Capitalism is getting obsolete

[Anderz]

In this presentation Peter Joseph explains what's wrong with capitalism. I disagree with his idea of a centralized system and believe more in decentralized systems, but I find it interesting that he says that a society without money is possible.

 

[Anderz]

Ironically it looks like China is going to destroy the old capitalism with a new kind of capitalism that is in bed with the Chinese government. It's super efficient! I predict that Chinese tech within the next few years will make Tesla cars and iPhones look like stone age technology in comparison.

The Chinese approach is massive integration of technology across all of society. This includes horrible Orwellian control and surveillance systems. I do however believe that we in the west will get a lot of that kind of surveillance and control systems too, because it's necessary in order to keep the increasingly powerful technologies safe for public use.

[Anderz]

I'm actually a fan of free market economy and entrepreneurship. I also want a strong social safety net and regulations for businesses. It's just that as I see it, capitalism which has been very useful for thousands of years is quickly, historically speaking, losing steam. Capitalism is getting too clunky and inefficient in the information age where value is moving towards people's attention with money serving more as a centralized middleman function for legacy reasons. 

[Anderz]

Another thing I heard an expert mentioning, which could be an indication of capitalism starting to fail, is that the stock markets have recently become detached from the actual values of the companies listed on the stock markets. Especially during the coronavirus situation money has flowed into stockmarkets when investments in other areas have dried up, he said.

Someone else said, probably as a joke but there could be some kernel of truth to it, that Elon Musk can say anything in a public statement, even that their business is failing, and the Tesla stock value skyrockets, haha.

Edited December 23, 2020 by Anderz

[Joel3102]

15 hours ago, Hello from Russia said:

@Joel3102

It seems like you've picked up these beliefs from poor people. Cash is the most valuable asset of all because it's the most liquid. That's why rich people who know what they are doing (Which a lot of them are) hold on big amounts of cash and don't just stupidly invest 60-80% of their networth into some good sounding bullshit, like most people people do

I don’t think that’s true. Super rich people have most of their wealth in either equity or property. It’s actually less risky in the long run not to have all all your wealth in cash because it won’t grow and will be eroded by inflation, unlike other asset classes. Of course as you get older you’ll want more cash because your time horizon is smaller. 

[Joel3102]

@datamonster Exactly true.

There isn’t a 10 year period in modern history where returns on an overall sample of the market would lose you money, as in the long run it will always provide returns. So it would be foolish to carry much more cash than you need for a rainy day. 

[Anderz]

On 12/22/2020 at 5:26 PM, neutralempty said:

... it [AI] will never be able to construct an AI more meta than itself.

Consider the possibility that each new moment contains more information than past moments. And an AI can take in new information from the environment that previously didn't exist and modify itself or modify new AI that it constructs. In this way I believe an AI can transcend itself and produce meta models.

Quote

"... in real-world problems, the dynamics governing the environment are often complex and unknown. Here we present the MuZero algorithm, which, by combining a tree-based search with a learned model, achieves superhuman performance in a range of challenging and visually complex domains, without any knowledge of their underlying dynamics. " - https://www.nature.com/articles/s41586-020-03051-4

 

[Progress]

@Leo Gura While most of your suggestions would indeed fix a lot of capitalistic problems, I believe one would severely backfire with two more doing more harm than good. No ownership of stock unless employed by the company means that the company will be held an even more exclusive amount of shareholders and wealth even more concentrated. Lets also remember that a lot of retirements and investment portfolio of average citizens depend on owning shares of companies that the shareholder has no involvement in. Let us also not forget that the stock market has lifted many average people out of poverty or greatly supplemented an otherwise mediocre standard of living. 

Salary caps would frankly not do much as most compensation or at least it will be after a salary cap would be in stocks and bonuses. If you are advocating for capping these other compensation, I think you find it to backfire as well. Take for example, Tesla, Only Elon Musk or maybe less than 100 other people on earth could pull Tesla off and frankly he barely did it with a month away from bankruptcy. Compensation for executives are high because they are often generally the only people qualified or skilled enough to hold the position. The benefit of their compensation far outweighs their cost. It is never in the shareholder's board to overpay an executive and they do try to lower the compensation as much as possible.

Yes, some incompetent people are made executives, however the company pays a severe price, literally when such events happen either in direct losses or opportunity costs. 

Higher taxes on corporations is a rather ambiguous statement. Should it be higher than the current 21%? I think so, the average federal income tax is 33% for incomes of $60k afterall. It is really on when corporations hit the S&P 100 that wealth is really starting to be hoarded as they max out their growth and therefore have more money than they know what to do with. So even amongst large companies, it is only likes of Apple, Google and Berkshire Hathaway that are true hoarders of money, so I believe there should be a different tax rate to the highest of corporations. Even so it is better to tax high net worth individuals rather than corporations as corporations keeping more profit benefits employees and the economy more or less. I'm far more a proponent of raising capital gains taxes for incomes over $1 million to 33% (the maximum is 20% if stock is held for a year). Individual wealthy people have much less interest to reinvest profits either within the company or the economy than a corporation. 

 

[flowboy]

On 22-12-2020 at 6:35 AM, Leo Gura said:

Many problems with capitalism could simply be fixed by passing a few rock solid laws.

• No ownership of stock without being employed by the company
• No corporate lobbying
• No corporate political contributions
• No buying of other big corporations by big corporations
• Salary caps for executives and management
• No arbitration clauses in contracts
• No criminal liability protections for executives
• No off-shore tax havens and corp tax loopholes
• All employees get representation on corporate board
• All employees get profit sharing
• Higher taxes on successful wealthy corporations
• Strict environmental regulations
• Severe fines for corporate fraud or mismanagement

Simple laws like that, when rigorously enforced, would fix many problems.

These laws are not that difficult to make work. It's just almost impossible to pass them in Congress.

@Leo Gura and how about:

• No selling debt of any kind, it has to stay with the entity that created it
• Politicians elected to a position of power will then get a fixed lifelong salary from the state and are not allowed to be paid in any other work they do after that

[Joel3102]

3 hours ago, Progress said:

@Leo Gura While most of your suggestions would indeed fix a lot of capitalistic problems, I believe one would severely backfire with two more doing more harm than good. No ownership of stock unless employed by the company means that the company will be held an even more exclusive amount of shareholders and wealth even more concentrated. Lets also remember that a lot of retirements and investment portfolio of average citizens depend on owning shares of companies that the shareholder has no involvement in. Let us also not forget that the stock market has lifted many average people out of poverty or greatly supplemented an otherwise mediocre standard of living. 

 

Yeah that one struck me as most problematic. Surplus savings in the economy generally becomes investment which are used as either debt or equity in the economy. By not allowing surplus savings to go back into the economy via equity, the only options would be cash (which is eroded by inflation), reinvesting back into your own company that you work at (which pools all your risk into one basket) or property (wouldn't make sense if everyone was investing in property).  A lot of completely regular people are able to grow their wealth significantly over their life by investing a portion of their savings into a broad sample of the overall market. If your company (or worker owned co-cop) goes bust, you're kinda screwed.

[LfcCharlie4]

On 22/12/2020 at 10:36 AM, Joel3102 said:

Have you thought through the economic implications of this? A blanket ban on public investment would crash the economy. And where are people supposed their extra savings for retirement..?

Real Estate / Service Accomodation & Crypto  

And other assets such as Precious Metals.

When one opportunity goes away, plenty more will present themselves. 
 

Plus more incentive to start your own company, even if it’s just a side company.

Although I do think, for me at least, it’s too far, I would say you could Just lower the amount of outside investment, not get rid of it completely. 
 

Also, if everyone had an investment mindset & invested their money in forward thinking companies, this would benefit society more as these companies would have more capital to work with etc. 
 

Balancing act I guess! 

Edited December 24, 2020 by LfcCharlie4

[Nahm]

A corporation is an entity, exactly the same as a person. 

The makers of laws are not subject to laws. 

[Progress]

@neutralempty

"Yeah the company, but not only a few exclusive people. Think about how that would improve the company/employee relationship if its only stock owners are it's employees. It doesn't say taking something away from people thatis already there. Just not allow new stock owners out of the company."

Many companies already have have stock bonuses for employees. There is no need to brick wall the means of production. By brick walling stock to new shareholders, you brick wall access to some of the greatest wealth generation to the average citizen. You do realize 50% of Americans do not own stocks. By this logic, these unlucky fools no longer have the chance to create a passive income and increase their livelihoods. Most stocks besides that are owned by institutions so after a stock blockade, the means of production are about to get a lot more unfair. 50% of stock market value is held by 6 companies. So imagine say 13,000 employees plus previous investors own Google, which makes up around 3-8% of the stock market. That is an extreme concentration of wealth to such a small amount of people. The other factor is stocks value is driven by demand, so when you blockade a company stock from being sold, this will severely crash the value of the stock, along with millions of investing accounts, college funds and retirement accounts.

 

"I don't know if this stands in relation to their skill. Regardless, his company income was not what saved the company. 

If we were to avoid tax dodging, we may implement another mechanism to support companies state-wise. Maybe that could have helped Elon Musk. In different System you have different ways of achievement.

But however the case this sounds to me like, war creates Saints so we cannot get rid of war. "

No his company income was not what saved the company, it was his skill as CEO, compensation is high for executives because they specialize in an extremely rare set of skills but also having the legitimacy and experience of performing said set of skills. State involvement in companies has only really worked well in Norway due to their extreme low level of corruption but also the competency of the Norwegian Government. It would be an extreme gamble to get the state involved in the free market at a higher scale and their would be an extreme chance that the American government would inefficiently sponsor companies.

 

"Well it depends on how much sense that would make, since we would get new wealth distribution throughout the whole company.

Maybe that could work as a bridge before a better wealth distribution."

When a company makes profit, it is in their best interest to reinvest that money to avoid taxes, so the money is spent for the benefit of the company, including employees in one way or another. Furthermore, profits boast the stock price, which help millions of people who own the stocks. Most companies are always spending to expand so wealth hoarding is not exactly a problem for 95% of even the largest companies as it is reinvested in the economy one form or another. This is only really an issue for the largest of the largest companies.

 

On a general note, not related to you specifically but it seems that the Actualized.org community applies idealistic models of personal development such as Maslow's hierarchy and a general push for "green stage" ideals into economics. Now this is all great and all, but it seems few people are actually doing their due diligence on how the economy actually works. Reform is indeed needed in capitalism but I caution against supporting policies that simply seem like "green stage", it doesn't mean it'll work. Any wrong major decision involving the economy can send millions into poverty and stir chaos. That being said, I believe if we are committed to the principals of actualization, the actualized.org community should make stronger strives in understanding economics if we are to impose policies and ideals.

[Progress]

@LfcCharlie4 There are several issues with these other asset classes.

Real Estate= Often very expensive and not accessible to at least 20% of the population and many do not qualify for loans. There are of course Real Estate Investment Trust, however these are literally sold as stocks which this policy would outlaw. Also real estate is the least liquid asset class out of the rest, making it much harder to sell than a stock.

Crypto= Extreme volatility and despite being theoretically liquid, the extreme volatility essentially has an extreme punishment for selling when the crypto is trending downwards which happens much more often than stocks generally.

Precious Metals= Often very stagnant investment and really only growing in value during an economic downturn. More of a store of wealth than an investment to increase it. 

 

Furthermore employee only companies would lead to extreme concentrations of wealth by employees who work at the largest firms with nonprofits and government workers getting fucked over, along with previous shareholders of companies. Most retirees would have to get back to work.

 

Edited December 24, 2020 by Progress

[Progress]

@Joel3102 Well said Joel! The stock market is not just for the rich and increasingly more and more average people are coming into the stock market, making up 25% of the stock market right now (2020) versus 10% in 2019. This is an unprecedented growth in redistributing wealth. The issue was never shareholders of companies but rather the lack of access the average person had to the stock market, lack of financial exposure and chiefly, education. The rise of Robinhood has made owning stocks much easier to acquire however the lack of financial education, exposure and literacy has yet to solved. 

Edited December 24, 2020 by Progress

[Hatfort]

Capitalism has already rules, rules established by the politicians lobbied by the wealthiest companies. So we need other rules for it established by politicians lobbied by the people. Why? Because capitalism, as it is, is causing a lot of unnecessary suffering to so many people and is holding us back as societies towards development. Will we get perfection? No. but that doesn't mean we cannot aim for better horizons.

People need to wake up and vote for more decent politicians, which is not that easy, as the media is owned by those same companies that will, directly and indirectly, send messages to prevent that. I'm not saying it is a conspiracy, they mostly believe their own bullshit.

[Bojan]

On 12/22/2020 at 7:50 PM, Leo Gura said:

Automation is a great thing. Just train for jobs that aren't so dumb a donkey can do them.

Can I/we get a list? 

[No Self]

It's well and good to have a wish-list, but who is going to implement it?

The billionaire class own the entire media (CNN, Fox, Facebook...) and set the tone for political discourse which in turn gives us governments and law. Even when the population is angry, their frustration can easily be manipulated to result in further tax cuts for the rich, or to encourage poor people to cannibalise each other, both of which were themes during the Trump era.

It becomes a runaway effect in which having too much power results in amassing even more power at an ever-faster rate. And something has to give. I do not know what the result will be.

[Progress]

@neutralempty

"Not all have a chance to get passive income via stocks, regardless of access to it. You need money for stocks.

If a company needs employees that invest in it, it may educate and treat people way better, at least that's what I expect currently, but maybe they will also start brainwashing employees and it backfires."

 

Yes you need money for stocks but by flat out banning external investments for stocks, by your logic, the previous shareholders (mostly large institutions) would end up with most of the shares and the average person can't benefit from owning shares of a company. Furthermore the banning of shares being sold cuts out a useful investment strategy for companies, forcing them to take on more debt rather than simply selling shares. This will impede economic growth especially in frontier sectors such as cannabis and  psychedelic companies that do not have or as easy access to loans.  The liability in balance sheet will increase dramatically from such policies. Furthermore, you don't need to block out external investments to encourage employees, offering stock options is enough to encourage higher productivity and cohesiveness and many companies already do so. 

"Most stocks besides that are owned by institutions so after a stock blockade, the means of production are about to get a lot more unfair How and why?"

When for example 75% of Apple is owned by institutions, previous shareholders and in your case, employees with no one else able to invest in, That means that the average 20 year old can no longer use the stock market to increase their wealth because only previous shareholders and employees can own shares. This will greatly concentrate wealth towards people, mostly older own shares before the ban on selling. The shares and means of production are owned by a small exclusive group and no one else can get in. How is this not unfair? Basically everyone just starting out in life are just fucked because they made the unfortunate mistake of not being born before selling stocks was banned.

 

"Yeah, but what kind of people own it now? The employees have a least an important say in the matter than maybe some other stock owners.

The problem I can consider is that there are companies who would crash and we would need a way to catch them and put them back on their feet and that could become expensive, if possible at all.

But whatever the stock access isn't even what I see as in important point. I don't even know why I am defending it."

You want some 13,000 people to exclusively own 3-8% of the market because they work at Google or were blessed enough to be a shareholder before stock selling is banned? This is essentially creating an extreme gatekeeper aristocracy. Do I think more employees should own shares? Yes, a lot of companies feel the same way, it benefits everyone but should they solely own the company? I think that is a disastrous decision which major company employees concentrate unnormal amount of economic power simply because the government said so, it also has consequences on the balance sheet as company valuation plummets to rockbottom and debt from the company not being able to sell shares rockets. Access to stock is a very important point, it is an extremely way of lifting many out of poverty, supplementing incomes, funding college tuitions and retirements. 

 

 

"That is true to some extend, but not in the company's as in the general case, but rather bound to a few peoples horizons and if those people are driven by greed, then they will collect it and not put it to healthy use. 

By avoiding taxes you aren't benefiting society or the state, which is what needs to be healthy in the first place for us to function.

I feel you should definitely not be in favor of this."

When a company makes profit, they reinvest in themselves and it is a false assumption to make that this isn't taxed, it actually in many cases is taxed more, for example Pizza Hut has extra profit so they buy new windows, invest in marketing, hire new employees etc. All these reinvestment activities are taxed and when the window company has more profit; they build new cavities, when the marketing company has more profits; they spend more on advertising, when Pizza Hut has new employees; they buy groceries, insurance and pay rent. This cycle continues on for awhile and brings in taxes at every step. It is better to receive taxes indirectly this way since much more people benefit and the actual productivity/wealth of the economy increases. Alternatively a company that is taxed more can't reinvest as much into growth and development and cause a domino effect of economic growth in its influence circle. Yes you can say that the government can use the extra taxes to increase economic development however the free market is generally a lot more efficient at directing resources and generating economic activity. I'm not advocating for "avoiding taxes", I'm saying that more taxes, especially income taxes does not always mean more revenue (I am ok with it being higher than 21% for corporations however) and certain taxes have very different economic consequences. Essentially all taxes are not made the same, see for example the paragraph I wrote about taxing corporations vs taxing wealthy individuals. 

 

"The economy doesn't work, but people make it work and they have minds and ideals and values and needs and so on.

But if you have a better understanding please elaborate. 

Maybe you could also tell us what kind of problems you see with capitalism?"

The economy doesn't work but people make it work????? Problems I see with capitalism, well theres many but I'll go over what I can list off the top of my head. I think the problem isn't always the free market but often the lack of accessibility the average person has to the free market. That has changed significantly the last 2 years as in 2019, the stock market was comprised of 10% retail investors (Non-institutions) and now nearly 2021, it is about 25%, more than doubling! Still this is not enough. There are various factors on why average citizens don't have much in the stock market however it boils down to education, exposure and initial funds. Education about finances and investing is slowly improving but it really needs to be taught at schools as a requirement, it would exponentially help people and the economy. Exposure to investing goes along with education, there should be more training programs or courses about it on a systemic level. The initial funds is a lot more complicated of a problem I have thought of a possible solution. A $6800 investment into the S&P would average $1 million at age 65, this is not even including reinvesting dividends, which would the investment worth $3 million at a 2% dividend a year. I think this initial investment when people are born into the stock market can solve issues of retirement, eliminate social security (therefore increasing effective salaries of average people), provide a makeshift UBI from the dividends and even reduce dependence on welfare. That being said I do strongly agree with removing money from politics. 

 

Edited December 24, 2020 by Progress

[Progress]

18 minutes ago, neutralempty said:

what do you suspect will happen if even 50% of people invest in stocks and become millionaires?

See the actual problem are the initial funds. If you're in a situation where you struggle putting aside money for some stocks you do not have goals of educating yourself on stocks and reinvesting.

Also do not forget that this heavily relies on frequent remarketing and loss of originality of produced good and that makes the minds sick. At some point people will develop an aversion, assuming the company can keep it's place for that long along with possible environmental consequences and exploitation for the sake of staying within relevence.

We cannot handle the economy without psychology and people aren't programs.

Well they won't become millionaires til they're quite old so, a higher standard of living really. It also won't really matter because people would become old at very different times and of course die at very different times. Yes people would be become millionaires, but that's mostly on paper as most millionaires are; to comfortably retire, they'd still need to keep the shares and simply live off the dividends. An estate tax on this specific retirement portfolio should even out any other issues.

Yes the problem is initial funds, that's why if the government were to start a fund on the citizens behalf with an initial investment of  $6800, controlled by parents til age 16 (with some regulatory restraint on parental control) by the time the person is 18, they can have a small yearly dividend but often this is the difference between life and death for some. As they age the dividend would increase substantially. How is the initial investment paid? It'll paid through a special wage tax to cover the initial investment adjusted for inflation for $6800. Of course there would be taxes on capital gains and an estate tax, so the government more than breaks even and yet the average citizen benefits so much from it during their life time. 

Of course this solution is not enough to solve poverty but it does serve as a good safety net and does solve the poverty if the person can survive til they are older. When people own stocks, they become much more interested in understanding it and the overall economy so this is a natural solution in financial education. Yes it is not perfect but it is certainly better than nothing. It doesn't really matter too much if people grow an aversion to stocks, most people don't exactly check their stocks each day and with the advent of ETFs, it becomes far safer and easier for inexperienced people to safety invest in the market.  It is generally imperative that financial education reforms are carried out if such a "birthright investment" is carried out nationally nonetheless.

I will not say I have the solution to people struggling to make ends meet but I am relatively supportive of UBI and I think that would help tremendously at the very least. Perhaps a combo policy where there is UBI from ages 18-30 or 35 and afterwards the dividends from this "birthright investment portfolio" should take over the function of UBI.