Yo Polar - Let's do the capitalism thing.

[nemo]

I'm feeling kinda bored right now, so I'm thinking maybe i should take up your challenge on the whole let's have it out over the pros and cons of capitalism thing.  New thread, new start and all. 

And to make things clear from the start, I don't think capitalism has made us all worse off or anything, I just feel that simply taking the fact that standards of living have risen under capitalism as proof that it's the most effective system is pretty naive.  In the last 100 years or so of legal slavery in the U.S. the living standards of the average slave increased by quite a large degree, doesn't mean that's a good argument for holding on to slavery.

We can cover the rights and wrongs of 'wage slavery', treatment of workers in the 3rd world, the break up of labour movements and workers' unions later, but I want to start on something that's in my head at the moment.  It's a less obvious form of exploitation, in fact I guess you could argue whether it's exploitation at all, but it does seem to be a pretty clear example of robbing from you and I to prop up those at the top table.

Because I was teaching someone today, he's a director of big electronics company that are heavily involved in hi-tech defense systems used all over the world.  Anyway, we were talking a bit about some of the things his company does and it got me thinking a bit.

So one of the things they do is to design/build/operate/sell missile guidance systems for fighter jets.  Another thing they do is design/build/operate/sell missile detection systems.  They sell 2 versions of both of these, 1 is available to all the NATO countries, the other is available to whoever else has the money to buy it from them.  And they've got a practical monopoly on this particular patch of the aero-defense industry.  So obviously the NATO  missile detection system is built to pick up the signal from the non-NATO missile guidance system and vice versa.  This company receives a massive amount of money from the governments of the NATO companies to fund R&D.  That R&D money is spent on every so often producing a new, slightly more advanced, harder to track missile guidance system which everyone wants to buy because the current tracking system can pick up what's being fired.  Only problem is of course that shortly after they do this, they release an upgraded missile detection system that can track the new missile (it's not so hard to work out how to do that, they did design the guidance system for said missile after all)  So they take in billions in subsidies to develop these things, and then sell them for billions to both sides to eventually essentially cancel one another out, and this process continues ad-infinitum.  It's a closed loop where they're just sucking in our money to nobody's benefit.

And it's a similar principle (though not really the same thing in reality) to what Lockheed Martin and McDonnel Douglas do in the USA, you guys subsidise the fuck out of them in public funding.  So they develop a new fighter jet every so often, at massive expense to the US taxpayer.  And it turns out to be the best plane ever (take the F-16 back in the mid 70's as an example here) so the US have a better fighter plane than everyone else.  But then for some reason Lockheed get to flog it to other countries, and suddenly you've got 25 different countries using it. 

http://en.wikipedia.org/wiki/F-16_Fighting_Falcon_operators

None of them are really your enemies as such (though some you aren't on massively friendly terms with, and when you guys considered an embargo on Venezuela a few years ago they responded by threatening to sell their planes off to Iran) and some were friends when they got the planes but now not so much.  So now someone's gonna have to build a better plane, because the US has to have the best tech equipment of any army going, just in case you have a big fall out with one of those guys.  Which means that you and anyone else who pays taxes over there is gonna have to fork out once again for the next generation of fighter (and the USA aren't the only ones doing it either, Dassault here in France do exactly the same thing, take public funds to develop the Mirage, then sell it off to other countries who aren't exactly guaranteed to stay best friends with France forever and a day)

Out of interest, is this an example of the market doing what you think the market should be doing?  Yeah, things are advancing and developing and people somewhere are making a product out of it, but I'd argue that in reality it's making the majority of us worse off.

[mooney]

Very interesting post, nemo. Interesting angle with the weapons technology.

[polar]

yay i finally get my thread after all these months, but you pick a time when i am managing a million projects, planning a wedding, finishing my soccer playoffs, and i have company in from california.

back on topic, luckily i have argued this subject before about war profiteering and vulture or disaster capitalism a few times before and i already have a reply, gimme a couple minutes brb

[polar]

So one of the things they do is to design/build/operate/sell missile guidance systems for fighter jets.  Another thing they do is design/build/operate/sell missile detection systems.  They sell 2 versions of both of these, 1 is available to all the NATO countries, the other is available to whoever else has the money to buy it from them.  And they've got a practical monopoly on this particular patch of the aero-defense industry.  So obviously the NATO  missile detection system is built to pick up the signal from the non-NATO missile guidance system and vice versa.  This company receives a massive amount of money from the governments of the NATO companies to fund R&D.  That R&D money is spent on every so often producing a new, slightly more advanced, harder to track missile guidance system which everyone wants to buy because the current tracking system can pick up what's being fired.  Only problem is of course that shortly after they do this, they release an upgraded missile detection system that can track the new missile (it's not so hard to work out how to do that, they did design the guidance system for said missile after all)  So they take in billions in subsidies to develop these things, and then sell them for billions to both sides to eventually essentially cancel one another out, and this process continues ad-infinitum.  It's a closed loop where they're just sucking in our money to nobody's benefit.

And it's a similar principle (though not really the same thing in reality) to what Lockheed Martin and McDonnel Douglas do in the USA, you guys subsidise the fuck out of them in public funding.  So they develop a new fighter jet every so often, at massive expense to the US taxpayer.  And it turns out to be the best plane ever (take the F-16 back in the mid 70's as an example here) so the US have a better fighter plane than everyone else.  But then for some reason Lockheed get to flog it to other countries, and suddenly you've got 25 different countries using it. 

http://en.wikipedia.org/wiki/F-16_Fighting_Falcon_operators

None of them are really your enemies as such (though some you aren't on massively friendly terms with, and when you guys considered an embargo on Venezuela a few years ago they responded by threatening to sell their planes off to Iran) and some were friends when they got the planes but now not so much.  So now someone's gonna have to build a better plane, because the US has to have the best tech equipment of any army going, just in case you have a big fall out with one of those guys.  Which means that you and anyone else who pays taxes over there is gonna have to fork out once again for the next generation of fighter (and the USA aren't the only ones doing it either, Dassault here in France do exactly the same thing, take public funds to develop the Mirage, then sell it off to other countries who aren't exactly guaranteed to stay best friends with France forever and a day)

Out of interest, is this an example of the market doing what you think the market should be doing?  Yeah, things are advancing and developing and people somewhere are making a product out of it, but I'd argue that in reality it's making the majority of us worse off.

what you laid out is not an argument for or against capitalism, your post is really about bad government policy.  just for the record, i too think the military industrial complex is a direct assault on our liberties, national security, capitalism, and human rights in general.  the "defense contractors" sell shit to everyone from african regime leaders to hugo chavez to the UK.  the US govt is like the mafia, if you pay us, we'll protect you.  but to join NATO, as you said, we don't just want you to buy a jet or some rocket launchers here and there, you have to dedicate 20% of your annual defense budget to buying american weapons,,, that's actually in the NATO agreement.  so like i said, it's like the mob.  but to get nations to join and stay in NATO, they have to keep a bad guy that is always spooky and hiding in the wings, plus make more money, so they sell landmines and guns and fighter planes to every regime under the sun, especially unstable crackpots

this is all not really an example of "capitalism" per se, it's more about really bad corporatism, raytheon and boeing and lockheed and 900 other companies only exist because the government interference creates a false demand and works against the free market.  just like we bail out the mega corporate banks which really run Europe and the US and makes the taxpayers poor and destroys the currencies, we also subsidize and worship this huge military industrial complex that eisenhower said 50 years ago would grow out of control and threaten our country and capitalism as we know it

[polar]

so is that all i get?  /sadness

[_Flame Trees_]

And to make things clear from the start, I don't think capitalism has made us all worse off or anything, I just feel that simply taking the fact that standards of living have risen under capitalism as proof that it's the most effective system is pretty naive. 

What do you think a better system would be?

[nemo]

Sorry, I've got man-flu at the moment, which means I'm quite convinced I'm at death's door right now.  Polar, I'll come back to it when I'm feeling a bit better, I'm sort of sleeping about 16 hours a day at the moment and not eating anything.  I'll try to have something over the weekend.

What do you think a better system would be?

A system where people were fairly rewarded for the work they do, where the primary motive behind decisions, both business and political, was not merely 'profit'.  A system where it wasn't accepted as good practice for companies' profits to be increasing while the standard of living of their employees was decreasing.  A system where the state's priorities were toward the well being of its citizens, not the opinions of business leaders and lobbying groups.  A system under which the state devoted the majority of its spending to increasing the well being of its citizens rather than funding escalating military spending.  A system that didn't seek to bully any alternative economic models out of existence by funding insurgency operations against governments which tried to do something different.  A system where political consensus could not be bought and sold.  A system that wouldn't confuse grass-roots protests with hugely funded astroturfing campaigns.  A system that doesn't provide multiple loopholes to allow the rich to avoid paying billions upon billions in taxes each year. 

(I'd also like to see much higher taxes on inherited wealth and an end to speculative trading [e.g. on futures], but that can wait for another day, for some reason that seems to be a much more controversial issue)

Those would be some good principles to start on, none of which are expressly anti-capitalist.  Like I've said plenty of times in the past, I'm not a Marxist Leninist, nor do I seek the abolition of money, or forcing everyone to live under the exact same conditions or anything like that.  It's more about invoking a sense of ethics in your decision making processes and actually creating some sort of real democracy rather than what we have in the UK and US today where wealth buys power and influence.  From there I guess you could refine things along the way, take the best of what works and dump or improve the bits which aren't turning out too fantastically.

[_Flame Trees_]

you're right, none of those are expressly anti-capitalist, and i'd agree that all of those things would be better than the status quo. i think the problem is, though, that so long as a capitalistic-style economic apparatus operates it will foster the type of problems you're mentioning.

how do you practically go about reforming the system to fit your model, and then what are you left with?

i guess the obvious way is through government intervention, but here is where i shirk the responsibility of doing any hard thinking and assume polar will list reasons why government intervention is a bad thing

[polar]

Sorry, I've got man-flu at the moment, which means I'm quite convinced I'm at death's door right now.

that's ok, i've had the brown-bottle flu every morning for the past week

A system where people were fairly rewarded for the work they do, where the primary motive behind decisions, both business and political, was not merely 'profit'.

i hope you don't think greed exists only in the business sector.  it's everywhere, especially in government. i'd really like to see where you find this dream cast of leaders lol

(I'd also like to see much higher taxes on inherited wealth and an end to speculative trading [e.g. on futures], but that can wait for another day, for some reason that seems to be a much more controversial issue)

i get it that you aren't keen on shorting a stock, but the most baffling thing you've said to date is you want a higher tax on inheritance.  so if i make a fortune over my life i can't give it to my kids??  lol i see zero logic in that.  how many times are we gonna get taxed on every dollar.  they already tax that same dollar 6 or 7 different times by the time i can actually keep it, now you want to hit me again for dying? lol seriously dude

if you want a fair system, you eliminate this slavery that the govt has put us in, aka inflation/stagflation and the national debt that we will default on in the near future, by cutting government spending  to absolute minimums, give govt minimum powers, give citizens maximum liberties, give citizens a fair flat tax across the nation, have 0 corporate taxes, and let the cream of the crop shine and bring everyone else a long for the ride.

[GGS]

What do we do with the people who don't contribute or don't work.

Capitalism for better or worse has been the only system so far that has delayed ok not perfectly but still reprieved for the most part the inevitable conclusions that both National and International Socialism reached.

Are we really going to stick people in camps again.

[nemo]

how do you practically go about reforming the system to fit your model, and then what are you left with?

i guess the obvious way is through government intervention, but here is where i shirk the responsibility of doing any hard thinking and assume polar will list reasons why government intervention is a bad thing

It doesn't have to be through government intervention.  Government intervention has been keeping the markets running and the big companies in business for the past 60 years.  Take manufacturing as a quick example, do you have any idea how much public funding through defense spending went into creating electronic production processes which bypassed the need for labourers/technicians on the assembly line?  These things were not anywhere near as efficient as the work done by people for years and years, without government funding for R&D costs they'd probably never have been achieved in a free market. 

Preferably it'd be done through a growth in labour unions, real ones, not the ones where one guy becomes union leader and takes it upon himself to make all the decisions on his members' behalf, but a democratic organisation of workers coming together for more rights.  A change in government policy in terms of military spending and a ban on political lobbying or political donations made by companies would be a step in the right direction as well.  The only point where i think the government really needs to intervene directly though is on closing tax loopholes (e.g. allowing contractors to set themselves up as self employed, take a salary from their own private company of the minimum wage and then pay themselves several hundred thousand pounds as a bonus per year.  i know people in the UK who boast about the fact that they earn £300,000 per year and yet are receiving low income benefits because their declared earnings are only about £200 per week) and things like tax relief on business expenses/client entertainment expenses.

As to what you're left with then, hopefully a more ethical system than we have now.  whether that would be the case I honestly can't say, I don't have a crystal ball after all.

i hope you don't think greed exists only in the business sector.  it's everywhere, especially in government. i'd really like to see where you find this dream cast of leaders lol

I know it exists everywhere, it's absolutely endemic in politics.  Yet I'm not arguing for more state intervention in anything particularly, I'm arguing for more democratic representation of the people of the country in making these decisions.  That may take the form of workers unions or it may take the form of local community groups, but probably beyond the essentials such as health, education, road building, etc, things which should not be run on a for profit basis, I'd keep as much power as possible out of the hands of central governments.

i get it that you aren't keen on shorting a stock, but the most baffling thing you've said to date is you want a higher tax on inheritance.  so if i make a fortune over my life i can't give it to my kids??  lol i see zero logic in that.  how many times are we gonna get taxed on every dollar.  they already tax that same dollar 6 or 7 different times by the time i can actually keep it, now you want to hit me again for dying? lol seriously dude

I'm discussing higher taxation at high levels of inheritance here.  Sure you want to give your kids the chance to make sure they can afford to buy a house at some point and all that jazz, but why someone should be entitled to inherit billions of dollars/pounds/whatever so they never have to work a day in their life and cruise through on a sense of entitlement because of something someone they're related to did is beyond me.  The dream was meant to be to make something of yourself, not to have your father make something of you.

if you want a fair system, you eliminate this slavery that the govt has put us in, aka inflation/stagflation and the national debt that we will default on in the near future, by cutting government spending  to absolute minimums, give govt minimum powers, give citizens maximum liberties, give citizens a fair flat tax across the nation, have 0 corporate taxes, and let the cream of the crop shine and bring everyone else a long for the ride.

I don't think I've seen any evidence that trickle down economics works in practice.  In fact, in real terms, adjusted for inflation and the like, the average starting salary for workers dropped by around 30% over the course of the 80's, to me Reagonomics is not really worth paying much attention to.

Nor do I think the cream of the crop have any interest in taking others along for the ride, rather they'd be more than happy to outsource to wherever they can get away with paying people the least amount of money for the highest number of productive hours, to fire any workers who attempted to unionise or take action for fair treatment, etc.

What do we do with the people who don't contribute or don't work.

Capitalism for better or worse has been the only system so far that has delayed ok not perfectly but still reprieved for the most part the inevitable conclusions that both National and International Socialism reached.

Are we really going to stick people in camps again.

Again this is a problem with investing all of the power and control in a centralised institution, and to be honest, the USSR was never really a socialist state, the closest it ever came was the 8 months from February - October 1917, the first revolution to overthrow the Tsar was intended to set up what may have become a socialist state, once Lenin and the Bolsheviks took over however what we got instead was a sort of totalitarian capitalism with the entire economy controlled by the state.

I'm not arguing for that.  Nor for putting people in camps and killing them, which is what almost unavoidably happens as a result of totalitarian capitalism.