June 24, 2009

Horse 1007 - Why the Right is Very Wrong

Frequent readers of this blog will realise that my political views are massively to the left, or far further left than most of the mainstream media. The main reason for this is actually to do mainly with the point of social justice, and because ultimately I believe that the main driving force behind capitalism is pure unadulterated greed and or selfishness.

Alan Greenspan, the former Federal Reserve chairman once made the following submission to the New York Times (June 14 1998):
"Socialism is a giant pyramid scheme that ultimately collapses, depending on population growth and services provided, when it becomes impossible to take in enough revenue to cover expenses. No social program has beaten poverty and none will."

Greenspan was at the time trying to speak about how in practice, Socialism ultimately fails the poor because the bureaucracy which runs it will eventually collapse. In broad terms with the rise and fall of empires, I suppose that he is in a roundabout way correct, but I seriously ask "is the alternative better?" I don't really know if he completely thought this through, or whether is ideology allowed him to do so.

Grant that poverty is always going to be difficult to control*, but making an attempt is a far nobler thing than in a pure capitalistic system where there is no attempt at all.
What economic benefit is there in helping the poor? Nil. If a purely capitalistic approach is taken then the fate of people is of zero consequence, because there is no profit taking ability in doing anything about it.

The "market" does not actually determine what is socially prudent, it only determines the level of prices. Goods/services which are inefficient uses of capital are not provided for. This is known as a "market failure".

The classic example of this is the little brass plaques you happen to see around London, that indicated if a building before 1865 was insured against fire.
Left purely to market forces, a building that was not insured by an insurance company was left to burn by that company's fire brigade unless it actually posed a significant threat to their insured interests. It probably helped in part to cause the fire at the Houses of Parliament in 1834 and the spate of fires on the River Thames in 1861.

Brigades would use the firemarks to identify whether a certain building was insured by them. When a building was on fire, several brigades would attend and if they did not see their specific firemark on the building, they would go away and leave it to burn.
I guess that's capitalism in action for you.

The argument is countered not by "what is efficient" but by "what the people ought to have". A fairly reasonable case can be made for the defence forces, schools, roads, clean water services, sanitation, hospitals and health care, police, fire brigades, because if people don't have access to those things then people die...

... which under a purely capitalistic approach, is of not interest unless there's a measurable economic benefit or detriment:
"If you don’t have the smarts or the money to insure yourself, then you must bear the consequences of not taking personal responsibility."
- Ronald Reagan, AHIP Conference, Jan 8, 1979
And yet this man became President of the United States - "For the people, by the people", ignore the people, stick the people!

I think that more or less proves that ultimately the main driving force behind capitalism is pure unadulterated greed and or selfishness.

*And of course if poverty is defined poverty line by "economic distance" as used in the OECD and the European Union, where a level of income set at 50% of the median household income, then by definition poverty as a statistical measure would always exist, because that line exists.

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