Nov 17 2008
The Current Status of the Economy: Part 3 — Deep Thoughts on Capitalism
It’s pretty well accepted that capitalism is the most functional economic idea man has ever had and enacted upon, so we don’t have to go back and question capitalism on the whole as an economic system as our newest president elect would desire. However, there are aspects of it’s ways that (as in any economic system) cripple the poor and make a few people extremely rich — the people that devote their time to figuring out how the system works and then putting all they have into manipulating it for their own gain.
Sometimes this involves stealing, but it never has to involve stealing. Like Warren Buffet you can just study hard, read up on the right economic thinkers, and move to Omaha, Nebraska — the financial hub of the world (not). But there is the possibility that you can “figure it out.” That’s a very capitalistic idea. In any other system you can easily label that “selfish” and even “illegal” to manipulate the system. Here in the good old U.S. of A. it’s known as being really smart and savvy but that’s because there aren’t that many rules that can hold you back from “figuring it out.” But there could be, and that’s what the regulators and those in power for regulation are working at this very moment.
In a way, regulation takes all the fun and hope out of capitalism and makes democracy seem less cool. Eventually, with enough regulation you end up with socialism (which would be the new Senate and Obama’s dream come true) and socialism is not capitalism. In that case, I’m heading to Canada. I don’t want to be rich but I am an entrepreneur and I do think capitalism is the only place where the term “entrepreneur” makes any sense.
But let’s point out some ironies before we continue loving on capitalism. First, the essence of capitalism lies in a big, fat gamble on yourself, the future, and your ability to adapt to whatever the future throws your way (such as an economic crisis). The bank signs a few papers and you have a house that you’ll need to work and produce and profit year in and year out for the next 30 years to pay for, but you’ll pay for it twice over since the bank charges interest and the system supports itself from there. However, gambling is illegal in Massachusetts. Yet, I did take a trip to Suffolk Downs last weekend where you can bet (gamble) on a horse race or two.
I gambled by going college. I threw $100K on the table (that’s what it cost for a 4-year educated back in those days believe it or not) hoping that when I came out in four years the economy would be in a place that would value my education and therefore I could get a job that would earn enough money to pay back the loan and more!
I will gamble when I purchase a home. This is more obvious but if the market tanks, I can lose more money than my house is worth and my loan becomes stupid and I easily fall into negative equity (which is why people in this situation have no problem foreclosing). I literally walk out of my house every day and bet that I’m not going to get fired or hit someone while driving or lose my wallet or be taken advantage of by the government.
Shall we keep placing our bets? I guess so unless you have any better ideas.
