“Late-stage capitalism,” give me a break! Capitalism shows no sign of abating and has endured much tougher hurdles, and it still has managed to emerge to be, rightfully, seen as the best economic system for advancing marginalized and disenfranchised groups, not to mention propelling societies forward not back. Far from being in its late age, capitalism has not even hit his stride yet.
Issues of high student debt and a lack of good jobs are not (purely) the result of capitalism, specifically the profit motive of student loan servicing companies; however, capitalism, if given a genuine opportunity, most assuredly can solve for it. We know what has driven up the cost of college education over the years, and it most certainly hasn’t been the fact that actually educating students has become that much more expensive, far outpacing inflation.
The traditional four-year institution has a civic place in our society about producing educated well-rounded citizens, and preparing them for advanced fields beyond college. The path to college should be available to everyone if they want it; however, the minute it moved from being a potential path of advancement to a simple prerequisite for life we threw the system out of whack.
Now, while I am generally of the opinion that even plumbers should know about Plato’s work, we should not be pushing everyone to college and higher education, unless we are going to also put in place the control mechanisms that would prevent the inevitable and as we can see eventual reality of money being spent for money’s sake.
In terms of where capitalism can provide some useful release valves to the current crisis in education, it better than anything else has a knack for extracting efficiencies from current goods and services. I mean, does it really take four years to graduate with an accounting degree? Do students have to live on campus all four years? Can we better utilize technology to cut down costs?
Absolutely, some of the rising costs of college comes from the fact that states have generally scaled back their allocation to higher education, which has forced more institutions to extract more out of tuition; however, when we actually look at what colleges are spending money on, the cost of instruction has not really gone up that much over the years, but administration and services has. Now, much of this is totally legitimate, with new mandates and regulations, colleges have to provide more services; however, the check to this in an open system is that if colleges cannot afford to pay for it then they won’t offer is not as readily present. If the federal government is always pumping in more money into the system, there is no natural incentive to drive down costs, in fact the very opposite effect. The fact that not just the same amount of money but even more money continually flows into colleges negates the need to have any of these conversations seriously.
The fundamental beauty of capitalism is that it rests on a simple assumption that nobody is going to spend $1 more than they have to in order to buy something, and no one will sell something for $1 than they can sell it to someone else. These two competing interests are what pushes the price point of goods and services to their natural equilibrium. However, if and when prices are artificially inflated and you remove risks, you will inevitably see that the natural checks and balances that exists in the system go out of sync. What I am specifically referring to is the fact that the federal government continues to pump money into colleges and universities, with no direct mandate or expectation of what needs to be done with them, and students, i.e. borrowers, are unable to discharge their loans in bankruptcy. The result is that students are the only ones on the hook for loans — and coincidentally recent college graduates also tend not to vote as heavily — and money keeps coming in. I don’t know how you blame capitalism for this.
In terms of good jobs, if it is anything that we have seen, it has been capitalism that has been better able to solve for this than any other economic system tried. It isn’t a failure of capitalism to provide good paying jobs, the system can and in fact does that, it is on individuals to best position themselves to go where demand is. It requires flexibility and adaptability on the part of workers. And, while I would not describe myself as a libertarian, I would argue that here government has erected many barriers that prevent investments from coming into communities. In no place is this more obvious than housing.
The cost of constructing new homes is much lower than the housing prices, in a natural, read open capitalistic system, this would not be last for a long time. You would expect the housing stock to rise relative to home prices; however, one of the hindrances to this has been local, state, and to some degree federal, intervention that disproportionately favors certain sectors and interests. Cities should be constructing far more homes than they are, but they do not, and in turn the demand goes up, which pushes rents up. If supply rose with demand, individuals would be able to shop for better prices, which, given the share of rent/mortgage is to most people, affects people’s ability to pay for other things or save.
Moving on, your point about “only five men having the wealth of half of the population” is myopic but not much else. For starters, it has generally always been that a disproportionate amount of wealth was in the hands of a much smaller group of people for all of human history as humans specialized into different industries, from the ancient Egyptians to Wall Street tycoons. The fact that only five men hold such a stupendous amount of wealth relative to everyone else, might sound bad, but you have to taper it with the fact that in general there is also much more wealth to go around for everyone. So everyone is relatively much better off today than we were when the difference between incomes was much smaller.
On their wealth specifically, much of it, essentially all of it, is derided from capital gains; however, it is only because current tax laws and policies that favor capital gains over wages that we see the push in their favor. Again, this is not a problem inherent to capitalism itself, but rather merely how it is managed. And before you blame the corrupt political system, it is important to keep in mind that while Congress has historically low approval ratings there is an over 90% rate of reelection for most members of Congress, who go on to write these laws. If people treated their member of Congress’ bid for reelection like they did the price of milk at the grocery store I can guarantee you that we would have different results than we do now.
On the environment, climate change is real and a serious problem, but it is one that was not caused by capitalism, but certainly it too can be addressed by it. If there are no fish then it’s not good for fisherman, so clearly there is a very good profit seeking motive in making sure that there is enough fish to go around, for example. This is why even before Adam Smith’s wrote Wealth of Nations, farmers, fisherman, and the like were sustainably managing their resources that ultimately provided for their well being. However, if the government enters and starts subsidizing the market to favor certain habits, that throws things off the natural supply and demand cycle; and this applies to everything from animal and agricultural farming to fossil fuels.
And while we are beyond the point where we can undo much of the damage we have already done to the environment, the idea that it is a genuine threat to our civilization is a bit overblown. The biggest challenge will be how do we effectively deal with the known ramifications of our past actions, which will very likely be managing the displacement of many people affected by climate change. However, unlike past ancient civilizations that prayed to various gods to solve their ecological disasters we know better. Additionally, we also have access to the tools that will actually allow us to combat the issue effectively, like GMO foods and the like, so that we can have better weather resistant crops to deal with the climate change.
Sigh. This turned out to be much longer than I had originally envisioned. My point is, Joe, while we have many socio-geo-political-economic problems on our hands, capitalism, rather than being the cause, can be an effective tool in facilitating innovations to address these problems and more. We should look to harness the creative-destructive potential of capitalism to seek out the most efficient mechanisms for achieving desired goals rather than seeking refuge in other systems that so far have only worked in theory.
