Capitalism has FAILED the bottom 50%
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Debate Rounds (5)
Capitalism is an economic system in which property is owned privately by individuals. Individuals are free to trade without interference from the state, and are also free to seek to increase their own capital holding (without the use of force).
Socialism is an economic and political system in which property is owned by the state on behalf of individuals. The main purpose of the system is to distribute wealth via centrally planned economic activity. Individuals are not free economic actors but are recipients of state decisions.
Standard of living generally refers to the economic output of a country as measured by GDP. This is averaged across the population to understand the purchasing power parity or PPP.
Socialism is the big failure of the twentieth century. It falsely promised its adherents prosperity, equality, and security, but it delivered poverty, misery, and tyranny. Equality was an illusion achieved only in the sense that everyone was equal in his or her misery. Based on historical evidence from governments, it has been responsible for extensive famine, severe poverty, and economic collapse. These are the natural products of removing the countries wealth creators, assigning people, as slaves, to jobs as if the country were a machine rather than a dynamic society. In Socialist countries wealth is not created but distributed, leading to the stagnation of the economy as the wealth creators flee, followed by increasing levels of state control and intervention to replace the vacuum, followed eventually by full economic decline. Individuals in these societies only get to share in this ever decreasing pool of wealth. We saw exactly this picture when East and West Germany re-unified. The West was prosperous, dynamic and rich, the East was poor oppressed, frustrated and bewildered. It has taken years of investment by the West to bring the East economy into the 21st century. Even today (25 years later) East Germans are only 67% as wealthy as the Western counterparts despite having the same access to Capital and labour. Of course that gap will close through time, but it shows how far and deep the economy had collapsed. Finally it is worth noting that it is clear that the more Socialist a country becomes that the more it will eventually develop its own "classes". Government officials as "the rich," a fringe technocrat "middle class", and a vast "lower class" composed of workers without hope of using their initiative to overcome their circumstances. Capitalists, like myself, are free to point out that these are the same "classes" that socialism eschews as exploitative
It isn't hard to see why Capitalism is more successful. Out of the 10 wealthiest nations on earth (based on GDP by purchasing power parity) 5 are explicitly capitalist countries (as close to laissez faire as we get) and 5 are based on mixed economies (free markets with a social welfare system). This trend continues all the way down the ranked table with those adopting more Capitalist economic freedom, generally being higher placed than the much more numerous mixed economy model. There are no explicitly socialist nations in the top 100 unless you include China at no. 83 (which has only seen explosive growth since the introduction of market reforms and the relaxation of Socialist central planning). This is because capitalist countries create wealth, and that wealth is then recycled through the economic system to the benefit of everyone who wants to actively participate in the economy. Finally it is worth noting that Capitalism has generated access to an enormous economic advancement and range of labour and time saving devices. Whereas I struggle to think of any innovations in the last 50 years from Socialist countries. Infact most Socialist advances were stolen from Western Capitalist societies and copied (badly).
In short if you are in the bottom 50% it is better to have a smaller share of a rich economy, than a higher share of a poor economy. Take two examples.
Since independence and the removal of the Socialist regime, Estonia has re-booted itself and assertively followed a free market economic model. Estonia's reforms have led to a balanced budget, low public debt, and a rapidly growing economy capable of giving opportunities for wealth growth and creation to its citizens. It has established its own fully convertible currency, implemented a fairly radical flat-rate income tax system, allowed free trade, built a private competitive banking sector and an e-Services based government for quick, efficient and easy access for its citizens. It has become a model of a free market economy. Estonian economy was one of the fastest growing in the world until 2008 with growth rates even exceeding 10% annually. The Estonian economy and its currency have remained highly resilient and solvent despite the worldwide 2008 liquidity crisis. In terms of wealth distribution the bottom 50% had access to 20% of the wealth, with the top 20% only having 40%.
Venezuela has a democratic socialist government and has had years of political stability under that rule. It has a huge wealth of natural resources and a plentiful supply of labour. Yet it remains a desperate place to live and certainly no utopia. It has a poverty rate between 76-80%. To top it all Venezuela has an unequal distribution of wealth, the poorest 20% of the population had 3% of national income, while the wealthiest 20% had 54%. For comparison the UK figures were 6.3% and 38.8%, and the US in 1972, 4.5% and 42.8%.
Where is the evidence that Democratic Socialism leads to a more equal distribution and higher standard of living? My opponent needs to identify a society which is better off because of Socialism and show how that has led to higher standard of living. Until he does that there is no case to argue. We haven"t even touched on the moral case for Capitalism yet.
What my opponent appears to mean by "Democratic Socialism" is Capitalism with a larger welfare state, than one would see in economies such as Singapore, Switzerland, Hong Kong, UAE, USA etc. He therefore concedes my argument and his debate against Capitalism is over.
So lets "look it up". What can we make of the differences between some of these nations in Europe. The data below is according to the Economic Freedom foundation (which effectively indexes how Capitalist a country is). Most of the nations mentioned by my opponent are categorised as "mostly free" (the second highest score), indexing between 70 to 80 points out of 100. Meaning the pillars, of economic freedom are substantially maintained:
- Rule of Law (property rights, freedom from corruption);
- Limited Government (fiscal freedom, government spending);
- Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and
- Open Markets (trade freedom, investment freedom, financial freedom).
Infact there are only a few countries in Western Europe outside of the "mostly free" categorisation. Firstly there is Switzerland which is categorised higher in the "free" section between 80 and 100 points out of 100. Secondly there is France, Spain and Italy in the "moderately free" category between 60 and 70 points out of 100. Thirdly there is Greece which is in the lower "mostly unfree" category with Mozambique and Bangladesh between 50 and 60 points our of 100. Greece has a huge government sector and a Socialist bias (like Bangladesh for example) to its economy. I need hardly tell you out of Switzerland and Greece, which economies and people do better. The Swiss are active particpators in their economy, expect nothing from government (other than security) and strive hard. The Greeks are expectant of handouts and large pensions built on bail-outs from more successful economies and taxation of its citizens. So all this really leaves you with is France, and I am not sure that you could really build a case that France is an economic powerhouse deriving fantastic standard of living for its bottom 50%. France underperforms its European counterparts, is the second worse Debt:Income ratio country in the G7 beaten only by Italy. Its economy struggles under the weight of government intervention to allow comapnies to create wealth for its citzenship. The highest GDP per head in Europe is (guess where) Switzerland, where the bottom 50% share in a vibrant, stable economy.
So I think your analysis was as superficial, as it was short. The data is freely available from the Economic Freedom foundation (2016 report). Good luck with the rest of the debate.
The POINT of my ENTIRE debate is that the BOTTOM FIFTY 50% are making between ZERO and 14$/hour, and NOT ONLY are they getting VERY little pay, MOST of them don't get ANY BENEFITS! No Paid Time Off, No Medical Insurance, No Dental Insurance, No 401k, No Vision Insurance, No perks, No discounts, no Retirement, No Holiday Pay, NO ANYTHING!
I have not "bashed you" personally (no ad hominems), but I have dissected your arguments. I find your arguments crass, unsophisticated, uniformed and self-defeating. Going around calling Capitalism a failure, whilst living from its fruits is hardly a consistent approach. On the other hand and rather ironically, you have attacked me personally rather than my arguments.
You started this debate with an inflammatory title. You have failed to prove your point and I have given you the counter arguments that demostrates Capitalism is vastly superior for ALL people and not just wealth creators. Any research beyond your superficial appraoch will demonstrate that. You need to accept it or offer better arguments.
You now move onto a discussion of low-paid workers in the economy. This is a reflection of the free market. With low paid jobs typically the supply of jobs is less, than the concommitant demand, hence wages are depressed. This means the individuals cannot always access the luxury end of the market, but in keeping with my earlier points they do benefit from the higher dynamism and growth generated by Capitalism in at least 3 ways.
Firstly, the growth creates more opportunities to move into higher paid work. Secondly expectations are created around what an acceptable minimum is for people (50 years ago cars were luxury, but now a necissity). Thridly re-training opportunities are abound, and there are no barriers to movement of labour between jobs. If you want to actively better yourself and participate in the economy, you can access resources and be the best that you can be (thereby maximising your potential). The alternative is you tax the people who create wealth more, in turn making them more short-termist and in turn less likely to take risk. You then dish out free hand-outs to the low paid, who in turn are then disincentivised to actively create wealth for themselves fear of losing short term benefits, and in turn become alienated through lack of opportunities and ambition. Eventually this ends in dependency on the state, whereby an "expectancy" culture is generated. In extreme Socialist states you have even less social mobility, as the technocrat central planner, tells you what your job is.
So whilst your motion is defeated, I do not think you even have a ghost of a point on the low-paid story you wish to create by patronising the low paid as martyrs and victims. They are humans with dignity and should not be made dependent on hand-outs, but set free to fulfill their potential. It cannot be your primary economic goal to basically make sure everyone is alright first, then wonder how you are going to generate wealth for people to access as a secondary afterthought. Your primary economic goal must be to maximise wealth creation and allow market forces (Adam Smiths "unseen hand"), work out the distribution efficiently. This is Capitalism and it is proven to work.
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