Posted by klausen on July 05, 2003 at 15:08:22:
In Reply to: Re: Microislet JDRF Hybrid Funding posted by Steve on July 05, 2003 at 14:35:53:
Well, of course poor societies have a problem with the distribution of incomes as well, as in the case of capitalist third-world countries like most of the South American states, Thailand, the Philippines, etc.
In the examples you give, while the total amount of money circulating in the society may grow, the total amount of happiness it produces is very much less than it could be if the money were distributed more evenly. Since only a neurotic miser thinks money is a good in itself rather than the mere means to the happiness it produces, the only name for capitalist maldistribution is waste.
Economists often talk about the velocity with which money changes hands as a factor in creating wealth. If the rich have more money, as under the Bush tax cut, they plan and calculate for a while and then invest it to build more industrial capacity to sell things; but if the poor have it, they go right out and buy something, so the lag time between receipt of the cash and expenditure of it is less. Why is creating more demand by giving money to the poor so often overlooked as a way to stimulate the economy, rather than beginning at the other end and giving money to the rich to increase investment? After all, the reason for the 1929 market crash was industrial overcapacity caused by the prices of goods for sale being too high for the wages being paid to the people who were supposed to buy things, but I have never heard of a depression being caused by excessive demand chasing too few goods as a result of the workers being paid too much!
The image of socialist states as always being economically depressed is empirically invalid. The Canadian economy, which is considerably more socialist than that of the United States, is now doing much better than the American economy. Germany, the Netherlands, and Sweden have always had a heavy mix of socialism in their economies, but they all have about the same per capita wealth as the United States. Switzerland, which has a much higher standard of living than the U.S. is thoroughly infected with socialist programs like free university education and healthcare. And just consider the case of the Soviet Union in World War II: even though Germany controlled nearly all the productive resources of capitalist Europe and had conquered half of Russia's industrial capacity in the first few months of the 1941 invasion, Russia soon outproduced Germany in every category of munitions and won the war! This shows how much more efficient a socialist system can perform than a capitalist one.