The Instigator
Arganger
Pro (for)
The Contender
passwordstipulationssuck
Con (against)

Entirely unregulated capitalism doesn't work

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Voting Style: Open Point System: 7 Point
Started: 2/14/2018 Category: Economics
Updated: 23 hours ago Status: Debating Period
Viewed: 128 times Debate No: 108029
Debate Rounds (3)
Comments (1)
Votes (0)

 

Arganger

Pro

Capitalism: an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.

Unregulated means that they don't have to do any and possibly more than the following:
  • Break up monopolies
  • Abide by a minimum wage
  • Follow government set work safety regulations
  • Have quality control standards enforced by the government
This would be under the traditional idea that capitalism regulates itself.

I am arguing that for the good of general humanity capitalism must be at least somewhat regulated.
passwordstipulationssuck

Con

I will first make my case by refuting my opponents. given the nature of the resolution, this should be more than sufficient.

We dislike oligopolies because we assume that more competition is always better. But a 2008 study on how the number of competitors affects competition found the exact opposite.

In the study, researchers looked at the results of standardized tests like the SAT in test centers with a varying number of test takers. They found that students scored higher when there were fewer students taking the test with them. Students in massive testing centers with hundreds of fellow test-takers scored lower. The researchers also replicated the results in a controlled setting.

Why do you score higher on tests when there are fewer people around? The researchers noted that the "motivation to compete is mediated by social comparison." Competing against a huge group is less motivating than competing with a few individuals because it"s harder to compare yourself to your competition.

The study concludes that increased competition, in terms of the number of competitors, actually reduces competition and its benefits.

Although this study was done with individuals, it would make sense for it to apply to companies. It will be much more essential to respond to an innovation made by one of your 4 competitors than one of 10,000 competing companies. And in an oligopoly, it will be much easier for executives to compare themselves to their competition. Clarity over which company is number 1, 2, 3, and 4 can fuel the competitive spirit in a way that competing to be a better convenience store - among the tens of thousands that aren"t easily compared - simply cannot.

This study suggests that a market being dominated by a handful of companies could actually be good for competition and innovation. If our cell phone service is bad, maybe something other than the small number of providers is to blame.
http://www-personal.umich.edu...

Minimum wage:Bernie Sanders and those who support a minimum wage are like Watson " they see an increase in the minimum wage, but do not observe the unintended effects of the law. In fact, an increase in the minimum wage harms most those whom the law is supposed to benefit.

U.S. Sen. Bernie Sanders (I-VT) speaks during a rally in front of the Capitol April 26, 2017 in Washington, DC. Activists and low-wage workers gathered on Capitol Hill to rally for a $15 minimum and rights to form unions. (Photo by Alex Wong/Getty Images)

Let"s start with an obvious point: No one can stay in business if a worker can only produce $10 an hour of value but the government forces them to pay their workers $15 an hour. A pay raise may sound compassionate, but it is not a sustainable option. Once a minimum wage is passed, the cost of producing goods made by unskilled labor will increase. This in turn means that fewer units can be made and that the price of the good itself will also increase. Because of the increased price, fewer units will be sold " which ultimately results in fewer workers being hired.

As the price of labor goes up, producers will have an incentive to use machines to replace labor. In fact, such replacements are already underway: Google "Robot Hamburger" to see what machines are being developed to replace the labor in fast food restaurants.

Producers will also have an incentive to eliminate entry-level jobs. Decades ago, many gas stations included "service stations." You drove your car up to a service station and a teenager came out and put gas in your car, washed your windows and checked your oil. At the time, this was the first job many American teens had. They learned basic skills like showing up on time, following instructions and interacting with customers.

But these jobs and others like them no longer exist. To lower costs, gas stations have substituted your labor and machines for the labor of the entry-level worker. Nowadays, you put your credit card in a machine and pump your own gas. Increasingly, restaurants and retailers are following these trends: You order at a kiosk and pick up your own food at the counter, or scan and bag your own items.

Admittedly, not everyone loses: The executive at the top will in fact keep his job and earn even more. But the entry-level or unskilled worker will lose his job to a machine or to labor that comes from the customer. And the greater the incentive to replace labor with machinery, the more jobs will be lost. Suppose we increased the minimum wage to $300 per hour. Do you really think that most of us would keep our jobs? Of course not " there would be no incentive for employers to retain us.

Despite government inspection of food or regulation of pharmaceuticals, for example, food poisonings and Salmonella contamination still happen and drugs with harmful side effects still make it to market. Government-licensed health care providers, day-care operators, and taxi drivers still make mistakes, which negatively impacts their clients and customers. Even if government regulators and inspectors truly care about people"s health and safety (which one would hope they do), they are human: fallible and prone to make mistakes. And as government employees, their incentives to avoid mistakes are limited: if they commit a really grievous error, their jobs may be at risk, but there is no threat of losing business or profits.

For business firms (their owners, managers, and other employees), on the other hand, the consequences of harming their customers, employees, or others, are severe. They may lose their business and their freedom, such as Sohel Rana, the owner of the collapsed factory building in Bangladesh, who is in prison awaiting for trial, charged with murder of the over 1,200 workers who died. Or their profits, reputation and brand value may be severely damaged, like Volkswagen"s after it cheated on emission control of its "clean" diesel cars. Or they lose everything and live in mental anguish, imprisoned, for the rest of their lives, such as Bernie Madoff. as we can see, it is capitalism and the free market that helps with safety over government. more capitalism=more safety.

My opponent argues that we need quality control. However, capitalism is at its core, competition. if one business makes a low quality product and one company makes a high quality product company B will make more money. it's when government steps in and imposes certain regulations that lazy companies that cut corners get to survive. Again we see that government regulations are largely ineffective compared to the driving forces of a capitalist market economy, the consumer. As my opponent states, capitalism regulates itself through consumers and market forces without the help of the government's excess bureaucracy.
Debate Round No. 1
Arganger

Pro

The 2008 study ends up being irrelevant.

This is because for businesses to do well, they want to minimize costs and maximize profits. So when businesses themselves do well it doesn't mean it is good for the market or people working there.

We don't want the businesses to do too well, because we don't want excessive pricing, or bad working conditions.

Even if it did apply, there are no guarantees of even so much as two competitors. An example of this is the American Sugar Refining Company, which at one point owned 98% of the sugar processing capacity. This left no room for competition until it was made to break up.

Once someone owns so much of the market they can crush or buy off competition and set any price they want.

Because the goal of Capitalism is to out compete your competition to make as much money as possible, sometimes you beat out everything else.

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https://en.wikipedia.org...

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The minimum wage becomes an issue when there aren't enough jobs for the people. In china, in 2009, the average wage was $1.13. This can lead to almost slave like exploitation. In china, this has improved due to population losses from the old one child policy, but is still a problem.

This also leads to dumping, which is when a country exports a normally lower quality product for much lower price than locals.

Unlike the use of a study, human rights violations as a result of no regulations is well observed in history.

In the 1800’s, Work hours were 12-14 hours a day, this came with low pay of which was even lower if you were female or a child. Beatings were also used on employees.

So long as the population is high and the laws allow, businesses are known to treat employees badly.

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https://www.bls.gov...

http://www.bbc.co.uk...

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passwordstipulationssuck

Con

Yes, businesses will maximize cost, but not at the expense of the people who work there, because if the people who work there are injured, seeking other employment, or unionizing, the business will begin to lose money. in the modern era it is unprofitable to antagonize or endanger your workers. especially considering the public backlash if you get exposed.

Supply and Demand economics dictates that when a business does well, even if they have a large monopoly, overpricing is not a good long-term solution. more on that later.

When you talk about monopolies, you need to realize that a monopoly is only effective insofar as people are willing to buy that one product, ifty years ago, when the American Telephone and Telegraph Company still held a monopoly on U.S. phone service, the first minute of a toll call could easily cost a dollar"the equivalent of about $5 today. But a few pennies of that 1950s dollar supported research and development efforts at Bell Telephone Laboratories and at AT&T"s manufacturing arm, Western Electric.

This corporate combination was probably the most potent innovation engine the world has ever known, spawning such midcentury marvels as the transistor, the laser, the solar cell, cellular telephony, and satellite communications. And it developed almost all of the silicon technology that others used to invent the microchip. Without a doubt, Bell Labs and Western Electric laid the foundations of the information age and today"s global society.

But these institutions have been declining since the 1984 breakup of AT&T. Soon that corporate colossus"once the largest company in America"will no longer exist, having been acquired by SBC Communications for only $16 billion. Bell Labs, whose physicists have garnered six Nobel Prizes for their scientific breakthroughs, is but a shadow of its former self under Lucent Technologies. And in 2002, Lucent spun off most of the remains of Western Electric as Agere Systems. A long-distance call may now cost pennies, but the nation has lost one of its leading institutions of science and technology.

Many economists argue that monopolies stifle innovation. The lack of competition induces corporate somnolence, and new technologies are patented mainly to consolidate and protect a company"s dominant market position rather than to encourage the creation of revolutionary products and services. But innovation was a much different affair at AT&T, which espoused a corporate ethos of universal service"and especially at Bell Labs, which adhered to a management philosophy calculated to attract some of the world"s best scientists and engineers to work in an industrial lab. A healthy percentage of the costs of R&D were built right into the calling-rate base. Thus assured of steady financing, lab managers could afford to take the long view and pursue breakthrough technologies that might not pay off for a dozen years or more but might ultimately be of enormous value to society. AT&T"s patient capital and secure cash flows allowed the company to take the substantial risks involved in attempting sustained innovation across a broad technology front.

The transistor is perhaps the best example of that process. AT&T"s managers recognized the long-range need for a solid-state amplifier and switch during the 1930s, but it wasn"t until 1947 that John Bardeen, Walter Brattain, and William Shockley invented the device. And it took another 15 years or so of technology development before transistors began to assume their modern form. Bell Labs and Western Electric fostered almost all the subsequent innovations this transformation required: purifying silicon, growing large crystals of this semiconductor material, diffusing layers of impurities into the crystals, patterning the layers using a protective oxide surface layer, and so on.

During the 1960s, Fairchild Semiconductor and Texas Instruments adapted many of these technologies to develop the microchip, whose manufacture now adds more than a trillion dollars per decade to the global economy. These smaller, less-robust companies could never have pursued the many different innovations that made their core product possible. But they were exquisitely poised to drink from the rich technology stream flowing from Bell Labs and Western Electric.

Only a large corporation such as AT&T"or others like General Electric and IBM"could ever afford to support the sustained, multidisciplinary, mission-oriented R&D efforts needed for these innovations without worrying too much about the short-term impact on the bottom line. And it was crucial that this work be accomplished in a pragmatic industrial setting, with a long-range goal of delivering better goods and services"an ethos that hardly exists in government or university laboratories.

Such farsighted institutions, performing basic research and development within industry, are necessary if society is to realize fundamental breakthroughs, like the transistor, that have the potential to transform it. AT&T"s seemingly excessive charges on toll calls served as a kind of R&D tax: The company provided a reliable mechanism for diverting a tiny fraction of our everyday expenses"coming from all corners of the U.S. economy"to long-term R&D projects that eventually made tremendous improvements in our lives. as we can see, when a monopoly causes a great increase in price we see that people will innovate and create a better product which renders a monopoly useless. Thus in order to maintain a monopoly and profit it will require that one maintain the best product and a reasonable price.

It's important that we define exactly what capitalism is so that we don't get capitalism restricting laws mixed up with other types of laws. capitalism is an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state. Thus we can see that human rights laws are separate from capitalism laws. Furthermore, It's important to note that China in 2009 was NOT a capitalist country. They were/are a Communist country which means that it was the STATE that was determining economic policy not private owners.

My opponent again confuses other laws with restrictions on capitalism. for beatings, that would fall under assault laws. which are not restrictions on capitalism but rather restrictions of violence. Moreover, the information climate of the 1800's is not even remotely comparable to that of today. a removal of restrictions on capitalism would not lead to grueling work hours because of 1. the availability of other work. 2. the media backlash if it was enforced universally which it wouldn't be.

References

China was communist https://www.hrw.org...
Monopolies encourage innovation https://hbr.org...
Debate Round No. 2
Arganger

Pro

communism:

"a political theory derived from Karl Marx, advocating class war and leading to a society in which all property is publicly owned and each person works and is paid according to their abilities and needs."

Since the economic reform of china in 1978, it has not been even close to trying to do that. True, the government does get involved in the business some times, for their own gains (Even the US does that sometimes), but it is capitalist in nature primarily.

http://www.businessinsider.com...

Public backlash may not be as strong as you think. Most every day objects are from china, made from badly exploited workers in horrible working conditions. As long as it isn't directly affecting the person, most people just won't and don't care.

Just as people who care about animals and would never directly hurt one, still buy meat from companies that have been proven to be cruel to their animals.

Cognitive dissonance is easy to develop.

https://www.simplypsychology.org...

Right now, unions may work, but as less jobs exist (As we are heading to now, as technology is taking jobs) they get less effective. Unions do help workers but their effectiveness is limited.

This is because when people get desperate for work, they stop caring so much about the pay or strikes, they just want to keep their family alive.

When the market is in favor of employers, they will exploit. That has been proven by history.

While it is true that monopolies won't always raise prices like crazy, they will still raise them as much as they can while people can still afford it in some way. The more necessary the service the worse it gets.

I am not arguing that monopolies stifle innovation as I feel it is irrelevant.

Monopolies can also cause Cost-Push Inflation.

"A good example is OPEC, the Organization of Petroleum Exporting Countries. It sought monopoly power over oil prices. Before OPEC, its members competed with each other on price. They didn't receive a reasonable value for a non-renewable natural resource. OPEC members now produce 42 percent of oil each year. They control 80 percent of the world's proven oil reserves. OPEC members created cost-push inflation during the 1970s oil embargo. When OPEC restricted oil in 1973, it quadrupled prices. In 2014, shale oil producers challenged OPEC's monopoly power. Prices dropped as a result." https://www.thebalance.com...

I apologize if I missed anything, and thank you for the debate.
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Debate Round No. 3
1 comment has been posted on this debate.
Posted by Arganger 1 week ago
Arganger
So... Are you going to post an argument soon?
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