Why Free Market Capitalism Creates Prosperity

a reply to: ChaoticOrder

I agree with everything in your post, except the flat tax. Please hear me out on this:

Under a primarily capitalistic system, it becomes easier to make income if one has capital. A person living at the poverty level or slightly above has limited options to create more income, while someone making $1M a year can make enough to survive quite well by simply investing. Within reasonable limits, a progressive tax system serves to help equalize this discrepancy. We should understand, however, as you say, that taxation should not become so punitive, even at higher incomes, to dissuade the taxpayer from continuing to advance. I personally think 33% is quite adequate.

A progressive income tax also helps to offset the discrepancies in the other taxes that negatively affect lower income families. A fuel tax, for instance, will likely affect someone wealthy only slightly more than it affects someone in poverty, considering that day-to-day travel expense is more dependent on geographic conditions than on income and poorer families cannot afford the latest fuel efficiency technology. Thus, the poor typically pay much more such taxation as a percentage of income.

TheRedneck

originally posted by: ChaoticOrder
a reply to: FyreByrd

Yes, we workers ‘interact’ in the capitalist system but only through the exploitation of our value-creating (for capital) labour power. We are not a ‘full participant’ in capitalism, except in that sense.

This is a completely ridiculous argument, no one is "exploiting" your labor unless you're a slave or they have a gun to your head. If you freely choose to trade your labor for some money then you absolutely are a full participant in the capitalist system. There is absolutely no reason you need to own stock and make money from dividends to be a capitalist, one must simply participate in the capitalist system through the act of exchanging resources and services using some form of currency.

If my 'labor' increases the bottom line and I don't receive some of that 'surplus' then I am being exploited as it is My Effort that is creating the surplus.

originally posted by: olaru12
Here's a perfect example of Capitalism working against the American working man. Trickle down at it's most obscene.... You ok with that?

fortune.com...

So let me get this straight... motorcycle sales slump and Harley Davidson is forced to lay off workers, and in your mind that is the "perfect" example of how capitalism is corrupted and works against the average man? And it's also some how related to trickle down economics? I'm sorry to say but thousands of people lose their job every day because businesses go bust... it doesn't mean those people will forever be without a job because thousands of new jobs also open up every day. Your view of the world seems to be ridiculously basic... once again I ask what other system would provide us with a more stable supply of Harley Davidson motorcycles?

The only reason we have Harley Davidson to begin with is capitalism, due to the race between businesses to create something better than the competitor, it's why we have hundreds of different motorcycle manufacturers rather than one centralized government manufacturer who controls all production. Honestly it's not surprising that motorcycle sales are dropping because people don't take so many risks these days and people prefer to drive cars. Nothing lasts forever and quite frankly this is probably the dumbest possible example you could have given to show why capitalism is flawed, the fact you got so many stars for it also sad.

originally posted by: FyreByrd
If my 'labor' increases the bottom line and I don't receive some of that 'surplus' then I am being exploited as it is My Effort that is creating the surplus.

Ok, at what point does your labor increase the bottom line? When they hire you they expect you to do a certain job for a certain wage, which you agree to before doing the job. If at some point during the job you decide to work harder then you may deserve to be paid more but there's nothing that should force a business to give you more, however if they think you are doing a good job they very well may promote you. If you feel like they are asking too much and not paying enough then it's your decision to stay there. If the business suddenly makes a huge profit due to a new partnership or something, they also have nothing forcing them to instantly give some of that extra profit to their employees but they may decide to, or they may decide to use it on other business expenses. The fact is many business owners are struggling to get by as well and they often reinvest most of their profits back into the business. It's their business and they can decide how it gets run, if you don't like it then become your own boss by doing freelance work or starting your own small business, it's far from impossible unless you lack any useful skills.

a reply to: TheRedneck

Yes I pretty much agree, I don't mind progressive taxes as long as the difference isn't too high. The tax system in Australia is fairly poor imo, if you make over $180K here you pay $54K plus 45c on every dollar over 180K, meaning if you make $1M you only get just over half a mill after paying personal income taxes. Meanwhile our corporations pay a flat rate of 30% which is also relatively high compared to other nations but still quite low compared to our individual income tax rates. Individuals earning between $37K-$87K pay around a 33% tax rate... I think 25% should the limit for personal income taxes, I mean if you cannot run a government using a quarter of the income of every working person in the nation plus the taxes from corporate profits then something is seriously wrong imo.

a reply to: ChaoticOrder

Nothing lasts forever and quite frankly this is probably the dumbest possible example you could have given to show why capitalism is flawed, the fact you got so many stars for it also sad.

Let me tell you what's dumb. Is making kneejerk judgments and insulting ATS members outside of the mudpit.

fyi, I am a capitalist, entrepreneur and still own and operate 3 llc's. Manufacturing, wholesale, retail and a service oriented company; plus I still own the family Farm. I have made and lost fortunes in the American marketplace. These operations now allow me the free time to produce and contribute to the economy of the state I live in with my Taxes, products and Jobs. This is real life and not some academic, school boy theoretical, Ayn Rand worshiping BS, pie in the sky model.
Also, I hire and pay American workers for my businesses and don't off shore anything, [even though I could] like Harly Davidson and Donald Trump.

a reply to: olaru12

Let me tell you what's dumb. Is making kneejerk judgments and insulting ATS members outside of the mudpit.

I said the example you gave was dumb, and it is, if you take that as a personal insult so be it.

fyi, I am a capitalist, entrepreneur and still own and operate 3 llc's

Oh so you're perfectly fine to enjoy the fruits of capitalism but simultaneously sit their typing countless posts about how much it sucks, interesting.

Also, I hire and pay American workers for my businesses and don't off shore anything, [even though I could] like Harly Davidson and Donald Trump.

Good for you, you're doing what you think is best for the U.S. economy and many other businesses do the same thing, but they also have the freedom to go else where if they feel excessive regulations and taxes are hurting their profits. That is why it's so important to have a high level of economic freedom, and the facts clearly show it is important. Since Trump get elected and put emphasis on supporting local U.S. businesses and middle class workers like farmers and miners we have seen many businesses move factories back to the U.S. or cancel plans to move off shore. Here is a short list of examples I made back in July of last year:

Stanley Black & Decker Announce Opening of New U.S. Plant After Trump White House Win

Breaking: Ford Cancels Plans for $1.6B Plant In Mexico; Expanding In Michigan

Trump Reaches Deal to Keep Carrier Factory, Jobs in Indiana: Report

INTEL Corp. - 7 BILLION DOLLAR Mega Investment In Arizona

General Motors to announce $1 billion in U.S. investment

SoftBank will invest $50 billion in the US, aiming to create 50,000 jobs

a reply to: FyreByrd

If my 'labor' increases the bottom line and I don't receive some of that 'surplus' then I am being exploited as it is My Effort that is creating the surplus.

Statements like this still amaze me.

You ARE receiving part of the surplus... it's called a 'paycheck.'

When you accepted the job, you made a contract with your employer. The deal was that you perform a job for them for a certain number of hours per week, and they compensate you with a certain amount of money per hour you work, plus benefits. You both agreed to the contract. You actually had the advantage... you knew ahead of time how much money you would make per hour and what benefits you would get. Your employer didn't know what kind of a job you would do. They took all the risk.

Do you use any company equipment to do your job? Does your employer provide you with a place to work? If so, you are not responsible for the surplus. If not, you should be working free-lance. Either way, you do not get to change a contract after you accept it. If that were the case, there would be no jobs because no one could do business! All business uses contracts: party A agrees to do something and party B agrees to do something.

That's where the "corporations are people" confusion starts... a corporation must have the right to execute contracts or it could not do business. It could not buy equipment or supplies, it could not hire people, and it could not sell its products/services... all those transactions are based on contracts.

To be honest, with that attitude you should be very thankful you even have a job,

TheRedneck

a reply to: ChaoticOrder

Ah, OK. Good to get an Aussie perspective!

I really disagree with the entire concept of corporate taxes. As it is, it is double taxation. The corporation pays taxes before disbursement, and the stockholders pay taxes again after disbursement. Any profits disbursed within 6 months should not subject to income tax at the corporate level.

If we assume a stockholder is in a 20% bracket, the 25% corporate tax is actually getting 40% of the profits once all is said and done.

TheRedneck

a reply to: TheRedneck

If this system works so well why is it so many people are falling through cracks, in your opinion?

a reply to: hopenotfeariswhatweneed

Government corruption and a poor welfare system.

Government corruption is responsible because the government has morphed its constitutional role of 'promoting the general welfare' into one of 'regulating the general welfare.' Government does indeed have a role to play, in things like establishing fair standards, safeguarding against monopolies, and promoting truth in advertising. There is also a need to protect the general public from things like pollution. But we have moved far beyond those things, including over-regulation that favors monopolies (or at least oligarchies), discourages innovation because regulations are tailored toward the non-innovative, and even attempts to inject itself into the market as a monopoly.

I'm describing Keynesian economics, of course. But Keynesian economics only works along a certain range of economic conditions. Outside that range classical economics is the preferred model. Both Obama and Bush 43 tried to apply Keynesian theory outside the applicable range. In a global economy where competing nations were applying classical theory, the result was to move companies and jobs to our competitors. That tanked the economy by draining our resources and that made it more difficult for small companies who could not afford to move to compete.

It effectively established a multinational oligarchy that we are still dealing with today.

Trump is applying classical theory, and the economy is rebounding. We still have the results of the poorly-advised previous policies to deal with, though.

Keynesian theory was chosen because it has, at its heart, a reliance on a steadily growing government influence. That benefits politicians, and the corruption in government placed personal interest of these politicians ahead of the best interests of the country as a whole.

A functional welfare system is an important socialist check on one of the two downfalls of capitalism. Such a welfare system, however, should have as a primary goal the return of participants to the workforce. Anything else will function as a disincentive for economic growth as well as a drain on resources that will further slow the economy. Our present system focuses on allowing certain classes to 'game' the system by rewarding long-term participants in order to gain political influence. Thus it functions exactly opposite its intended purpose.

TheRedneck

a reply to: TheRedneck

Thx for the reply and that was a fantastic summary...

[quotes in r]
no one is "exploiting" your labor unless you're a slave


Most workers are slaves, we have no choices in reality.

a reply to: hopenotfeariswhatweneed

You're very welcome!

I don't know whether to laugh or shake my head in disgust when I hear someone claiming that "capitalism has failed." We haven't used actual capitalism in over a century now. What we have used has been a capitalistic base riddled with corruption and bloated by too many ill-conceived socialistic agendas. When we started, we were almost completely capitalistic; over time, a few socialist policies crept in and we grew from a rag-tag band of colonies to an economic powerhouse.

As we have increased socialism and allowed corruption to flourish, our growth overall has slowed. It's not capitalism that has failed. It's the corrupt, bloated perversion of capitalism that has done so. Capitalism with the right balance of socialism has never failed.

TheRedneck

originally posted by: ChaoticOrder

originally posted by: FyreByrd
If my 'labor' increases the bottom line and I don't receive some of that 'surplus' then I am being exploited as it is My Effort that is creating the surplus.

Ok, at what point does your labor increase the bottom line? When they hire you they expect you to do a certain job for a certain wage, which you agree to before doing the job. If at some point during the job you decide to work harder then you may deserve to be paid more but there's nothing that should force a business to give you more, however if they think you are doing a good job they very well may promote you. If you feel like they are asking too much and not paying enough then it's your decision to stay there. If the business suddenly makes a huge profit due to a new partnership or something, they also have nothing forcing them to instantly give some of that extra profit to their employees but they may decide to, or they may decide to use it on other business expenses. The fact is many business owners are struggling to get by as well and they often reinvest most of their profits back into the business. It's their business and they can decide how it gets run, if you don't like it then become your own boss by doing freelance work or starting your own small business, it's far from impossible unless you lack any useful skills.

GILSP - when I produce more on my job then "I was hired to do" that creates more profit. As I learn a job "I was hired to do" and become more efficient in what I'm doing, I create more profit.

You are making an argument for "doing the job you were hired to do" at only a beginners level and never doing any more. And yes lots of people share your attitude. I don't and most working people want more out of their jobs then just a boring day doing the same stuff day after day for 'the wage they agreed to at hiring.'.

Today - people are being EXPLOITED many time by having their 'well defined' simple jobs loaded with additional responsibilities for no additional compensation without their approval to increase profit.

You might consider reading real economists, capitalist and otherwise.

You might consider starting with this:

davidbrin.blogspot.com...

About what Adam Smith (free marketeer's god) actually said about competitive capitalism.

excerpts

Adam Smith again said it best, defying the stereotypes and cliched images of him.

"When the regulation, therefore, is in support of the workman, it is always just and equitable;

but it is sometimes otherwise when in favor of the masters.”

It is an argument made forcefully later by Friedrich Hayek, another genius whom the right idolizes in abstract, while betraying almost everything that Hayek stood for, such as maximizing the number of skilled, empowered and knowledgable competitors and thwarting conspiracies among monopolists and oligarchs, whether those were rooted in government bureaucracy or in narrow owner elites.

a reply to: FyreByrd

I don't and most working people want more out of their jobs then just a boring day doing the same stuff day after day for 'the wage they agreed to at hiring.'.

I'm pretty sure every person on Earth wants that, and once again no one is stopping you from doing what you really love and finding a way to make a profit from it. You are the only one who makes the decision to get up every day and do the same old boring thing. Why would anyone expect a boring low skilled job to give them fulfillment, if you stumble through the same routine your entire life instead of taking initiative then it's no one's fault but your own if your never achieve your dreams. Success doesn't come at the snap of a finger, it takes dedication and practice to excel at anything. And in no way am I arguing against regulations which protect the average worker, I'm arguing against excessive socialist policies which harm the economy.