
Scott Adams Blog: The End of Capitalism - Anon84
http://dilbert.com/blog/entry/the_end_of_capitalism/
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ryanwaggoner
This is perhaps the most poorly-thought out post on economics I've read in a
long time. Adams is essentially arguing for a completely unrealistic set of
draconian regulations to manage every aspect of society, from capital
investment to personal health. An example:

"Stock bubbles could be avoided by restricting how much money can be invested
in stocks, on an annual basis, to keep the price earnings ratios around 15."

Err...what? Who decided 15 was the ideal? What about those companies that
clearly don't deserve that multiple based on their growth prospects, or
companies that clearly deserve more? Why bother with a market at all?

He asserts that it's not socialism, but I'm having a hard time seeing how it
wouldn't be worse.

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jwesley
What were you expecting from a cartoonist?

~~~
Retric
Cartoonists are good at finding the flaws in the current system but not really
finding ways to fix them.

So looking for some more reasonable ideas to address his concerns: There are
already limits on the kinds of investments low net worth individuals can make
and quite possible some for of useary law limiting interest to ~20 - 30% which
would cut down how much credit people can get and reduce there payments at the
same time. A few changes to how people can invest their 401k's so they need
some reasonable P/E and diversification if they have less than say 200k and
are over 55 might not be a bad idea.

I think most of what he is complaining would be addressed with those changes
and something like them might even become law but we would still have
capitalism. Because capitalism is about having markets determine price which
would still happen based on the actions of people with more money.

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darjen
More like the downfall of crony capitalism, caused by the federal reserve.

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MikeCapone
Okay, I just skimmed it, but that didn't make much sense. I guess it's a Scott
Adams post...

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graemep
He is probably right in that the economic system needs to evolve to keep up
with technological change, but he misses the most important reason for that
(the increased importance of products with negligible marginal cost of
production), and he has no reasonable idea of possible solutions.

He is not content to be a cartoonist and has so far tried to write about
physics (the last part of, I think, the Dilbert Principle) and religion (God
Debris, which is a free download - he manages to come up with crude versions
of ideas that Hinduism got to millennia ago).

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DanielBMarkham
_"...The economy is now too complicated for even the regulators to know when a
con or a huge mistake is happening..."_

I stopped after this sentence. The economy has always been too complicated for
experts to understand. That was the beauty of what Adam Smith identified --
with billions of people, billions of "unseen hands" control the division of
labor.

The current crises is the 15th crises since the civil war that involved some
sort of mortgage gimmicks. We have fraud and economic panics going back to the
1600s.

Nothing new here to see, Scott. After you blew it with the statement above,
you continued to go off the rails with the rest of the article, all because of
your belief that economies can be engineered. That's a farce that Smith
observed in his day. You'd think that a basic education would take most people
beyond that point.

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timr
_" The economy has always been too complicated for experts to understand."_

Adams' thesis doesn't rest upon any assumptions about the complexity of the
historic economy. He's simply acknowledging a fact: the economy of today is
much _faster_ than it has ever been before. Scammers can effectively hide
behind the speed of their actions. That's new.

Once upon a time, regulatory agencies like the SEC had a fighting chance of
catching stock scams, because the market was _slower_. It was still efficient,
but because there were fewer players, making fewer plays per billionth of a
second, they had a chance of stopping crime. Today, the best that the SEC can
do is to (maybe) catch these guys in retrospect -- and there's absolutely no
chance that they're catching all of them. Thanks to modern technology, market
manipulation can happen at the speed of light.

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JulianMorrison
There are two ways to speed up antiscamming that I can think of. It could
become automated, AI-controlled, with a machine capable of pulling the trigger
at computer-speed. Or, it could become distributed, one-on-one. The latter
seems to me to have better scaling characteristics.

How about this as an idea: suppose somebody starts a financial market which
from day one has a system of guarantors. You have to be introduced by a
member, who thereby takes full personal responsibility for your bankrupt
losses.

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randallsquared
The "full responsibility" thing means I will never introduce anyone, save
possibly my own children.

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JulianMorrison
You would be able to demand insurance and payment from them as a condition.
You could demand they let you audit on zero notice. In the worst case you
would be able to revoke their sponsorship and that of their transitive
protégées (stopping your losses by cutting off responsibility for any future
transactions).

The idea here is to make the risk manifest with the risk-taker, rather than
letting it settle by default on their clients.

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hohlecow
At the risk of being a hypocrite (mortgage, student loans), why not eliminate
credit? Can't afford a $200,000 house or $20,000 car without credit? Guess
what, no one else can either. Prices of those goods would fall back to
reasonable levels. Can't afford cable, data plan, or fancy clothes? Guess
what, you don't need those things, so learn to live without them.

What good has credit brought the individual? Inflated prices, slavery to debt.
What good has that done for corporations, banks and governments? Trillions
worth of good. (Not saying that corporations, banks, and governments are bad,
just pointing out that they are the winner with regards to credit.)

I realize prohibiting credit instantly would be a huge jolt to the system, but
wouldn't it prevent similar problems in the future?

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mindslight
Credit is just the continuous version of slavery. There's little difference
between a literal slave and someone deep in debt with creditors forcibly
confiscating their income. Unfortunately the market rewards those who use
credit, which encourages a society based on debt rather than one based on
widespread assets.

However, this does not mean that credit should or can be prohibited via edict.
What will happen is that over time communications technology/market efficiency
will progress to the point that anonymous transactions will (once again) make
economic sense.

When it once again becomes feasible to transact your life using money (instead
of the current identity based "point" system), it will make sense for people
to liquidate all sources of credit and laugh as the creditors are unable to
collect. When this catches on, the credit system will crumble.

edit: cool - mass downmods for an idea that doesn't mesh with the groupthink
du jour. didn't know one had to pay karma to hopefully start a discussion.

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jwesley
Let me guess, you just watched Zeitgeist Movie? Great flick.

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mindslight
Never watched the first one, but I saw the 'Addendum' a while ago and thought
it was mild at best. They point out a lot of problems and the history, but
their proposed "resource-based economy" solution is just more monolithic
authoritarian gobbleygook.

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theschwa
What he's talking about is essential Corporatism; its been tried, and it
doesn't work. In fact, its more of a continuation of our current trends which
have caused these problems in the first place.

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known
We need both Socialism and Capitalism to build and sustain a great nation.

1\. Prevent race to the bottom aka Socialism 2\. Promote race to the top aka
Capitalism

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petercooper
_Perhaps your health insurance premiums would be based on your body mass index
and whether or not you smoke._

You mean it's not already? I'm an ignorant Brit with state healthcare (mostly)
in this regard, but doesn't insurance work this way in the US?

Our car insurance varies on gender, age, employment, and all sorts of factors
- shouldn't health insurance be based on.. well.. your claim risk too?

~~~
bmj
Not unless you are paying for your own insurance.

This is, however, how life insurance works.

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petercooper
I'm surprised anyone's self employed in the US with the various hurdles
(higher taxes, choosier health insurance) :)

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chaostheory
to me the future isn't about some new variation of the decrepit systems that
already exist (capitalism, socialism, democratic republics, ...).

when you think about it, those systems are just hacks meant to maximize the
good parts of humanity (cooperation, innovation, ...) and minimize the bad
parts (corruption, ...). imho what we have now is the acme of those systems

I feel that if humanity can survive long enough (with our scientists and
current infrastructure intact), eventually we can make those systems obsolete
by fixing the root of the problem: basic human nature - specifically the part
where sub-systems try to maximize their efficiency at the expense of the
system as a whole. bureaucratic systems (no matter how large or small) can
limit it (temporarily), but they can never eliminate it in the long term...

to me the answer is human evolution through artificial means.... a shared
consciousness (aka the borg); though i'm sure it'd have its own set of
problems...

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annoyed
idiocracy, here we come!

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jderick
I thought this was going to be funny?

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Allocator2008
I think one thing similar to one of the things he said is to limit the amount
of tax free equity one can hold in a 401K plan. Like say if you hold more than
50% of your 401K as equity, there will be a tax incurrance. That way,
government is not "dictating" your portfolio, but it is "encouraging" you to
have a well-balanced, more conservative portfolio. Dictation by the government
on one's portfolio I don't think would work any better than prohibition
worked, but small things here and there I think can be done to encourage
people to have more conservative holdings, and therefore keep a lid on market
"bubbles".

That said, I think I have concluded that capitalism will never go away, simply
because we are the "gene machines", programmed towards the best interest of
the "selfish gene", and therefore, we will always have a "greed is good"
mindset. It is in our DNA. We can't escape it. A socialist society would never
happen in the long run, because quite simply the competition of genes would
not allow it. No political or economic theorist can beat natural selection.
Survival of the fittest is universal, it created us, and our markets, and will
continue to shape our lives, like it or not. My opinion anyway.

~~~
maxwell
Capitalism is just a system that replaced heredity with exchange values as the
economic imperative. It's only been used by a few primate tribes for a few
hundred years. It's about as significant to the genetic tree of life as this
sentence I'm writing is to the internet. And it's dying anyway; this site, for
instance, implements a postcapitalist economic system.

