Comment by adrian_b
3 days ago
Yes, many Americans and other Westerners believe that the so-called "socialist" economies, like those of the Soviet Union and of Eastern Europe were non-capitalist.
This is only an illusion created by the fact that the communists were careful to rename all important things, to fool the weaker minds that the renamed things are something else than what they really are.
In reality, the "socialist" economies were more capitalist than the capitalist economies of USA and Western Europe. They behaved exactly like the final stage of capitalism, where monopolies control every market and there is no longer any competition.
Unfortunately, after a huge sequence of mergers and acquisitions started in the late nineties of the last century, the economies of USA and of the EU states resemble more and more every year the former socialist economies, instead of resembling the US and W. European economies of a few decades ago.
Everyone wants to tag the evil with their opposition's name. The evil is concentration of power. But no one wants to call it that because then they can't pretend that it's something different when they're doing it themselves.
Witness the people who keep proposing to solve market consolidation with higher taxes. Higher taxes go to the government, and therefore the interests that have captured the government. Are we going to solve it by taking money from Warren Buffet and giving it to Larry Ellison? Do we benefit from increased funding for Palantir? No, you have to break up the consolidated markets through some combination of antitrust enforcement and peeling back the regulatory capture that prevents new competitors from entering the market.
> Higher taxes go to the government, and therefore the interests that have captured the government.
There is at least a chance for it to be redistributed, unlike private wealth.
Let's have a quick look at the federal budget. The big ticket items are social security, medicare, net interest and military/VA. Together those are more than half the budget.
Social security is the biggest of them. Older people have more wealth than younger people on net and social security is structured to make higher payments to people who made more money when they were younger, which is significantly correlated with having more wealth right now. So it's a massive transfer payment system that transfers money from the poor to the rich. Meanwhile it uses its own special tax which is significantly more regressive than the ordinary income tax and doesn't tax corporate income at all. Notice in particular that we could instead be solving "grandma doesn't starve" with a UBI that makes uniform payments to everyone and not disproportionate payments to the rich, and comes from a tax which is also paid by corporations.
Net interest is a naked transfer to people with enough capital to invest in government bonds.
Most of the military and VA budgets go to government contractors who work hard to sustain an uncompetitive bidding process with thick margins.
Medicare uses the same bad tax as social security and those dollars go to the healthcare industry which has thoroughly captured the government. The AMA lobbies to limit the number of medical residency slots and sustain a doctor shortage and healthcare corporations have established a thicket of laws to limit competition, impair price transparency and promote over-consumption.
That's where the majority of the government budget goes, and the remaining minority of the money is also going in significant part to government contractors and regulatory capture industries. The government takes tax money from the middle class and gives it to the rich and huge corporations.
We don't need any more "redistribution" like that. If you think you can get the government to stop doing that and instead give the money the poor and middle class then first prove you can do it with the existing money before even thinking about collecting more. You have a nutrient deficiency because you're infested with tapeworms, not because you don't have enough food.
I'd argue we need both massive antitrust, and higher taxes on the wealthy to prevent them from amassing the power to prevent the antitrust.
And change in laws regarding the legalized corruption (Citizens United, ...). And fight for real freedom of speech.
This is very complex problem that needs to be tackled from all sides simultaneously, the entrenched interests are already well setup to defend themselves.
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Plus a systematic way of keeping the Gini coefficient of wealth small in a sustainable way. I'm a fan of establishing sovereign wealth funds whose dividends are paid out equally per capita for this purpose.
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The things amassing power to prevent antitrust are corporations, not individuals. It does nothing to make Bill Gates sell shares in Microsoft to pay taxes when the corporation stays the same size. If anything it makes it worse because then more corporations are controlled by Wall St rather than founders and they're significantly more inclined to turn the screws to juice short-term profits.
wow!! straight to the dome.
thought about this too - but not as expressively as you put it.
e.g in China - for early stage ventures - there's cut throat competition - then as Thiel would put it with heavy competition profits trend towards 0 - by then the tech is perfected or close to perfect - then the state uses its funds to back a monopoly. that's how you get a BYD.
And to complete the reversal what is now referred to as the "golden age of capitalism" i.e the post WW2 USA was actually very socialist. Strong social movement and unions and social spending that created a wealth working/middle class with a bunch of spending power.
Inequality society producea inequal economy (and vice versa) which is the economy of any developing country. Few rich,. miniscule middle class and lots of poor people in slums snd poverty.