Capitalism first, a hybrid economic perspective from a woefully amature economist

I’m not a scholar of economics, so I probably have no business writing about this at all, but here goes anyway. I’ve spent time, probably too much time, thinking about socialism and capitalism and the ways that we’ve been told that capitalism is good and socialism is bad, and how to reconcile the socialism in our society that we love with the capitalism in our society that we hate. It’s not an easy task, and the most simple and easiest answer to the clear discrepancy is that people are stupid. This seems to be the fallback too often these days. Why did people who benefit most from government vote for smaller government? Because people are stupid. Why did people who have insurance thanks to Obamacare vote for a candidate who ran to repeal Obamacare? Because people are stupid. I’m not saying I disagree with that response entirely, but it’s too easy, and too simplistic. I think there’s more to ponder here, which is what I plan to do with the next few hundred or so words.

Let’s establish some things first: no matter how much we are told that socialism is evil, we have plenty of socialism in American society and we like it. Medicare/Medicaid are government owned and operated health insurance systems. That is socialism. We have a post office written into our constitution, and it’s government owned and operated. That is socialism. We have an amazingly effective and massive military that’s government owned and operated. That is socialism. We have a very strong public school system (perhaps the “strong” adjective applies more ubiquitously at the post-secondary level, with a lot more work to do at the earlier stages) that is owned and operated by the government. That is socialism. We have police forces, firefighters, hospitals, etc, all owned and operated by federal, state, or local government. That is socialism. We like those things, and as much as we might complain about them sometimes, we are happy to have them and don’t want them to go away. But we are told, over and over, that socialism is

socialism4-3

bad. Perhaps a false dichotomy between the days of Communism and our fears of its takeover. Hard to say. There is some evidence that the badness of the socialism label is fading. A YouGov survey in 2015 found that Americans still think more highly of capitalism than socialism, but the numbers were almost equal among 18-29 year-old respondents. Is this because younger people are less influenced by the Cold War Socialism vs Capitalism false dichotomy? Maybe. Maybe it was just because Bernie Sanders got a lot of attention in that age group because of his focus on college tuition, an issue that affects them greatly. Either way, the badness of the term might be fading. As of now, it’s one data point, so we’ll have to wait to see if a trend emerges.

Capitalism remains reasonably well supported. The YouGov survey shows more people with a favorable opinion of capitalism, but it’s notable that the highest it gets is 59%, meaning that a full 41% in both of the highest age groups have an unfavorable opinion of capitalism. So, it seems that, as far as public opinion goes, we are a bit mixed, and maybe not as black and white as the rhetoric of our politicians.

So what do I think? That’s what this site is all about for me, putting my thoughts on (virtual) paper. There may be a name for what I think, and some economist somewhere (maybe a whole school of them) probably studied this, classified it, and named it, but I consider myself a hybrid. I did a google search for “economic philosophy hybrid capitalism socialism” and came up pretty empty, except for a very short post at a wordpress site called “goodflagbetsy,” but I think “hybrid economics” has a nice ring to it, and I’m going to use that to flesh out how I feel about these things. It’s a good term for me because I’m neither a socialist nor a capitalist, at least not universally in either case.

There are things about capitalism that I like. I think the idea of competition is good and healthy for innovation and providing good products and services to the people who want and need them. The big computer companies (both Apple and Microsoft; no need to start a loyalist flame war about which one is best here) have delivered exceptionally powerful things to the market that have clearly benefited society in measurable and unmeasurable ways. I do not know how much of that would have happened without a free market and the incentives that come with that, but I think it’s fair to view it as a success story of capitalism.

I have no problem with companies trying to make a profit. That doesn’t bother me. If you make a good product or service and there are people who want it, I’m 100% supportive of you selling it and being rewarded, in profits, for those sales. If it only costs you a penny, but people are willing to pay $1000 for it, more power to you. Well done. That doesn’t bother me one bit.

But I have some limits on that. I don’t want you to be able to operate with total impunity. I don’t want anarchy. We are a nation of laws after all. If you’re hurting people, especially without them knowing or consenting to being hurt, you should be stopped. If you’re treating your workers unfairly, you should be forced to treat them better. I’m all for those restrictions that are absent in an extreme version of capitalism. I simply don’t believe that the market will solve those problems, at least not soon enough. I think that people will buy the cheapest sweater (assuming they like it as much as the expensive one), even if it’s cheap because kids sewed it together with their teeth while being pumped full of drugs to work harder. OK, maybe that would cross the line for some, but I bet there would be some who would say that they’re just happy to get the sweater for pennies.

I also share some of the concerns voiced by those who talk about the evils of socialism. I think competition is good, and I think that’s more likely to happen when there are multiple companies working to achieve a goal, which means some companies will thrive and others will fail. Of course, there’s nothing stopping that kind of set up in socialism. You can have a government agency set up so that competition is the culture, but without allowing some to fail, and without consequences for that failure, it all becomes meaningless. But that doesn’t mean that I don’t see a place for socialism. That’s where my hybrid economics comes in. But where to draw the line?

My answer is somewhat simple: For the most part, I think we should let the free market try first. When there’s a free market approach, let it happen. If some private company can find a way to deliver a product or service and make a profit (or at least break even) doing so, let them go. I do have some exceptions to this. I think there’s a moral issue when it comes to profiting on some things. I do not think that the military should be profit-driven. I think there’s too much potential for problems there. Wars should not be fought to enhance the profits of a company or two or five or a thousand. I feel the same way about prisons. We’ve seen how privatization of for-profit prisons has impacted our criminal population. I think that was a mistake, that we should correct. I have mixed feelings about healthcare. This is one that walks the line for me. Like I said, I’m all for letting the free market try first, but when I hear stories (from doctors) about them picking procedure A over procedure B, not because A is better than B, but because they get paid more for A than for B, it gives me pause. There’s something that feels unsavory about making profit-based decisions about people’s health. But, for the most part, the “hybrid” or “capitalism first” approach sits well with me. In some ways, it’s what we have done already. There’s simply no way for a private company to make a profit from providing health insurance to the elderly. The cost of healthcare for the elderly is so high, and this makes the expenses of any such company outrageous, driving premiums much higher than most elderly customers can afford. This is why we need the Medicare system. We pool tax revenues from all of us to help pay the extraordinary costs of providing care for the elderly. Socialism fills in the gaps where the free market can’t or won’t survive. And, yes, we do have private companies operating in this market space today. We have Medicare Advantage plans run by private insurance companies, but that’s not a free market. Those companies are being paid by the government, by our pooled tax dollars, to provide the service that would otherwise be unaffordable. Without the government paying the bill, there would be far less demand for the services they provide. That’s not capitalism, that’s socialism, with the small difference that the company itself isn’t owned by the government.

There are other obvious ones. Biomedical research and basic science like space exploration. Yes, there are private companies operating in those spaces too, but only because the government spends the money they need to survive. We, as a society, value science and exploration, but it’s very difficult, if not impossible, to make it profitable or even sustainable without our pooled tax dollars paying the bills. These represent nice hybrids and fit with how I think things should be. If the free market can’t get there alone, but we value it, either have the government do it, or have the government pay for it so the companies can do their thing.

Here’s one that I’ve been thinking about for years: supermarkets. An obvious free-market one in many ways. We have profitable supermarket companies operating in many parts of the country. A free-market, capitalism success. All good. But not all good. Thanks to the Let’s Move! initiative started by Michelle Obama (the future of which is a bit uncertain now), the United States Department of Agriculture has created a Food Access Research Atlas. This atlas lets us visualize parts of the country that are low income, with low vehicle access, and without places to buy fo

food-desert

od. These “food desert” areas cover large parts of the United States. In my “capitalism first” worldview, this is a place where capitalism has failed. There are people who need access to food, and do not have it. As a society, I think we should be providing food for these people, and if the free-market won’t do it, then we should pool our resources to make it happen. Either establish government owned and operated stores to eliminate food deserts, or, like we do for health insurance for the elderly, use taxpayer dollars to provide the market incentive (money) to bring food access to the deserts. Capitalism first, but where it won’t go, we fill in the gaps with socialism.

OK, a bit more than a couple hundred words, but that’s how I roll.

 

 

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3 thoughts on “Capitalism first, a hybrid economic perspective from a woefully amature economist

  1. you do realize that in the opinion polls obamacare repeal was the number one issue why people voted the way they did? https://spectator.org/obamacare-repeal-trump-has-a-mandate/
    notice this is a real survey not some concocted one where “only a few people” are presented as a plurality.

    the real reason it is so unpopular is because the burden is similar if not higher than the 12.6% social security tax. ergo the 9.8% is paid by employeer but that money is paid by the self-employed most likely themselves, and the overage everything above 9.8% is paid by the employee. imagine your an auto mechanic that makes 45k with a 6k premium in Ohio, and it goes from 4 to 6 to 8 with 12k project in the next year. This is a major issue for you, irrespective of whom gets elected.

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    1. Indeed, Obamacare is quite unpopular, as I said, seemingly more disliked by people it helps the most. The burden of uninsured illness is far greater than what you describe though, which is kind of the point of insurance, right?

      What’s interesting to me with respect to the poor approval of Obamacare is that in states like Kentucky, where the Obamacare exchange has a different name, it’s far more popular than Obamacare. That’s funny because it shows that the name, but not the actual program, is what’s unpopular.

      That said, the specifics of Obamacare really aren’t the point of this. It’s really just me thinking out loud (surprised that anybody reads it too!) about how I see the balance between public and private ownership of goods and services.

      Thanks for reading though. Hope you enjoyed at least some of it.

      Like

  2. Pingback: Enough – Hitting Bregma

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