Republicans: Please answer regarding Capitalism?

Question

I am not trying to get a political thread going, this is an honest question: I always hear from conservative commentators about "common sense" and "market forces" and especially "personal responsibility". You guys say you are for "Pure Capitalism", and I am with you. However, how Capitalistic is it when the US Government pays billions of dollars to farmers to grow nothing? Or gives subsidies to farmers growing rice, who then flood the market with it? Is this Common Sense?

How can it be Capitalism when we keep bailing out companies that make bad decisions, like Bear Sterns or the major Airline companies? Shouldn't they simply be allowed to fail, ie. the weak will be cast aside? What we have sounds more like Socialism, ie. the govt paying companies/farmers to exist!

How is it fair to tax small companies who are barely getting by, yet allowing billions to slip through our fingers by NOT taxing major oil companies that are making obscene profits? Is THIS common sense?

Thanks

Answer 1

No, it is not common sense --- nor is it a free market.  But free markets would be rational if government did not interfer with them.

Note the axioms of perfect competition:

"Assumptions

Often models of perfect competition assume that some subset of the following six conditions be fulfilled. In such a market, prices would normally move instantaneously to economic equilibrium. It should be noted however that these represent sufficient, not necessary conditions.

Atomicity

    An atomic market is one in which there are a large number of small producers and consumers on a given market, each so small that its actions have no significant impact on others. Firms are price takers, meaning that the market sets the price that they must choose.

Homogeneity

    Goods and services are perfect substitutes; that is, there is no product differentiation. (All firms sell an identical product)

Perfect and complete information

    All firms and consumers know the prices set by all firms (see perfect information and complete information).

Equal access

    All firms have access to production technologies, and resources are perfectly mobile.

Free entry

    Any firm may enter or exit the market as it wishes (see barriers to entry).

Individual buyers and sellers act independently

    The market is such that there is no scope for groups of buyers and/or sellers to come together with a view to changing the market price (collusion and cartels are not possible under this market structure)

Behavioral assumptions of perfect competition are that:

   1. Consumers aim to maximize utility

   2. Producers aim to maximize profits.

"

All of the sins, which you cite are the results of government getting involved in the market.  It is unfair of you to question only Republicans on this --- most of the cited sins are direct outgrows of New Deal market interference.

The 300 million farm bill just passed was obscene -- but few know that if Congress did not extend the bill, payments and conditions would have reverted to a 1949 base --- which would have been far worse to the farmer and consumer.

The Bear Sterns bail out --- had to be done (per FRB) rules.  However, if the FRB did not exist --- the Bear Sterns problem would have been similar to bailout arranged by JPMorgan in 1903 where only he, and his friend stood to loose.

Democrats (Wilson) were disgusted that individuals would/could pony up their assets to keep markets working, that they created the FRB and income tax in the same year.

Our tax law is obscene due to the special favors place it for politically connected families or firms.   Hillary, during her campaign mockingly noted this point --- in a campaign quip.

She noted that if she changed the taxed law many people would be hurt  --- big farms, small farmer, and politician  [could not find text of quote :-(  ]

Notice that Republicans and Democrats look at taxes differently:   Republicans look at total dollars of tax revenues -- the number of dollars a person actually pays to the government.  While Democrats tend to obfuscate the issue with how large is the percentage of income is the amount paid to income -- despite the size of the amount paid.

To remedy the markets:  Government should rewrite the tax code:   one definition of revenue(R).  One definition of expense(E), Taxes (T)

one tax percentage(P), one minimum income amount(F).  All of the above would be fixed for a 10 year cycle.

income would be  I = R-E.   T =  P(I-E-C)  -- This is by individual:  Let P = .17, I=50000, E=25000, and C=9000.  T would equal $2720.   If a person was below C taxes would be paid to that individual to get to C.  

E is a list of expenses that offset income for individuals and business alike.  One person (real or legal) one tax rate.

Congress would be penalized for overspending or increased indebtness.

Answer 2

the simple fact is... there are two kinds of Republicans...

1. those who don't know how the world works... and actually believes the propaganda about "why can't we all just be self reliant"

2. those who know how the world works and just lie to the other group and say "why can't we all just be self reliant".... even though they know that it doesn't work...  

group 2 are usually the leaders and do the things you mention that clearly illustrates that they don't believe what they say...

Answer 3

Join the Club... we had jackets, but the government took them all.

Answer 4

I believe in this simple saying.  I will share, but don't expect me to support your mistakes.

Answer 5

You're right, it's not true capitalism.  Farm subsidies have been policy for quite some time now.  Farmers are being paid not to grow crops, and when they do, they're guaranteed a minimum selling price for their crops.  Corporations, some of them any way, are being bailed out to keep them in business.  

Politicians claim to  support the small business owner, yet their actions would seem to indicate that they don't, judging by the way small business are taxed.  Also, as an owner of a small business, you personal assets are not protected.  If you own a small business with partners, all partners are 100% liable for that companies debts.   Corporations, on the other hand, aren't taxed as heavily, and the personal assets of their stockholders is not at risk.  I guess that the lesson here is, if you plan to go into business, especially with partners, form a corporation or and LLC.