Under the title, Why isn’t capitalism working?, Summers promotes the idea that the current problems in the economy are the result of "capitalism".
He writes:
The spread of stagnation and abnormal unemployment from Japan to the rest of the industrialized world does raise doubts about capitalism’s efficacy as a promoter of employment and rising living standards for a broad middle class. This problem is genuine.Say what? The current problems are not the problems of free markets, but occur at precisely the areas where government gets involved. Minimum wage laws and unemployment insurance are the only way long-term unemployment can occur. The slowdown in the standard of living (decline?) is the result of government regulations protecting elitist firms, at the expense of upstarts and other competitors that would advance innovative products and new ways of doing things.
Summers continues:
...along with dramatic rises in the share of income going to the top 1 and even the top .01 per cent of the population and declining social mobility do raise serious questions about the fairness of capitalism. The problem is real and profound and seems very unlikely to correct itself untended. Unlike cyclical concerns there is no obvious solution at hand.Again, this is the direct result of regulations benefiting the elitists, at the expense of others.
And it sure can create itself "untended". Just quit making it regulatory difficult for new firms. The elitists use their access to get around the many regulations that make it difficult for most to operate.
Summers is discussing a problem caused by central power gaining an edge, not free market capitalism.
Next, Summers states that there are areas where capitalism performs weaker:
The difficulty is that in many of these areas the traditional case for market capitalism is weaker. It is surely not an accident that in almost every society the production of health care and education is much more involved with the public sector than the production of manufactured goods.This clearly shows that Summers has no understanding of the capitalist system. There is no reason why healthcare and education can not be provided by the free market. Indeed, at different times they have. It is only when government has gotten involved that quality has collapsed and prices have skyrocketed.
Bottom line: Summers has created a straw man of what capitalism is. He points to problems created by government intervention and implies that they are caused by capitalism. Remarkably, after building this strawman, he resorts to calling for more government control. No doubt with himself as a key player in wielding the power. The latest rumor is the Summers may be named head of the World Bank, that colossal organization that acts as enforcer for elitist banksters and drives countries into poverty----poverty which Summers will likely claim is the result of "weaknesses" in capitalism.
Capitalism?
ReplyDeleteThe U.S. is a picture-perfect example of corporatism or fascism.
Even if the State owned and controlled everything under the sun, and private property was completely abolished, they'd find a way to blame capitalism.
I'm not sure why I'm amazed at the utter ignorance of a government boob, yet still it is befuddling just how some of these people made it in the real world....oh, I forgot they didn't make it in the real world!
ReplyDelete"The difficulty is that in many of these areas the traditional case for market capitalism is weaker. It is surely not an accident that in almost every society the production of health care and education is much more involved with the public sector than the production of manufactured goods."
ReplyDeleteHere in Britain it's no accident, but the state made it that way. Propaganda, will is almost universally believed, is that a state 'National' Health Service was created in 1948. No, the private (and national) health service was collectivised, and it's been deteriorating ever since.
Literacy and numeracy rates in late-Victorian Britain were greater than today, when private actors provided education in endless ways all across the country. The state steadily collectivised education and today no parent should let their children near state schools if possible.
Such is the totality of the state in these areas that hardly anyone is aware of these histories or can believe markets would provide health services and education far better if the state got out of the way.
God these guys are so full of it- using capitalism to describe corporatism and then criticizing the system to undermine it with more intervention. Remember this great Mises quote:
ReplyDelete“As a rule, capitalism is blamed for the undesired effects of a policy directed
at its elimination. The man who sips his morning coffee does not say, “Capitalism has brought this beverage to my breakfast table.” But when he reads in the papers that the government of Brazil has ordered part of the coffee crop destroyed, he does not say, “That is government for you”; he exclaims, “That is capitalism for you.”
This is the typical arrogant thinking that comes from academia that has pretty much abandoned reality. Its the old saying that "in theory the markets should work this way but in reality they do not." Guess what, if your theory does not work in reality, then its an invalid theory -- like most of mainstream economic theory.
ReplyDeleteAs for the dishonest discussion going on around the globe about income/wealth inequity, ask these geniuses why they do not include government pensions, employer health-care and government promised benefits in the income/wealth conversation? According to our government's own numbers SS&MC are $33T underfunded, which means that they have a value of $37T ($33T+4T excess pmts) and most of that is owed to the bottom 99%. That is 3x the wealth of the stock markets in the US. Add to this the amount of pensions to just government workers and that number grows by another $10T. The problem with the middle classes wealth is that it sits in the form of government promises. This is the same problem across the globe. Its an affirmation of Directors law. All I can say here is the government better find a way to create a lot more rich people to tax or this house of cards is coming down.
What Summers fails to grasp, which any business owner could explain to him, is that even though we see our businesses picking up we know that none of the world's government's have done a damn thing to solve their debt crisis. With this financial crisis in government, it raises the level of uncertainty to a point that preservation becomes as important as growth and liquidity becomes the difference between those that survive and those that don't. My business has picked up quite a bit (nothing close to where it was in 2008), but I can assure you that we are ready for it to fall off a cliff again like it did in 2010. This is why I only hire contract labor and lease rather then buy equipment. Like every business I have to be ready for the perversion of the market place by government intervention to save itself.
Larry should stick to pension fund investing.
ReplyDeleteOh, wait, that did not work out too well, either.
Nevermind.
Summers is such an establishment a**hole. And as everyone, including himself (who is also one of the 1 percent he tries to lament), who are a direct cause of the problem, always deflect attention away from where the 'real problems' lie....and are also where his paycheck comes from. The problem is the FED-government banking system and Big Government. Free banking, commodity-based money, end of the Fed, and massively less regulation, taxation, and government is the ONLY way to any 'solutions'.
ReplyDeleteMore relevant Mises quotes:
ReplyDelete"The regular scheme of arguing is this; A man arbitrarily calls anything he dislikes 'capitalistic,' and then deduces from this appellation that the thing is bad."
"The concept of capitalism is as an economic concept immutable; if it means anything, it means the market economy. One deprives oneself of the semantic tools to deal adequately with the problems of contemporary history and economic policies if one acquiesces in a different terminology. This faulty nomenclature becomes understandable only if we realize that the pseudo-economists and the politicians who apply it want to prevent people from knowing what the market economy really is. They want to make people believe that all the repulsive manifestations of restrictive government policies are produced by 'capitalism.'"
"Unlike cyclical concerns there is no obvious solution at hand."
ReplyDeleteIt's not obvious to him because the solution will involve forcing him to get a real job!
"Americans have traditionally been the most enthusiastic champions of capitalism. Yet a recent American public opinion survey found that just 50 per cent of people had a positive opinion of capitalism while 40 per cent did not."
ReplyDeleteThat's the opening line from Summers' article. Is it any surprise that people hold a negative opinion of capitalism when they are living under a barrage of blatant propaganda of the type Summers has provided here?
The Mises quote from anon 4:25 is spot on!
"It is surely not an accident that in almost every society the production of health care and education is much more involved with the public sector than the production of manufactured goods. "
ReplyDeleteWell of course it wasn't an accident it was deliberately planned and coordinated for years. What Mr. Summers is trying to imply here is that because it happened everywhere it happend for good reasons. This is absurd on it's face, slavery happened everywhere (pretty much) did that indicate slavery is a good thing?
So let me get this straight "The problem is [wages] they have stagnated or fallen measured relative to the price of housing, health care, food and energy or education.".
ReplyDelete"The difficulty is that in many of these areas the traditional case for market capitalism is weaker. It is surely not an accident that in almost every society the production of health care and education is much more involved with the public sector than the production of manufactured goods." So the fact that the stagnating productivity is in areas where government has the most power is an argument AGAINST capitalism?