Uncommon Sense

January 1, 2022

We Need to Fix Capitalism . . . Now!

Capitalism is quite flawed, but so are all of the other economic/political systems. Some countries have been good at reining capitalism’s excesses . . . this country isn’t one of those.

As I have said, often enough, capitalism’s Achilles’ Heel is that it doesn’t place any limits whatsoever upon greed. I suggest that a good start at reining in the greed woven into the warp and woof of capitalism is to eliminate speculation. There is no inherent good associated with speculation, although there are many associated evils in it; for example, people try over and over to manipulate prices, markets, whatever to make their speculations pay off, legally and illegally. Those are not what might be classified as productive labors.

We need to eliminate speculation as something that doesn’t contribute anything to our society, nor does it contribute anything to individuals. It is a form of gambling, pure and simple.

There is something called the “futures markets” in which prices are set now for sales that will take place in the future for various commodities. The buyers are hoping the prices go up and they will get a deal when that sale is triggered and the sellers are hoping the prices are going to go down, so they will get a fatter price for their goods. In an ideal world this process helps to moderate price changes, but in the world we live in, it is just another form of gambling.

The stock markets are dominated by secondary sales, making the story about the role of such markets in our economy we are taught in school to be a very, very minor form of providing capital for businesses. Instead these markets are very close to just being casinos where rich people gamble.

Let me explain how these capitalistic devices have taken over. If you go to the store and buy, say, a shirt in most states you will pay a sales tax, up to almost 10% of the price of the item (although a small number of states charge nothing, but I think there are just five of those). But if you buy a share of stock, what “sales tax” to you pay? The answer is nada, zip, zilch, no tax at all. Some items, such as alcoholic beverages, include what used to be called “sin taxes.” Extra taxes are levied upon alcoholic beverages to discourage their consumption (Get behind me, Demon Rum!). We do the same for gasoline in which there are substantial taxes, both federal and state, paid and then sales taxes added on top of those! We could do the same for stock transactions. This would discourage speculation, certainly the practice of buying a stock and selling in when its price went up a few cents, often just seconds or minutes after the buying transaction. (Amazing what you can do with computers!) If the profits from the sale didn’t cover the sales taxes, those sales wouldn’t be made.

Plus people who buy and sale and trade stocks contribute nothing to our society. Extensive studies show that stock markets are actually a drag on our economy (they extract funds from the economy without producing anything in exchange). We, at least, need to slow their roll.

Currently we have a patent system, a flawed system but it works . . . kind of, sort of. Drug companies have become adept at acquiring patents and then jacking up the prices for the goods produced under those patents. A current example is insulin. One vial of insulin lispro (Humalog), which used to cost $21 in 1999, costs $332 in 2019, reflecting a price increase of more than 1000%. The cost of manufacturing that drug has barely changed over that same time period. We could change patent laws to prevent such abuses. “What the market will bear” is not a limit upon greed. These same pharmaceutical companies have also taken to making very, very (very!) minor changes in their drug’s formulations to apply for new patents, extending their “right” to make as much money as they want. Patents were supposed to, were designed to, expire so that those things end up belonging to the commonweal. Often the public has already paid to research that drug in the first place through public universities and federal institutions and research funding. The same thing is woven into our copyright laws with written works and others eventually ending up in the public domain.

We have tools to rein in greed in capitalism but the current greedy class has acquired so much wealth that they are blocking access to the political gears of government to make such reforms. If we do not act soon, it will be too late. The only result of extreme wealth inequality is armed strife.

21 Comments »

  1. Don’t forget waking up to see what happened in after-hours trading. That little gem is the biggest WTF in history.

    Liked by 1 person

    Comment by jim- — January 1, 2022 @ 9:08 am | Reply

  2. The rich get richer and the poor get poorer … and thus it will continue. Methinks even if the “armed strife” were to occur, history would repeat itself. Humans will be humans.

    Like

    Comment by Nan — January 1, 2022 @ 10:35 am | Reply

    • Hari Seldon would be so ashamed! :o) This is all an effort to temper the bad and elongate the good, of course.

      Liked by 2 people

      Comment by Steve Ruis — January 1, 2022 @ 11:36 am | Reply

  3. Anyone who talks in terms of “fixing” capitalism has no REAL clue what the true problem is.

    An evil system like capitalism does not NEED “fixing” but its elimination.

    And capitalism is only a SYMPTOM of a deeper causal reality which are “2 Married Pink Elephants In The Historical Room” … https://www.rolf-hefti.com/covid-19-coronavirus.html

    Like

    Comment by Plovw82 — January 1, 2022 @ 3:24 pm | Reply

  4. You’re exactly right, of course. Capitalism rewards the worst impulses of human beings, greed, selfishness, bullying, lying… the list goes on and on.

    a good example is what happened to a local department store chain, Shopko. It started to get into some trouble like a lot of retailers did. It ended up getting bought out by an “investment company” that basically was little more than a corporate raider. Shopko itself owned it’s own stores and real estate. The first thing the new company did was sell off all of the buildings and land. To a shell company that it itself also owned, and at bargain basement prices. It now started charging astronomical lease payments to its own stores, with the payments going to the shell company. Stores were now being charged $50,000 to $75,000 per month to stay in the buildings the company once owned outright. Multiply that by the several hundred stores the company ran and, well, there was no way they could dig themselves out of that hole. Basically they deliberately drove the company into bankruptcy for short term profits.

    Like

    Comment by grouchyfarmer — January 1, 2022 @ 10:53 pm | Reply

    • Ah. modern finance! This is the business that made Mitt Romney his fortunes (on top of what he inherited).

      Liked by 1 person

      Comment by Steve Ruis — January 2, 2022 @ 8:54 am | Reply

  5. I’d really, really, really like to see an experiment with stamped scrip, like the Wörgl Experiment.

    Like

    Comment by john zande — January 2, 2022 @ 4:28 am | Reply

    • The filthy rich would just figure a way to get richer off of it. What is needed is some way to get hoarded wealth back into the economy, which means a wealth tax or something similar to discourage the accumulation in the first place.

      Like

      Comment by Steve Ruis — January 2, 2022 @ 7:50 am | Reply

      • But that is the way! Money looses value the longer you keep it. Soooo, the incentive is to get rid of it quickly.

        Like

        Comment by john zande — January 2, 2022 @ 11:09 am | Reply

        • So people would buy, what? Gold? Silver? After the necessaries, you couldn’t buy up perishables, even food that stores well because you’d run out of room to store it all. This would only work if you lived paycheck to paycheck.

          Like

          Comment by Steve Ruis — January 2, 2022 @ 12:47 pm | Reply

          • Invest it in some project, philanthropy, whatever. The goal is to keep the capital flowing.

            Like

            Comment by john zande — January 2, 2022 @ 1:50 pm | Reply

      • Gesell wanted to create a new kind of money — a money that would “rot like potatoes” and “rust like iron” so no one would want to hoard it, a money that was “an instrument of exchange and nothing else.” And the crazy part is that he did create it. Through a series of pamphlets, articles and books, Gesell inspired a worldwide movement that introduced a completely new form of money. It’s one of the most fascinating, and largely forgotten, stories in economic history.

        https://www.npr.org/sections/money/2019/08/27/754323652/the-strange-unduly-neglected-prophet

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        Comment by john zande — January 2, 2022 @ 11:21 am | Reply

      • And this is the The Wörgl Experiment: Austria (1932-1933)… which frightened the living shit out of the days bankers.

        http://www.lietaer.com/2010/03/the-worgl-experiment/

        Like

        Comment by john zande — January 2, 2022 @ 11:22 am | Reply

        • Too late, I had already looked it up. A bit too manipulative, but I guess it is a tax on kept currency. Too bad the rich don’t keep much currency.

          Liked by 1 person

          Comment by Steve Ruis — January 2, 2022 @ 12:45 pm | Reply

  6. We HAD reined in capitalism with the New Deal. & then it was all ruined when Reagan was elected … & then Bush & Clinton & so on. If the electorate wasn’t so F*ng ignorant, we could do all this again but now everyone thinks that taxing the rich is some kind of theft … like the ordinary joe is going to be rich someday … like the desires of the rich are the desires of us all.

    I don’t think this country will ever get back to the great capitalist-socalist blend that we had between 1940-1970 … when we had the best economy in the world & everything just hummed along.

    Liked by 3 people

    Comment by silverapplequeen — January 2, 2022 @ 4:39 am | Reply

    • I dislike your conclusion, but I agree. The New Deal was just a start . . . but the oligarchic propaganda machine targeted it, especially labor unions, to the point that working people sneer at unions now. This was no accident. Those same people have blocked ever state’s effort to include labor history in high school history courses. (It was a cursory study of labor history that led to my transformation from being anti-union, to being pro-union, up to holding office in several unions.

      Like

      Comment by Steve Ruis — January 2, 2022 @ 7:47 am | Reply

      • I paid little to no attention to politics before tRump, so much of what happened prior is foreign to me. Which is why your comments about unions intrigued me. My other-half is adamantly against them and whenever the word is even mentioned, his vocabulary gets rather “unpleasant.” It would seem that “oligarchic propaganda machine” you mentioned put him under their spell …

        Liked by 1 person

        Comment by Nan — January 2, 2022 @ 10:48 am | Reply

        • Labor unions fought battles against oligarchic business owners (who enlisted government troops to aid them). The New Deal empowered labor unions, which helped create some of the assumed labor characteristics we have today (the 40-hour work week, the five day work week, unemployment insurance, etc. While some unions, as they gained power, became corrupt (the Teamsters and the Mafia, etc.) the vast majority of unions were legitimate and honest.

          But the oligarchs did not like having their employees having any power whatsoever, so a key element of the campaign to reverse the New Deal was to disempower labor unions. Circa 1960 both Canada and the US had about 30-33% of its jobs covered by union contracts. Currently Canada is about the same but in the US, it is in the single digits. This is because of that campaign. We don’t see Canada’s economy going down in flames, now do we. In enlightened countries, unions are honest stakeholders, with seats on the boards of major corporations, to represent the employee’s interests, etc.

          In the US, well, attitudes are different. It is entirely possible your man ran into a real problem with unions (they are run by people, now aren’t they). But often as not, their attitudes have been determined by hearsay.

          Back when IO was a union officer, I tried to recruit a colleague to become a member, she had declined so often, I asked why (not being owed an explanation, but we were friends). She said she remembered her father coming home from union meetings in Detroit (yes, the auto industry) and sometimes he was covered in blood. (Yes, there were battles, involving baseball bats, steel pipes, etc.) She just couldn’t support unions because of her experience as a girl. I tried to explaining that ours was a very different situation and blah, blah, blah, but finally I thanked her for her time and noted that she should not be bothered in the future. There are good reasons and bad reasons for being anti-union. Forty years ago, most working people had a positive thing to say about their union (from direct experience) and today, almost nobody has such an opinion (and has no experience with unions).

          If it acceptable for our politics to take the form of representative democracy, why not our working situations?

          Liked by 1 person

          Comment by Steve Ruis — January 2, 2022 @ 1:14 pm | Reply

          • Thanks for the background. He did work under a union some years back, but he happens to be a VERY independent individual, so anything that smacks as “control” (to him) is immediately BAD… BAD…BAD!

            Like

            Comment by Nan — January 2, 2022 @ 1:24 pm | Reply

    • Jesus, could you imagine todays Republicans and right wing media if Biden, for example, recalled all privately owned gold!! (Which is what FDR did, of course… then doubled the price… which is kinda’ hilarious for being so cheeky).

      Like

      Comment by john zande — January 2, 2022 @ 11:26 am | Reply


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