Capitalism and Socialism: The Good, The Bad and The Ugly

[Pierre]

One thing about UBI that also doesn't make sense to me, is the need for money at all

I think the ones who need money the most are the ones who benefit the most from it.

About 97% of money worldwide is created as debt by private banks. Today, the global debt is close to $250 trillion. It means that, for an average 2% annual interest rate, private banks extract about $5 trillion dollars ($5000 billion i.e. 150% of the US federal budget) from its debtors (public and private institutions + individuals).

Imagine all the problems mentioned in this thread that could be solved with such a huge amount of money. For example, the cost of ending world hunger is estimated to be $30 billion, i.e. 0.6% of the amount mentioned above.

This situation is historically all the more striking because:
1/ for centuries, each state had the monopoly on creating its own money (because in the end a national currency is the reflection of the value of the nation)
2/ for millenia, interest collected on debt (usury) was legally and morally reprehensible. It was banned all the way back to Ancient Greece and this lasted until the XVIth century. It is still banned by the Catholic canon law.

 

[Approaching Infinity]

Next bit from Ponerology, where Lobaczewski describes how an overall psychological worldview is essential to the proper development of culture and individual character, conditioning the development of moral and social attitudes, and all our private and social activities, mundane or important.

The level and quality of a given society’s psychological worldview is also a condition of realization of the full socio-psychological structure present as a potential in the psychological variety within our species. Only when we can understand a person in relation to his actual internal contents, not some substituted external label, can we help him along his path to proper adjustment to social life, which would be to his advantage and would also assist in the creation of a stable and creative structure of society.

As long as a society has a poor understanding of psychology and the range of variation in types (e.g. big 5), the society in question will not develop its potential. And again, the level of analysis has to start at the individual, not in terms of group identities. Otherwise, individual potential can't be developed, thus stunting social potential. Psychology first, everything else after - that's the approach Peterson learned to take back in the 80s.

Supported by a proper feel for, and understanding of, psychological qualities, such a structure would impart high social office to individuals possessing both full psychological normality, sufficient talent and specific preparation. The basic collective intelligence of the masses of people would then respect and support them.

And so, in such a society, the only pending problems to be resolved would be those matters so difficult as to overwhelm the natural language of concepts, however enriched and qualitatively ennobled.

I.e., a hierarchy of competence. And people don't resent people 'above them', as long as they perceive them as being a good fit and deserving their position.

But even such a society will run into problems if they don't have specific knowledge about ponerology, e.g. when dealing with a lunatic revolutionary movement. He then talks about two additional problems which work to distort the healthy formation of a pschological worldview: "society pedagogues" (i.e., people who think they know better how to reshape society, but whose overly simplistic ideas - even if sometimes true - only succeed in depriving society of universal values and creating the opening for destructive ideologies) and pathologicals (whose influence is more severe when they're attached to an ideology).

Many causes which easily escape the notice of sociologists and political scientists can thus be broken down into either the development or involution of this factor, whose meaning for the life of society is as decisive as the quality of their language of psychological concepts.

After this, he gives his first proposal for a kind of social thermometer to measure a society's health: an inventory of the contents and correctness of the psychological knowledge of representative people within any given society. This would give an idea of a nation's
"talent for self-government and progress, as well as its ability to carry on a reasonable international policy" and serve as an early warning system of deterioration. That leads to the background for his second proposal, which is the main part I was thinking about in relation to this thread:

Let as adduce another example of a congenial nature: the development of an adult human’s gifts, skills, realistic thought, and natural psychological world view will be optimal where the level and quality of his education and the demands of his professional practice correspond to his individual talents. Achieving such a position provides personal, material, and moral advantages to him; society as whole also reaps benefits at the same time. Such a person would then perceive it as social justice in relation to himself.

If various circumstances combine, including a given society’s deficient psychological world view, individuals are forced to exercise functions which do not make full use of his or her talents. When this happens, said person’s productivity is no better, and often even worse, than that of a worker with satisfactory talents. Such an individual then feels cheated and inundated by duties which prevent him from achieving self-realization. His thoughts wander from his duties into a world of fantasy, or into matters which are of greater interest to him; in his daydream world, he is what he should and deserves to be. Such a person always knows if his social and professional adjustment has taken a downward direction; at the same time, however, if he fails to develop a healthy critical faculty concerning the upper limits of his own talents, his daydreams may “fix on” an unfair world where “all you need is power”. Revolutionary and radical ideas find fertile soil among such people in downward social adaptations. It is in society’s best interests to correct such conditions not only for better productivity, but to avoid tragedies.

This also meshes with the stuff Peterson talks about. There is a social hierarchy, and everyone potentially 'fits' where they're most suited. And just like with the overall worldview, this acts as a measure of overall social health. Some people with certain talents will be better suited for certain professions and positions, and will reap advantages those below them do not. But as long as the people below them are well-suited to their position, there won't be resentment. And I think you could say that an important part of being well-fitted to your position is the amount of money you make. Many jobs that don't provide a living wage perhaps ideally should provide one. And even if some jobs can't (e.g., typical low-income jobs like the types traditionally taken by teenagers) - maybe programs for job placement, learning new skills can help.

But when there is downward-adjustment, it leads to resentment and revolutionary tendencies, which under the right circumstances can destroy the old, sick system, and replace it with a pathocratic social structure, which is orders of magnitude worse than even the crappy previous one. Pretty sure I've heard Peterson talk about this concept too, in reference to this book: Killing the Competition: Economic Inequality and Homicide. It's not exactly what Lobaczewski's talking about, but it's related I think. From the book description:

Criminologists have known for decades that income inequality is the best predictor of the local homicide rate, but why this is so has eluded them. There is a simple, compelling answer: most homicides are the dénouements of competitive interactions between men. Relatively speaking, where desired goods are distributed inequitably and competition for those goods is severe, dangerous tactics of competition are appealing and a high homicide rate is just one of many unfortunate consequences. Killing the Competition is about this relationship between economic inequality and lethal interpersonal violence.

Suggesting that economic inequality is a cause of social problems and violence elicits fierce opposition from inequality’s beneficiaries. Three main arguments have been presented by those who would acquit inequality of the charges against it: that “absolute” poverty is the real problem and inequality is just an incidental correlate; that “primitive” egalitarian societies have surprisingly high homicide rates, and that inequality and homicide rates do not change in synchrony and are therefore mutually irrelevant. With detailed but accessible data analyses and thorough reviews of relevant research, Martin Daly dispels all three arguments.

Killing the Competition applies basic principles of behavioral biology to explain why killers are usually men, not women, and counters the view that attitudes and values prevailing in “cultures of violence” make change impossible.

Just for reference, practically all the cities with the highest murder rates are in Brazil (17 cities), Mexico (12 cities), Venezuela (5 cities), and the US (4 cities, 5 if you include San Juan, Puerto Rico).

Back to Lobaczewski:

Another type of individual, on the other hand, may achieve an important post because they belong to privileged social groups or organizations in power while their talents and skills are not sufficient for their duties, especially the more difficult problems. Such persons then avoid the problematic and dedicate themselves to minor matters quite ostentatiously. A component of histrionics appears in their conduct and tests indicate that their correctness of reasoning progressively deteriorates after only a few years’ worth of such activities. In the face of increasing pressures to perform at a level unattainable for them, and in fear of being discovered as incompetent, they begin to direct attacks against anyone with greater talent or skill, removing them from appropriate posts and playing an active role in degrading their social and professional adjustment. This, of course, engenders a feeling of injustice and can lead to the problems of the downwardly adapted individual as described above. Upwardly-adjusted people thus favor whip-cracking, totalitarian governments which would protect their positions.

And these people aren't even necessarily pathological, just ill-suited to their position - but the people under them will see them as tyrants. The downside of tenure, you could say!

Upward and downward social adjustments, as well the qualitatively improper ones, result in a waste of any society’s basic capital, namely the talent pool of its members. This simultaneously leads to increasing dissatisfaction and tensions among individuals and social groups; any attempt to approach human talent and its productivity problematics as a purely private matter must therefore be considered dangerously naive. Development or involution in all areas of cultural, economic and political life depend on the extent to which this talent pool is properly utilized. In the final analysis, it also determines whether there will be evolution or revolution.

Technically speaking, it would be easier to construct appropriate methods that enable us to evaluate the correlations between individual talents and social adjustment in a given country, than to deal with the prior proposition of the development of psychological concepts. Conducting the proper tests would furnish us a valuable index that we might call “the social order indicator.” The closer the figure to +1.0, the more likely the country in question would be to fulfill that basic precondition for social order and take the proper path in the direction of dynamic development. A low correlation would be an indication that social reform is needed. A near-zero or even negative correlation should be interpreted as a danger-sign that revolution is imminent. Revolutions in one country often cause manifold problems for other countries, so it is in the best interests of all countries to monitor such conditions.

I wonder if something like this has been done, or if existing measures can come close to measuring the same thing?

Just a couple more sections to go...

 

[Jones]

There's also the difference between commerce and trade to take into account.

Trade basically started out as barter prior to there being a uniform medium of exchange in the form of currency. As such, trade was more dependent on supply and demand and required a higher degree of input either in the form of energy or assets, or from an individual. Transport costs were minimised because it was more likely to be local.

Commerce isn't as reliant on supply and demand, can have a reduced degree of energy or asset input because commerce basically creates it's own markets through advertising, propaganda, debt, influencing laws, transport, insurances, taxation, levies, warehousing, packaging etc. There are so many levels where individuals or businesses can take a slice of each commercial transaction that are not applicable in a basic trade.

From what I can gather both capitalism and socialism seem to want to suppress trade by applying the same laws to it that are applied to commerce.

The biggest threat to capitalism and socialism presented by a UBI from this perspective is that it may free individuals up from their concentration on the basic needs of survival to want to engage in trade or volunteer in some capacity, some activity that they find meaningful and don't necessarily need a financial reward for. Thus reducing the systemic influence on their choices or taking some of the market share away from commercial interests.

 

[Beau]

Socialized healthcare has apparently led to the collapse of Finland's government:

Finland's Government Collapsed Under Weight Of Socialized Healthcare

Finland's government has collapsed just weeks before the general election. New socialist and communist reforms have failed due to the rising costs of healthcare.

www.shtfplan.com

Finland’s government has collapsed just weeks before the general election. New socialist and communist reforms have failed due to the rising costs of healthcare.

Healthcare costs, which are high because of governments, have caused the collapse of the Finnish government. Prime Minister Juha Sipila and the rest of the cabinet resigned after the governing coalition failed to pass reforms in parliament to the country’s regional government and health services, the Wall Street Journal reports. Finland, like much of the developed world, faces an aging population, with around 26 percent of its citizens expected to be over 65 by the year 2030, an increase of 5 percent from today. The strain on the socialized medical system is impossible to ignore, and cannot be fixed by more government interference.

And the problems with socialism continue, as money is taken from some and given to others, eventually, the takers will outnumber the makers.

As an increasing number of people live longer in retirement, the cost of providing pension and healthcare benefits can rise. Those increased costs are paid for by taxes collected from of the working-age population – who make up a smaller percentage of the population than in decades past. -BBC

The only reform that could possibly help these failing systems is to have the government step back and let competition and the free market thrive. Of course, that’s the one thing governments cannot and will not do because it means giving up power and control over people’s lives.

Reuters reports that soaring treatment costs and longer life spans have particularly affected Nordic countries. It isn’t just Finland. Sweden and Denmark face similar bleak outlooks for their socialism as well. “Nordic countries, where comprehensive welfare is the cornerstone of the social model, have been among the most affected,” according to Reuters. “But reform has been controversial and, in Finland, plans to cut costs and boost efficiency have stalled for years.”

The Kaiser Family Foundation found that 58 percent of Americans oppose “Medicare for all” if told it would eliminate private health insurance plans, and 60 percent oppose it if it requires higher taxes, according to a report by the Washington Free Beacon. Americans are general living paycheck to paycheck and already suffer under an unjust and burdensome tax system. Socialized medicine would mean one thing is for certain: more of your money will be stolen from you to pay for it. It isn’t about giving everyone healthcare, it’s about a boost in power and control for government officials and politicians who think they have the right to steal from us and run our lives.

When is enough enough?

 

[Beau]

There have been issues with Finland's healthcare system for quite a while apparently. The main problem is healthcare is underfunded, which has led to weeks of waiting to see general practitioners. The system basically forces people to see private doctors. Also, the percentage of doctors working privately has doubled in the last 20 years. This has led to the more experienced, quality physicians working in the private sector and the weakest doctors being public. None of this sounds like something any other country should strive for.

From 2016:

Why is Finland’s healthcare system failing my family? | Ed Dutton

The country is held up as a model welfare state, but its high taxes are spent on education and childcare, not on health

www.theguardian.com

Imagine going to your nearest doctors’ surgery at 9am on a weekday with your sick six-year-old daughter because you cannot make an appointment over the phone. After your drive to another part of the city, you can’t simply book a time with the receptionist. There isn’t one. Instead, you must swipe your daughter’s national insurance card through a machine, which gives you a number. Then you and your feverish child simply sit and wait. Or rather, you stand, because the room is so crowded that people are sitting on the floor, on steps, or leaning against walls. The numbers come up on a screen every 10 minutes or so, in no particular order so you’ve no idea how long your wait will be as your daughter complains of feeling cold then hot and then cold again.

By 10.45, another patient’s dad exclaims he’s been there since 8.15, he’s had enough, and he’s going to go to a private GP. “You used to just be able to make an appointment with a doctor!” he says angrily.

You see, you are not even waiting to see a GP. You’re waiting to a see a nurse in order to justify to her how quickly your child needs to see a GP or whether she needs to see one at all. At 11.30, you give up and take your daughter to see a private doctor as well, forking out £50 for the privilege.

This isn’t some nightmare vision of the NHS after 10 years of Tory cuts. This happened to me recently in a country I have moved to from Britain that is normally lauded as the shining example of a successful welfare state.

Finland receives such a positive press in Britain. Its schools consistently have the best international student assessment results in the western world; there’s high social equality; all its teachers have master’s degrees. But it has one of the worst health services in Europe.

Finland’s health service has been in a parlous state for decades and it is getting worse.

According to an OECD report published in 2013, the Finnish health system is chronically underfunded. The Nordic nation of five million people spent only 7% of GDP on its public health system in 2012, compared with 8% in the UK. In 2012, the report found, 80% of the Finnish population had to wait more than two weeks to see a GP. Finland’s high taxes go on education and daycare.

Finland has more doctors per capita than the UK but, at the level of primary care, a far higher proportion of these are private than is the case in Britain. And the Finnish equivalent of the NHS is far from free at the point of use. A GP appointment costs €16.10 (£12.52), though you pay for only the first three visits in a given year. A hospital consultation costs about €38, and you pay for each night that you spend in hospital, up to a maximum of €679. And once you get to the chemist, there is no flat fee; no belief that you shouldn’t be financially penalised for the nature of the medicine you require. The service is not national, but municipal, meaning that poorer areas of the country tend to have a bad health service and limited access even to private GPs, who set up practices in more affluent areas.

In Helsinki there are reports of huge queues at health centres (GP surgeries), waits for appointments of many weeks, and greater and greater demands with less and less funding. In south-eastern Finland it takes about a month to see a GP. Back in December 2013, it was reported that Finns were increasingly using private doctors in neighbouring Estonia to save time and money.

I live in Oulu, Finland’s northern technology hub, famed for its annual Air Guitar Festival. Jani Saarinen (not his real name), an Oulu doctor in his 30s, who has worked in both the state and private sectors in different parts of the country, explained to me that the municipal health system was plagued by “cost pressures” and “long waiting times”.

“There used to be an outsourced health centre in Oulu, so it was private, but it was the public service that the city offered,” says Saarinen. “Using a different system from the municipality, they managed to get waiting times down to two weeks and see emergency appointments on the same day. Outsourcing was a much more efficient way of working, but it was closed down.”

Saarinen explains that the system essentially forces people to go private or rely on friends who are doctors.

“I was at work and I got something in my eye. I couldn’t carry on working because of this,” Jani recalls. “As the hospital only provided minimal occupational health, I’d have to go to the health centre and maybe wait four hours. I obviously didn’t have time to do that, so the only solution was to find a friend who was an ophthalmologist or go to a private doctor. Many parents see private health insurance for their kids almost as mandatory.”

The dad I waited with at Oulu’s Kontinkangas health centre was Ville Ranta, a political cartoonist. He says that the Finnish left believes that the health service is being deliberately made so bad that everyone goes private. Certainly, no Finnish government has been led by a leftwing party since 2003 and, since then, private primary care has expanded hugely.

Even in Finland, universal basic income is too good to be true

According to the Finnish Medical Association, 17% of Finnish doctors work solely in the private sector, generally in primary care. This is double the percentage it was 20 years ago. Another 20% are partly in private practice, and most employers pay for their workers – though not their workers’ families – to have private primary healthcare. The private system is better paid and there is less pressure. Accordingly, claims Saarinen, more experienced and “better” doctors end up in the private sector, leaving the “inexperienced” and “inefficient” doctors running the health centres.

Hospitals are struggling as well. In December, my wife slipped on the ice so badly that she broke her leg. Visiting her in hospital, I found the corridors lined with bedridden elderly women, so overcrowded were the wards. On my second visit, the glass-fronted room on my wife’s ward set aside for patients to drink coffee with their relatives had been closed off and curtains hung on the windows. It was now a makeshift bedroom for an ice victim.

But there may be hope, at least for healthcare centres. Pekka Järvinen, ministerial counsellor for legal affairs at the health ministry, tells me: “There are plans to reorganise the system by 2019. At the moment, there are often long queues … healthcare is run by 301 different municipalities, some of them very small.” The new system, he says, will create about 19 “large organisations and this will be a better way of financing the service”.

Saarinen is not convinced. “Maybe the new system will make things work more efficiently,” he says. “We’ll see, but at the moment it’s a mess.”

 

[Beau]

Here is a rather scathing report on the state of things in Denmark, specifically regarding the welfare state and immigration:

Denmark in a State of Unreported Collapse

The official statistical definition of "descendants" includes only the first generation after the person who migrated to Denmark. So the official figures do not show the real picture. If the population statistics continue to follow that pattern, ethnic

www.gatestoneinstitute.org

• The official statistical definition of "descendants" includes only the first generation after the person who migrated to Denmark. So the official figures do not show the real picture.
• If the population statistics continue to follow that pattern, ethnic Danes -- whose birthrate is far lower than that of non-Western immigrants -- will become a minority sometime around the year 2065. According to a 2017 report by Statistics Denmark, only about half of non-Western immigrants between the ages of 16 and 64 are employed (53% of men and 45% of women).
• In 2017, a third of all the people provided for by Denmark's basic social-welfare system were immigrants, which constitutes a rise of 82% in a mere seven years. These figures show that the public expenses connected to immigration will, in the long run, bring the welfare state to an end.

The media portrayal of Denmark as a country hostile and inhumane to migrants is misleading, if not completely false.

One reason for the inaccurate picture is that it is painted by journalists' political bias. Another is that trustworthy official Danish statistics on the country's immigration problem are both difficult to find and even harder to interpret. A further problem is a lack of reliable research, at best; and purposely distorted data, at worst.

The following breakdown illustrates that rather than being more relatively free of the consequences of mass migration than other European countries in general, and Scandinavian countries in particular, Denmark is in a state of societal collapse. In spite of Copenhagen's many laws that govern migration and affect immigrants, the Danish people have been experiencing a major cultural and political shift in their life as they have traditionally known it.

Population Projections
In 1960, the population of Denmark was 4,580,708. Today, that number stands at 5,768,712. This growth appears to be largely due to immigration.

In 2016, Statistics Denmark projected that the country will have 507,000 "non-Western" immigrants by the year 2060, and 342,000 "non-Western descendants."

"Descendants", however, include only the first generation after the person who migrated. So the official figures do not show the real picture.

In 1989, a private organization, "The Danish Association", published an alternative projection as part of a special edition of the group's periodical Danskeren(September 1989, p. 3, not available on the internet.) The article, published anonymously -- revealing the degree of political correctness and self-censorship required in Denmark even then -- predicted that immigration would remain relatively static, regardless of foreseeable insufficient attempts to tighten legislation. This prediction has turned out to be almost correct up to now.

The article predicted about 1.1 million immigrants around 2020, in accordance with what can be seen in current statistics if you include the third generation of newcomers as well as the probable number of unregistered foreigners.

If the population statistics continue to follow this pattern, ethnic Danes -- whose birthrate is far lower than that of non-Western immigrants – will become a minority sometime around the year 2065. This is in fact quite likely to happen, as immigrants defined as "refugees" continue to enter the country; and others, such as arrivals of family members and "walk-ins," are rarely able to be returned to their countries of origin.

Employment and Social Welfare
According to a 2017 report by Statistics Denmark, only about half of non-Western immigrants between the ages of 16 and 64 are employed (53% of men and 45% of women). When broken down into countries of origin, however, major differences among migrants were revealed -- with the employment rate being particularly low among those hailing from Iraq, Lebanon, Somalia and Syria.

Analyzing Statistics Denmark data, the Danish Employers Confederation revealed that in 2016, 41.5% of non-Western immigrants were on welfare, while only 17.5% of ethnic Danes were supported by the same benefits. In 2017, a third of all the people provided for by Denmark's basic social-welfare system were immigrants, which constitutes a rise of 82% in a mere seven years.

These figures show that the public expenses connected to immigration will, in the long run, bring the welfare state to an end.

Education
According to the same 2017 Statistics Denmark report, 49% of male non-Western descendants, and 70% of female non-Western descendants, completed an education in an employable field, compared to 73% male ethnic Danes and 81% female ethnic Danes.

In addition, ethnic Danish children scored higher on final exams than immigrants' children and their first-generation descendants (grades of 6.7 for boys and 7.4 for girls, compared to 5.3 respectively 5.9 for non-western first-generation descendants). Those who scored lowest were first-generation descendants of Turkish and Lebanese immigrant parents.

A 2018 report by the Danish Ministry of Education found a similar difference even among third-generation descendants of migrants. The study was disputed, but the factual results stand. They indicate that many of the long-term descendants of non-Western immigrants will have difficulties satisfying the demands of a modern, highly industrialized Western society.

Unfortunately, reports in Denmark increasingly end up as this one did: If officials publish something that contradicts the fairy-tales of the do-gooders, journalists will take action and scare the transgressor -- so he will rephrase what he said without directly correcting it.

The Economy
According to a February 2018 Danish Finance Ministry report, the government's net annual expenditure on non-Western immigrants in 2015 was 36 billion Danish kroner -- approximately $5 billion USD. As there are approximately 5 million ethnic Danes, the taxpayer cost borne by each individual, in effect, came to $1,000 per year, or $4,000 for a family of four.

That figure, however, only refers to public budgets directly related to immigrants. It does not include the additional indirect public funds spent on law enforcement, schools, social security administration and other ancillary matters, due to the presence of non-Western immigrants.

It will not be possible in the long run to finance these rapidly growing expenditures.

Crime
According to the Statistics Denmark report, the crime rate among in 2017 was 35% higher among non-Western male immigrants and 145% higher among male descendants of non-Western immigrants than in the Danish male general population. It should be noted that the figures are misleading, since third-generation descendants of immigrants are counted as Danes also in this context. Male descendants of immigrants from Lebanon - many of whom were, according to the report, stateless Palestinians -- followed by male descendants of immigrants from Somalia, Iraq, Pakistan, Morocco and Syria -- rated the highest for crime.

Polls

Polls have been taken among immigrants. Examples: In 2006 young adult Muslims in Denmark proved to be more religious that their parents; half of them even thought that freedom of speech should give way for consideration of religious rules and traditions (reported in Jyllands-Posten 21/5 2006). Only 59% of the Muslims though that the constitution alone should be the basis for Danish legislation. More than a third of the Muslims in Denmark felt more connected to their country of origin than to Denmark (Jyllands-Posten 13/5 2006). Four out of 10 boys of Turkish and Lebanese background expect their mother to be at home to take care of family and children (Jyllands-Posten 12/11 2008). About half of the Muslims polled thought that Israel has no right to exist. Other polls show the same depressing picture.

Political Fallout
Do not be fooled by the much-publicized burqa ban that went into effect in Denmark in August 2018. For one thing, it has rarely been enforced -- only 13 fines in half a year. Moreover, those who wish to oppose the idea of equality between men and women are free to go to countries where such dress-codes are welcomed.

Do not trust other media stories running along the same lines, either. Suffering refugees are not forced to live on a remote island. Only foreign criminals"convicted of crimes and slated for deportation under the terms of their sentences" will be housed there. And they will even be given ferry rides to the mainland, under the excuse that this is necessary due to "international conventions".

Refugees are not "stripped" of their valuables at the border. Jewelry and assets exceeding a value of 10,000 Danish kroner ($1,500 USD) have to be handed in to the authorities to help pay for those seeking asylum. Just as Danes do not get social welfare money if they have valuables that enable them to provide for themselves. The actions by the border-control authorities on this are subject to control by the courts.

Other examples of media disinformation on Denmark abound.

The political climate in Denmark is such that even Prime Minister Poul Schlüter (served 1982-1993), a conservative, at a time when there was a discussion in 1989 of reversing the then recently-passed catastrophic immigration legislation, was prevented by the private but heavily subsidized organization Danish Refugee Council from meeting with a representative of the most prominent anti-immigration organization. [1]

Most of all, due largely to the left-wing media, most Danes fail to understand how serious the problem is that the country is facing from the influx of non-Westerners, whose children and grandchildren in unsettling numbers do not appear to be adopting Danish culture and values, and who seem to resist assimilation. It is thus highly unlikely that any political party that opposes immigration will find support among voters to influence legislation enough to meet the country's urgent needs.

 

[Approaching Infinity]

A few interesting economic tidbits from articles I've come across over the past week or so. First, the following graph:

http://www.aei.org/wp-content/uploads/2018/07/cpichart2018a.png

And commentary:

a. The greater (lower) the degree of government involvement in the provision of a good or service the greater (lower) the price increases (decreases) over time, e.g., hospital and medical costs, college tuition, childcare with both large degrees of government funding/regulation and large price increases vs. software, electronics, toys, cars and clothing with both relatively less government funding/regulation and falling prices. As somebody on Twitter commented:

Blue lines = prices subject to free market forces. Red lines = prices subject to regulatory capture by government. Food and drink is debatable either way. Conclusion: remind me why socialism is so great again.

And a couple of interesting papers on modern capitalism:

Capitalists in the Twenty-First Century

Founded in 1920, the NBER is a private, non-profit, non-partisan organization dedicated to conducting economic research and to disseminating research findings among academics, public policy makers, and business professionals.

www.nber.org

Have the idle rich replaced the working rich at the top of the U.S. income distribution? Using tax data linking 11 million firms to their owners, this paper finds that entrepreneurs who actively manage their firms are key for top income inequality. Most top income is non-wage income, a primary source of which is private business profit. These profits accrue to working-age owners of closely-held, mid-market firms in skill-intensive industries. Private business profit falls by three-quarters after owner retirement or premature death. Classifying three-quarters of private business profit as human capital income, we find that most top earners are working rich: they derive most of their income from human capital, not physical or financial capital. The human capital income of private business owners exceeds top wage income and top public equity income. Growth in private business profit is explained by both rising productivity and a rising share of value added accruing to owners.

Related study arguing that income inequality is primarily driven by labor income:

https://scholar.harvard.edu/files/atsiarasjmp.pdf

This paper investigates the contribution of entrepreneurship to increasing U.S. wealth inequality. Using data from the Survey of Consumer Finances (SCF), I document that, since 2000, the increase in the wealth shares of the top 0.1% and 1% groups of households is almost exclusively driven by entrepreneurs, identified empirically as private business owner-managers. Additional evidence from the SCF points to an increase in the average returns to entrepreneurial ventures as a likely driver of these patterns. I develop analytical characterizations of summary measures of inequality in the context of a model of wealth accumulation featuring heterogeneity in investment returns and in labor earnings across households in order to examine the restrictions that the wealth distribution imposes on the underlying return heterogeneity. To match the relative position of entrepreneurs across the wealth distribution and the level of top concentration in the SCF data, as well as changing inequality from the 1990s to the 2010s, the model requires high persistence of entrepreneurial status across households and a substantial increase in the average excess return to entrepreneurial investments. The associated slow transition dynamics of the wealth distribution in the model imply that, if not reversed, recent structural shifts may lead to widening inequality for many years to come.

From a Quillette article on the papers:

While the NBER data suggests that Piketty’s view of wealth generation and accumulation may be somewhat misspecified, persistent economic growth may yet prove to render his conclusions impotent on their own terms—his central thesis recognizes that income inequality is suppressed during periods of high economic growth. Given the recent performance of the U.S. economy, Piketty may yet live to regret or even update one of his own conclusions—this being that there is no reason to believe that the long run economic growth rate can exceed 1 to 1.5 percent annually. The Trump administration has so far succeeded in overseeing a period of economic expansion that Piketty himself would admit is highly unusual and inimical to rising inequality even in the absence of any specific policy.

And this one on inequality in the digital age:

Digital Innovation and the Distribution of Income

Founded in 1920, the NBER is a private, non-profit, non-partisan organization dedicated to conducting economic research and to disseminating research findings among academics, public policy makers, and business professionals.

www.nber.org

Income inequalities have increased in most OECD countries over the past decades; particularly the income share of the top 1%. In this paper we argue that the growing importance of digital innovation – new products and processes based on software code and data – has increased market rents, which benefit disproportionately the top income groups. In line with Schumpeter’s vision, digital innovation gives rise to ”winner-take-all” market structures, characterized by higher market power and risk than was the case in the previous economy of tangible products. The cause for these new market structures is digital non-rivalry, which allows for massive economies of scale and reduces costs of innovation. The latter stimulates higher rates of creative destruction, leading to higher risk as only marginally superior products can take over the entire market, hence rendering market shares unstable. Instability commands risk premia for investors. Market rents accrue mainly to investors and top managers and less to the average workers, hence increasing income inequality. Market rents are needed to incentivize innovation and compensate for its costs, but beyond a certain level they become detrimental. Public policy may stimulate innovation by reducing ex ante the market conditions which favor rent extraction from anti-competitive practices.

Another interesting graph:

https://twitter.com/x/status/1091767209171529728

 

[Approaching Infinity]

Anyways, let's stick to the 50% market share threshold. There are actually plenty of firms controlling 50% or more of their market.

Ok, thanks for defining the terms. I was thinking of monopolies in terms of a more restricted definition as firms that don't have any competition, as in the "natural" monopolies in the article I referenced. I'm not convinced that having even a 50% market share is necessarily a bad thing. It can be, maybe it even often is, and if businesses of such a type are actually engaged in nefarious dealings, they should be penalized. (But there's also the fact that it's often competitors that bring up antitrust suits - is it because the offending company is actually engaged in bad behavior, or just because they're doing a better job?)

In the case of Facebook, for instance, with 53% of social network market, the way I see it the 'ideal' social network, according to what they want, would be to have a social network with everyone on it. And for a regular person using it, they'll want to use the network where all their friends are. It seems unrealistic to have 100 competing social networks each with 1/100th of the users, or for all users to use all the networks, unless they're specialized somehow, like Twitter, Instagram and Facebook which each have a somewhat different function. And their relative ranks aren't necessarily guaranteed. If they screw up enough, or someone better comes along, they may go the way of MySpace. Unless they're a government-backed monopoly, in which case nothing happens when they screw up, and no one can attempt to offer a better alternative.

Historically, De Beers, a private firm, controlled more than 90% of the world diamond market for almost a century. In the US, the standard oil company (Rockfeller) enjoyed a monopoly for more than 70 years. Bosch controlled 80%+ of the world market for magneto ignition system in the first half of the 20th Century. The Bell Telephone then AT&T controlled the whole phone system in the US for more than 3 decades. In the 19th century, the East India Company controlled, 50% of the total trade made in the whole world including 100% of several commidities.

I've got a hunch that there is more to a lot of the allegations of 'monopoly' than meets the eye. For instance, with Bell and AT&T, as referenced in the article I included in the previous post about natural monopolies:

The biggest myth of all in this regard is the notion that telephone service is a natural monopoly. Economists have taught generations of students that telephone service is a "classic" example of market failure and that government regulation in the "public interest" was necessary. But as Adam D. Thierer recently proved, there is nothing at all "natural" about the telephone monopoly enjoyed by AT&T for so many decades; it was purely a creation of government intervention."54

Once AT&T's initial patents expired in 1893, dozens of competitors sprung up. "By the end of 1894 over 80 new independent competitors had already grabbed 5 percent of total market share … after the turn of the century, over 3,000 competitors existed.55 In some states there were over 200 telephone companies operating simultaneously. By 1907, AT&T's competitors had captured 51 percent of the telephone market and prices were being driven sharply down by the competition. Moreover, there was no evidence of economies of scale, and entry barriers were obviously almost nonexistent, contrary to the standard account of the theory of natural monopoly as applied to the telephone industry.56

... Like so many other instances of government regulation, AT&T quickly "captured" the regulators and used the regulatory apparatus to eliminate its competitors. "By 1925 not only had virtually every state established strict rate regulation guidelines, but local telephone competition was either discouraged or explicitly prohibited within many of those jurisdictions."58

In a previous post I wrote that monopolies are intrinsic to capitalism. Actually, monopolies are one of the goals of capitalism. Profit-wise, oligopolies are good, collusive oligopolies are very good, monopolies are the best.

I'd rephrase that to say that monopolies are the goals of greedy individuals. Many 'capitalists' would say free markets and competition are essential parts of what they think of as capitalism. And they'd agree that monopolies aren't necessarily the best.

Lastly, I think it is a mistake to equate capitalism to free enterprise. Free enterprises have existed for millenia. Capitalism didn't invent the free enterprise but what capitalism did (as pointed by Blanc and Proudhon) is to change the fundamental goal of enterprises (at least the big ones) by erecting the maximization of shareholder's wealth as the sole objective at the expense of any other legitimate objectives (social utility, customer satisfaction, employee's well-being, environmental responsibility, technological progress, balanced distribution of profit...)

In this sense, capitalism is the opposite of free enterprises, since it submits enterprises to one very reductive role: the maximization of the shareholder's profit.

So would it be fair to define capitalism as: the reduction of free enterprise to the sole objective of maximizing shareholder profits above all else, and potentially to the exclusion of all else? If so, I don't think there are many people who would disagree that that's a bad thing, including many self-declared capitalists.

A few things I'm not sure of: where is the line drawn between free market enterprise and capitalism? Who were the first capitalists and what made them a new phenomenon not seen in the prior history of market economies? And is it impossible to be a capitalist who also values social utility, customers, employees, the environment, etc?

 

[Jones]

Approaching Infinity:

And is it impossible to be a capitalist who also values social utility, customers, employees, the environment, etc?

I'd say yes. You'd have to be a gifted strategist as well though because some in competitive capitalism would probably see those qualities as weaknesses to take advantage of. Some capitalists would attract more shareholders/investors because they don't have those concerns to the same degree so they can increase profitability at the expense of social utility, customers, employees and the environment. So they can undercut on price as well. For example there is a quote from George Soros at 2.37 "I am basically there to make money. I cannot and do not look at the social consequences of what I do."

 

[Jones]

The disappearance of the middle class will also affect the way products and services are positioned in the market. Initially it would seem as though you'd need to choose whether you are aiming for higher socio-economic clientele or lower socio-economic clientele. There's a higher proportion of the population in the lower end, so a greater proportion of products and services are aimed at that group necessitating shaving the bottom line expenses of production. Or you could aim at the higher socio -economic crowd and have larger ticket prices, fewer sales but a greater margin.

Another approach has become more apparent in the last decade or so though. Sell a basic model, but also have after market up selling. Eg, buy the basic program that has enough function to get you by, but offer additional bells and whistles increasing functionality, utility, prestige or ease as add on costs. That approach seems to be the one that's crossing the divide.

 

[Neil]

A few things I'm not sure of: where is the line drawn between free market enterprise and capitalism?

Based on the philosophy I've read, there isn't one. In its purest form, a free market by is definition a market without regulation where anyone can do whatever they want. Capitalism is the system built around this fundamental core concept; capitalism in its purest form is laissez-faire.

Who were the first capitalists and what made them a new phenomenon not seen in the prior history of market economies?

I think capitalism has its origins in the Renaissance with Italian bankers from rich Mediterranean trading hubs. Anything that increased trade was seen as a way to increase their wealth. And who doesn't want more wealth? The Enlightenment movement away from spirit and divinity provided fertile ground for proto-capitalist ideologies which were eventually codified in the mid to late 1700s. Europe found itself in a position of technological superiority where most external empires were in stagnation or decline and was able to build the first truly global supply chains by capturing rival territories and essentially enslaving their populations. Capitalism as we know it grew out of this exploitation, and philosophies of self-interest and later social Darwinism helped to rationalize it. All of this looting and asset-stripping increased profit to unimaginable levels and the most successful progeny of the gilded age grew into the oligopolies that more or less own the world today. The record amount of wealth that the system generated justified its more unsavory qualities.

And is it impossible to be a capitalist who also values social utility, customers, employees, the environment, etc?

It would depend on how you define it and what philosophy you frame it in. It has been mentioned in other places on the forum that STO is the only truly viable mode of existence in the longest term, STS can become greatly advanced but can only evolve so far before it destroys itself. From a capitalist perspective, one could say that the greatest profit of all to oneself comes from serving the "greater good" and being an organization dedicated to an ethical and just society. In this way, everyone is given an opportunity to maximize their humanistic value and the economy functions at the equilibrium point that maximizes their creativity and ability to serve the collective. As the 6D beings imply, the greatest service to self, or self interest one can pursue, is actually being of service to others. So it's all in how one relates to the idea of profit, and not all profits are monetary. A laissez-faire system that is infused with these kinds of values could work theoretically, because everyone would seek to be the best they can be and the best way to do that would be however they see fit, let them learn their own lessons without too much regulation, just occasional guidance. This interpretation essentially turns capitalism as it taught in the business community on its head; capitalism is all about serving others by serving self, not the other way around. Since this world is STS, this value structure will always be inverted. So letting everyone be the best they can be without regulation just results in selecting for the best murderers, liars, and thieves. Communism and extreme forms of socialism try to imitate some STO ideal in an STS way, essentially forcing an illusion on those who are subject to it. So these systems exist, and the application of the same system can have radically different results depending on if you're STS or STO. In this world, no matter which -ism you choose, you choose STS, (unless you have a fundamentally different value structure) and there is absolutely nothing anyone can do about it except watch the world frivolously burn. Hence, my effort to reframe the philosophy capitalism draws from and retain the possibility of STS/STO choice without the STS side gaining complete dominance.

 

[luc]

Ok, thanks for defining the terms. I was thinking of monopolies in terms of a more restricted definition as firms that don't have any competition, as in the "natural" monopolies in the article I referenced.

I think there is some merit to the idea of "natural monopolies". If you look at England and what they did to the railway system, this becomes apparent: it's just insane to think many companies can compete on such a "market". It just leads to chaos. You simply have only one railway infrastructure, and building redundant infrastructure would be crazy. So they came up with the idea to separate the infrastructure from the companies - instant chaos followed. Here in Germany, they stopped at one point luckily, and we pretty much have a "natural monopoly", only that it's semi-private instead of 100% state-run. We do have some local private train companies, and all it does is sow chaos (such as that you need to change trains where otherwise you wouldn't). It just doesn't make sense. Also, the privatization led to crumbling infrastructure, because as a profit-maximizing enterprise, the train company tends to cut costs, and reducing the expensive regular maintenance and check of the infrastructure is great for the quarterly report...

Same for energy companies. They separated the grid from those selling electricity. All this led to is higher prices, confusion etc. (But hey, the design of their marketing material improved!) That's what happens IMO if you force the market paradigm on things that cannot really be a market. Admittedly, these may be very few.

I'd rephrase that to say that monopolies are the goals of greedy individuals. Many 'capitalists' would say free markets and competition are essential parts of what they think of as capitalism. And they'd agree that monopolies aren't necessarily the best.

That's what they say, but as human beings, is that what they do? Would they voluntarily help competitors, for example, just to avoid becoming a monopoly? Bill Gates did such a thing with Apple, but arguably only to avert the antitrust case brought against him.

So would it be fair to define capitalism as: the reduction of free enterprise to the sole objective of maximizing shareholder profits above all else, and potentially to the exclusion of all else? If so, I don't think there are many people who would disagree that that's a bad thing, including many self-declared capitalists.

Maybe the very principle of "shareholders" and public companies is part of the problem? As you said, businesses who have a "managing owner" tend to do better, because those have skin in the game and are often driven by more than just profit; it's their life's work, they want to pass on the company to their sons, they have a personal relationship with their employees etc. In the shareholder model, it's often hire and fire, managers coming and going, and the goal of an enterprise is reduced to a single (and pretty nonsensical!) goal: maximization of shareholder value. Which in the US, by the way, is a legal obligation!! In other words, if you have some shares of a company, you can sue the managers if they are not greedy and shortsighted enough!

Just some thoughts... great discussion!

 

[herondancer]

Same for energy companies. They separated the grid from those selling electricity. All this led to is higher prices, confusion etc. (But hey, the design of their marketing material improved!) That's what happens IMO if you force the market paradigm on things that cannot really be a market. Admittedly, these may be very few.

Would the problem come from framing things that ought to be thought of as public goods to the population, such as utilities and transportation, as profit-focused enterprises? I'm not well versed in economics, but it seems to me that privatising such things never led to a better long-term outcome, however bad the government-run version was. Britain's NHS is failing because it appears the govt. wants it to fail, by starving it of funds, to make the case that private firms would do it better.

Maybe public goods can be provided privately but also putting regulatory limits on rapacious greed in place. America's health care system was required to be non-profit until 1971, when John Eichman talked Nixon into changing that law. It's been an unfolding disaster ever since.

Thanks Nixon: Before 1973 it was against US law to profit from healthcare

 

[Pierre]

I think capitalism has its origins in the Renaissance with Italian bankers from rich Mediterranean trading hubs. Anything that increased trade was seen as a way to increase their wealth. And who doesn't want more wealth? The Enlightenment movement away from spirit and divinity provided fertile ground for proto-capitalist ideologies which were eventually codified in the mid to late 1700s.

Throughout history we can find here and there individuals who displayed capitalistic behaviors (maximization of individual profit), like some of the members of the Borgia (16th Century) or even some Templars, the prototype of international bankers (the order was dissolved in 1307 by the king of France, Philippe the fair).

However, for centuries, while there were isolated capitalistic behaviors, it was not systemic. Things started to change during the 16th century with the rise of Protestantism (see Max Weber's The Protestant Ethic and the Spirit of Capitalism) and then during the 18th century with the subsequent development of the enlightenment 'philosophy'.

Voltaire, the epitome of the enlightenment perfectly illustrates this new relation to money, luxury and pleasure. One should read 'Voltaire méconnu' by Xavier Martin (unfortunately not translated ) to see how Voltaire raveled in lies, greed, hate and contempt while being depicted as a parangon of virtue by official history.

Traditionally, the old continent, imbued by a millennium of Catholicism viewed excessive individual profit as greed, a capital sin. The three ideologies mentioned above reversed moral perception of profit maximization that was growingly presented as a virtue.

The French revolution was the final turning point and marked the official proclamation of the new official religion: secularism. Secularism is a religion divinizing the individual in all his materialistic and individualistic 'glory'.

For instance, in the declaration of the rights of man (1789), the word 'sacred' is only mentioned once, not in relation with God, religion, life or moral value but in relation with material property:

Article XVII – Property being an inviolable and sacred right

Secularism has its churches (schools), gods (the individualistic and materialistic citizen), redemption (material progress), gospel (declaration of the human rights), virtues (equality and liberty), Pope (President of the republic), mass (presidential elections), eschatology (regeneration through revolution), Christmas (Bastille day) and of course its inquisition or worse (the terror, the genocide and the guillotine).

Interestingly, the triumph of the secular religion coincided with the industrial revolution. It is the combination of those two revolutions (moral and industrial) that made capitalist behaviors systemic.

Indeed, the moral revolution made individual profit maximization acceptable if not desirable while the industrial revolution made it possible.

For centuries the production of goods was insured by small local groups of manual workers. Each good was produced individually and each good was different (no standardization as exemplified by blackmsithing).

Then came the metal lathe (invented by Vaucanson in 1750, witnessed by Thomas Jefferson during his visit in France a few years before the revolution, Jefferson introduced the concept in the U.S.)

The metal lathe enabled to produce series of identical parts, that's one of the necessary conditions for mass production. In addition the metal lathe, because of its accuracy, enabled the production of operational steam machines, with a small enough diameter difference between the piston and the cylinder allowing to contain steam pressure and transform it into mechanical force.

The combination of metal lathes and steam machines marked the birth of mass production, i.e. a high concentration of machinery, energy and workersgenerating very large production volumes. It was the birth of the modern factory.

Production was not limited by traditional local sources of energy (windmill and watermill) anymore. Also, before the production being insured solely by workers, there was no economy of scale. Producing 1 unit or 1000 unit led to the same cost per unit. The modern factory introduced the economy of scale, the larger and the more numerous the machines are, the lower the cost per units gets.

But, in order to reach very profitable economies of scale, the new factories required huge investments (acquisition of machinery, power-plants, buildings...). It was the birth of capital intensive industries and capitalistic barriers of entry.

That's where a fundamental shift in the balance between the capital and the labor occurred. For centuries, workers, through manual labor, were the main constituent of the production and sales process and therefore its main beneficiary. The quality of the manual labor provided by workers was the main competitive advantage.

After the industrial revolution the main competitive advantage was the investment capacity. The richer one is able to buy the largest plant which generates the lowest cost per unit i.e. produces the cheapest goods, that gain market shares and leads to substantial profits.

Thus, the capital became the centerpiece of the production process while the worker became a cost deemed to be minimized.

 

[herondancer]

In the shareholder model, it's often hire and fire, managers coming and going, and the goal of an enterprise is reduced to a single (and pretty nonsensical!) goal: maximization of shareholder value. Which in the US, by the way, is a legal obligation!! In other words, if you have some shares of a company, you can sue the managers if they are not greedy and shortsighted enough!

I was shocked when I first read that a few years ago. It was in an article about managers who did want to take their companies in more pro-social directions, that would have cut into short-term profits, but probably would have meant long-term benefits. They were voted down and then out by angry shareholders.

It seems that only privately held companies have the freedom act on other factors besides profit. Dr. Bronner's, the hippie soap company has its ethics written right into its charter. Among other things:

While Dr. Bronner's was busy dragging the rest of its industry into organic integrity, David decided to set the bar even higher for his company. Fair labor practices had long been a core issue for the company, going back to a concept Emanuel liked to talk about called Constructive Capitalism, which held that you should "share the profit with the workers and the earth from which you made it." In 2001, David, Michael, and their mother, Trudy Bronner, who is the company's CFO, sat down to codify how they would put the concept into action. To the company's already generous benefits (fully paid health plan, a retirement-plan contribution equal to 15 percent of salary), they added 25 percent annual bonuses for full-time employees. The highest executive salary is capped at five times the salary of the lowest-paid warehouse employee, meaning David makes about $200,000 a year.
[...]
In 2005, David decided he couldn't in good conscience buy raw materials from operations that didn't take labor practices as seriously as he did, so he set a two-year goal of switching all the company's major ingredients to certified fair trade. Only one problem: Nobody could find any certified organic and fair-trade farms that produced some of those ingredients.
[...]
Going fair trade hasn't been cheap. In addition to the start-up costs, Dr. Bronner's pays a 10 percent premium, dedicated to community development projects such as digging wells, on top of what it pays farmers for the raw materials they provide. And of course, it has meant another series of battles to establish better standards and fight so-called fairwashing, in which manufacturers use just enough fair-trade ingredients in a product to put a big Fair Trade on the label.

So it's possible, if you want to do it.