Ever hear of market failures, externalities, monopolies, asymmetric information, moral hazard, adverse selection, imperfect information, tragedy of the commons (very real; look at fish stocks over the last 100 years), etc.? You "free handers" strike me as people who aren't well-versed in economic theory and history. Neoclassical economics rests on assumptions that are demonstrably false, including the assumption of free-flowing perfect information, no externalities, etc.
Take moral hazard for instance. Wall Street loves to use your money to make what are essentially gambles. If they win, they keep the profit. If they lose big enough, they whine to the government for handouts. If you truly believed that "free hand" garbage, then you would be perfectly fine with letting the banks fail. Yet Republicans, who absorb most of Wall Street's massive campaign contributions, threw money at the banks. Banks, which fraudently signed up as many crappy mortgage instruments.
That's just one of MANY failures in the ridiculous world dreamed up by Adam Smith where we all prosper forever thanks to magical assumptions that do not exist in REAL LIFE.
Don't get me wrong; I don't think a totalitarian state run by the govt is any better than capitalistic anarchy, but let's not pretend even for a second that Adam Smith's world actually exists.
Look, I'm not saying capitalism is perfect but there is more logic to my way of thinking than perhaps you realise. Take China, they were very poor until their government started embracing free market principles and they are now on track to becoming the worlds greatest superpower. The USA became the worlds greatest superpower by manufacturing goods and selling them to the world. You may not realise but the united kingdom, where the industrial revolution started, was once known as the workshop of the world and they also became very wealthy.
Something else you may not be aware of is that the USA is going to collapse in the not too distant future. As is much of Europe and the uk. When creditor nations stop lending the US money it's game over because the US's service sector economy depends on credit and without it, it won't survive. Why would countries stop lending the US money? well because the US has no way to earn the money to pay them back. Why? Because the US hardly produces anything anymore, all they can do is borrow more and more money. It's a rat hole. The sums of money the US is going to need in future are going to be untenable and anyone caught holding the bag is going to lose a lot of money. What I'm saying is, default on the debt is inevitable. Yeah, they could just print it and pay their creditors back like that, but at that point massive inflation occurs and borrowing any more money becomes extremely expensive due to massive interest rate hikes, so it's still game over.
Now, when the service sector collapses what is going to replace it? Nothing. What the US needs is manufacturing jobs so they can sell to nations who DO have money, but the US can't compete with those countries, why? Is it because China devalues it's currency? I don't think so, devauling ones own currency is easy, just send everyone a check in the mail and add as many zero's as you want. The reason is because it's expensive to manufacture in the US because of regulations and taxes. I've heard economists say that the US will never be able to compete in manufacturing with china, but they must. Basically China is just a bunch of people and America is just a bunch of people, so what's the big difference? Why is one so competitive while the other one isn't? Government. The minimum wage needed for someone to survive in China is much lower. Anything that raises the cost of living damages the economy because the wages needed to survive are driven higher. Taxes do this and regulations make doing business more expensive.
It is my belief that the whole world can be wealthy, some think that it's a zero sum game, one country gets richer while another gets poorer. What you have to understand is that capitalism and productivity actually creates wealth. Thinking in terms of money confuses the situation, imagine there is no money and we just barter with whatever we produce, would the world be a more wealthy place if we produce very little or if we produce very much?
Capitalism doesn't just distribute wealth, it creates wealth. I mean, do you think we are more wealthy, now, as a species or when we were all living in caves? we have obviously created wealth since then and we can create more if only we would embrace capitalism again.
Edit: A lot of what I've written above doesn't seem really relevant in response to what you said.
- I don't think Wallstreet should have been bailed out by the government.
-I don't think the gov. should have guaranteed any housing loans.
- I don't agree with the FED devaluing the currency which is what enabled the housing bubble to exist.
- I also don't think the government should make any guarantees on anyone's deposits. Now, I know they do this to try and prevent bank runs and bank runs are obviously very serious. The problem is, that now no one gives a crap about what the banks do with their money or what risks they take because depositors know they'll get their money back w/e so who cares?
- One reason why so many people are attracted to wallstreet is because of the inflation created by the FED and the more inflation there is the greater the risks people are willing to take to make returns. Wallstreet does very well out of inflation because yes the prices of many things go up but they get more than their fair share of the liquidity.
Edit: In response to your Adam Smith comment. Do you know the single best thing that China could do for its people's living standards and the world economy? Let their currency rise. If they did that their money would rise in value hugely compared to other currencies and importing goods from other countries would become ridiculously cheap. Why would it benefit the world economy? because profit seekers would start building factories in other countries who didn't have a strong currency or economy and then that country would slowly become more wealthy, their currency would rise just like China's did and the story would repeat itself and keep repeating itself. Adam's Smiths theories haven't really been given a chance because governments keep fing it up.
Facebook
Twitter