Does American capitalism have any alternatives?

agreed

 

It's actually pretty simple. Since employment will not be available for large portions of the future population and the economy requires continued consumption growth in order to advance the only reasonable method for providing adequate consumer incomes in the future will be through greatly expanded capital ownership, to the point where average people gain the majority of their income from capital. In other words, a transition to universal income through capital ownership is absolutely necessary if capitalism is to survive into the long term.

What's your idea?

 

I don't know if that's much of an idea. Unemployed people become stock holders. So... do you hold a collection to buy them shares?

 

Lots of people with no gainful employment are stock holders, in fact many with large stock holdings have never had a job.
My idea would be for the government to offer tax credits for non-voting shares that will be otherwise treated like other shares, including dividend payments, but will never be sold on the open market.
The government will hold them in trust or establish a separate trust to manage the shares and distribute all dividends directly to the citizenry.

Over the long term this trust could accumulate significant shareholdings to the extent that many people would receive enough income from this shareholding to relieve the government of much of its social welfare spending and the accompanying bureaucracy.

This is the most conservative approach to the long term economic problem of a decline consumption created by a decline in employment demand and with that, consumer incomes and spending as every sector of the economy becomes totally automated. Capital is already capturing all economic growth in the US. Employment income and consumer spending are not keeping pace with economic growth and there is every economic reason to believe that they will never return to growth unless the increasing efficiencies of capital deployment in the use of labour are somehow reversed, a decidedly unlikely scenario.

Simply put, the economic model that the US and the entire developed world has depended on for the past decades, that income from employment and consumer spending will always grow in the aggregate is no longer valid. If capitalism is to survive over the long term something like this has to happen because it is extremely unlikely that people will accept a wholesale decline into poverty in an economy with no scarcity of goods and more wealth than in their grandparents time, who lived far better than them.

But then again it is extremely unlikely since capitalists have never been able to see further than their own wallets.

 

Well good luck.

 

What forms of capital?

How will people acquire these forms of capital?

 

It is explained above.

 

Continued growth in consumption is not sustainable. That is a hard fact. Infinite growth, finite resources is not sustainable. The move to robotics and automation for most goods and services implodes capitalism. Capitalism is only a temporary economic model, and it is impossible to sustain it. But non of these people who believe in capitalism will think very hard about this, for they do not want to see it end. Their self identity is tied up in their beliefs about capitalism. And so it must implode right before their very eyes for the intellectual light bulb to turn on. And even then, the hard heads will not be able to accept the fact.

I like the Venus Project ideas, and the Zeitgeist Movement, and at least these people are not dumbed down and know that capitalism and the monetary system are doomed to implode. But I knew that capitalism was doomed years before I ever heard of either of these movements, for its just common sense. But when it comes to making money under capitalism, you really don't want to know that this paradigm isn't sustainable. But the sooner we face facts the better.

 

Actually, consumption growth can easily continue while reducing and eventually eliminating new resource exploitation over the long term. In fact, it is the only path that will provide the wealth necessary for social and technological progress at a very wide scale to continue.

The problem right now is that a large portion of the planets available wealth is controlled by people whose thinking is tied to the old processes of making money though resource exploitation. This has skewed the world economy into wasteful practices. This archaic focus of available wealth into new resource extraction has made the recycling of existing resources, increased efficiency and newer replacement technologies anathema to a large portion of available wealth holders, who use their economic power to influence political scientific and social spheres against these initiatives.

In this sense the old capitalism is indeed doomed to fail. However, the myopia of old money has allowed a significant portion of the wealth from recent economic growth to fall into the hands of people who view wealth from resource exploitation as an anachronism. In their view future wealth is in reducing resource use as low as possible and they are already beginning to move the economy from growth through increased resource exploitation to growth from increased use of existing resources.

Increasing consumer spending is easy to do without increasing resource exploitation, just move it up the value chain where technology and intelligence increase value while reducing the resources needed to produce them.

Consider the smart phone, and all the technology it made obsolete.

 

I don't believe it is possible to consume ourselves into economic prosperity. Perhaps if unemployment was truly low, and perhaps if the workforce participation rate was higher, and perhaps if most people did not abuse credit purchases, and perhaps if Americans truly lived within their means, then it's possible to consume ourselves into a better economic situation. However, everything I just stated in the last sentence is a fairy tale...

 

That's exactly what we did throughout the 20th century.

 

Sure we did things in the 20th century that we don't do today...but don't ignore outsourcing and automation and expanded imports! Don't ignore the lower workforce participation rates and don't ignore the chronically unemployed. And stop ignoring population growth of which many are uneducated and unskilled. Lastly, today you have a federal government sucking $4 trillion per year from taxpayers, plus $17 trillion in debt, plus the out of control costs of all local and state governments...YEP...we don't do things like we once did...

 

We imported stuff in the 20th century too.

Is this supposed to have something to do with my post, or are you just blathering in an irrelevant rant again?

 

The federal government is only sucking $3Trillion a year from taxpayers.
A proper comparison over time would be as a percentage of GDP.
From 1950 to 2000 the average spending by the Federal government hovered around 19% of GDP with average revenues hovering around 18% of GDP. The difference between revenues and spending was from 0.5-1.5% of GDP.
Beginning in 2001 government revenues as a percentage of GDP began a decline from the historical average to a low of 15.7% in 2010. Government spending was maintained at about its historical average until 2009, when it rose precipitously, peaking at less than 21% of GDP in 2011 and slowly declining ever since. Government spending has already declined back to its historical average and is projected to be less than 19% of GDP in 2015 and into the future. Government revenues are not projected to recover to their historical average but to gradually decline from the current level of 17%.

So, looking at the historical record and considering the recent economic landscape it is quite clear that the government made some egregious mistakes since 2000. Changes in tax policy in the early 2000s made the government unable to gain increased revenue from the growing economy, even as spending was maintained. This put the government in a precarious position in 2008 when the economy crashed. Deficits were already projected to reach $1Trillion by 2010 even before the economic calamity. In 2009 bank bailouts and stimulus spending pushed government spending over 20% of GDP while revenues declined to 15.6% in a tanking economy.

The really interesting part of this whole thing was that in 2000 the US had a budget surplus and if it had continued on that spending and revenue path the national debt would have been eliminated by 2010, even with the economic calamity of 2008. Instead, the party that took control of the Presidency and both houses of Congress tossed the entire concept of fiscal responsibility out the window, cutting taxes willy nilly while increasing spending with off the books wars and unfunded mandates.

Should we give them another try at it?

 

In 1970, US imports were about $0 and they grew reasonably until about 2000 then increased 2-1/2 times since 2000.

They are things you will ignore in order for you to believe we are still in 1970...unfortunately we are not...

 

The federal government is spending about $4 trillion this year...not $3 trillion? Of course $500 billion of it is deficit spending, but no matter, it is still spending.

And, if you look at Obama's budget forecast through 2022, the spending increases every year! Now add this to all the local and state government spending and a lot of cash is being sucked from society.

Looking at government spending as a percentage of GDP is IMO silly since government and tax policy has nothing to do with GDP. GDP can increase $1 trillion while government reduces taxation by $1 trillion. Spending is spending and we should look at it as the cost per American...today this would be about $12,500 per American. The only question is who to compare this number with to decide if we are over or under spending?

No matter, it is obvious Americans are refusing to pay more taxation yet the federal government keeps on spending money we don't have...all during a period when we have no national emergencies...no reasons for deficit spending...

 

It's just inaccurate that imports "were about 0" in 1970.

But so what. How does this prove that it is not possible to consume ourselves into economic prosperity?

What are you babbling about now?

 

Despite the fact that the nation is a lot richer but we have more people who are poorer, the Govt last year spent less, proportionally to GDP, that every year Reagan and Bush1 were president.

We've done austerity over the past 5 years. It's hurt the recovery. We don't need to cut spending and do more austerity.

Spending increased every year under Nixon!
Spending increased every year under Ford!
Spending increased every year under Reagan!
Spending increased every year under Bush1!
Spending increased every year under Bush2!

You act like this is some kind of unusually event.

What is unusual is cutting spending. You have to go back many decades to find a year spending went down. Before Obama. And now it's decreased 3 times in the last 5 years. Unprecedented in modern history. We spent less in 2014 than in 2009. Unprecedented in modern US history.

It's silly not to compare it to GDP. Since GDP establishes a baseline for comparison over time, and also provides the measure of raw economic power to support taxes and ultimately spending.

Americans have shown their complete willingness to cut their own taxes and run up trillions of debt, and stick the next generation with our debt. And politicians have shown complete willingness to pander to this base want.

That doesn't make it the right thing to do.

 

How do you think the budget forecasts are calculated?
They start with GDP.
A huge portion of the governments spending and revenues are tied directly to and have an outsized influence on GDP.
If the government cut spending by$1Trillion it is highly unlikely that GDP would not decline, let alone grow by $1trillion. While it is theoretically possible if carried out over an extended period of time like a decade or so, economic studies of nations that have tried it indicate that it becomes very detrimental to economic growth over the long term as government investment in basics like infrastructure education and public health declines and the government becomes increasingly incapable of providing the public services necessary for private sector growth.

This is playing out quite clearly in US infrastructure right now. The gas tax has remained fixed for decades. Gas tax revenue has become increasingly inadequate for funding basic highway infrastructure maintenance let alone new construction needed to accommodate the growing demand of the economy and population. The Highway Trust fund has run out of money with 10,000 bridges in need of replacement and 5,000 mile of seriously deteriorated highways that there is no money to even make plans to repair, let alone repair. Meanwhile Congress has refused to provide any long term funding solution which is really the only way to fund highways since it takes years to plan and complete major highway projects. It is estimated that the deterioration of the highway system is costing the private sector economy 0.5%-1% of GDP just from increased traffic delays and higher wear and tear on vehicles.

This is what happens when you think that government spending has nothing to do with GDP, when you think that all taxes are bad and fight against increases in any of them as the country falls apart around you.

 

Every single retail store across the USA, from clothing to shoes to lumber to furniture to hardware to electronics to tools, including major portions of cars, trucks, airplanes, etc. etc. are imports! Except for the retail store workers, all of this money is paying for goods produced outside of the USA. As imports grow we are producing less in the USA which means less jobs, taxes, etc. Example of why the trade balance is important...to stop procuring so much outside of the USA. I'm not saying we can ever produce all this stuff in the USA again, but I am saying it places a heavy burden on the US economy which makes it difficult to consume ourselves into economic prosperity. After WWII, which does include 1970, the US was in an economic boom building our neighborhoods and cities and roads and airports and other infrastructure where anyone who wished to work could work...not the same today...

 

Who cares about proportions except for Oprah at the all you can eat diner? Spending is spending and government spending increases every single year. If we can't afford government today how can we afford it in the future?

We've run the national debt up to $17 trillion...don't you think this is a good reason to either cut spending or collect more taxes? Or do you believe greedy and self-serving Americans today can keep racking up debt and just let future generations pay for our excesses?

As long as we have $500+ billion deficit spending, we are spending too much! Makes no difference all that happened before us...we have out of control spending and don't even have a national emergency!

GDP and tax revenues run on different engines.

If we desire healthy and profitable American capitalism, then we must get out of it's way and let it flourish. We must also prepare for those times when the economy reduces! But when we abuse credit purchases, live pay check to pay check, don't have savings, we place ourselves in a no-win scenario...

 

Perhaps if they start with GDP this explains why we have $17 trillion in debt and $500+ billion in deficit spending forecasted for years?? I suggest more realistic metrics.

Americans or voters place all those idiots in office and if they don't manage the nation well we only have ourselves to blame.

Government regarding GDP is nothing more than a consumer. I never have said taxes are bad?? Why increase taxes when we have no fiscal responsibility...if we collected $6 trillion in taxation the government would spend it...

 

What metrics would you propose?

Government spending generates about 40% of GDP in the US.
In fact, the cut backs in government spending are the primary reason why the unemployment rate has been so slow to go down since private sector employment has been growing for the last three years.

 

We only import about 15% of GDP. By far most of spending goes to products and services made here.

Any other arguments you want to try to defend your claim that it is not possible to consume ourselves into economic prosperity?

The question I put to you is: How else can we restore economic prosperity except for increased spending?

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I think its closer to 15-20% or so.

 

It should every year to keep up with inflation, population growth, and GDP growth.

It hasn't for 3 of the past 5 years, unprecedented in modern history.

I think it sucks.

If you really care about it and you're not just flapping your guns as a partisan hack, write your Republican Tea Party reps and tell them to quit being selfish jackasses and compromise on a tax increase and stop pandering to greedy and self-serving Americans so we stop racking up debt and expect future generations pay for our government.

Deficits are a function of revenues as well as spending. We are spending today proportionally less than every year Reagan and Bush1 were presidents. I have no problem with slowing lowering spending to GDP, but we need to stop the austerity.

GDP has a close correlation with income, so the are actually pretty much the same.

How are you going to have "healthy and profitable American capitalism" when the vast bulk of the people don't have money to spend?