baby boomers and the potential for subsidies to lower-income people who buy insurance policies on health exchanges to become another huge unfunded health care entitlement.
Wow...
So its not just America, Europe's screwed, Japans toast even China's goose is cooked. Want to survive the meltdown of economics as we know it...Looks to me like he left out Sub-Sahara Africa and the Arabs pretty much...and you thought Shiara law was a bad way to do capitalism - guess not its apparently one of only two ways that work - the other being whatever the heck they do in Sub Sahara Africa.
Check out how you fix this problem too...you stop giving money to support worthless members of society. He singles out old people as the group that really has to go but it dawns on me all worthless members of society are in the same boat. Those wounded coming back from the wars - put a bullet in their heads and save the nation at the same time - its the patriotic thing to do! Prisoners need to pay for themselves...the mentally unfit...you probably see where this is going, do try and be humane about it.
Now personally I don't think we need to worry about this to much - seems to me we'll pay down the road so to speak. I mean when all the cash runs out in 20-30 years most of us will be getting onto our rockers and sitting on the front porch yelling at kids to get off the lawn.
Once the kids figure out that the money's all gone the revolution begins, they get their guns and its "f!+& you Grandpa, your tyrannical robbery ends now - BLAM". Once we are all dead they don't have to pay for us any more and the fiscal imbalance closes...problem solved.
Excellent thread.
The United States of America has had one advantage no other nation has had in the history of the world...a near-unlimited credit card. It started with the European nations loaning credit to the New World Colonies for their American revolution, and culminated with the Federal Reserve Note of 1913 becoming the de facto world reserve currency after World War II in 1947. By closing the gold binding the dollar in 1972, the paper became fiat, and the printing press has run non-stop ever since. World War II made people believe in the winners of the war, the American people, and buy their bonds and copy their system of government and business, called capitalism.
Capitalism works but is easily seduced and shackled by the promise of money from the future, i.e., credit. Capitalism controlled is capitalism subverted into corporatism, or fascism, or communism, while still being called "capitalism". True capitalism demands an educated buyer as well as an educated seller still trying to take advantage of each other in the transaction but each coming to a compromise in their exchange of goods. The shortcut, or medium of exchange, must be agreed upon by both parties. When a third party (government) imposes its own medium upon the exchange, and parasitically benefits from each transaction, by using inflation and taxation to reduce the medium's store of value to its own coffers, then capitalism suffers.
To have true capitalism you must banish both credit and fractional banking, which is fraud. A world without credit can be viable, because you use savings from the past instead of a promise of productivity from the future. Yes, it would take a longer time to accumulate savings to the point growth in business is possible. But the owner of that savings can then proceed without the shackles of dependence upon others for permission to use his or her own money. The freedom of savings replacing credit would be enormous, and that very freedom threatens control by others, which is why we do not have such operations today.
Such thinking today is anathema and foreign to most citizens, who have been raised for the last three or four generations to believe in centralized government with heavy regulations and guaranteed minimal outcomes with limited liability. This is anti-capitalism, which allows high profit for high risk, but also liquidation for the failures. We have outlawed liquidation-for-failure proportional to the size of the business as well as dependent upon political ties from that business to government, while at the same time limiting new players in the game's ability to start new businesses and grow them from small to large levels. Bureaucratic government hates competition, and so do large corporations of limited liability and socialist leadership. This is not capitalism.
Once government agrees to subsidize any business it has created a floor for the pricing of goods from that business, and with inflation thereafter created never-ending price inflation until the business has priced itself out of the marketplace. To prevent that business from losing all customers government must either reduce prices or eliminate competition. You can guess the typical reaction from government. Today we have government not only subsidizing businesses, but subsidizing a demographic of customers to buy those goods and services. Both sides of the transaction are subsidized! The people have found out how to vote themselves largess from the government's taxation treasury. The bureaucracy determines by favoritism and regulation who qualifies for either subsidization, perverting true capitalism.
America in 2010 is reaching the 100-year mark for the creation of the Fourth Centralized Bank of the United States of America, i.e., the Federal Reserve in 1913. Inflation has reduced the value of the original currency by 96% to 98%. When it reaches 100% and the fiat dollar is valueless, then either the debt must be repaid by confiscation of all productivity both present and future (with a new medium of exchange replacing the failed dollar), or else repudiated with the slate wiped clean (and replaced with a new fiat currency), which has its own geopolitical consequences. This will either be instantaneous or drawn out over the course of years. It cannot take generations, as the law of compound interest and inflation has taken over the interest on the government's debt.
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c) Production of unskilled people
Good education isn't free, and many of those who call themselves capitalists wouldn't make basic education free.
Since lower class families can't pay for good education, the system will produce a number of unskilled workers.
I have heard something about letting companies pay that education, if they want to, imho that's ridiculous. Many companies could do it right...Primary and Secondary Education is free in Australia - Tertiary education used to be free. Unfortunately the generation (the bastards) that got free University or Trade education abolished it and those of us that go/ have gone to Uni have to pay for it up front or as an additional percentage on our Tax. I have just finished paying mine off and I finished Uni in 1995.
The only problem with the free Tertiary education was that we ended up with an over abundance of lawyers and economists and not enough electricians and plumbers. In Australia tradesmen earn as much as lawyers and economists.
Should have declared those trades a compulsory entrance requirement for University.
America in 2010 is reaching the 100-year mark for the creation of the Fourth Centralized Bank of the United States of America, i.e., the Federal Reserve in 1913. Inflation has reduced the value of the original currency by 96% to 98%. When it reaches 100% and the fiat dollar is valueless, then either the debt must be repaid by confiscation of all productivity both present and future (with a new medium of exchange replacing the failed dollar), or else repudiated with the slate wiped clean (and replaced with a new fiat currency), which has its own geopolitical consequences. This will either be instantaneous or drawn out over the course of years. It cannot take generations, as the law of compound interest and inflation has taken over the interest on the government's debt.
There is no reason to believe that the fiat money will cross any kind of a threshold when its worth less then 1% of its original value. Many nation states have had currencies worth a hell of a lot less then that. Of significance is Brazil, which is currently on a tear economically and, finally, looking like it'll shortly enter the ranks of bonafide major world powers. Its last currency was so worthless that they had to go and invent a new one.
As for the rest of your post. The problem I see is you describe capitalism as a hot house flower that needs to be protected and nurtured. If so then its basically worthless. Its only claim to real value as a way of running things is that its some kind of a deeper truth. Its how the world 'really' works.
If that is not the case and we are going to have to go out and pick an artificial system and protect and nurture it then we should pick a system that makes things like fairness, happiness and equality, the highest ideals of the system. Obviously this is not how the world 'really' works either but if I have to strive to put together something, because there is no real default mode, then better to strive for something that encompasses our cherished ideals rather then something that rewards are darkest impulses.