Wednesday, April 26, 2006

The Failure of Capitalism

Genkaku has a new post on wealth and its unfair distribution. There is a fair amount of righteous anger and frustration being expressed -- and understandably so when one stops for a moment to look at the world. But anger is not the energy we need to bring to this problem. Anger is unfocused and undirected. We need focused rebellion. We need some healthy Red meme energy behind some healthy Green meme values.

A while back I blogged about a piece in The Nation that mentioned how "a full-time worker making the minimum wage earns $10,500 annually, while last year the CEO of Wal-Mart earned $3,500 an hour. The CEO of Halliburton earned about $8,300 an hour. And the CEO of ExxonMobil earned about $13,700 an hour." The CEO of Exxon is only paying Social Security taxes on one day’s income (assuming an 8-hour day) with the current $96K limit.

Congress will cut SS benefits before it will make the uber-wealthy pay more in social taxes of any kind. Is that what we want to be as a nation?

And we are the wealthiest nation on the planet. The genkaku post wonders why we can have so much while a child in Darfur is too dehydrated to even shed any more tears. We are wealthy beyond the imagination of many millions of people in the world, and yet our poor live on the streets, scavenging for food and shelter on a daily basis. And we do very little, compared to what we could do, to ease the suffering of the world’s poor and starving. We should be ashamed, yet many feel we do too much.

This U.S. disparity in wealth has only gotten worse during the Bush administration. There are more millionaires than ever before (7.5 million households in 2004 and 8.9 million households in 2005), but there are many more millions of people who have fallen below the poverty line (37 million people lived in poverty in 2004, with an increase during each year of the Bush presidency, despite reported jobs growth). The numbers on poverty aren’t even accurate -- they are based on a 1960’s model that calculates the poverty line by how much it costs to feed a family of four, not on real world costs such as rent, gasoline, car insurance, utilities, daycare, and so on. There are tens of millions who live in poverty in America who are not considered by the current measurements.

Unemployment numbers appear to be encouraging, until you understand that tens of thousands of people have given up on finding work and fallen out of the statistics. Overall, incomes in the U.S. are up, but when you remove the incomes of the wealthy from the equation, the rest of us are actually making less -- much less. And what we make buys us less than it did five years ago.

Capitalism has served its purpose and is now obsolete. It is an Orange meme economic system, but it lacks a compassion element. Capitalism does not care for the losers in its winner-takes-all system. It cannot be made into a second tier system, and that is what we need now -- a second tier approach to the economy.

I have no idea what that might look like.

How do we reframe our entire economic system to reflect a concern for the weak and disadvantaged? How do we create a system that allows -- in fact, encourages -- those who have less to increase their chances of making more? How do we build an economic system that honors the Spiral of human values? How do we build an economic system that has compassion at its core?

I don’t have any answers to the questions. But I think it’s time that we begin asking the questions.

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Anonymous said...

For some at least preliminary ideas, I think we need to look humbly at the examples set by societies more highly developed along the spiral than America (i.e., some of northern and western Europe). I read a fascinating article once (in the New Yorker?) about how closely the equitable distribution of wealth in a society tracks whether the average height of the citizens is low, average or high vis a vis the human maximum (the average height of Japanese is catching up fast to Americans [who've stopped growing] while the Dutch, for example, have far surpassed us and are pulling still further ahead).

Kai in NYC

Unknown said...


Red, Green, Beige, Yellow. What's needed is a better understanding of capitalism, here. Not so much misapplied righteous indignation.

The failure here isn't capitalism. What is going on is plain old corruption, rent large.

Genkaku's post is terrible. She identifies a huge problem of inequities, that anyone can agree is a problem, but tackles it with no insight, only emotion. It is green, but it is dastardly mean green.

Your Halliburton and ExxonMobil CEOs are good old boys being make supremely rich by other good old boys in a back scratch fever. Corruption is all too common in every economic system. It is corruption that should be targetted that would right most of the outrageous disparities. [I am including as a target 'legal corruption'; we should have laws to end the autocracy of the rich in politics and at large- and medium-sized companies.]

I would suggest that if we have a minimum wage, we ought to be able to impose a maximum wage, as well. It presents many implementation problems. But a fix along those lines could be implemented -- along with many others -- that would help.

William, many things that you suggest as fixes would make worse others of your cited problems. We need to first understand the tangled interests and motivations that exist in our economy. Suggesting a fix for ONE thing, and not wrestling with all the implications is blind-sided arguing.

If you raise the minimum wage, there will be repercusions. Basic commodities are the items most likely to see price increases. More people won't be able to find work since their labor isn't worth the new, higher minimum to employers. Many small businesses would have to go out of business. Any rise in the minumum wage is sure to raise unemployment.

Also, our country is not rich! We have a national debt that capitates at $30,000. That debt is quite real and humongous, and when the chickens come home to roost, ours will become a second-class nation.

The advantage of capitalism is that it is efficient. A control economy, of any kind, is wildly inefficient and brings with it all sorts of shortages and injustices.

What we have to do is better tame the capitalism beast. BUT we will not easily end poverty altogether. Unhappily, some people are adverse to work, or overmuch enjoy spending, or are irresponsible and they will put themselves in situations of need to motivate themselves. Other people love accumulating wealth and measure their worth by their income or acquisitions. This won't end either. We should always expect to have a range of life choices that people make that will include rather poor and rather rich folks at the extremes.

Umguy said...

When I try and sort this stuff out I wind up coming back to the idea that a much greater level of mandated transparency would be something to fight for and something that could help.

Like with the estate tax news about the 18 families. If people really knew...

Oh, this just gets into the access to information thing. You'd have to try to figure out how to make information available in a way that would encourage people to get informed.

It's such a difficult subject. Short of figuring out how to raise people's consciousness and bring about greater levels of care and concern...

I think it's worth wrestling with though. Thanks for the post.

Unknown said...

I cannot go without pointing out the problem with the crying baby in Darfur example.

It is wildly difficult to fix other countries, particularly ones that are in the grips of some crazy, smoldering warlike situation. THINK IRAQ.

There is a lot of craziness that complicates fixing these amazingly tragic inequities and injustices. Certainly, American and the UN and the world ought to be able to do A LOT better. But it does seem to me that there is a lot of forgetfulness going on where we demand that things get fixed and then, capriciously, damn the attempt to fix them.

I would submit that Rule 1 for an integral approach toward fixing the world should be TO GET REAL

Steve said...

I second the notion that we need to look at countries like Finland as models. I also believe that we need to tax the ultra-rich at ultra levels and radically lessen the disparity between the highest and lowest incomes in a company. For instance, the highest income should be a reasonable maximum multiple of the lowest income and would rise only if the lowest income also rose. But these are right quadrant solutions to a problem that also demands left quadrant approaches. I'm not sure what they would be, but we should all be thinking about them.


william harryman said...

Thanks to all of you for your comments.

I like the idea of a maximum wage. I have long copmplained that no human being is worth more than one million dollars a year to do anything. But that runs counter to everything Blue and Orange Anerica believes in.

I think Kai makes a good point. Northern Europe (Finland and the Netherlands, especially) has managed to reframe a capitalist/socialist economic approach that has nealry eliminated povery, allowed for much greater freedom in how they work, and still supports state-run health care and social programs.

Admittedly, they are generally more homogenous nations and more highly placed on the Spiral.

Getting rid of corruption would make capitalism work better, for sure. But capitalism is set up so that the rich can buy their government -- and those being bought are pretty happy with that system. Money is the fuel for everything in our economic system.

As Tom points out, our national debt is frightening -- and it is mostly owned by Japan and China. This severely limits our power as a nation to impose tarifs that allow our companies to compete on an equal footing in the market. They have cheaper labor in China, so most everything you see in Walmart was made in China.

Still, I think capitalism itself is the problem. It worships profit and abhores government intervention. When corporations are funding politicians like Bush, government is not going to regulate their operations, which ruins the environment, prevents equitable wages, and encourages outsourcing. To make matters worse, big business demands and gets tax incentives.

What I want is a system that honors the Orange need to acquire things/money. That honors the Blue need for higher authority and a certain degree of regulation. That honors the Green need for equality and fairness.

What I want is a Yellow/Turquoise approach that recognizes the values of all the lower memes, but also sees the need for a holistic approach. We are not an isolated nation -- we are part of a world community.

I think I am just frustrated. I want to see things change for the better in my lifetime, but it only seems to be getting worse.

I make more than my father ever made in any year of his working life. He supported a family of four. I barely support myself with no health insurance and very little left for retirement savings.

My father had insurance and a pension. I would gladly earn less money or pay more in taxes to have insurance and some hope of a retirement plan.

Okay, I'm done ranting.