Category Archives: Broken in the USA

guns & gas

Capitalism

Capitalism

The below is a decent description on Capitalism via Wikipedia:

Capitalism is an economic system based on the private ownership of the means of production and their operation for profit. Characteristics central to capitalism include private property, capital accumulation, wage labor, voluntary exchange, a price system and competitive markets. In a capitalist market economy, decision-making and investments are determined by every owner of wealth, property or production ability in financial and capital markets, whereas prices and the distribution of goods and services are mainly determined by competition in goods and services markets.

Economists, political economists, sociologists and historians have adopted different perspectives in their analyses of capitalism and have recognized various forms of it in practice. These include laissez-faire or free-market capitalism, welfare capitalism and state capitalism. Different forms of capitalism feature varying degrees of free markets, public ownership, obstacles to free competition and state-sanctioned social policies. The degree of competition in markets, the role of intervention and regulation, and the scope of state ownership vary across different models of capitalism. The extent to which different markets are free as well as the rules defining private property are matters of politics and policy. Most existing capitalist economies are mixed economies which combine elements of free markets with state intervention and in some cases economic planning.”

If you want to read a terrific view of the evolution of capitalism and predictions for the future please consider “Capitalism” by Thomas Pikkety. My view is that the owners of capital tend control the distribution of both income and wealth. Numerous decades ago, the primary source of capital was land. The owners of the land (primarily the Royals) controlled the living conditions of the masses. Today Capital is primarily controlled by major corporations and the top .1% of the wealthiest families (the Nuevo Royals).

There is no question the Nuevo Royals have been more generous with income & wealth distribution and are responsible for the emergence of the “middle class” and a significant reduction in the size of the lowest income segment. When land ownership ruled the day there were basically the Royals & their appointees and the peasants.

Can the middle class make a case that make a case that they are reaping their fair share of income and wealth accumulation? I think so, but I think there is a stronger case for the lowest 50% income group. I have addressed this topic in numerous prior posts. When a family has absolutely no chance to participate in our capitalistic system. In reality they do not have the income to satisfy the basic needs that the middle class takes for granted without some form of subsidy; Food, housing, transportation & healthcare.

I will leave you with this final thought. Most alarming to me is that many of the CEOs of major corporations make 500 times as much (and more) compensation than the average compensation of their employees. Is this fair to the middle-class worker?

Better Life Index

Better Life Index

The OECD Better Life Index, in May 2011 by the Organization for Economic Co-operation and Development following a decade of work on this issue, is a first attempt to bring together internationally comparable measures of well-being in line with the recommendations of the Commission on the Measurement of Economic Performance and Social Progress also known as the Stiglitz-Sen-Fitoussi Commission. The recommendations made by this Commission sought to address concerns that standard macroeconomic statistics like GDP failed to give a true account of people’s current and future well-being.

There are 11 areas that comprise the BLI rating factors: Housing, Income, Jobs, Community, Education, Environment, Civic Engagement, Health, Life satisfaction, safety & work-Life Balance

The specific elements within the above areas are: Dwellings without basic facilities, Housing Expenditures, Persons per room, Household net adjusted disposable income, Household net worth, Labor market insecurity, Employment rate, Long-term unemployment rate, Personal earnings, quality of support network, Educational attainment, Student skills, Years in education, Air pollution, Water quality, Stakeholder engagement for developing regulations, Voter turnout, Life expectancy, Self-reported health, Life satisfaction, Feeling safe walking alone at night, Homicide rate, Employees working very long hours & time devoted to leisure and personal care.

The USA still ranks in the top 10 (we are 10th) on the better life index. At one time I suspect we were at the top or very near the top. We have been slowly slipping, primarily replaced by EU countries. The top 20 can be seen below.

1 Norway
2  Australia
3  Iceland
4  Canada
5  Denmark
6   Switzerland
7  Netherlands
8  Sweden
9  Finland
10  United States
11  Luxembourg
12  New Zealand
13  Belgium
14  United Kingdom
15  Germany
16  Ireland
17  Austria
18  France
19  Spain
20  Slovenia

Another view of the Success of countries is the Quality of Life Index. It is a bit more basic, but still considers many important factors and demonstrates the high ratings of many of the EU countries as can be seen below:

RankCountryQuality of Life IndexPurchasing Power IndexSafety IndexHealth Care IndexCost of Living IndexProperty Price to Income RatioTraffic Commute Time IndexPollution IndexClimate Index
1Denmark198.6114.475.879.481.46.928.522.181.8
2Switzerland195.9129.778.572.7121.29.629.122.080.1
3Finland194.0112.377.273.572.88.030.411.958.6
4Australia191.1122.957.276.472.17.635.324.093.8
5Austria191.196.778.679.271.810.125.222.077.7
6Netherlands188.9102.571.477.874.87.429.927.587.5
7Iceland187.891.876.766.4101.96.619.715.268.8
8Germany187.1116.265.574.367.69.029.928.082.5
9New Zealand185.6101.160.573.672.68.331.222.795.5
10Norway181.9103.664.774.1101.08.427.119.971.2
11Estonia180.976.079.272.151.09.325.818.264.3
12Japan180.5103.186.380.483.311.340.037.184.8
13United States179.2122.052.969.469.93.632.934.077.5
14Sweden178.7111.450.771.071.610.330.318.074.9
15Slovenia176.075.477.462.852.510.224.824.378.1
16Spain174.283.867.577.854.79.229.439.494.2
17United Kingdom170.8105.757.374.765.39.234.639.487.8
18Canada170.3109.460.571.065.07.733.827.952.6
19Qatar167.8138.386.772.459.15.731.766.536.0
20United Arab Emirates167.8119.683.768.056.24.437.553.145.2

The Population issue and how it concerns us in the near term

The Population issue and how it concerns us in the near term

Based on the estimates by the experts that study and analyze population and based on current technology the Earth’s resources have the ability to “sustain” somewhere between 3 & 5 billion people. What this means, with a population exceeding 7 billion we are using up our resources at an alarming rate. Current projections show that the world’s population will be just short of 10 billion in 2050!

In the past, we have believed that one significant measure of a country’s success is growth in the economy. When we examine this view along with population growth it becomes evident that this belief is not sustainable without creating conflict among countries. As resources dwindle countries will become more protective of the resources they have and they will be much less willing to share. Competition for resources will eventually lead to a significant increase in armed conflicts!

Currently, in the US the death rate is slightly higher than the birth rate which I view as positive. The downside is that there are fewer persons working to support the retirement funds that seniors rely on, especially when the numbers in the senior group continue to increase. You might think that the seniors have paid into Social Security and they are merely getting what they put in returned. Unfortunately, that is not the case, but that is a topic for yet another post to this blog.

Fortunately, we do have a modest growth rate in workforce availability via immigration. Looking forward we must come up with more feasible measures of success that do not rely on depleting resources. I would suggest that both productivity and quality of life are worth considering.