Capitalism vs. Government Controlled Economy
"In this corner, weighing in at 4 trillion tons of oppression, hailing us from the concepts of feudalists and dictators... the Joseph Stalin of stompin' on the fallen, the bringer of dread while you stand in line all day for stale bread... the owner of everything in your countryyyyy.... Government Controlled Economies!
...And in this corner, standing at just over 230 years old, originally from Philadelphia, PA... the ever-so-hot melting pot, the liberty brawler for those that lift themselves out of squalor... the undisputed best economy in the history of the worrrrrld...... AMERICAN CAPITALISM!!!"
In talking with many people about the benefits of our capitalist society and how it made us into the greatest nation on Earth, a lot of people have said to me, "free market economics sound good in theory, but not so much in practice." This always confuses me, given our history. I would like to ask the blogosphere the question that I always use to follow up that conversation:
What services/products does government provide that are better than the private sector?
You've heard me acknowledge a few that I know the private sector could not (or should not) try to pull off: coining money, raising an army, providing national defense. So there are some good answers out there. I look forward to reading yours.
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16 comments
16 Comments:
We need the government for infrastructure. In particular, the contruction and maintenance of roads comes to mind here.
We need the government for social programs. Now, before you go off on me, hear me out. Some people take advantage of welfare system, and that's wrong. But you need some social programs to keep people off of the street. I truly believe that you pay for poverty at one end or the other; it's either by instituting social welfare programs, or through crime and theft.
The free market does have its problems. I can't recall all of them, but externalities, imperfect competition, and the asymmetry of information come to mind.
As for my example about cutting corners, is there a more prime example than Enron? Without government legislation like Sarbanes-Oxley, public companies could use bad accounting practices to, in effect, lie on their financial statements.
Roads are definitely a good example that I usually agree with. I'm not totally convinced though since I've read horror stories about how ODOT runs their people and projects, but I'll give you roads as there isn't much of a private sector road repair company for comparison.
I think I've mentioned before though that I definitely disagree with you about most welfare programs. Now, I don't want the government 100% out of the welfare business. However, I don't think anyone can honestly say that government is more effective and efficient than private charities.
It is a fact that local charities are much better equipped to serve their communities. Also, when you look on a larger scale, who helped the Gulf coast residents more after Katrina? Any level of government? Or the Red Cross?
Therefore, I'm afraid I'm going to have to strike social welfare programs from the list.
Again, in theory, I agree with you; local charities would be more efficient. And for the sake of argument, let's say we cut all government social programs and in turn, stop taxing for them. Problem: you and I both know that a very, very, very low percentage of these untaxed funds would go to charities.
Nick, I guess we'll just have to agree to disagree. I think that people would definitely contribute more money to charities. We're already the most charitable nation on Earth.
I think people would be a lot more likely to donate needed funds because:
1) They just got a 50% salary increase.
2) They want to keep their local community safe/supported. People would know that their money is helping their homeless and not a city 2000 miles away and they want to improve it for selfish reasons.
3) They know that if they don't "pick up the slack" then it would have to go back to the old system and they would lose 50% of their income to go towards programs they don't want. I bet Andy is not very happy about his taxes going to church subsidies. I don't like paying for anti-gun organization's public propaganda. Giving your money how you want will be a huge incentive. It definitely would be for me.
I agree with you that we will have slightly less than the gazillion dollars we have now that are forcibly taken from us, but people are still responsible individuals and will give. There won't be as much total money, but it will be more effective money because the majority of it won't go to red tape and paying bureacrats like it does now. The majority of it could go straight to the people that need it.
Sure it will mean that we'd have to re-evaluate and make sure only the truly worthy are receiving assistance. If that discourages 18 year olds from having 6 kids and enourages people to get a job picking cabbage or plucking chickens rather than collecting a government freebee, I don't see anything wrong with that.
Anyway, this is a good conversation, but the topic wasn't so much supposed to be about "what should government do" it was "does government do something better than the private sector?"
I think the answer in this case is "no", myself.
Don't get me wrong, I'm certainly not suggesting that socialism is a better system. I definitely think that capitalism is the best system, I just don't think that pure capitalism is necessarily practical, especially considering that we're all signing up to live under a federal government. Simply by living under a federal government, I think that you have to accept certain programs which might be labeled as socialist in nature. Social security is the best example. I don't like it, and it's a problem which needs to be fixed, but otherwise there's a good thance that you'd end up with scads of elderly citizens with no way to live, simply because many people aren't very good at planning for retirement (especially with modern medicine, people are outliving their savings on a fairly regular basis).
...I think that you have to accept certain programs which might be labeled as socialist in nature. Social security is the best example...
Sorry Nick, but again I have to disagree. Since you posted that in this thread, I have to assume you are suggesting that Social Security is a better platform than private retirement investing (IRAs, 401k, stock market, CDs, bank accounts, etc). I'm not sure even how to begin to say how *unbelievably* screwed up Social Security is. I don't even know where to begin listing the things that we all know are wrong with it. It is so obviously a failing system that could never compete with private investing.
As to the need that everyone thinks that we have for Social Security, I find that indoctrination kinda scary. I doubt that every single person that turned 65 before 1940 (when people first started collecting this welfare) instantly died of homelessness and hunger.
People always were (and still can be) responsible for their own well-being. I know I can be.
I would give my left nut to just have the choice to take my mandatory Social Security taxes and put them into my IRA and 401k that I set up when I was 25.
All I'm talking about is a choice. Relying on the government to take care of us is why our generation will have some serious problems when we ask, "Hey, where the hell is our Social Security?"
I'm rather disappointed no one has brought up the two answers I hear first to the question about government effectiveness vs private enterprise:
1) Schools
2) The U.S. Post Office
I'm used to easily disabling those.
I'm not trying to argue that social security is by any means efficient, my main point was that many people either poorly plan for retirement or outlive their savings, so they need something to survive on. Can you imagine the nightmare of millions of retired seniors out on the street because they have no money? It'd be nobody's fault but their own, but it would be downright heartless to allow it to happen.
The nature of social security doesn't allow for it to be eliminated because an entire generation would get screwed at one point or another, and nobody would stand for it. It needs heavy reform, but I understand why it's there in principle, even if the program's permanence may not have been Roosevelt's original intent. And let's not forget that although social security is posting a huge deficit, for decades the funds designated for social security were borrowed to fulfill scads of other purposes, which has only perpetuated our current predicament.
OK, I missed some stuff, it's late, I'm tired.
Don't put words into my mouth, I DON'T think that social security is better than private retirement funds. However, can you at least recognize that many people may not practice prudent planning (I love alliteration) as you and I do and without these funds would have nothing?
I know that I won't need social security, because I'm not planning on it being there. But for me to simply say "screw 'em" when asked about the folks that depend on social security, I can't do that. They're human beings.
Of course every single retired person prior to 1940 didn't die a horrible horrible death. I think we can concede that some did.
I truly do love seeing how people analyze the same issue and come up with a different conclusion than me. That's why I jabber on about this stuff.
I will again have to say that "the nightmare of millions of elderly dying on the street" wouldn't happen. It didn't happen before. We would of course need a temporary solution and not cut off benefits 100% at the drop of a hat.
Perhaps the people that you mention that are terrible at prudent planning are that way because they grew up thinking it's the government's job to take care of them. We need to be weaned from the government's teat (yeah, I said "teat") or we're going to continue moving farther away from what established us as the greatest system of government in the history of the world.
America became the greatest country on Earth because of individualism, personal responsibility, and liberty. That's how our country functioned for a long time. We're going the other way now in the past 60 years or so.
Don't get me wrong, I'm certainly not suggesting that socialism is a better system. I definitely think that capitalism is the best system
We seem to agree here in principle, but I want to put it back into practice. Why not trust it like we used to?
I favor capitalism, but not pure capitalism. Pure capitalism with government deregulation creates little incentive for companies to be socially, and perhaps more importantly, environmentally responsible.
"I will again have to say that 'the nightmare of millions of elderly dying on the street' wouldn't happen. It didn't happen before."
I think you're ignoring the advances in health care. Consider this: in 1900, the average white man or woman had a life expectancy 47 and 49 years (from birth), respectively, and the average black man or woman lived 33 and 34 years, respectively. In 2004, the average life expectancy for a white man or woman was 76 and 81, respectively, while the life expectancy for a black man or woman was 70 and 76, respectively. Your analogy doesn't hold water because the average white American is living about 30 years longer, and the average black American is living about 40 years (more than double!) longer.
At the same time, this argument can also be used against social security, because people are on the system much longer than it was originally expected. However, the disparity in life expectancy at birth when social security was institued compared to today pales in comparison do the difference between when social security was instituted and what the average life expectancy was for the retired American at the time of social security's inception (I'm not sure that makes sense, so I hope you can sort it out). Strong arguments can be made for both sides, but the ever-advancing quality of health care in the United States will only make it more likely for people to underplan their retirement.
Very good points and I don't have too much to add besides what I've already said, although I do find it interesting that both you and I (and every single person in "our generation" I talk to) are planning for their retirement on the assumption that Social Security will be completely zero when we turn 65. And as you pointed out, we should grow to be even older than anyone before us.
Somehow, we are capable of planning for things if given the opportunity and told we have to do it for ourselves.
As you know, my default argument for almost everything (including this issue) is for freedom. It encourages people to be responsible - which is what makes themselves, their community, and thus their nation great.
(How's that for a sickly sweet closing statement?)
Let's talk about more important things. For example, how we have forfeited about half of the Bill of Rights, or how George W. Bush's presidency will prove to be the most corrupt in history, or how Bush is the worst contemporary President.
I don't like George Bush either, but I don't think he's the complete 100% devil that the mainstream media makes him out to be. Maybe just 80% devil.
He's expanded the size and spending of the Federal government to unprecedented levels. Guess what? I don't like that one bit.
You want to talk about the Bill of Rights? Hmmm, maybe I should consider doing a post or two on those suckers.
But wait, I thought that conservatives believed in small government, limited spending, and keeping the government out of daily life...
Did you miss the part right above your post where I said this:
"He [GWBush]'s expanded the size and spending of the Federal government to unprecedented levels. Guess what? I don't like that one bit."
As I pointed out and then you pointed out, George Bush does not hold to true conservative principles.
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