What's wrong with communism?

[Tobiasly]

Originally posted by sycamore
What's wrong with communism? Sure it was bad in practice, but it's a nice theory, IMO.

What's wrong with communism is that you can't separate practice from theory. Even a die-hard Reaganomics proponent like me agrees that "to each according to his need, from each according to his ability" (sorry if I butchered that) sounds like a pretty cool idea.

However, humans are greedy people. I'm greedy, and you're greedy. We're also lazy. It's in our nature. Some of us are more greedy than others, but when it comes right down to it, each one of us will take care of ourselves and our loved ones first. Communism tries to pretend that this isn't the case, but you can't change human nature. Capitalism doesn't try to ignore this fact; it <I>counts on it</I>. By rewarding people who take risks and succeed, our whole society moves forward.

Of course it's not perfect, and there is a need for some control of the process to make sure it doesn't get outta control. But capitalism is the only economic paradigm that is based on the way humans think and act, and that is why it's the only viable choice in a modern world.

[juju]

Yep, I'd pretty much agree with all of that. Except for the part where you said 'Capitalism is the only viable choice'. I don't get your logic there. Just because it's a good model doesn't mean another better one doesn't exist.

Also, when you base a society on greed, you get a society full of greedy people.

[elSicomoro]

No arguments from me Tob...I love capitalism. I just wish I could be one of those folks that makes a pile of money on a risk.

[Xugumad]

Originally posted by Tobiasly
Even a die-hard Reaganomics proponent like me agrees that "to each according to his need, from each according to his ability" (sorry if I butchered that) sounds like a pretty cool idea.

Reaganomics, if examined through the looking glass of Economics, was a mixed bag. It impoverished many people and caused wide-spread poverty, but then again this is not of any concern to most other people as long as they are doing alright.

Here are some downsides to Reagan's economic policies (in response to the 'capitalism is great' tone of the thread):

- Federal debt (privately held) increased from 22.3% to 33.1% during his years in office.

- The Federal deficit in Reagan's last budget remained unchanged at 2.9% of GDP.

- Although supposedly using neo-liberal market capitalist economic strategies (and going exactly against his rhetoric of free trade), Reagan in fact employed the most protectionist methods of any President since Hoover. Trade restraints and protective tariffs increased from 12% of all imports to 23% of all imports between 1980-'88.

- Reagan presided over the worst US recession since WW2, 1981-82; the Savings and Loans crisis of 1982 caused the collapse of more US banks than ever before.

- Despite the claim that Reaganomics used tax cuts and modest spending as a means of stimulating the economy, the opposite is actually true: taxes rose by total of $375billion, government spending rose by $450billion.

Especially the last detail is often overlooked when 'tax-and-spend' liberals are attacked politically; tax-and-spend is the method used by the most celebrated right-wing economic approach of the last century.

X.

[Undertoad]

Capitalism is the "least worst" economic system going.

I'm sure there's something better but A) it would take a lot of improvement of change in humanity to get its act together, and B) it probably will be worked out after everyone has the kind of lack of scarcity that most Cellar folks enjoy today.

That's my theory.

[Tobiasly]

Originally posted by juju
Except for the part where you said 'Capitalism is the only viable choice'. I don't get your logic there. Just because it's a good model doesn't mean another better one doesn't exist.

True. I probably should have said "capitalism is the only choice that seems to have worked in the modern world." But I sure haven't heard any better ideas that would work in the real world.

Originally posted by Xugumad
Reaganomics, if examined through the looking glass of Economics, was a mixed bag. It impoverished many people and caused wide-spread poverty, but then again this is not of any concern to most other people as long as they are doing alright.

Mmkay, by "Reaganomics" I don't necessarily mean the way the economy was run under Reagan. I guess I should have said "supply-side economics". I think "trickle-down", for the most part, works. There have to be limits in place to prevent abuses, but one of the best ways to increase the livelihood of the people is to make it easier for the people who create jobs to do so.

Despite the claim that Reaganomics used tax cuts and modest spending as a means of stimulating the economy, the opposite is actually true: taxes rose by total of $375billion, government spending rose by $450billion.

I'm not sure if you're obfuscating or just confused, so I'll give you the benefit of the doubt. Reagan <B>did</B> cut taxes, meaning he cut the tax rate. For example, the highest marginal tax rate on individuals when he took office was 70%, which his tax cut package lowered to 28%.

The result of that is, as you point out, an <I>increase in tax revenues generated</I>. Yes, more money came in to the government, because unemployment dropped and there were more people working and thus paying taxes. But that's what Reagan and company expected to happen, so to say that was a failure of their policy is incorrect.

[Xugumad]

Originally posted by Tobiasly
Reagan <B>did</B> cut taxes, meaning he cut the tax rate. For example, the highest marginal tax rate on individuals when he took office was 70%, which his tax cut package lowered to 28%.

The result of that is, as you point out, an <I>increase in tax revenues generated</I>. Yes, more money came in to the government, because unemployment dropped and there were more people working and thus paying taxes. But that's what Reagan and company expected to happen, so to say that was a failure of their policy is incorrect.

That is factually wrong, and a fairly common mistake to make for a non-economist.

Here is the breakdown:

The top tax rate was cut, from 70% to 28%, <b>the biggest tax cut in after-war US history</b>. Spending did not decrease, and the economy was not sufficiently stimulated to offset the loss in tax revenue. As a direct result, federal deficit and annual deficit increased sharply; by the summer of 1982, the US was in deep recession. (having briefly overcome some economic difficulties during the first year of Reagan's presidency)

In September of 1982, Reagan's budget included the <b>biggest tax raises in after-war US history</b>. (done partly to work against the rising rate of inflation at the time) In 1986, there was an additional double tax increase, retroactive, on commercial real estate and in capital gains taxes. Simultaneously, there was also a retroactvive decreased depreciation deduction allowance. Those were just some of the examples of sharp tax increases in Reagan budgets. (the one on commercial real estate was particularly catastrophical, triggering the collapse of a whole industry. The effects of 1986 were to some part responsible for the late-80s downturn and the economic problems of the early 90s)

I think "trickle-down", for the most part, works.

Many economist would - regarding the US during the 80s - strongly disagree with that. I'm not going to debate it now, the discussion is significantly too complex to address here; I will, however, name the sources and background information that will help you find out more on the subject. (it'll take a few days to go through my postgrad Economics and Political Science books, if I can find them after moving)

Regarding trickle-down, it's easy to discuss faceless numbers and bare statistics. Having witnessed the stark truth of mass empoverishment in America during the 80s, however, has forever changed some people's views of 'trickle-down'.

Here's another couple of faceless numbers for you:

During the first five years of the Reagan administration, the number of people under the poverty line DOUBLED. (Department of Labor statistics, reported in the Washington Post, May-13-1986)

During the 13 years previous to 1986, real take home wages decreased, adjusted for inflation, by 14.3%. (Associated Press, July-31-1986)

X.

[jaguar]

Who was it who said a liberal democrasy is a terrible system, but the ebst until we find something better. Same applies. I'm with plato, democrasy is flawed; the masses are stupid enlightened democrasy is the only way to go

[Tobiasly]

Sure, I'd be interested in reading your resources X, although something tells me they'll be one-sided.

We must also not forget that it's impossible to isolate a particular period of time and say "this was caused by this". Let's not forget the whole Cold War thing that was going on at the same time, where it was vital to demonstrate to the Soviets that they couldn't maintain the same level of war resources that we could. Also, the fact that spending increased is not solely attributable to the President, as I'm sure you're well aware.

There were good and bad aspects of Reagan's economic policies, to be sure. I've read very good (one-sided) arguments on both sides of the issue. And since I'm no economist, I still may be mixing my terms.. my point is that entrepreneurs must be given as much of an opportunity as possible to create jobs, because <B>they are the only ones who can</B>. The government doesn't create jobs, and policies don't create jobs.

Some people want to tax the rich at a ridiculous level, because "no one needs any more than X amount to live well". A <B>70%</B> marginal individual income tax rate? That's insane. At that rate, Mr. Factory Owner has no incentive to expand his company, because by the time Uncle Sam takes 70% of whatever else he earns, it's just not worth it. So instead of reinvesting that money in some new endeavor that will create jobs, he saves it or invests it in some more attractive way.

[Tobiasly]

Originally posted by juju
Also, when you base a society on greed, you get a society full of greedy people.

Somehow missed this one earlier. What economic system can we use that doesn't create greedy people?

[Xugumad]

Originally posted by Tobiasly
Sure, I'd be interested in reading your resources X, although something tells me they'll be one-sided.

I'll assume the smilie meant you were joking and not being prejudiced.

My 'sources', as you call them, are standard economic textbooks and analyses by economic journals and scholars. There is very little room for opinion or prejudice.

We must also not forget that it's impossible to isolate a particular period of time and say "this was caused by this".

That sidesteps any analysis of causality altogether, especially considering the fact that the number of people living below the poverty line doubled in the first five years of the Reagan administration.

...my point is that entrepreneurs must be given as much of an opportunity as possible to create jobs, because <B>they are the only ones who can</B>. The government doesn't create jobs, and policies don't create jobs.

I fully agree with you there, and I also agree that a cut of the top rate was a good idea; the level at which it took place necessitated the largest tax increase in US history, in 1982/83, since it didn't have the expected results. Cutting too much means bankrupting the economy, and causing budget deficit increases on a level from which the US hasn't recovered yet, and judging by current US economic policy, will not recover for the foreseeable future.

As an aside, placing the fate of your country in the hands of stockholders and company boards is suicidal: stockholders have only one interest, share profits; thus company directors will do whatever it takes to produce profits, with often-disastrous results. The liberal-market right has sneered for years at attempts to place restraints on the 'free market'; the results have been unchecked excesses that have brought the US (and by proxy much of the world's economy) to the brink of disaster. Bush is signing company-control laws that two years ago would have been met with derisive laughter by pretty much anyone on the right.

After all: the best way to ensure companies and businessmen improve the economy is to let them do their job and make money...

X.

PS: Speaking of sources, here are a couple of introductory economics textbooks. That ought to give you a better idea of the matter at hand. They are all ludicrously dry and boring if you're not interested in Economics, but they are the standard of what's used to teach Economics.

ISBN: 0716752379
ISBN: 0691092575

On a slightly higher level:

ISBN: 0072318554
ISBN: 0262231999

If you haven't read the basic texts, also read:

[Economics]
John Maynard Keynes, "The General Theory of Employment, Interest, and Money"
Adam Smith, "The Wealth of Nations"

[Theory]
Jean-Jacques Rousseau, "The Social Contract"
Thomas Paine, "The Rights of Man"

[jaguar]

I hate to flog a dead horse but we've never had a decent implimentation of communism. All the biggies have replaced religion with hero worship, the cult of the leader, something i doubt marx would ahve liked. If Trotsky ahd evened up in change....

I do agree that communist economies don't work though, there is no motivation for the workers. Look at Vietnam, when they finally gave the land back to the peasents rather than collectives production went though the roof.

As an aside, placing the fate of your country in the hands of stockholders and company boards is suicidal: stockholders have only one interest, share profits; thus company directors will do whatever it takes to produce profits, with often-disastrous results. The liberal-market right has sneered for years at attempts to place restraints on the 'free market'; the results have been unchecked excesses that have brought the US (and by proxy much of the world's economy) to the brink of disaster. Bush is signing company-control laws that two years ago would have been met with derisive laughter by pretty much anyone on the right.

Exactly. When the motive is profit everything is short term too, which carries its own dangers too.

[Tobiasly]

Originally posted by Xugumad
I'll assume the smilie meant you were joking and not being prejudiced.

Half-joking; the smilie is because when people are trying to prove a point, they generally only cite references that back up that point.

I don't agree that economics texts leave little room for opinion or prejudice, however.. especially macroeconomics. It's a science, to be sure, but by definition the scientific method prefers an isolation of variables that just isn't possible on such a large scale.

Yes, we must attempt to establish causality, but to take one certain period of time and use it to say an entire economic theory is flawed is a fallacy.

I am somewhat familiar with Keynes and Smith, and I don't really have any interest in reading an economic textbook cover-to-cover, but if you have specific references regarding your position on supply-side economics I would be interested.

[Tobiasly]

Originally posted by jaguar
Exactly. When the motive is profit everything is short term too...

That's not true at all. Rich people are just as interested in providing for their future, and that of their families, as anyone else.

[juju]

Originally posted by Tobiasly
Somehow missed this one earlier. What economic system can we use that doesn't create greedy people?

Beats me. Stop poking holes in my logic! :)