Tribal Economics

If we lived in a society where certain basic needs like health care, secure retirement and basic sustenance were guaranteed, it would allow people to pursue their passions.

Would this release of creative energy offset the claimed decrease in economic activity posited by the pure capitalists?

How productive are people forced to work for minimum wage at jobs they detest just to survive?

I suspect not very.

Still, forcing them to need these jobs increases the labor supply and drives down wages.

However would the release of the creative forces offset this or not?

This is probably the single biggest difference between Capitalists and Socialists.  The idea that everyone should be taken care of to some degree versus a dog eat dog mentality.

In our earliest societies, as best we can tell from studying indigenous peoples, we had essentially a socialist society although everyone who could was expected to contribute.  Those who couldn't because of age or other infirmity were generally taken care of.

There are a few instances where this was not true, generally in the harshest environments, although even there mostly they were not abandoned unless absolutely necessary.

As our original simple structures evolved we saw more of a disconnect between members and less of a desire to share.

Can we at this point in our society emulate our earliest ancestors and treat all people equally with merit being rewarded, but not excessively?

That remains to be seen

Capitalism and Taxes

While people are generally governed to a large extent by self interest, it isn't often that self interest and the good of the country don't go well together.

It was called the invisible hand of economics and the idea is that everybody pursuing what is best for them will result in the overall best result.

There are some problems with that, the different level of power and influence being the main one, but generally it works pretty well and is to a large extent the basis of capitalism.

No other system has in fact produced greater economic well being than capitalism.  We do have to remember that capitalism is in fact an economic system, not a social one.

Since it does in fact generate the most wealth it provides the greatest tax base.

This is where capitalism as an economic system needs to serve the greater needs of society.

It is never generally in anyone's best economic interest to fund social programs, at lest not directly.  Of course it does help stabilize society and make economic pursuits safer.

This leads to the question of what tax levels should we have to fund social programs?

Well economically it should be the largest amount that doesn't impact economic growth.

Since economic growth is the engine that drives the economy we don't want to kill it, but a tax rate is a funny thing as far as motivation goes.

At every tax rate, a capitalist will engage in activities that are profitable.

We hear some proposals talking about Tax rates as high as 70%.  We had those during some of our most prosperous times.  We have now made it possible for those who have been helped the most by this country to pay a much smaller share in the name of tax relief.

Creating an environment for success is essential but tax rates are seldom much of a factor.  Funding the programs that promotes the good of the many over the few is the role of government.

Safety Net?

One of the great appeals of capitalism is the ability of anyone to aspire to and possibly accumulate great riches.

Of course only a few actually do but in general they are admired and serve as exemplars of what can happen if you have the right combination of skill and luck.

Clearly not everyone does, but the opportunity creates hope and enthusiasm that leads to new ideas, businesses and other enterprises which breeds a healthy progression in society.

We have example after example of rags to riches stories and some of our very largest corporations were started by young people working on an idea that worked.

People often talk about the American Dream but I believe the real American Dream is to become incredibly rich, or at least rich enough to not worry about mundane things like making a mortgage or rent payment.

The downside is the income inequality that is created between winners and losers.

The system creates many more losers, people struggling to get by and make ends meet than winners.

This has been true throughout history.

One difference today is that we generally believe that anyone can succeed in America, while in many societies wealth and success were tied into a caste system for the fortunate few.  Most of those societies have been replaced by either an American style capitalism or a European style socialism.

Europe of course has its elites, but it has also taken efforts to assure every citizen has basic things like health care, education and pensions guaranteed by the state.

It does require more taxation and more state involvement but generally it goes a long ways toward eliminating the very poor.

We refer to this concept as the safety net in America but its clearly a pretty low net in comparison to most European countries.

Right now we can't even afford what we have.

Government Role

In many ways the economy is doing well, but in some other ways not so much.

It was always clear from the demographics that we would have a bit of a labor shortage after the baby boomers started to retire and to some extent that is driving the low unemployment.

However, many of them are not prepared for retirement so I guess they are either staying in their current jobs or finding new ones.

We have seen a transition from a manual labor manufacturing model to a more robotic, technical one and that has disrupted a lot of rust belt jobs.  Those jobs aren't coming back even as we add some manufacturing jobs to our lowered base.  Unskilled labor is simply not going to command the wages it once did.  This is in many ways a positive trend for the economy and growth although not for those specific workers.

The issue there is that the profits are being unequally distributed with the displaced workers getting very little transition assistance as we reduce the Government programs that could have helped them.

This uneven distribution of wealth is probably the greatest threat to our country as it attacks the very foundation of our middle class society.

The best way to fix it is via Government programs as in Europe where certain expenses such as health care and pensions are centralized allowing people to have less expenses.

Of course those type of programs are an attack on wealthy people who would be subsidizing the poor.

Should the Government serve as the provider of certain services or not?

We are somewhere in the middle and right now we are saying no, in general.

However, the level of income inequality shows how our current approach is failing, so the times they may be a changing.

Socialism

Socialism has been one of the most abused words in the English language, partly because it has become closely associated with communism.

However the simplest definition of socialism is the idea that society as a whole should be the primary concern of our policies.

Capitalism, another word for individualism, focuses on the benefit to the individual instead of the group.

It should also be noted that it doesn't have to be an all or nothing situation.

Every society and Government has to be concerned with society as a whole, or it wouldn't function.

The interests of the individual and the interests of society are not generally in conflict, however at times they are.

Generally it involves control of resources and how those resources are distributed.

In general we are a country that believe in capitalism in that we respect individual property and the right to amass wealth.

The general argument here is that it promotes progress and therefore ultimately better opportunities for all.

Wealth is in fact a proven motivator, but of course on might wonder if it is the only one.

The other issue concerns social welfare, a non-economic form of socialism.

Should health care be provided to all or just a few?

We see great disparities in wealth in this country and we see great disparities in quality of life.

Should some of our elderly be forced to scrape by, eating cat food to save a few pennies, unable to afford medication or should society take care of them?

Many of us who support economic rewards also feel that we need to improve our social welfare programs.

Its recognition that all people are created equal, although not so much in America.

Safety Net?

There is a view of America that restricts Government involvement to a small number of limited areas, like defense, foreign relations, interstate commerce and a small number of other areas enumerated in the Constitution.

They don't believe that the expansion of the Government into areas such as retirement, social assistance, education, housing, or health is appropriate and they would like to see it reversed.

Individual initiative with a merit based society where everyone on the whole does better because the people with talent are allowed to use those talents and grow the country.

It actually has a certain appeal, except what about those who don't have the skills are resources to enable them to compete?

To have winners you also have to have losers, and while there are many instances of people starting with next to nothing who manage to succeed greatly, those are still generally the exceptions.

In this view those who don't lead have to follow and they need to accept their lot.

Charity isn't the business of Government and it should stay out of it, leaving it to the churches and other organizations.

This will force everyone to work and take the Government out of the income redistribution business which destroys initiative and leads to socialism.

In this country socialism is a bad word, at least to many.  It has gotten mixed up with communism in many minds but it isn't communism.

Socialism is simply the idea that the society as a group should share in the prosperity as opposed to individualism (a winner take all approach).

We are not a socialist country, but we do have some social welfare programs such as Social Security, Medicare, Unemployment, Food Stamps, Education Assistance, the Affordable Care Act and a few others that are in fact socialistic in nature since they are designed to benefit society as a whole.

Some feel that Social Security doesn't belong on this list, since we pay into it, but it does redistribute those contributions based on a formula and we don't just have an account we draw from.

The question is do we want to dismantle these programs and reduce taxes or continue to provide a safety net to those who need it?

Each of us has to decide.