Well, let's talk a bit about the other options, and what makes them different. Note I am not using official terms correctly here, just using simple names to make discussing the categories easier - what I call Mercantilism is not the official definition.
In general, the most common difference between economic systems that Americans discuss is government power. Ranked from lowest to highest they would be:
- Anarchy. Effectively, that's what you get with no government - or with a government that can't actually pass and enforce laws/regulations. People can outright lie about anything - No, there's no asbestos in the house I'm selling, and the hot water boiler works great! People only care about profi.
- Laissez-faire capitalism - some basic rules, but with only minimal enforcement preventing outright lies, but allowing 'sins of omission'. If I don't tell you about the asbestos in the ceiling or that the house's boiler acts up, it's your fault for not asking. If you ask, I can avoid answering the question and if you buy it anyway, you are out of luck. There are a few minor concerns about ethics, but profits almost always over-ride it.
- Regulated capitalism. This is pretty much what the US uses now. Here, you have to act in good faith. You don't have to point out the hot water boiler, but you have to mention the asbestos. Profit is still the highest motive, but ethics actually matter here.
- Mercantilism. Here the government makes a lot of rules and regulations. This will probably stifle some innovation, but prevent most ethical abuses and protecting national security (i.e. don't sell high end cryptographic software out of the country). In effect, the government doesn't control the businesses - but permission has to be granted to do anything new. Usually the profit motive is still there, but both ethics and national security are a close second and sometimes over-ride profit.
- Socialism. Here the government doesn't just grant permission, it actively directs what many businesses can or should. But they don't have total control, and people can start new businesses, as long as they don't directly interfere with certain key ones the government runs and accepts profit for. While profit still exists, it takes a back seat to issues of ethics and national importance tend to over-ride it.
- Communism. Here the government acts as the business owner for all businesses. There are no new businesses that are not controlled by the government. Here, profit is generally not considered that important.
First, a nod to the socialized healthcare debate. Requiring people to buy insurance is not running a business. It isn't socialism. It is at worst mercantilism, but most likely regulated capitalism. See point two below.
For our purposes, the economy refers only to businesses designed to make a profit, it does not include non-profits, charities, or similar activities. ALL governments run a certain, limited number of activities that are deemed in the national interest, without concern for profit. The military is a prime example of this - and is probably the largest organization in the US that is run by the government. If you work in the military, you basically live in a socialist country. The government provides clothing, food, housing, healthcare, etc.
So when a government runs an organization to make a profit for the government, that's sociailsm. The key word there is PROFIT. If the government is not trying to make a profit, then it's not socialism. Medicare, Medicare and Social Security, are therefore not socialism. Truly Communist organizations are designed to make a profit. They may talk about other things, but if all activities are non-profit, that each transaction loses value, and you very quickly end up with nothing. By very quickly I mean ithin one year. When Communism at least tries to make a profit, it can last for decades. Note, it usually FAILS - because communism is so bad at making profits. But it can succeed at very small scales (anything less than 1,000 people or so), for centuries - particularly if it doesn't have much competition.
Note, all of these are on a scale of how much the government controls the economy. It's on a scale from zero government control to total government control. But that is NOT the only difference between economic systems. There are all sorts of weird economic theories that have been tried. Citizens have no economic power, but corporations have them. You could take away the bankruptcy protection offered by incorporation. You could make rulings that each corporation must pick one of several religions and abide by it's teaching.
But we don't talk about any of these strange ideas, because none of them are worth discussing. They simply don't work very well. They tend to create less profit, less ethics, and less national secuirty over-all. Any minute gains in one area end up costing a huge amount in the other two.
There are really just three potential goals for any economy. Profit, ethics, and national security. (Ethics and national security can be considered two sides of the same coin, but governments can also act unethically to enforce national security.) Most of what Americans talk about is where on the power scale the government acts, because that is the most powerful, proven tool to address those three goals.
In anarchy, they are in business, with no government control, and that means they are competing with other businessmen. Even if they themselves are ethical and patriotic, they are competing with people that are not. With very few exceptions (monopolies) , they will be driven out of business if they try to maintain ethics and patriotism. As such, at level 1 of government interest, profit quickly ends up as the only goal, while ethics and national security are almost entirely ignored.
Similarly, with Communism, national security becomes the all abiding goal, and both profit and ethics end up being ignored almost entirely (although some corrupt government employees start focusing on profit to the exclusion of national security and ethics). Even minute issues of national security - such as the popularity of the leader and/or economic system over-ride interests of huge profitability or ethics.
Regulated capitalism and Mercantilism both are where ethics rule. In the middle, with government not powerful enough to stomp on minor issues of national pride, it is still strong enough to stop the big ethical problems - which include any issues of real national security. Mercantilism has slightly less unethical actions, but also slightly less profits. Here, government has enough control to stop almost all egregious bad actions - including both activities that impair national security and those that effectively cheat citizens. Regulated capitalism has higher profits, but runs certain national security risks (greater import/export can lose key businesses to foreign corporations, as well as industrial secrets), and makes it a bit easier to cheat citizens.
Socialism has significantly less profits, about the same ethics as Mercantilism (less evil actions caused by the desire for profit, but more motivated by governmental interests). Laissez-faire capitalism has significantly less ethics, but has huge profitability gains. Mainly because most people, even unpatriotic ones, don't want to mess with national security. But it is a lot easier to make a significant profit if you don't care about cheating people. Which means the most successful businessmen all end up being unethical in a true laissez-faire system. In a regulated capitalism, it is possible (but not guaranteed) for ethical businessmen to triumph over their less ethical ones.
Why does this happen? It's not just that people that go into government care more about national security and ethics than people that go into business. Another major factor is SCALE and risk taking.
Government only has a certain number of employees. As population doubles, the number of employees goes up by less than a doubling, for several reasons A city has one mayor, no matter how many citizens, for example. Also, in the less government economies, the government wants to encourage more business, so pretty much ANYONE can start a corporation. Moreover, if the government employees fails badly enough, he get's fired (or loses some power). If the businessman fails, he starts over. Several very successful businessmen failed in their first attempts. They kept trying, sometimes declaring bankruptcy multiple times, until they got it right.
In addition, the government is fairly hierarchical, and therefore slow to respond. Small businesses usually start with a flat hierarchy, and can try to stay that way as they grow.
Net result, businesses can try 1,000 ideas during the same time that government tries three. Two thirds of both will fail. That leaves 333 successful business and one successful government program, one cancelled program, and one limping along. Of course, some of those 333 will be unethical, and perhaps even traitorous.
Private industry has the advantage of numbers, as well as a clearer goal (profit).
The trick is to find a level of government regulation that has a good trade off of national security, ethics, and profit. We saw what happened under Clinton - no recession, no major business ethics scandals. Instead the GOP mainly talked about sex. Obama has not had a great recovery - but it is a recovery rather than a deepening of the recession. It may be a job-less recovery, but it is a recovery.
Compare with the Republican record. Huge scandals about business ethics. Enron. Housing market disaster. The liberals are willing to sacrifice some profits to ensure that that kind of crap doesn't happen. The fact that it DOES happen is pretty good proof they have not gone too far.
No comments:
Post a Comment