The Fundamental Flaw in Socialist Economics

a reply to: daskakik

I'm curious, what country do you live in?

originally posted by: ChaoticOrder
I'm curious, what country do you live in?

Guatemala.

The other countries in Central america are pretty much comparable to Guatemala except for Costa Rica and Panama, who have double and triple our per capita GDP, respectively.

And while the market keeps some things cheaper, farmer's market type items and housing, the price of anything that needs to be transported from far away goes up every time gas goes up.

A lot of people work hard and they are just surviving.

I'm not here saying there aren't capitalistic nations which are wealthy nations and they have a higher standard of living but that isn't always the case.

a reply to: daskakik

Well I don't know a whole lot about Guatemala, but a quick glance at Wikipedia tells me there has been a long history of brutal dictators and civil wars being fought between Marxist groups and US backed groups (back when the US opposed Communism). I would hazard a guess that is a primary reason why Guatemala still has a relatively low GDP per capita, however it seems Guatemala is slowly stabilising and the economy is improving, at least according to data from the world bank.

On an unrelated note, the world bank also provides this chart, and I bet many other countries have a chart which looks similar. Something has seriously damaged our health in recent years... I wonder what it could possibly be...



On the topic of Costa Rica and Panama, they both seem to have a more stable political history and they have closer relations with the US compared to Guatemala. Costa Rica seems to have a fairly centrist political climate, they appear to respect free market principles to a certain extent but also have fairly robust social services which balance out the flaws in capitalism. They also have no military which would save them a huge amount of money.

In 2009, the state monopolies on insurance and telecommunications were opened to private-sector competition. Certain other state agencies enjoy considerable operational independence and autonomy; they include the electrical power company (Instituto Costarricense de Electricidad), the nationalized commercial banks (which are open to competition from private banks), and the social security agency (Caja Costarricense del Seguro Social).
...
Costa Rica's government provides many public services, including health care, education, and social welfare programs. ... Their public health care system attests to strong political institutions and its 70% of its citizens entirely depend on the services. These services are generally well-funded and accessible to the general public. However, there are also concerns about the quality and productivity of these services and the sustainability of the country's public spending.

Politics of Costa Rica

I think that last sentence is very relevant to the argument I'm making in this thread. I live in Australia and we are capitalist at our core but we also have quite robust social services, including free public education and health care (to a certain extent). However, I've heard enough horror stories about the quality and hidden costs of our healthcare system, that it has made me seriously consider getting private health insurance now that I'm reaching middle age.

More importantly, if we cannot afford to pay for all these social services, and it constantly causes government debt to rise, and it's eventually going to cause very serious problems, which is the essence of my argument. Some nations now have so much debt they are spending more on repaying the interest on that debt than anything else in their budget. Until we are willing to acknowledge the fundamental problem nothing will be solved.

I'm not here saying there aren't capitalistic nations which are wealthy nations and they have a higher standard of living but that isn't always the case.

Obviously there are many, many factors which determine the success of a nation. However, there is a clear statistical trend which shows us the most powerful and wealthy nations in history have been capitalistic, especially when they used a hard currency with intrinsic value. Fiat money can also work, so long as there are hard limits on the creation of new currency in order to prevent runaway debt. But that would require actually balancing a budget and spending money efficiently.

originally posted by: ChaoticOrder
Obviously there are many, many factors which determine the success of a nation.

That was my point, just being capitalistic isn't a silver bullet. Not in personal finance or national economy.

However, there is a clear statistical trend which shows us the most powerful and wealthy nations in history have been capitalistic, especially when they used a hard currency with intrinsic value. Fiat money can also work, so long as there are hard limits on the creation of new currency in order to prevent runaway debt. But that would require actually balancing a budget and spending money efficiently.

Nobody is disputing that, what was said was that living and working hard in a country that is capitalist doesn't mean you are guaranteed success and I know that is what you claim to have been saying all along, but I still don't get why you felt the need to twist "what you have been saying all along" into something that was never said.

Paraphrasing the title of your thread: "The Fundamental Flaw in Capitalist Economics" is thinking everyone is going to play fair.

There is a reason anti-monopoly laws are enacted. There is a reason why governmental bodies try to control the quality and safety of things like food, medication and the impact on the environment by industries.

These things didn't just pop up out of the blue. In the US you had Standard Oil and Sherwin Williams dumping their waste into a river that caught fire a bunch of times.

I hate to break it to you all but The United States is already about an 80% socialist country.

Social security is the biggest Ponzi scheme ever invented and FDR Implemented this program in the 1930s. There is no way to opt out if you are a W-2 employee. All the money that is being paid out in benefits now is being borrowed either from the Federal Reserve or Japan through open Treasury auctions. It’s not china that holds the most US debt it’s the Federal Reserve first then Japan
Being forced to pay for someone else’s retirement when that person partied there while life and spent all there money on vacations and bull# and never planed for the future is immoral and wrong.

Over 65% of this country is already on government run healthcare through either Medicare for people over 65 and you are forced into Medicare whether u like it or not or they are on Medicaid which is about 45 million people.

America ceased to be a free enterprise capitalist country almost 90 years ago