
Why Socialism for the Rich, Capitalism for the Poor? - whitepoplar
http://europe.newsweek.com/robert-reich-why-socialism-rich-capitalism-poor-455066?rm=eu
======
warcher
I hate to get into politics here, but I will say that the one thing that
capitalists truly despise is a free market. Competition is terrible for
profits. Anybody worth their salt is always always always looking for unfair
advantages, cause that's where the money is.

~~~
theseatoms
> Anybody worth their salt is always always always looking for unfair
> advantages, cause that's where the money is.

Those people aren't capitalists in the proper definition of the term.
Capitalism is voluntarism, which manifests as free markets in practice.

~~~
dragonwriter
> Those people aren't capitalists in the proper definition of the term

There are two definitions of "capitalist":

(1) A holder of capital,

(2) An adherent to "capitalism", the dominant economic system of the
industrialized West in the mid-late 19th Century (which has been diluted by
subsequent reforms, but remains a core element of the structure of economy in
most of the modern developed world), named "capitalism" by its 19th Century
socialist critics for the ways in which it systematically served the interests
of capitalists (by the preceding definition.)

The GP post seems to be accurate whether using "capitalist" in sense (1) or
sense (2).

~~~
theseatoms
Ok. It sounds like we're using the same word to describe two separate ideas.
Your definition sounds like what I'd call "crony capitalism", or the rigging
of the game (i.e. government policy) in one's favor. I'd bet that I'd consider
some of the "subsequent reforms" you've described as fundamental corruptions
of the system. For example, political donations as corporate free speech
(Citizens United v FEC) doesn't make much sense in a world where shareholders
aren't engaged and active participants in company behavior. In other words,
corporate governance is broken, something that Reich gets right.

~~~
dragonwriter
> Your definition sounds like what I'd call "crony capitalism",

"Crony capitalism" is the only kind that has ever existed, and definitely the
kind for which the term "capitalism" was coined. The idea of any other kind of
"capitalism" is, well, highly implausible. To avoid cronyism, you are going to
have to take out the core features that make it capitalism.

> I'd bet that I'd consider some of the "subsequent reforms" you've described
> as fundamental corruptions of the system.

Thing like establishing labor rights are certainly "corruptions" if you view
the 19th Century system initially labelled "capitalism" as pure.

I don't see "corrupting" the purity of capitalism as a problem, though.

> For example, political donations as corporate free speech (Citizens United v
> FEC) doesn't make much sense in a world where shareholders aren't engaged
> and active participants in company behavior.

 _Citizens United_ is a move back in the direction of a pure 19th Century
capitalism, and a reversal of reform efforts aimed at constraining the
dominion of the capital-holding class (which is what campaign finance reform
efforts that seek to limit the influence of wealth on politics to protect
democracy from capitalism are.)

Whether shareholders are personally active or find it most useful to give
management free reign is immaterial to this.

> In other words, corporate governance is broken, something that Reich gets
> right.

What Reich gets wrong is embracing the idea that capitalism is betrayed by the
various failures, rather than the source of them. His idea of supporting a
"share the gains" capitalism is amusing: "share the gains" is not, and has
never been, capitalism (though it's occasionally a lie that capitalists use to
justify capitalism, as in "trickle-down" economics.)

------
TallGuyShort
The sad thing is this article only focuses on the kind of "socialism for rich"
that isn't even really socialism: it's purely private arrangements for those
who have huge amounts of leverage in a free market. All that considered, I
still generally support a free market, but what the article brings up is bad
to begin with, but then you see that Republicans tend to also support lots of
special treatment from the government - perhaps not always in the form of
direct government funding - but in massive tax cuts, regulations in their
favor and other special treatment only for select insiders, etc. and then turn
around and scream 'free markets!' when it's somebody else's turn. Rank
hypocrisy. They criticize the welfare state, but only as long as it's for
individuals, they suddenly fall silent when it's for corporations.

~~~
nickik
The pure fiction that Republicans have anything to do with free market is
simply refusing to die. I simply don't understand why people even still have
this connection in its head.

~~~
Declanomous
Because Republican politicians tend to talk about "The Free Market" whenever
they talk about regulations and laws. "We need to let the free market work!"
Basically, it's just the brand identity the Republicans have created for
themselves.

~~~
nickik
The Left is always there to point out how false everything they say is, on
this point however they stay silent. I seems to benefit both of them, the left
have the perfect boggy man (neoliberalism is literally the source of all evil)
while the right seems to use is mostly to oppose leftist schemes. The never
talk about free markets when they are talking about their own policy.

~~~
dragonwriter
> The Left is always there to point out how false everything they say is, on
> this point however they stay silent.

The Left has been pointing out that capitalist markets are coercive rather
than free since socialists coined the term "capitalism" for the economic
system whose coercive structures they were criticizing, something like 150
years ago.

If you aren't noticing it, you aren't paying much attention to the Left. This
often happens when people, for example, mistake the dominant faction of the US
Democratic Party (center-right neoliberal capitalists) for "the Left."

------
paulpauper
_Theirs is cutthroat hyper-capitalism—in which wages are shrinking, median
household income continues to drop, workers are fired without warning, two-
thirds are living paycheck to paycheck and employees are being classified as
“independent contractors” without any labor protections at all._

But many businesses are also struggling . By some estimates, this is this
harshest environment ever for small business. Employees are being squeezed but
so is small business (except web 2.0 and stuff like that), which is another
component of capitalism

~~~
jcslzr
I live in Mexico, I feel that we bring the US American jobs down here but
without the salaries, now there are no customers, most markets does not exist
under Mexican salaries.

~~~
nickik
Of course the salaries don't come with it, that why it was moved in the first
place.

However, the reality is that if a country has good enough policies so that
more industry starts there it will lead to more growth. If you sustain that
for 40 years you can go from the poorest to one of the richest countries.

That's how growth works.

------
ogezi
For almost all of history the rich and powerful have had to play by different
(more favourable) rules than everyone else. I suppose that the general
situation is a better now since people can get into positions of power by
means other than their birth and there's democracy, but in some ways much
hasn't changed.

It's interesting to me when I think of a world where people that paid higher
taxes (absolute values and not a % of income) had more votes during elections.

~~~
pm90
If you look at history, the rich often used their influence to reduce their
tax burden from the state, and this often led to crushing tax burdens on the
people who could not represent themselves: peasants and the like. I think
Fukuyama gives some great examples of how this led to instability in the
political order and finance in pre-revolutionary France [0].

I'm afraid we are seeing something similar now, with some billionaires
desperately trying to reduce any and all kinds of taxes they need to pay.
Frankly its breathtaking to see how much greed these people have...also, a
supreme lack of solidarity with they society they live in (and apparently a
lack of knowledge of historical precedents as well).

I should add that the same doesn't hold for all the rich/billionaires. Very
much respect the work the Gates foundation is doing, just as an example.

[0]: [http://www.goodreads.com/book/show/9704856-the-origins-of-
po...](http://www.goodreads.com/book/show/9704856-the-origins-of-political-
order)

------
dragonwriter
Public policy mitigating risk at the top and increasing it at the bottom isn't
"socialism for the rich, capitalism for the poor", it's just _capitalism_ , a
system that was named by its (socialist) critics for the way in which its
structures inherently favor the interests of the holders of capital.

~~~
mtgx
Reasonable public policy would stop too much consolidation from happening,
knowing it will represent a risk for the economy in the long term, though.

That's not happening anymore...because campaign bribes.

~~~
dragonwriter
> Reasonable public policy

...is not a defining feature of the real 19th Century system for which the
term "capitalism" was coined as a label by its critics.

------
examancer
"Have an idea! Don't come in here with half a thing and not be able to...
after you've walked me to the brink. And say, 'We've gotta do this. It's
important though I have no earthly idea how.'" \- Toby Zielgler, The West Wing
([https://youtu.be/YKSTkLWjuyo](https://youtu.be/YKSTkLWjuyo))

Robert Riech makes good points but provides zero ideas how to solve them.
Relying on the goodness of CEO's hearts isn't going to cut it. That won't help
enough people. How do we incentivize the behavior of employee ownership? Right
now the incentives are aligned against that, as Reich seems to make clear. He
seems to be advocating against more "radical" approaches advocated by Bernie
Sanders because there is this glimmer of hope some CEOs will be nicer. It
seems like this article makes the point that structural changes are necessary
but the author falls short of that conclusion and instead gives glowing praise
to a single CEO in hopes it will inspire a few others. It might, but that
won't help much.

~~~
gremlinsinc
The answer is easy, just cap CEO pay. Execs can only earn 25X the average
salary of employees incl benefits. That multiplier goes up 1x per 1000
employees or whatever is fair there could be a different algorithm but
something along those lines. But there's a measurable way to raise the CEO's
pay: Hire more employees, and/or raise wages. -- Along these same lines
Congress should also be capped at the average American yearly income +
benefits = to average American's. -- Why should they get anything better than
the rest of us?

~~~
AstralStorm
But facetiously, they make the laws to give themselves salaries...

Plus there are other loopholes, some of which are already used, such as
banking in Cayman I islands, and being located in a more "friendly" country.

------
Mendenhall
Because the average citizen does not take an active enough roll in
government.That effect has compounded over time to put us in current
situation.

Also this isnt so much about socialism or capitalism but about why the world
seems to favor the rich.

~~~
joepvd
Let's reword your statement:

> Because the average employee does not take an active enough role in
> management decisions.

Think on the politics that are closer most people in their day-to-day lives,
at the workplace, active engagement with general policy is disencouraged and
might be dangerous. Meaning, most people refrain from engagement with
"management material." Being trained like this, it naturally extends to
governmental politics.

------
zeteo
> Even if Yahoo’s board fires her, her contract stipulates she gets $54.9
> million in severance. [...] In other words, Mayer can’t lose. [For the rest
> of America] wages are shrinking, median household income continues to drop,
> workers are fired without warning, two-thirds are living paycheck to
> paycheck and employees are being classified as “independent contractors”
> without any labor protections at all.

> Before we go to the barricades, you should know about another CEO named
> Hamdi Ulukaya [...] Last Tuesday Ulukaya announced he’s giving all his 2,000
> full-time workers shares of stock worth up to 10 percent of the privately
> held company’s value when it’s sold or goes public

This is comparing apples to orange socks. The issue at hand is the safety net.
If she gets fired, the underperforming CEO gets enough money to continue her
lifestyle - perhaps indefinitely. The Chobani employees get a little more
upside, but their downside is pretty much the same. E.g. they're still in deep
sh*t if the company does badly.

~~~
dkarapetyan
Wait what? Are you seriously poking a hole in the argument by saying it's fine
because CEOs are just used to being rich?

~~~
zeteo
>Are you seriously poking a hole in the argument by saying it's fine because
CEOs are just used to being rich?

That's pretty much the opposite of what I'm saying.

~~~
dkarapetyan
Kinda hard to parse your argument then because

> This is comparing apples and orange socks. The issue at hand is the safety
> net. If she gets fired, the underperforming CEO gets enough money to
> continue her lifestyle - perhaps indefinitely.

I guess you're saying the comparison isn't even fair because it is completely
different playing fields but it's hard to parse that from the above sentence
structure.

~~~
zeteo
Yahoo does badly -> CEO still does well.

Chobani does badly -> employees' Chobani stock is also doing badly.

Giving more stock to employees is not a safety net.

------
facepalm
It sounds like a nice move to give employees shares in one's company. But what
is stopping employees from simply buying shares from their salary? Giving them
a high enough salary so that they could buy any shares they want seems like a
nicer move than promising them shares in one's own company.

Also, people who get angry about this are often beneficiaries themselves - the
article mentions the pension funds who own most shares, but who will also
later pay most people's pensions.

~~~
JoeAltmaier
Because a company can print shares; cash hurts the bottom line.

------
heynowletsgo
When is the denial going to stop? Capitalism is a system of slavery, and the
poor are the slaves not the rich. The ownership shares to stay the owners, and
the poor work so the owners stay the owners. Sophisticated slavery, all its
ever been.

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Broken_Hippo
This is only theoretically good because he's _giving_ the employees stock.
Most times, stock options seem like a rip-off that folks can never really cash
in on properly.

Maybe I've only encountered this with folks working retail and in places like
call centeres, never quite having enough either to buy stocks nor exercise
their options after they've left the company. Even $75,0000 (half of the lower
stock price amount) can be a life-changing amount for someone making 30k per
year.

I understand it is cheaper on the bottom line to offer stocks, but it still
can be worthless to the bottom-rung employee.

~~~
jimbokun
"Even $75,0000 (half of the lower stock price amount) can be a life-changing
amount for someone making 30k per year."

Yeah, ever see the people openly weeping at the end of every Undercover Boss?

~~~
Broken_Hippo
I had to look up what Undercover Boss was, honestly, so no :)

------
lumberjack
How are CEOs shielding themselves from risk while still benefiting from the
gains? And how is that legal? Seems like some sort of scam.

~~~
VLM
There's at least three levels of answer

The first level is its just political sloganeering.

The next level is they're contract jobs and the pay is high enough to be F-you
money if they fail and via the magic of survivorship bias we never hear about
those that fail, although they and their kids are the trust fund babies that
explode inflation while producing nothing of value other than CO2.

The next level of analysis past that is a matter of scale. I can independently
afford food and housing and medical care for my kids, maybe not the best but
I'd be OK. If my business fails, no biggie, I just won't buy an ocean going
sailboat in the 10+ meter range, we're still going to be OK. Someone lower on
the socioeconomic totem pole tries to start a business and fails, or gets
downsized from his good job, his wife has to leave him to get herself and the
kids on the programs or they'll literally starve, that means she'll get the
house, its the end of that dudes life, perhaps literally. Certainly its an
economic death penalty even if he physically survives or if by some miracle
his family survives intact. So the risk is a bit asymmetric because unless you
magically have total equality in income, wealth, education, social
connections, you're going to have people who will literally die if they lose
$5K and others who can shrug off half a mil or more.

------
draw_down
Well, that's how really-existing capitalism functions. Socialized losses and
golden parachutes for the ruling class, wage theft and austerity programs for
the working class. Still, I suppose the "why" is worth pondering.

