Home
Things change. It's the nature of the universe. Yesterday's greatest ideas give way to ideas that are better, or better suited to the present, or at least different. Change is the only thing on which you can depend.

So what about capitalism?

I think capitalism had a good run, but it will soon be done. Socialism will be too expensive to maintain as the world economies slow, and communism won't be making a comeback. The economies of the future will be something new.

Capitalism was conceived before the Internet, and before the gears of commerce became computerized. The system could absorb a lot of con artists because they didn't have the ability to steal fast enough to cripple the system. As you know, that has changed. Crooks in expensive suits now have the ability to swindle trillions, collectively, thanks to the efficiency of the system. And idiots in expensive suits can do even more damage.

The economy is now too complicated for even the regulators to know when a con or a huge mistake is happening. The balance of power has swung to the crooks and the market manipulators. Even if we could regulate away these problems, it's already too late. There isn't enough money left to support the planet under the current social systems, at least not when the boomers start retiring and unemployment starts climbing.

I've been wondering what the new economic system will look like. I think the next economy will have the same freedom of employment and entrepreneurship as capitalism. That part seemed to work well. But you might see restrictions on what types of investments individuals can make, to keep them out of trouble. Most people should be restricted to buying only the broad indexes with an ETF. And perhaps the percentage of stock you can legally own as a percentage of your net worth should go down as you near retirement. Stock bubbles could be avoided by restricting how much money can be invested in stocks, on an annual basis, to keep the price earnings ratios around 15. New stock offerings would be funded by existing companies and institutional investors.  (Clearly that idea isn't well thought out. It's just a directional sort of prediction.)

But the biggest change could be in what sort of consumption is allowed under the new economy. Most of our problems were caused by people who couldn't control their own spending. Banks could tighten their credit requirements but that won't be enough to stop the spending junkies from depleting their own nest eggs. So you might see some forced savings rules in the new economy.

Depending on how bad the economy gets, you could also see rules banning single passengers in cars. And working from home might become a legal requirement for economic reasons. Perhaps your health insurance premiums would be based on your body mass index and whether or not you smoke. You could see a whole range of restrictions on how consumers can live, spend, and invest, to prevent market bubbles and waste.

So I think the new economy will allow you freedom of employment, but you won't be able to spend and invest your money as freely as you once did. That was the part that got us in trouble.

I'm not saying this new economy will be an improvement. It's just a prediction.
 
Rank Up Rank Down Votes:  +3
  • Print
  • Share
  • Share:

Comments

Sort By:
Mar 1, 2009
Lets just hope that our economy would now do better. Everyone is affected by the recession that we are facing and almost everyone today is now in need for financial options like payday loans. The popular online auction site eBay may be next in line for payday loans. The website has been an online Mecca for people looking to sell superfluous items, collectible and offbeat, for over a decade, but their revenue has been slipping of late. The auction function of the site hasn't been as lucrative as it once was. The website may be looking for payday loans to boost its diminishing stock price. Extraneous spending has been dropping across the board, and most of eBay's income has been from straight sales rather than auctions. The average person doesn't want to bid on a vintage lava lamp when they are contemplating <a href="http://personalmoneystore.com/Cash-Advance-Loans/">Cash Advance Loans</a> just to keep their lights on.
 
 
Jan 18, 2009
Here are my predictions on what will change:

To keep risk-taking and moral hazard under control: expect more restrictions on lending and debt financing, stricter corporate governance and securities market regulations, more vigorous prosecution of white-collar crime, and harsher bankruptcy laws.

To raise the revenue needed to fund entitlement programs in a politically convenient manner: expect more taxes on consuming things that are deemed to be socially harmful, such as various unhealthy substances and environmental pollutants.
 
 
Jan 10, 2009
How about banning blogs that advocate stupidity while conveying authority (yes you)?

How about making it illegal for popular people like Mr. Adams to give advice without a license?

Mr. Adams, capitalism never failed. American materialism did. People borrowed in order to finance
a lifestyle they did not earn or deserved. People turned in new cars for newer cars with better GPS.
People traded 3000 sf houses for 5000 sf houses for that cathedral ceiling.

Capitalism never failed. It actually succeeded so much we forgot it can SOMETIME fails. And so
we lived like is no tomorrow and are paying the price which we should all, including myself, pay.

Mr. Adams is also a great beneficiary of capitalism and the ease by which one can conduct
business in this wonderful country of ours.

As an immigrant, who lived in many other countries, I have to tell you, America is not perfect,
but it is still the best.
 
 
0 Rank Up Rank Down
Dec 29, 2008
This guy says capitalism does not exist and never has. I agree.

http://www.americanthinker.com/2008/12/meritalism_not_capitalism.html
 
 
Dec 22, 2008
How could they ban single passengers in cars?

More people are staying single every year.

So invest in the blow-up doll industry now and

don't forget to buckle them up.
 
 
Dec 22, 2008
Actually whenever I catch on fire I smoke. Don't you?
 
 
Dec 21, 2008
The end of capitalism- no way. The end of consumer credit- maybe. The end of consumer debt securitization- definitely. Individual stock ownership is not the problem, it's debt. We are be seeing the end of easy credit for companies, individuals, and the United States. Hopefully we will also see an end to people being able to buy insurance on risky loans.
 
 
Dec 20, 2008
I agree with johno777. One of the main problems with what has happened here has been deregulation. We have either deregulated industries so they are no longer accountable or we make laws but then don't fund for enforcement.

I work in healthcare as a rehabilitation therapist and it is a huge mess because of deregulation. What I see is that most healthcare companies, including hospitals, nursing homes, and assisted livings are owned and operated by people who have no background in medicine and are there only to make the investors money. The problem with this is patients are often snowed by the facility into unneccessary treatments so that the healthcare center can make money off of insurance and Medicare.

Now, one would think that the doctors and the therapists could step in and stop this right? Wrong. Most physicians and therapists don't work for themselves anymore, they work for a company. The company pushes "productivity" quotas that healthcare providers must reach in order to stay employed.

This is suppossed to be regulated and physicians and therapists can be charged and convicted of Medicare and insurance fraud. Unfortunately, the company and/or management doesn't get in trouble for this. Also, Medicare and the FBI are so poorly funded for this right now, that they seem to be looking the other way and these companies know this.

So now, healthcare providers are between a rock and a hard place: Refuse to give unethical medical treatments and lose their jobs (and be unable to find employment without the same expectations) or commit the fraud and (maybe) get caught and lose their license to practice.

Are the companies and the investors hurt by this? No. If one provider refuses to do something unethical and is terminated, they can always find someone else who will do it.

My solution: Healthcare shouldn't be a business. Invetors shouldn't be able to make money off of your illness or health crisis. The money the company makes should go back to the patients in the form of salaries for healthcare providers (CNAs don't make squat and they have the hardest job in the whole building), increased staff for more individualized care (think patients in nursing homes!), improved environments and activities (again, eldercare), and programs for preventative medicine that acutally work (here's one solution for destructive behaviors, like overeating and smoking).
 
 
Dec 17, 2008
Wow...I wouldn't want to live in that society. Freedom is the only way Scott, I'd move wherever I had to for that.
 
 
Dec 17, 2008
The system you describe would still be capitalism. Adding more restrictions on what people can invest in (there already ARE restrictions) won't change anything. Forcing people to consume less is just some form of social engineering, which will change the way capitalism will work but it won't make it anything other than capitalism.
 
 
0 Rank Up Rank Down
Dec 17, 2008
User Name: callcopse Dec 17, 2008
"I'd go with a variant of anarcho-syndicalism, a form of libertarian socialism. Decentralize power and give it to local communities. Let no man be your boss and be the boss of no man. But whatever..."

Look, Dennis, that's all good until King Arthur gallops into your community and demands to know who the lord of your castle is!

:-)
 
 
Dec 17, 2008
What is this about the end of capitalism?

Capitalism is working beautifully here in Australia. Of course we are suffering a few minor shocks in industries that depend on trade with the USA, but other than that we're simply experiencing low petrol prices and mortgages. For the majority of Australians we are currently in good times (and of course I know enough about the world economy to not take that for granted; but still . . ).

I think rather than the end of capitalism, what you are observing is the end of unregulated capitalism. With the right regulatory structures, the system is better than anything else anyone has ever proposed.
 
 
0 Rank Up Rank Down
Dec 17, 2008
I think you overestimate people's willingness to give up freedom in how they spend their money. Nobody would vote for a plan like the one you proposed. As far as each individual person goes, they think "I'm managing my money just fine, but *everyone else* needs to get with the program."
 
 
Dec 17, 2008
I'd go with a variant of anarcho-syndicalism, a form of libertarian socialism. Decentralize power and give it to local communities. Let no man be your boss and be the boss of no man. But whatever...
 
 
0 Rank Up Rank Down
Dec 17, 2008
Is it just me that gets the feeling that something similar to this would've been published early on in the Great Depression?

Busts are part of the cycle of capitalism - much as at the height of every boom, the prediction is that "It'll be different this time," every bust leads to predictions of "it'll be different this time..."
 
 
Dec 16, 2008
Scott,

If you think people controlling their own money has a lot of problems, just wait until you increase the ability of people to control other people's money!
 
 
0 Rank Up Rank Down
Dec 16, 2008
You missed one thing.

The bit problem has been unrealistic lending.

Now it would be nice if people took ownership of their borrowing rather than blaming the government and the banks for letting them borrow so much, but I think we have no chance of that happening.

Because of that, we're doomed to see this happen again unless we regulate debt much more tightly.

How about this:
Total limit on all credit cards you own must be less than 2 months' income - one month's for you and one for any employment expenses.
Credit cards to be paid in full by direct debit each month.
Longer term borrowing to be structured within a loan agreement to ensure that it always decreases rather than builds.
Loans only available for specific purposes, e.g. car purchase, education / career development
Only one mortgage permitted per house.
Total view of debt - Maximum debt is 3.5x salary. I.e. if you have a credit card with 0.1x salary, Loan for 1x Salary, this is 1.1x salary, so the most you can borrow for a house is 2.4x salary (3.5x minus 1.1x)

This would have to be set in law as the banks will never do it.

It'll never happen.

Which is why this will all happen again only worse as we'll convince ourselves that we've fixed the economy and that it can't recur. And everybody will forget that you can't have a boom without having a bust.
 
 
Dec 16, 2008
Forced savings accounts you say? Could of swore that it is called Social Security? I could be wrong though ;)
 
 
Dec 16, 2008
Here's my holiday economic comment:
Santa Needs a Bailout for Christmas!

http://www.youtube.com/watch?v=oKR5_GtrRLk
 
 
Dec 16, 2008
>The system could absorb a lot of con artists because they didn't have the ability to steal fast enough to cripple the system. As you know, that has changed.

Prices of commodities can also be a lot more accurate now, thanks to instantaneous feedback.

>There isn't enough money left to support the planet under the current social systems

Agreed. Just wait until Obama gets going...

>Most people should be restricted to buying only the broad indexes with an ETF.

So now all common stocks will be treated the same as hedge funds? Who decides which stocks make it into the index?

>Banks could tighten their credit requirements but that won't be enough to stop the spending junkies from depleting their own nest eggs.

How will banks know if I have accounts at other banks? Or will that be illegal too?

>Depending on how bad the economy gets, you could also see rules banning single passengers in cars.

I don't see a correlation between single passenger cars and the economy as a whole. People can voluntarily carpool if it's cheaper/better.

>And working from home might become a legal requirement for economic reasons.

This won't work for too many reason to list. If I'm a salesman, I need to get out of the house. If I handle classified information, I have to work in certain areas.

>Perhaps your health insurance premiums would be based on your body mass index and whether or not you smoke.

I love this idea, but we live in a politically correct society (although some insurance is currently tied to whether or not you smoke)
 
 
 
Get the new Dilbert app!
Old Dilbert Blog