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Things change. It's the nature of the universe. Yesterday's greatest ideas give way to ideas that are better, or better suited to the present, or at least different. Change is the only thing on which you can depend.

So what about capitalism?

I think capitalism had a good run, but it will soon be done. Socialism will be too expensive to maintain as the world economies slow, and communism won't be making a comeback. The economies of the future will be something new.

Capitalism was conceived before the Internet, and before the gears of commerce became computerized. The system could absorb a lot of con artists because they didn't have the ability to steal fast enough to cripple the system. As you know, that has changed. Crooks in expensive suits now have the ability to swindle trillions, collectively, thanks to the efficiency of the system. And idiots in expensive suits can do even more damage.

The economy is now too complicated for even the regulators to know when a con or a huge mistake is happening. The balance of power has swung to the crooks and the market manipulators. Even if we could regulate away these problems, it's already too late. There isn't enough money left to support the planet under the current social systems, at least not when the boomers start retiring and unemployment starts climbing.

I've been wondering what the new economic system will look like. I think the next economy will have the same freedom of employment and entrepreneurship as capitalism. That part seemed to work well. But you might see restrictions on what types of investments individuals can make, to keep them out of trouble. Most people should be restricted to buying only the broad indexes with an ETF. And perhaps the percentage of stock you can legally own as a percentage of your net worth should go down as you near retirement. Stock bubbles could be avoided by restricting how much money can be invested in stocks, on an annual basis, to keep the price earnings ratios around 15. New stock offerings would be funded by existing companies and institutional investors.  (Clearly that idea isn't well thought out. It's just a directional sort of prediction.)

But the biggest change could be in what sort of consumption is allowed under the new economy. Most of our problems were caused by people who couldn't control their own spending. Banks could tighten their credit requirements but that won't be enough to stop the spending junkies from depleting their own nest eggs. So you might see some forced savings rules in the new economy.

Depending on how bad the economy gets, you could also see rules banning single passengers in cars. And working from home might become a legal requirement for economic reasons. Perhaps your health insurance premiums would be based on your body mass index and whether or not you smoke. You could see a whole range of restrictions on how consumers can live, spend, and invest, to prevent market bubbles and waste.

So I think the new economy will allow you freedom of employment, but you won't be able to spend and invest your money as freely as you once did. That was the part that got us in trouble.

I'm not saying this new economy will be an improvement. It's just a prediction.
 
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-1 Rank Up Rank Down
Dec 16, 2008
I suggest you watch the movie Zeitgeist
Scares the hell out of me
It turns Christianity into Swiss cheese
Shows how international 'incidents' were an inside job to throw us into war
And how everything is controlled by a few very very wealth people
Seems like it's right up your alley
 
 
-3 Rank Up Rank Down
Dec 16, 2008
Begin prod
e-j-a-c-u-l-a-t-e
ejakulate
End prod
 
 
Dec 16, 2008
Settle down, Chicken Little. Every time there's a recession, the scaremongers come out and declaim the end of Western Civilization. Hasn't seemed to happen yet, so what makes this one any different?

Capitalism is prevelant because it works. What fundamental factor has changed to make that no longer true? The current collapse occurred because of a well-understood (and predicted by people like Buffet) market failure involving derivatives - a failure which is easily (EASILY!) fixed with some minor regulatory action. There'll be a few months of economic slowdown while the economy reboots and the information gleened in the past 6 months diffuses through the market, causing capital to be intelligently re-allocated. In 5 years the Dow will be back at 14k and this recession will be a distant memory.

Capitalism is like evolution, where failure is the rule and the only absolute is the Law of Unintended Consequences. That's why 99% of all the species ever to have existed are now extinct, and why 9 out of 10 companies fail in their first year. The current recession is just the latest event in a long history of creative destruction. The reason we have a system that's able to recover and learn from setbacks like this is that it's not over-encumbered by regulatory ideology; there are no great edifices that have to be torn down in order to rebuild again.

But, uh, feel free to give me all of your 'capitalist' cash if you think it's going out of style.
 
 
Dec 16, 2008
This site is ridiculously slow! A packet trace from my workstation shows that while your server immediately ACK's my browser's GET request, it doesn't actually send any information for 58 seconds. After the 58 second gap, it still takes another ten seconds to load all the content of your page. Sixty-eight seconds--yes, you heard right. It might as well take a year. Do you think I have all the time in the world to wait for your page to load, and take network packet traces, and post scathing comments on blogs?!?! I hate you.

P.S. Thanks for the free blog.

P.P.S. Capitalism will be alive and healthy long after you and I are dead of natural causes, not global warming or the rapture. Well, hopefully someone will shoot you. Jeez your site is slow.
 
 
-1 Rank Up Rank Down
Dec 16, 2008
The "!$%*!$%*!$" is clever. Do atleast you get to see what I actually wrote there?
it was ee ja ku la te.
 
 
Dec 16, 2008
Things change. It's the nature of the universe. Yesterday's greatest ideas give way to ideas that are better, or better suited to the present, or at least different. Change is the only thing on which you can depend.
>> No. It changes only for people who didnt bring about the change. They are logs thrown into the sea.

>>I think capitalism had a good run, but it will soon be done.
Yo, it was done long back like about 100 yrs back when crooks decided if everyone gets according to what they produce they are not going to get anything and that led to what is called MIXED !$%*!$%*!$%*!$%*!$ will be too expensive to maintain as the world economies slow,
should be "Socialism IS too expensive to maintain AND IT is slowing the world economies ...,
700 billion already and counting.

Capitalism was conceived before the Internet, and before the gears of commerce became computerized.
>> Yes fire was conceived before you could have roast turkey.

.. because they didn't have the ability to steal fast enough to cripple the system. As you know, that has changed.
>> Yes, it took 100 yrs. But it is now perfect.
Crooks in expensive suits now have the ability to swindle trillions, collectively, thanks to the efficiency of the system. And idiots in expensive suits can do even more damage.
>>And idiots who WANTED to buy expensive suits gave their money to the crooks and the ducks.

The economy is now too complicated for even the regulators to know when a con or a huge mistake is happening. The balance of power has swung to the crooks and the market manipulators.
>> These regulators are the so called super experts who make magical decisions right? Actually they are the ones who really MAKE any decision while you guys nod.
There isn't enough money left to support the planet under the current social systems
>>Yes everything has gone ... all given to the hobos.

I've been wondering what the new economic system will look like. .. will have the same freedom of employment and entrepreneurship as capitalism. .. But you might see restrictions on what types of investments individuals can make, to keep them out of trouble.
>> Yea the motto for this would be "Free to !$%*!$%*!$ but expert regulated opinion on where, when and how much?"

But the biggest change could be in what sort of consumption is allowed under the new economy.
>> Sex is INJURIOUS to YOUR health?.
Most of our problems were caused by people who couldn't control their own spending. ..to stop the spending junkies from depleting their own nest eggs. So you might see some forced savings rules in the new economy.
>> why not just let them die? why celebrate their ineptitude?

Depending on how bad the economy gets,
>> upto several million will die... but very very slowly.
You could see a whole range of restrictions on how consumers can live, spend, and invest, to prevent market bubbles and waste.
>> As we all know a single nostril is sufficient for YOUR optimal consumption WE are planning to reduce the excess waste.
So I think the new economy will allow you freedom of employment, but you won't be able to spend and invest your money as freely as you once did. That was the part that got us in trouble.
>> freely?, putting where the Asshats say you to put isnt exactly free my dear.

I'm not saying this new economy will be an improvement. It's just a prediction.
>> Its not a prediction. You are living in it.
 
 
Dec 16, 2008
I'm leaning towards a "little house on the prairie" style of civilisation, but with internet and decent health care.

Imagine how healthy people would be eating the fresh food they worked to grow themselves?

Anyone can own a gun and defend themselves, minimal government, what's not to like?

Back to reality: I'm making progress with my electric car conversion. The blog is at http://ev-pulsar.blogspot.com
 
 
+1 Rank Up Rank Down
Dec 16, 2008
Scott, Your post confirms an interesting idea I had today. I drove past the local gathering of day laborers (Jeronima in Lake Forest, CA) and wondered whether it would ever be possible for them to gather at freeway onramps as carpool passengers. The only tough part of that as a job is getting back home at the end of the day.

Maybe we'll need to make that kind of transaction punishable by death to keep people from cheating the well intentioned regulations of our future.
 
 
+1 Rank Up Rank Down
Dec 16, 2008
There is another flaw in your plan: people who are already tired of how the government is controling our lives will begin to rebel at that level of financial control. Your additional regulations would just be a step towards anarchy.
 
 
Dec 16, 2008
Scott,
I thought you talked to economists. Your post evinces a complete lack of understanding of economic principles. One example: We are moving away from capitalism, but we still have stock ownership in private hands?

The economy is too complicated for regulators, but you propose all kinds of regulations that should be enacted. The wisdom of the market is that many actors in the economy acting on their own knowledge provide a much more accurate assessment of value & risk. But it does not mean that nothing goes wrong, only that the bad actors are dispatched with brutally & quickly.

Moral Hazard is written all over the current issues - the GSE's were considered to be completely insured by the federal government & safe. Many investors & the firms themselves considered many of the banks & corporations as "too big to fail", and that is what is happening.
 
 
Dec 16, 2008
I agree that the bubble has finally burst in terms of how much money we spend/how much resource we consume per capita, and we will have to cope in the future with much less scope for growth in wealth etc.

But what is even more scary is that another bubble continues to expand unchecked - population growth. The planet simply cannot continue to sustain exponential population growth, so eventually a point will be reached where the population has to contract. This may take the form of a global pandemic killing hundreds of millions of people, or perhaps a nuclear war. I'm not sure what form it will take, or when it will happen, but it has to eventually.
 
 
Dec 16, 2008
If the problem is that the criminals are crippling the system, then we should cripple the criminals. In order to boost the economy, legalize (or decriminalize) such operations that make criminals rich, then let the government reap the taxes. The best examples I can give are marijuana and prostitution, legalize, regulate and tax., once it's legal, the forbidden fruit aspect will disappear, eliminating half the problem. Regulate marijuana like ground beef, but instead of fat percentages, THC percentages, with the price going up with the percentage, you want premium BC bud, you'll pay for it. Same with prostitution, make the prostitutes get regular checkups, licenses, setup government brothels to monitor, tax the other brothels, tax the prostitutes income, and have a sliding fee schedule setup so that most can charge the same amount, depending on talent of course. Once the criminals feel the bite taken out of their organizations, you branch out and hit them from other angles. And when you get them in jail, punish them, 23 hours a day in a 6x6 cell, bread, water and a apple for every meal, and forced labor camps. Maybe the Internet needs some regulation too, to keep idiots from giving out their passwords, and make it easier to prosecute violators of internet law. The car companies want a bailout, tell them they can, if they make changes to all of their cars, effective immediately: Double the fuel efficiency, install breathalyzer ignition cutoffs, eliminate SUVs and sports cars, and make all car racing events use electric cars to help with carbon emmissions.

There are solutions, but they would mean that people would have to change, and not a little change, widespread change, which is why I think the world will go to hell before it gets better.
 
 
Dec 16, 2008
One word: Anarcho-syndicalism. They're still working the details out but I think, like the other utopian schemes you see misrepresented in the comments, it will probably involve tear gas and holding cells.
 
 
Dec 16, 2008
Sigh.

The government is and always has been the problem in this mess. And having another form of government will not solve this problem. As long as we elect people that we believe will "give" us something ("Obama is going top buy my gas!") , we will forever be tied to a corrupt system.
And when we have supposed "thinkers" that propose even more draconian measures as a good idea, or we have people that think consumerism (buying goodsa and services ) is a bad idea, well, hope for a future without a dictatorship, well all is lost.

It was a good experiment while it lasted, too bad FDR messed it up, and a bunch of people followed suit.
 
 
Dec 16, 2008
Sorry, Scott, but this is one of the few theories where you are radically off base. The efficiency of crooks to steal massive amounts of money is not inherent in capitalism in general, it is the function of exploiting a centralized business or government that has no checks or balances within itself. The Federal Government has long since stopped being about checking the power of corporations or the alternate political party that is not in power, instead they are all about compromise with each other to find a way to make their friends and supporters happy while trying to drop as much !$%* on the unaffiliated (generally small business and people not part of special interest groups) as possible. There is rampant corruption everywhere and it has led to a very unhappy nation state, people don't feel part of any sort of community and there is a terrible "every man for himself and screw the system" mentality due to a lack of leadership.

This has led to hundreds of little routine moral failings that are all too common and that no one care about from speeding to pot smoking to illegal downloading of copywritten material to cheating on taxes, and they are only snowballing. This isn't to say all of these things are non-rationalizable or even necessarily evil in an objective sense, they are just signs of the disconnect that we have from the entity that is supposed to govern us. When you have a nation that is divided against itself in this many ways, when the sense of belonging and doing the right thing for its own sake is compromised and when its so clear that no one in power could ever give a damn about the common man, it's only a matter of time before the system comes down. More people are getting disenfranchised and it's taking all the government's effort to bribe everyone into a sense of calm, hell we mortgaged the future the last 10 years trying to do it, and only in small towns do you even find people that aren't willing to step on their neighbor for ten bucks or are genuinely happy in a non-material way. And that is all rapidly crashing down now.

The new economy is going to form when the federal government becomes insolvent and no longer has rule of law because they can't pay the people enough to enforce it. If this doesn't happen because of the current crisis, it will certainly do so when we have to support an aging population of Boomers who will all rapidly lose productivity as they go into their golden years. Wealth is going to drop considerably and we are going to reform into small, local economies where everyone knows each other and trust is going to be the most valuable commodity. It's not impossible that we will have different currencies through different regions, but that will still be a long time coming even after the crisis has come, at the very least the currency will have lost so much value that people will lose stock in it as the decider of so many of their options. I think it's going to be a peaceful affair in most places as most Americans still believe in the ideal of the country even though they have a strange sense it is somehow lost, although many big cities may have some strife for a while.
 
 
Dec 16, 2008
"So you might see some forced savings rules in the new economy."

You mean, like Social Security?
 
 
Dec 16, 2008
As long as the system allows 1% of the people to control 50% or more of the wealth, it should be stable.

I agree with bobman1235, nottaxes, schmoe90, rockbert, & pattyg. Aardwiz has interesting ideas but still too much regulation & taxes.

The US government is a little too full of itself. Regulations are intended to have a specific effect. The unintended consequences seem to outweigh the intended consequence most of the time. Prohibit alcohol, breed organized crime. Prohibit marijuana, breed organized crime. You can't fight the free market.

The US government is really good at breaking things though. They can threaten you, coerce you, jail you, and kill you, but they can't tell you how to live your life and be happy.
 
 
-2 Rank Up Rank Down
Dec 16, 2008
Capitalism is the solution to this mess, not the problem. There were regulations in places forcing banks to give loans out to high risk borrowers, in order to increase the amount of minorities owning homes. And all these government bailouts will only breed more irresponsibility.

It was terrible ideas, like the Social Security program, that got us into this mess. Removing government from the picture can only help.
 
 
Dec 16, 2008
You don't have to throw out Capitalism to put in place a few simple rules that would change everything: For example, what if:

- You had to own a stock for at least 1 year before you could sell it? Mob mentality would slow down, as those who bought a hot stock wouldn't be able to sell it as the demand went up. There just wouldn't be any available stocks to be had. Dividends would be more important.

- Banks were forbiidden to print money. What's that, they already are? No, they can't print CASH. Money on the other hand is something that is generated when you lend more than you have. Printing presses are so 19th century.

- Since banks can't lend more than they have, then someone has to cover all those mortgages. With Fannie Mae & Freddie Mac already, and TARP supposed to buy those "troubled" mortgages (which seems unfair to those folks who, while struggling, are still making THEIR payments at the higher rate), and since it's the government (local) that does the assessment (worth) of the property anyway, and since they own all the land anyway (Imminent Domain), it won't be long before the government goes into the Real Estate business. The interest they change (i.e., profit) will be the revenue stream to pay for everything. The only hurdle is that even the US Governemnt doesn't have enough money to buy itself (or at least all the land).

- Torte laws award "Punitive Damages" (damages with enough bite to make the MegaCorp actually care to fix a problem) to the State rather than the plaintiff. Compensatory damages (restoring out-of-pocket losses) would still go to the sheister lawyer. er, the plaintiff, off course. Those $10M settlements would go a long way to ballancing budgets.

- With torte reform, weaken the concept of "Expectation". Acknowledge that mistakes happen even when we try to do our best, and that there are no guarentees in this life. Yeah, the doctor screwed up and yeah, that company made a defective product. But I don't remember either of them putting down in writing that I'd be made whole or that the product was fool-proof. Fewer law suits and lower insurance. Much of the financial crisis comes from Insurance companies being needed to insure that a deal doesn't go south.

- Create the "flat tax", but have the "standard deduction" tied to the Minimum wage, which is also tied to the Poverty Level. Thus, anything more than "minimum", the government gets a cut. And "income is income is income", whether by wages, sales, or investments. Index investments for inflation. Outlaw ANY AND ALL other tax decutions, tax credits, tax loopholes, with the possible exception of Charity ("People know how to spend their money better than the goverment").. If Congress wants to encourage something, it must GIVE the money, not creat a law that you have to know about to get a discount on your taxes. And if they don't allocate enough, oh, well.... Pesto! - you've got a system that allows Congress to determine EXACTLY what its budget will be for each year. If it doesn't have enough, raising taxes by 0.1% would raise roughly $14B, and I think most of us can handle 0.1%.

And so on. Nothing drastic. Some of which is happening anyway. Some of which will never happen. Sigh.

 
 
Dec 16, 2008
You're always quite cavalier about how you want to "force" people to do various things to fit your view of what the ideal society is. How many elected officials have you ever met that you would trust with the creation and enforcement of all these draconian regulations? Are you prepared to deal with the rebellion of tens of millions of people who don't particularly like being told what to do "for their own good"? And think of all the restrictions and rules we supposedly have in place now that haven't made a lick of difference in preventing our current "financial crisis." What makes you think new, stricter and even more ridiculous rules will make a difference? When in the course of human history has it HELPED a society (in the long run) to create a bigger, more powerful government (and based on the various rules you want to implement, a much larger governing body would be required to enforce these rules)? "The course of history has shown that as government grows, liberty decreases" - Thomas Jefferson.

I think it's a common (and deeply flawed) mindset that when something doesn't work, rather than rethinking the original strategy and why it didn't work, we tend to stubbornly double down on our flawed efforts. Often I think we instead have to realize that we just can't govern most things like we would want to, and the harder we try, the worse off we make ourselves. Many people smarter than myself could point to dozens of pieces of legislation that have been enacted, all in an effort to help people or the economy, that have led us to where we are. I hardly can imagine that even more legislation would help us out of it.
 
 
 
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