In yesterday's blog I imagined a future where capitalism morphs into something with freedom of employment but more restrictions on how individuals can spend, invest, and buy health care. The point of the restrictions would be to keep gullible idiots from destroying the entire economy, again, through their own reckless behavior.

Most of the comments fell into two camps:

1. Capitalism is fine the way it is.

2. People would never stand for those new restrictions.

Some people also assumed I was recommending new restrictions on freedoms. I'm not. I'm predicting the restrictions because it will become clear that the alternatives are impractical. And as always, it is just a thought experiment. Don't take it too seriously.

First let's look at the notion that capitalism is fine and we're experiencing nothing more than another recession. I don't think that's the case this time for several reasons. The biggest reason is the baby boomer generation that is retiring and poised to absorb all social security and health care resources while adding little in productivity. And by the way, they didn't save enough money to retire. Next you have the Kazillion dollars in debt, and another tsunami of mortgage defaults that will trigger over the next few years as rates automatically adjust upward according to contract.

Meanwhile I see no obvious candidate for an economic driver to the upside. Apple can only sell so many iPhones.

Unwise debt and unsustainable bubbles had masked the fact that the economy was already bankrupt. The next mortgage meltdown (unavoidable), and the baby boomer impact (unavoidable) are not balanced out by anything that looks like good news. In other words, capitalism Part 1 failed.

The second objection to yesterday's post is that people wouldn't put up with any additional curbs on their spending and investing freedoms. That seems ridiculous to me since we already put up with so many societal restrictions. A few more would hardly be noticed. I don't remember the last time I heard anyone grumble about seatbelts. And if the government told banks they couldn't make billion-dollar loans to the homeless, no one would complain about that new restriction on freedom. Some restrictions on freedom just make sense.

Suppose your so-called restrictions on freedom came down to this question: "Would you rather have affordable healthcare or the right to make ignorant and risky investments?" Or how about, "Would you like to have a job or the right to be obese without being taxed extra?"

I don't know what capitalism's second act will look like, but it probably involves preventing individuals from being as self-destructive as they would prefer.

I remind you that I lean libertarian, so I'm happy to let anyone engage in risky and morally ambiguous behavior, but only up to the point where it has an impact on me. When your behavior raises my taxes it becomes my business.

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Apr 15, 2009
In recent times, research teams have found out that when intimidation is used, the recovery usually does not happen. That is why an intervention doesn't condone any sort of physical threat to get somebody into treatment. An intervention is fundamentally individuals teaming up to make war to persons’ drugs or alcohol problem and making them face the reality that they require a specific treatment.

Karen Walter
<a rel="dofollow" href="http://www.drug-intervention.com/north-carolina-drug-intervention.html" rel="dofollow">
Drug Intervention North Carolina</a>
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Jan 29, 2009
"Some people also assumed I was recommending new restrictions on freedoms..."

I never cease to be amazed by the lack of reading comprehension I see demonstrated day after day.

Dec 23, 2008
It terrifies me to be cynical than Scott Adams....

We are not facing (just) the end of capitalism - we are looking at the end of Democracy (though these days, it's actually more of a plutocracy by special interest.)

I believe I will live to see the end of the United States. Our debt is too large and our view too entitled to survive. No politician will make the fiscal changes that are required to return the nation to long-term health, because those decisions, like more taxes, less earmarks, and more personal consequences, are highly unpopular, and look really mean on the evening news.

If the status quo continues, the nation will implode financially. We are currently able to function with a deficit and immense national debt because foreign investors are supporting our excess. Eventually, those investors will cut us off, either because they don't trust our ability to pay, or because they have been sucked down with us. At that point, something is going to happen...

I haven't been able to get a clear picture of what comes next - mass poverty leading to revolution? Invasion and occupation by a foreign country? (and if so, which one?) A new form of government/economics not currently in existence? I honestly don't know.
Dec 22, 2008
Scott - as a libertarian, I can't believe you don't get it. Capitalism is just fine. It's Socialism that's wacked. We created Social Security, Health Insurance, pensions, 401Ks, and the Great Society, so the boomers figured they didn't HAVE to save. What if we didn't have government assistance programs? What if the boomers saw the elderly die poor rather than be the most comfortable age group. Would they have started saving? You Betcha!

It's actually democracy that failed because the elderly VOTE, which is why we have all the social programs for them.
Will the boomers vote themselves a comfy retirement?

You betcha!
(and no, I'm actually socially liberal myself)
Dec 19, 2008
As many here have opined, you are completely off base. All the things you talk about as being "wrong" with capitalism can be directly related to government intervention. Liberty and freedom are more important than protection from our own mistakes. By the way, liberty and freedom are two very different things - if you don't know the difference, ask me and I'll tell you, because the difference is very important.

You don't learn from your successes. You don't get better if you aren't allowed to make a mistake. That goes for people and businesses. Do me a favor, Scott, and get a little better educated, or at least expose yourself to more 'solutions' than "The government will regulate every aspect of our lives." That's what we fought the American Revolution for. That's what our country was founded to do. That is what has made us the greatest country on Earth.

The rest of the world, at least the more successful countries, are moving away from socialism and toward capitalism. Something like 32 countries have moved to a flat tax. Look at what happened in Ireland when they cut their corporate tax rate. Their economy went through the roof. Look at China since they took over Hong Kong and started allowing limited capitalism within their country.

The evidence is all around you, yet you and many others are just ignoring it. Even old Europe is starting to back off from their socialist forms - even France (!!!) Now is the time to push for a resurgence of capitalism, not ever-increasing restrictions on individuals and businesses.

Now we have Obama planning a new New Deal - massive public works projects paid for with massive tax increases and borrowing, that don't do a thing for building the economy. Not to mention socialized medicine - take a look at how well that worked in Hawaii. They put together a plan where all children would be covered by state Medicaid. It lasted for about four months, because everyone who was paying for their own children's health care dropped it (why pay for it if you can get it for free?). It bankrupted the program in a few months, and the state had to drop it.

When Obama does the same thing, he'll just print more money and sell more of our children's future to the Chinese and Arabs. Boy, that sure gives me a warm, fuzzy feeling. Be glad you don't have kids, Scott, because they are going to have to somehow pay off the debt their parents are running up.

Do me a favor, Scott. Read P. J. O'Rourke's book, "Eat the Rich." Take a look at the examples he gives of four different countries and how their economies compare with each other, and then let us know what you think. Even though it was written a few years ago, it is still instructive. You can get it at the library if you don't want to buy it - or I'll loan you my copy.

If you really lean libertarian, then you should begin thinking (and posting) about how to get government out of our lives and their hands out of our wallets. That would be a far better use of your vast intellect and free time. Since 'free' is a word we're going to be hearing less and less of.
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Dec 19, 2008
I have a very simple solution. Just make all financial accounts read accessible to the public at large on the internet. Of all induhviduals, corruporations, guvernmints. Worldwide. No exceptions.
Dec 19, 2008
I was thinking 2 measures that would be radical and maybe restore some agility in the market. The first one is to only allow humans to own shares, no legal entity could be entitled to own other !$%*!$%*! The second one would be to limit the size of companies to avoid the huge company that we have now. We could do this by law or by a tax on the size of the company.

The idea is to force smaller player in the market and to allow more diverse economic eco-system with more death but also more birth of companies.
Dec 18, 2008
A little restriction could be nice. But there's one thing that will (thankfully) delay your vision. Retiring at 65 will no longer become a viable option. We will need to put our seniors to work. I always thought there was something strange about people saying "I'm old, so I don't need to work anymore."
This would require anti-senior changes in legislation, which would be political suicide because seniors comprise so much of the voting population. Uh... How do we get around that?
Dec 18, 2008
stop mislabelling your premises.
when were societal restrictions, bailouts, social security were all part of capitalism?
Its socialism that you have been experiencing for several years now. (come to India to see its full range and see how far it has supposedly progressed since its independence..... vaccinate urself before u land here)

You dint make the connection between government slowly entering different kind of restrictions to something that will affect your freedom in future. Maybe you thought it will just go away. Maybe you though it is only a slight raise in taxes at start and that will be it. You thought you could anyway go for the cruise trip you planned for or your long cherished simple luxuries are still affordable. You underestimated the influence that can be had on your freedom. Did you understand freedom?? Its time to pay back for the ignorance and see your wealth(built on a creative lifestyle) dissolve away... Yes it will. Make no mistake.

Dec 18, 2008
Sounds like the future of the US is Canada. Come...joooin usssss {insert crazy-eyed children of the corn emoticon here}
Dec 18, 2008
I understood your previous post to mean that a different economics and incentives system would supplant capitalism -- something different like communism (communism on paper, since communism in practice still had a lot of capitalist elements).

Now, you seem to be indicating that capitalism v1.0 failed because capitalist programs like social security, public health care, mortgage bailouts, and such are bankrupting the country and affecting your prosperity. I'm a little confused on that premise, since you're ultimately complaining about socialist systems within our not-so-capitalistic government that have crept into our economy... It's not really the capitalism that is killing us, so much as the socialism.

also, I wouldn't call our current system capitalism v1.0, since capitalism has been revised several times, already, to avoid various types of monopoly which already emerged as built-in points-of-failures in a "pure" capitalism.
Dec 18, 2008
You've unwittingly described the problem as "not enough capitalism".

People exiting the workforce to live on social security and health benefits... These are public resources. They are inheritly uncapitalistic.

This is a problem with socialism; if there was MORE capitalism, people who didn't save for their own retirement wouldn't retire. Problem solved.

Have you considered that maybe our concept of retiring at 65 isn't compatible with our life expectancy anymore?
Dec 17, 2008
How do you survive in capitalism? By working, and being paid for it by the folks around you.

How do you do better in capitalism? By being paid more for the same work (more money, same effort).

How do you win in capitalism? By doing no work and being paid for it.

Why does capitalism have problems? Because scams and cons are the ultimate expression of how the rules work. *shrug* Capitalists win by impoverishing the people around them (after all, if they are not impoverished then inflation ensures that the Capitalist did all of that work for nothing - you can't just have everyone getting richer at the same rate) - Capitalism: it creates losers as well as winners - and you wouldn't want to meet many of the winners...
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Dec 17, 2008
Capitalism was working fine until crooks turned it into a pyramid scheme. Well, actually it was never perfect, that's what regulation and law was for, so thirteen year olds weren't working thirteen hours a day in a coal mine getting their fingers sliced, but were in school.
Baby boomers will retire and live with their working kids (now adults) who will feed them and reduce the need for social security and pensions. Government will incentivize getting married and having kids so people can combine their income and boost the economy, because people will live in closer communties with families less spread out. Boomers can all become novelists or painters or something - something that's not labor that takes up 10 hours a day, but people can pay for to boost the economy. Gas will get expensive again and the phrase "finish all the food on your plate" will make a big comeback. People will live in closer communities. Solar panels on all roofs.
Either that or we'll continue to be isolated, misrable slobs in a plastic wasteland.
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Dec 17, 2008
I totally miss the point of the last two blog entries:

1. The question of risky investments made by individuals on the stock market is irrelevant to the present economic crisis which happens only due to subprimes, real-estate bubble and banking practices.
2. However, I can’t see how those risky investments are likely to raise taxes? Moreover individuals’ investments are a minor part of the transactions on stock markets; the big players are institutional investors who are the ones that are more likely to cause a crash.
3. The investment-restricting regulations predicted by Scott Adams have a near-to-zero probability to happen, not because they would merely restrict some freedom but because they would mean a fundamental blow to the concept of property. Property has 3 (or 4 according to doctrines) components, including the right to use the assets you one at your total discretion, providing it doesn’t cause harm to others (I don’t think that making a risky investment could qualify as doing harm to others). Such restrictions would be a huge precedent that could just lead to the end of property right.
4. On the consumption side, rather than regulating people’s consuming-behavior wouldn’t it be simpler and more efficient to restrict their credit?
5. Wouldn’t it be smarter to develop decent public transportation infrastructure and services and to force carmakers to produce low-consumption and environment friendly hybrid cars than “banning single passengers in cars” which again goes against the fundamental right to use your property as you wish, and anyway would be awfully difficult to enforce, technically?
Dec 17, 2008
"When your behavior raises my taxes it becomes my business."

Too right, lovely quip!
Dec 17, 2008
Would you like to have a job or the right to be obese without being taxed extra?"

You are right that is the question. Would you be surprised that more people would go with Obese? Most people don't share your values. That is why they came up with the Constitution to protect you from people who don't share your values.

People's values would improve if the government would only quit rescuing every state, everyone. But that won't happen to they've taxed every dollar from everyone.
Dec 17, 2008
"The next mortgage meltdown (unavoidable), and the baby boomer impact (unavoidable) are not balanced out by anything that looks like good news. In other words, capitalism Part 1 failed."

What does any of this have to do with capitalism? The baby boomer impact is due to short-sighted social policies (aka legal ponzi schemes). Capitalism calls for no such thing. The mortgage meltdowns are due to bubbles, which are due to over-speculation, which is due to easy credit, which is due to banks not making rational decisions, which is due to the banks knowing that they'll be bailed out. Bailouts have nothing to do with capitalism.
Dec 17, 2008
as always scott, i find your thoughts very insightful. additionally, i've incorporated the term "asshat" into my everyday lexicon. great word. on to the subject at hand....

in order to say that capitalism in the united states has failed we must first assume that the economic system we have here is actually capitalism. that's like saying a mule is a horse.....although there's some shared genes and features, it's still a whole new animal. we've created an economic system that is, in my humble opinion, chaos. we've managed to pull together bits of capitalism, socialism, state corporatism, fuedalism, i-have-no-idea-ism, etc, etc, and create a system with such strange foundations, i'm not so sure that anyone actually understands it.

as ayn rand wrote, the only moral economic system is capitalism. no person is entitled in any way to the fruits of another's labor. it's just simply against natural law. any form of communism, communalism, whatever you want to call it, takes away the motivation of the individual to perform. you can see the results of these hand-outs everywhere....when the gvt extends unemployment benefits, those receiveing them don't look for work. when the government bails out an institution, the leaders of the institution suffer no consequences for their lack of proficiency. society in general begins to expect these bailouts and the aggregate productivity of the nations slumps. it's a lose/lose situation....the giver is participating in theft, the receiver is accepted stolen property and is kept in his perpetual non-productive state.

the older i get, the more libertarian i become as well.....the problem with your argument, however, is that you say are only libertarian to the point that it affects you. the truth of the matter is, if it was a pure state of libertarianism, other people's issues should never affect you. obesity should never cause taxes to raise. the individual is responsible to himself and himself only, and if others participate in behavior that causes them financial strife, strained health, etc, it is their responsibility to rise above it. nowhere in the constitution does it say that the government has the right to take resources from one party and disperse them to others for various reasons of their discretion. the commerce clause has been exploited to the point of blasphemy.....

Dec 17, 2008
I agree that capitalism part 1 is dead. It was killed by the greed of big business and the stupidity of the government/people to regulate them. The RayGun knucklehead was the first on that bandwagon. I had to deal with him as Governor when I lived there in CA (he raised the tuition at the State Universities to control the anti-war protests. All he did was make college unaffordable for poor kids like me, sending me to the military, while not affecting the rich kid protesters) Then again as President when I was back in college after the military. Businesses must be held accountable to more than just their shareholders. The greed and stupidity came to a head with Clinton passing NAFTA. Ross Perot nailed it when he said all that would accomplish would be the giant !$%*!$% sound of all our jobs going overseas. The deep pockets of the middle class dried up without jobs. In order to have an economy, we have to MAKE something! The last few years of shifting money around is not an economy, it's just a get rich quick scheme for the selected few. The only was for us to survive is to go back to square 1 and get people back to work in manufacturing SOMETHING (other than military hardware) then NOT ship it overseas to the lowest bidder.
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