Tuesday, November 22, 2011
Thursday, November 17, 2011
Capitalism, Socialism, "Job Creators", and what Conservatives miss about ALL of them
Conservatives have shown their off-kilter view of the world by refashioning definitions of words and terms in order to create entirely new connotations. Socialism is now defined as a "government take over"; Capitalism is now completely and utterly patriotic, and the wealthy are now defined as "job creators". But you can redefine all you want - it's not going to change the true meaning of these terms one whit.
CONSERVATIVE-ESE:Socialism = Government takeover of all industries.
ACTUAL FACT: Socialism does not mean the abolition of a free market society, nor does Socialism call for a government takeover of all industry. That would atcually be Communism, and we owe a debt of gratitude to the former Soviet Union for clearly demonstrating how monstrously unworkable it is.
The Socialist acknowledges that the free market is good, but limited, and believes that some industries should not be run for profit. Police protection, fire protection, prisons, education, health care, parks, electricity, water supplies, waste and sewage removal, and roadways are just a few examples of industries which should not be run for profit. Why? When these industries are operating for profit, not only will prices rise, but corresponding services would then be reserved only for those who can afford them. Or more succinctly, no one person should be able to profit over running services from which everyone benefits.
One excellent example of how Socialism can at times beat the free market can be found in our banking industry. While most banks operate for the profits of their stockholders (most of whom are not customers of the bank) and CEOs (paying said CEOs GINORMOUS amounts of money), credit unions are owned and operated by their members. The money that ISN'T paid to CEOs are reflected back to the customer in higher interest rates for investments, lower interest rates on loans, and a nominal dividend to the member/customer, which usually gets reinvested right back into the credit union as a deposit.
It's worth pointing out that credit unions did not run the same risks as banks when our financial bubble burst, and thus did not request nor receive any TARP bailout money. Nor have the credit unions contributed to the morass of fraudulent foreclosures that the banks have.
Another example: health care. The free market creates for-profit businesses ranging from medications, medical testing, medical treatments, medical research, to hospitals. None of these have lowered the cost of health care through innovation or through competition. This is because the demand for health care is a basic necessity; it's non-negotiable. Like clean water & air, humans cannot survive without such products or services. The demand for these is a constant, therefore they are not subjected to the law of supply and demand. When prices go up, demand does not lessen beyond a certain threshold. Where the free market brings economic ups and downs which effects everyone, Socialism believes that there is a limit on the protections a free market provides for everyday citizens. And quite simply, some things should not be run for profit, especially at the expense of everyone else.
CONSERVATIVE-ESE: Capitalism is pure good, and if you oppose it in any way, you are Un-American.
FACT:Capitalism is an economic term for the free market system which is structured upon the accumulation of money, where the means of production are privately owned and operates for profit. Capitalism is neither right nor wrong, it is simply an economic term. Nor is Capitalism patriotic! A system which encourages the accumulation of wealth does not salute a flag, nor is it loyal to a native country. This market system crosses state and national borders in order to provide larger profits for business owners. If labor costs are cheaper overseas, then it is capitalism which will drive businesses out of our country. If a company finds it cheaper to produce a dangerous product than it is to produce a safe one, it is capitalism which will produce the most profitable option without consideration of customer safety. Capitalism only seeks profits and will by nature migrate operations towards areas which promotes greater profits. Capitalism has no allegiance to any one country as it operates in a global economy. Again, capitalism has no allegiance with patriotism. Where would a business find themselves most profitable? Would they find a country with extremely lower labor costs to be more profitable for manufacturing than a country with higher labor costs? Would they find a lower taxed area more profitable than an area with high demand for their products? But most of all, wouldn’t it be more patriotic for an American business to spark demand in order to operate, manufacture and sell their goods or services inside America, as opposed to overseas?
CONSERVATIVE-ESE:The wealthiest among us are the Job Creators.
FACT:
The wealthy are not necessarily the job creators. Poor and desperate innovators have sparked many new business ventures despite their lack of wealth. Many small businesses began out of practically nothing, but only an idea executed inside of their garages. (Anybody ever hear of Apple? Hewlett-Packard?)
The fact of the matter is that neither wealth nor lower taxes create jobs; only demand creates jobs, as I have stated elsewhere.
This little tidbit of truth is lost in translation when the wealthy are deemed as “Job Creators”. All this is is a ploy designed to promote additional tax breaks for those who have more than enough while at the same time promoting cuts in public services for those who do not have enough.
Another tidbit of truth which is diluted in this argument is the inequality of income between the workers and the owners. A CEO today typically earns 343 times more than an average employee - up from 30 times more in the 1950s - when top tax rates were around 90%! Did CEOs become THAT much more valuable? And while 88% of domestic profits go to corporate bank accounts and CEO bonuses, only 1% of these profits gets applied towards labor. The business owner shoulders no responsibility for producing any product or service. Rather the business owner invested their money (and in most cases time) into a business which is productive. Productivity is a result of the balance between the investors, the managers, and the workers. It is a symbiotic relationship, which many Americans cannot conceive of. For where would any business be without any one of these three elements? Despite conservative talking points, even the lowest of employees is an invaluable asset to a business. In a restaurant, an effective business owner knows that the dishwasher and busboys are just as important to their operation as their managers and customers. If you remove the dishwasher and/or busboys from the equation, the business suffers. Yet an effective manager can be absent from their responsibilities and the operation may not not suffer. So which employee should be valued more than the other, the laborer, the manager, or the investor? The answer is neither of the three. For without one, the other two would not have a business operate or a job to tend to. Yet the argument goes that only the wealthy create jobs. Without enough demand, even these jobs won’t last very long.
Conservatives are actually correct that we should not tax our job creators in a time of economic recession. But they've BADLY misidentified exactly who these job creators are. When our recession is being prolonged out of a lack of demand, it is not the business owner who can create jobs; rather it is consumers who create jobs by spurring demand. So let’s not overburden our true job creator, the consumer. In order to spark higher demand, we must effect the largest target market we have at our disposal. It’s not the wealthy who can spark this demand; they only constitute up to 2% of our populace. Rather, we should focus our attention on the other 98% of our populace, our struggling middle class and poor.
Henry Ford understood this well - he believed that his product meant nothing unless he had customers who could afford to purchase it. In order to ensure his company’s success, he paid his laborers more than other businesses, so they could buy his cars. This enabled his employees to comfortably afford to buy Ford products. This sparked higher demand, which in turn produced higher job growth, which led to Ford’s success story. Henry Ford did not believe in paying the least amount possible for labor, eliminating the minimum wage, or acquiring higher profits at the expense of his workforce. Instead he realized the symbiosis between business and labor and between business and customer.
And not only did Ford boost his OWN business - by paying his own workers more, he forced other businesses to boost worker pay lest they lose their employees. This increase in salaries boosted consumer demand across the board, beginning the economic boom that culminated in the Roaring '20s.
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