Capitalism and Socialism: Getting Out of the Hole

I am not an economist; I am simply an observer making some thoughtful observations.  In those observations, I have noticed that we are still in a world of economic hurt, both nationally and locally.  State governments across the country are experiencing severe financial shortfalls, and our federal government is going to have to make some drastic cuts in the near future to meet our fiscal obligations.  The fact that China is doing so well while disregarding our most cherished notions of fair play, respect for human rights, and corporate responsibility stings us all the more, but I don’t think it should.  China will have reckoning to do if it keeps treating its people like cattle.

I am not, however, a fatalist.  Our economic problems have been our own doing, and in large part it has resulted from our inability to balance two seemingly opposing interests: capitalism and socialism.  We want a burgeoning capitalist society.  Capitalism is a system which thrives on the self-interest of its participants and suffers from overregulation and high taxation.  I think our interest in socialism is very much embedded in the former.  When I think of socialism, I think of the social safety net that is in place to protect those who fall between the fingers of the invisible hand.  A purely capitalist society is a natural law, survival-of-the-fittest approach to growth, and, as such, it guarantees a handful of economic and societal losers.  Some suggest that we have a moral obligation to the less fortunate to provide them living assistance and essential services such as health care.  I believe there are valuable practical benefits to society for reducing poverty and ensuring healthcare for all.  Crime would likely decrease, and there would be less societal conflict, even when you exclude the whiners who have to pay a little extra in taxes. 

Our attempts at balancing our capitalist engine with the social safety net have been well-intentioned, but poorly conceived.  One of our tactics has been to regulate corporations, requiring that they pay for personal expenditures such as health care and requiring them to pay a minimum wage. 

Currently, the unemployment rate is hovering at about ten percent.  It bothers me that we have so much wasted potential sitting on the sidelines.  Some of this loss in productivity can be attributed to our attempts to combine capitalist and socialist agendas.  A better approach may be to divorce these interests.  One example is the minimum wage.  We could get rid of the minimum wage, and immediately there would be more people working.  At the same time, we could supplement the incomes of the disabled and under-employed.  I like the idea of supplementing the incomes of the under-employed more than paying people who are doing nothing.  I would also like us to do away with insurance-run health care in lieu of a government system that has market-based cost control measures.  With all the fear-mongering going around about government-run health care, the insurance companies are the only true beneficiaries of the status quo, and they are playing quite a number on us to convince us otherwise. 

The Top 1% aren't doing too shabby.

To make sure our capitalist policies work, we want to make sure that we are encouraging innovation while also keeping the money flowing to and through the middle class.  Capitalism that is entirely unrestricted and unregulated will ultimately wind up with all of the money being funneled up to the top echelons of society.  Right now, a quarter of our nation’s wealth is in the top one percent of income earners.  This is a tragedy of the commons situation.  Just because one percent of the population is smart enough to gobble up 25 percent of the fish, it doesn’t mean they should keep all of it, particularly when there are people starving.  While I do not suggest anything specific on how to address this, we should remain mindful of the fact that a successful capitalistic society needs its money to flow. 

We are in some strong need of adjustments to our social policies, and this will require some sincere thoughtfulness on the part of our lawmakers.  We live during an incredibly interesting period in history, and time will tell how this story plays out.

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