5 ms·

> The profit motive can be a powerful force for the common good, driving businesses to create products that consumers rave about or motivating banks to lend to

by pdog 10y ago

> The profit motive can be a powerful force for the common good, driving businesses to create products that consumers rave about or motivating banks to lend to growing businesses. But, by itself, this will not lead to broadly shared prosperity and growth. Any proponents of free market capitalism (or libertarianism) wish to chime in on this essay?

blahi 10y ago
I don't think any non-radical person would be a proponent of 0 regulation capitalism. That is basically anarchism. The problem is not with radicals, they will always exist. The problem is that people in the middle are getting tripped up and supporting radical measures. The problem, and why I felt I had to submit this, is that there actually is a threat to capitalism. Things are better than ever, and at the same time people feel wronged. So wronged that Obama actually thinks that there is a real threat to capitalism and we might be at the verge of changing political and economic systems. This is very frustrating and scary. And I see no way to make people realize what they are doing.
- amelius 10y ago
  We can always change economic systems with a dial, and turn the dial back when things turn bad.
  - eloff 10y ago
    You make it sound simple, painless. It's not. There could be decades of suffering and chaos. People would literally die. Look at Venezuela for an example.
    - amelius 10y ago
      That is an unfair comparison, because they didn't implement the change continuously.
      - eloff 10y ago
        I'm not sure I agree with that, but any comparison would be unfair because all situations are different and the real world is very messy. But that's just the problem.
  - AnimalMuppet 10y ago
    No, we can't. It's Congress that's going to have to do the changing. That means each iteration of your "changing it with a dial" is going to be larded with pork, poorly-thought-through rules and regulations, general incompetence, and political grandstanding. Then it's going to be frozen in time for a year or a decade or a century, until Congress decides to tackle it again.
- psyc 10y ago
  Do you believe the poor and lower middle class are mistaken in being discontent with table scraps and a clearly disproportionate struggle? How should they react to perpetual promises of change that never materializes for them? Assertions that prosperity is rising ring hollow to this large segment, and rightly so. "The system is working; you just can't see it."
- badsock 10y ago
  If you're talking about the median American, and about essentials such as housing, education, medical care, and job security, I don't think you can claim that things are better than ever.
- jnbiche 10y ago
  > Things are better than ever, and at the same time people feel wronged... And I see no way to make people realize what they are doing. This right here is why Trump has a fighting chance to win this election, much to my chagrin. So many people in wealthy East and West coast cities have no idea how much the majority of the country is suffering still. The recovery has not touched the majority of poor and lower-middle class Americans.
  - blahi 10y ago
    I am talking in terms of much longer spans of time than 5 years.
- matt4077 10y ago
  For many, probably most, people, times aren't the best they have ever been. Part of it is inequality in the distribution of the spoils of growth in productivity. Another part is that subjective well-being isn't perfectly correlated with economic facts. Maybe it's the fact relative wealth has more psychological impact than absolute wealth. Maybe they see others struggling and are empathetic. Many middle-class people may suffer from the constant fear that the loss of a job could mean an immediate and permanent drop in social standing and quality of life. Usually, countries can react to common problems: if people are willing to forgo some income for security they can strengthen social system etc. In the US, for some reason, people with identical experiences came to two different conclusions. The left advocates for policies "kicking up" - basically redistribution from top to bottom. The right chose to "kick down", basically trying to strengthen their competition by eliminating the competition from those considered lower than them. These sides have fought each other to an almost perfect standstill, thanks to a few quirks in the constitution like first-past-the-post-voting and a three-legged legislative. As nothing happens, people get more frustrated etc. pp. rinse repeat.
lobotryas 10y ago
What's there to comment on? As phrased, the sentence is correct. If we want "broadly shared prosperity" then capitalism alone can't deliver because without an external influence (socially conscious leader of a private company, government regulation on wages, etc), business will always try to optimize for higher profit at almost any cost. The debate is around the words "broadly shared". How broad do we go? What level of prosperity is targeted?
bcherny 10y ago
To quote Milton Friedman: > “Government has three primary functions. It should provide for military defense of the nation. It should enforce contracts between individuals. It should protect citizens from crimes against themselves or their property. When government-- in pursuit of good intentions tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player.” (from https://www.amazon.com/Capitalism-Freedom-Anniversary-Milton-Friedman/dp/0226264211 https://www.amazon.com/Capitalism-Freedom-Anniversary-Milton...) Specifically addressing antitrust: > My own views about the antitrust laws have changed greatly over time. When I started in this business, as a believer in competition, I was a great supporter of antitrust laws; I thought enforcing them was one of the few desirable things that the government could do to promote more competition. But as I watched what actually happened, I saw that, instead of promoting competition, antitrust laws tended to do exactly the opposite, because they tended, like so many government activities, to be taken over by the people they were supposed to regulate and control. And so over time I have gradually come to the conclusion that antitrust laws do far more harm than good and that we would be better off if we didn't have them at all, if we could get rid of them. But we do have them. > Under the circumstances, given that we do have antitrust laws, is it really in the self-interest of Silicon Valley to set the government on Microsoft? Your industry, the computer industry, moves so much more rapidly than the legal process, that by the time this suit is over, who knows what the shape of the industry will be. Never mind the fact that the human energy and the money that will be spent in hiring my fellow economists, as well as in other ways, would be much more productively employed in improving your products. It's a waste! But beyond that, you will rue the day when you called in the government. From now on the computer industry, which has been very fortunate in that it has been relatively free of government intrusion, will experience a continuous increase in government regulation. Antitrust very quickly becomes regulation. Here again is a case that seems to me to illustrate the suicidal impulse of the business community. (from http://object.cato.org/sites/cato.org/files/serials/files/policy-report/1999/3/cpr399.pdf http://object.cato.org/sites/cato.org/files/serials/files/po...)
- matt4077 10y ago
  To quote me: > Just because Milton Friedman says it, it doesn't mean it's not idiotic. Government is the embodiment of a collected conscience. And just as it would be immoral for you to watch someone suffer when you could easily help, it is unconscionable for government to remain passive when any of its subjects suffer.
jnordwick 10y ago
It seems to me to be an economically illiterate statement that overly conflates profit motive, capitalism, and competition. But this does come from the pen of President Obama, so my hopes aren't that high. I seriously don't see the US as having a problem with too much competition, profit motive, or capitalism. Our biggest problems are in our most highly regulated industries. And as regulation grows regulatory capture becomes a far larger problem. If anything, I think we are suffering from a terrible lack of capitalism.
- matt4077 10y ago
  The current crisis was mostly caused by real estate and the financial industry. And while there's a lot of regulation in the financial industry, I doubt anybody argues that lehman brothers was forced into it's business by oppressive regulation. Concerning other industries, those most regulated are those that tend to natural monopolies such as energy or telecommunications. Nobody can seriously advocate for a return of the old telephony monopoly, so I'd say these industries suffer despite regulation, not because of iy.
tbrownaw 10y ago
From memory: "A free market is an excellent way to provide almost anything, except for a free market". People doing whatever works best for themselves can be good or bad, depending on how closely their own self-interest is aligned with the collective good.
davidw 10y ago
Policies that are market friendly, rather than business friendly, as proposed by Luigi Zingales here: "A Capitalism for the People: Recapturing the Lost Genius of American Prosperity" - http://amzn.to/2d6rUIi http://amzn.to/2d6rUIi I found it pretty convincing, even if I am not a libertarian.

by pdog 10y ago

blahi 10y ago

I don't think any non-radical person would be a proponent of 0 regulation capitalism. That is basically anarchism. The problem is not with radicals, they will always exist. The problem is that people in the middle are getting tripped up and supporting radical measures. The problem, and why I felt I had to submit this, is that there actually is a threat to capitalism. Things are better than ever, and at the same time people feel wronged. So wronged that Obama actually thinks that there is a real threat to capitalism and we might be at the verge of changing political and economic systems. This is very frustrating and scary. And I see no way to make people realize what they are doing.

amelius 10y ago
We can always change economic systems with a dial, and turn the dial back when things turn bad.
- eloff 10y ago
  You make it sound simple, painless. It's not. There could be decades of suffering and chaos. People would literally die. Look at Venezuela for an example.
  - amelius 10y ago
    That is an unfair comparison, because they didn't implement the change continuously.
    - eloff 10y ago
      I'm not sure I agree with that, but any comparison would be unfair because all situations are different and the real world is very messy. But that's just the problem.
- AnimalMuppet 10y ago
  No, we can't. It's Congress that's going to have to do the changing. That means each iteration of your "changing it with a dial" is going to be larded with pork, poorly-thought-through rules and regulations, general incompetence, and political grandstanding. Then it's going to be frozen in time for a year or a decade or a century, until Congress decides to tackle it again.
psyc 10y ago
Do you believe the poor and lower middle class are mistaken in being discontent with table scraps and a clearly disproportionate struggle? How should they react to perpetual promises of change that never materializes for them? Assertions that prosperity is rising ring hollow to this large segment, and rightly so. "The system is working; you just can't see it."
badsock 10y ago
If you're talking about the median American, and about essentials such as housing, education, medical care, and job security, I don't think you can claim that things are better than ever.
jnbiche 10y ago
> Things are better than ever, and at the same time people feel wronged... And I see no way to make people realize what they are doing. This right here is why Trump has a fighting chance to win this election, much to my chagrin. So many people in wealthy East and West coast cities have no idea how much the majority of the country is suffering still. The recovery has not touched the majority of poor and lower-middle class Americans.
- blahi 10y ago
  I am talking in terms of much longer spans of time than 5 years.
matt4077 10y ago
For many, probably most, people, times aren't the best they have ever been. Part of it is inequality in the distribution of the spoils of growth in productivity. Another part is that subjective well-being isn't perfectly correlated with economic facts. Maybe it's the fact relative wealth has more psychological impact than absolute wealth. Maybe they see others struggling and are empathetic. Many middle-class people may suffer from the constant fear that the loss of a job could mean an immediate and permanent drop in social standing and quality of life. Usually, countries can react to common problems: if people are willing to forgo some income for security they can strengthen social system etc. In the US, for some reason, people with identical experiences came to two different conclusions. The left advocates for policies "kicking up" - basically redistribution from top to bottom. The right chose to "kick down", basically trying to strengthen their competition by eliminating the competition from those considered lower than them. These sides have fought each other to an almost perfect standstill, thanks to a few quirks in the constitution like first-past-the-post-voting and a three-legged legislative. As nothing happens, people get more frustrated etc. pp. rinse repeat.

lobotryas 10y ago

What's there to comment on? As phrased, the sentence is correct. If we want "broadly shared prosperity" then capitalism alone can't deliver because without an external influence (socially conscious leader of a private company, government regulation on wages, etc), business will always try to optimize for higher profit at almost any cost. The debate is around the words "broadly shared". How broad do we go? What level of prosperity is targeted?

bcherny 10y ago

To quote Milton Friedman: > “Government has three primary functions. It should provide for military defense of the nation. It should enforce contracts between individuals. It should protect citizens from crimes against themselves or their property. When government-- in pursuit of good intentions tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation, and loss of freedom. Government should be a referee, not an active player.” (from https://www.amazon.com/Capitalism-Freedom-Anniversary-Milton-Friedman/dp/0226264211 https://www.amazon.com/Capitalism-Freedom-Anniversary-Milton...) Specifically addressing antitrust: > My own views about the antitrust laws have changed greatly over time. When I started in this business, as a believer in competition, I was a great supporter of antitrust laws; I thought enforcing them was one of the few desirable things that the government could do to promote more competition. But as I watched what actually happened, I saw that, instead of promoting competition, antitrust laws tended to do exactly the opposite, because they tended, like so many government activities, to be taken over by the people they were supposed to regulate and control. And so over time I have gradually come to the conclusion that antitrust laws do far more harm than good and that we would be better off if we didn't have them at all, if we could get rid of them. But we do have them. > Under the circumstances, given that we do have antitrust laws, is it really in the self-interest of Silicon Valley to set the government on Microsoft? Your industry, the computer industry, moves so much more rapidly than the legal process, that by the time this suit is over, who knows what the shape of the industry will be. Never mind the fact that the human energy and the money that will be spent in hiring my fellow economists, as well as in other ways, would be much more productively employed in improving your products. It's a waste! But beyond that, you will rue the day when you called in the government. From now on the computer industry, which has been very fortunate in that it has been relatively free of government intrusion, will experience a continuous increase in government regulation. Antitrust very quickly becomes regulation. Here again is a case that seems to me to illustrate the suicidal impulse of the business community. (from http://object.cato.org/sites/cato.org/files/serials/files/policy-report/1999/3/cpr399.pdf http://object.cato.org/sites/cato.org/files/serials/files/po...)

matt4077 10y ago
To quote me: > Just because Milton Friedman says it, it doesn't mean it's not idiotic. Government is the embodiment of a collected conscience. And just as it would be immoral for you to watch someone suffer when you could easily help, it is unconscionable for government to remain passive when any of its subjects suffer.

jnordwick 10y ago

It seems to me to be an economically illiterate statement that overly conflates profit motive, capitalism, and competition. But this does come from the pen of President Obama, so my hopes aren't that high. I seriously don't see the US as having a problem with too much competition, profit motive, or capitalism. Our biggest problems are in our most highly regulated industries. And as regulation grows regulatory capture becomes a far larger problem. If anything, I think we are suffering from a terrible lack of capitalism.

matt4077 10y ago
The current crisis was mostly caused by real estate and the financial industry. And while there's a lot of regulation in the financial industry, I doubt anybody argues that lehman brothers was forced into it's business by oppressive regulation. Concerning other industries, those most regulated are those that tend to natural monopolies such as energy or telecommunications. Nobody can seriously advocate for a return of the old telephony monopoly, so I'd say these industries suffer despite regulation, not because of iy.

tbrownaw 10y ago

From memory: "A free market is an excellent way to provide almost anything, except for a free market". People doing whatever works best for themselves can be good or bad, depending on how closely their own self-interest is aligned with the collective good.

davidw 10y ago

Policies that are market friendly, rather than business friendly, as proposed by Luigi Zingales here: "A Capitalism for the People: Recapturing the Lost Genius of American Prosperity" - http://amzn.to/2d6rUIi http://amzn.to/2d6rUIi I found it pretty convincing, even if I am not a libertarian.