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I think past 100 years have been a pretty good lesson that capitalism works best when there is government to help with collective action. This is what is happen
by ivalm 4y ago
I think past 100 years have been a pretty good lesson that capitalism works best when there is government to help with collective action. This is what is happening now and how we avoid tragedy of the commons. Laissez faire capitalism is stupid and every historic data point agrees.
- DethNinja 4y agoProblem is how government allocates all the funds. Right now all the winners are chosen by the government. Thus, it is not based on meritocracy but entirely on connections. Also, government and corporations have merged to such an extend that competition with existing players are not even possible. I think a good classification for the current system would be neofeudalism. You are either a noble with connections or a peasant.
- ivalm 4y ago> all the winners are chosen by the government Not true > government and corporations have merged to such an extend that competition with existing players are not even possible. Look at s&p500 cos from 2000 and now, there is a huge amount of displacement (due to competition).
- Forgeties79 4y agoYeah. I like the economist until they make statements like this. Capitalism isn’t a moral good, it isn’t noble. It’s just a system we’ve “created” and we can adjust/mess with it as we see fit. They make it sound like there’s some moral imperative to “stay out of the way of the invisible hand” or whatever when, as you said, historically this has proven pretty destructive.
- jnwatson 4y agoYeah it wasn’t until I heard that the banks weren’t allowed to hedge HTM bonds that I truly appreciated the “make it up as we go along” nature of our monetary system. There could be a bank run on Chase tomorrow and they wouldn’t be able to hold. The only thing keeping everything together is folks not panicking.
- JaimeThompson 4y ago>The only thing keeping everything together is folks not panicking. That applies to a great many things in modern society.
- Forgeties79 4y agoMy engineer buddy always says “you’d be amazed how many things are dependent on someone having their morning cup of coffee.”
- somenameforme 4y agoI'd distinguish between monetary system and economic system. An amazing page is wtf happened in 1971. [1] The event it's alluding to is the end of the Bretton Woods System [2]. 1971 is effectively the day that the USD became completely unbacked by anything whatsoever, enabling unrestrained "printing" of money. It's quite difficult for a free market of any sort to function when you have a government that becomes capable of arbitrarily distributing effectively unlimited funds at their discretion. This is even more true when that "discretion" is often whimsical and self destructive. So you look at the various graphs seeing things like skyrocketing wealth inequality, inflation, government debt, and more - and all one can think is, "Gee, who'd of thunk?" In any case, it's important to appreciate that our current monetary system only began about 50 years ago. [1] - https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/ [2] - https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system
- brightball 4y agoWhich historic data points?
- ivalm 4y ago- Outcomes in unregulated banking (early 20th century US+Europe, crypto more recently) - De-regulation of banks prior to 2008 - Austerity vs stimulus in EU vs US post 2008 - Austerity post COVID in UK - Healthspan outcomes in places with lax environmental safety regulations (us early 20th century, China more recently) - Fishery collapse throughout oceans due to lack of government intervention - Hunted animal population collapses (prior to intervention) and rebounding (after intervention) The list could go on much much more… Tragedy of commons just occurs everywhere all the time
- brightball 4y ago2008 is an interesting data point to include in there because wasn’t it government intervention that was forcing banks to take on riskier loans in the first place? The rest are solid data points at a glance though.
- bcrosby95 4y agoFunny. The government seems to only want to help with collective action for certain participants in capitalism. The rest of us get whatever those chosen participants allow us to get.
- ivalm 4y agoYou mean like extra unemployment checks during COVID? COVID stimulus checks? Public student debt forgiveness? Various forbearances during covid?
- Atlas22 4y agoDont forget the selective sharing of inside information and bailing out of only certain banks and investors, that just happen "by pure coincidence" to make large political contributions and extensive lobbying to government officials that make those choices.
- ivalm 4y agoI am all for more oversight of the government and stricter ethics guidelines!
- Atlas22 4y agoIn the past 100 years we've had conservatively 17 recessions (not including the current one) lasting 17 years 11 months total time (18% of the time), and with 1,691% inflation... And that includes all the adjustments to how they calculate CPI they like to include almost every recession to make it look less bad.
- ivalm 4y agoWhat’s wrong with inflation? We want to encourage growth & investment rather than hoarding of money, inflation is good because it punishes hoarders. Recessions and bubbles occur more often in unregulated economies.