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My point of view is this.

Capitalism is the most effective way known of getting people to do what it gets them to do. However you have no control of what that is.

Therefore if you want to have clean water supplies, universal education, national defense, police, unproductive people not starving in the streets, etc then you need to divert some resources away from capitalism. This is the justification for taxation and government.

The justification for Michael Moore's point of view is that he wants to see those things happen, and capitalism doesn't do that very well.

However be very careful about using government to try to direct capitalism to meet your goals. Because well-meaning interventions regularly fail spectacularly due to unintended consequences. One of which is that any influential group that is regulated by government will try (and eventually usually succeeds) in getting control over their regulators.




The problem is the word "capitalism" - it implies just for-profit enterprises. But capitalism is really just how Marx branded "free enterprise."

> Therefore if you want to have clean water supplies, universal education, national defense, police, unproductive people not starving in the streets, etc then you need to divert some resources away from capitalism.

Capitalism - free enterprise - handles all of those pretty well except national defense and maybe policing. Charities are part of capitalism. Infrastructure's not so bad for government to build. In wealthy countries, charities vastly outperform government in alms and welfare because it doesn't create power structures that people try to hijack and lobby.

As for government in education, it corrupts education completely. Look at the standard American middle school and high school curriculum - very little of practically important things (scheduling, personal finance, establishing habits, interpersonal skills, critical thinking, problem solving), and a lot of nonsense. They teach algebra fairly well in American high school and almost nothing else. I can't believe that any educator would be in favor of government-run education: It sinks to a very low level, teachers are handcuffed by bureaucrats and public opinion in their teaching methods, honest perspectives on history, ethics, and civics become impossible to learn, bad teachers don't get fired, good teachers with non-traditional backgrounds don't get hired... like, government doing a lot of stuff is a relatively new idea, and it's a nice idea, but it usually doesn't work so well in practice.


As side from definition, I think of capitalism as an algorithm with no inherent moral obligation. It's neither good or evil. Thus it's critical to apply capitalism only where it fits.

When a business's profit is proportional to the well being of the mass, then capitalism is great.

Problem arise when profit is proportional the degradation of the public health, the number of wars being waged, and the amount of people being imprisoned.

Then of course we have to "regulate" it.

Some may say capitalism is "in-efficient" when it's regulated. I completely agree, in the sense that any algorithm is in-efficient when there is more over heard.

It may be easier to think of the task of improving the state of the world as a global optimization problem in computation. Experienced computer scientists will tell you that the hardest part of an optimization problem is defining exactly what is to be optimized - Think fitness measure in a genetic algorithm.

This make sense. We can make an algorithm as efficient as possible, but if we are optimizing the wrong thing then all the work are pointless.

As complex as the world is, I can't bring myself to believe that profit alone is enough as the fitness measure. That's why people have proposed adding other measures such as carbon emission credit to be traded in a capitalistic algorithm. (Maybe we should even add more measures such as health and education credit.)

Some may call this "regulating" capitalism. I personally think it's just redefining the fitness function, which is a very sensible thing to do in terms of computation.


I have been explaining the "capitalism is only efficient if the incentives are aligned with what is best for society" concept a lot lately in the healthcare debate.

If the industry got paid for making people healthier, we would be much healthier.

They are currently paid for treatments performed, based on price.

Thus they optimize for lots of expensive treatments.

There is a correlation between lots of expensive treatments and health, but not a direct one. The only direct result is higher spending on health care.

If we paid for outcome, healthcare would undoubtedly be cheaper, and probably better as well.


I can't agree with you more. How can we implement such an incentive alignment?

It's quite hard. Yes, true health care should be preventive, but this also means money is paid before any health problem occurs. Yet the general public are reactionary consumers. Why would they pay when they are still healthy?

Perhaps you have a better suggestion.


As for government in education, it corrupts education completely. <snip> [Government-run education] sinks to a very low level, teachers are handcuffed by bureaucrats and public opinion in their teaching methods, honest perspectives on history, ethics, and civics become impossible to learn, bad teachers don't get fired, good teachers with non-traditional backgrounds don't get hired... like, government doing a lot of stuff is a relatively new idea, and it's a nice idea, but it usually doesn't work so well in practice.

What an incredibly simplistic analysis! 'Analysis' is too strong of a word; this is mere polemic. It is clearly not the case that government completely corrupts education. It is further untrue that any of the consequences described can be attributed entirely to the fact that government runs public education.

The parent merely asserts that government 'corrupts' education and then lists a bunch of alleged educational maladies. Many of these maladies are clearly due to the fact that schools are institutions and that they serve pluralistic communities. The point about bureaucracy is especially vacuous. Can we even imagine a school or school district, public or private, without imagining an attendant bureaucracy? Another poster mentioned Marx; is it lost on the parent that Marx talks about, iirc, alienation due to private bureaucracies as well as government ones?

The real causes of problems in education will not turn out to be so simple as 'government.' The real problems will turn out to hinge partly on the peculiar aspects of government bureaucracies vs. private bureaucracies for sure, but will also stem from economic issues like poverty and hunger, social and socio-economic issues like the amount of time parents spend away from home working, and cultural issues like the value placed on education and civic responsibility by contemporary culture, and many other possibly irremediable causes.

Finally, the form of the original 'argument' offered is this: There is an overly simple problem, it has an overly simple cause, and the solution is simply to remove that cause. The truth is that both the causes and effects of real-world situations are both more complex and more intractable than that. That any adult should fall for such a blatant oversimplification is perhaps a clearer indicator of the trouble with current corporatist culture than the addled mind of Michael Moore could ever conceive.


The point about bureaucracy is far from vacuous. You rhetorically ask whether we can imagine a school or school district without any bureaucracy. Well obviously not. But I can imagine a bureaucracy that is so minuscule that it is practically invisible. Not only can I imagine it, but I can point out that Catholic schools manage to devote less than 1% of resources to administration, yet have better outcomes than public schools with comparable populations.

By contrast the figure I saw quoted a couple of decades ago ago is that New York City had more school administrators than France, and New York State had more than the whole European Union. (Looking around, http://www.mackinac.org/article.aspx?ID=6014 was from 1991 and cited the source as William Brock.) If you consider that France has 3x the population of New York State, clearly some bureaucracies are worse than others.


The point about bureaucracy is especially vacuous. Can we even imagine a school or school district, public or private, without imagining an attendant bureaucracy?

Probably not above a certain minimum size (of school), but we can easily imagine a smaller bureaucracy.

If you abolished the LAUSD or NY's and made school districts for every area with 10,000 ± x students you could replace the vast majority of the bureaucracy with volunteer labour, otherwise known as busybody parents.

Seriously, what is the point of having these administrators? Record keeping and quality control are the only thingsd that come to mind. Parents have pretty good incentives to monitor quality if they have a chance of actually getting something done by making a stink, which becomes harder and harder the bigger a school district becomes.

Someone explain the point of school districts above size x to me please. I don't see any obvious economies of scale above the levels where you have enough kids you can hire your own ful time child psychologist, and I think 10,000 people per would be well above that, and smaller than the size where people's first response to crap schools would be to think about private schools, and second would be to think about moving.


> If you abolished the LAUSD or NY's and made school districts for every area with 10,000 ± x students you could replace the vast majority of the bureaucracy with volunteer labour, otherwise known as busybody parents.

This only works when parents have the available free time and resources to replace these administrators with their free time. The problem with this is that parents with available free time and the motivation to donate to their child's school is very unevenly distributed. You are also going to end up duplicating a lot of administration bureaucracy across these smaller districts and losing a lot of efficiencies that can be gained from centralization. Centralization has its own costs, but sometimes these costs are not as large as the cost of a lot of duplicated effort.


The problem with this argument is that the larger the distance between bureaucracies and productive work, the more free the bureaucracy is to grow based on internal dynamics with no reference point to actual productivity. Therefore when it comes to bureaucracy, I generally expect centralization to cost more.

Point of comparison based on actual statistics from Detroit 20 years ago. (See http://www.mackinac.org/article.aspx?ID=6014 for a citation.) Administrative overhead for the Detroit public school system: nearly 40%. Administrative overhead for parochial schools run by the Catholic Church: 0.7%. Key difference? The parochial school system is bottom up, whenever possible responsibility is pushed down to the individual school. By contrast Detroit's schools centralize responsibility with the district, and over time that grew into an ever expanding bureaucracy.

Admittedly not an entirely fair comparison. However decentralization sure looks good.


> very little of practically important things (scheduling, personal finance, establishing habits, interpersonal skills, critical thinking, problem solving), and a lot of nonsense.

That's the best description of what's wrong with education I heard in a loong time. Just, congratulations.


Sounds like you went to a bad public school. Except for personal finance my high school hit those well. I've always thought if we can have drivers ed and health in school we should have a personal finance class though.


Please do not confuse efficiency of directing money with being able to realistically address the problem.

I grant that well-run charities are much more efficient than government. However not nearly enough money is voluntarily donated to charity to realistically address the problems that exist. Based on http://www.givingusa.org/press_releases/releases/20080622.ht... we collectively donate about $300 billion per year. That's about $1000 per year per person.

But to bring up one example, about 1% of the population gets schizophrenia, and about a third of those we do not have effective treatment for. In a country with 300 million people that's about a million people with an untreatable mental illness that is very expensive to deal with. At a minimum that would take 10-20% of the total available for charity for a cause most people haven't even heard of. Once you take out all of the money donated to causes donators care about - such as museums, cancer research, third world poverty, and a million splinter causes (such as the Electronic Freedom Foundation), there simply isn't enough left to address a lot of very real and expensive needs.

Moving on let's look at your claims about education. I won't disagree with any of your criticisms. I've said the same and worse before. However I'm aware of one fact that you are probably not. Which is that, after controlling for parent's socioeconomic status, students who go to public schools in the USA do better on tests measuring their academic performance than students who go to private schools. (If you don't control for the large correlation with parent's socioeconomic status, public schools come out worse.) So as bad as the public option is, the private one seems to be worse!

Not to mention that the big problem the public option solves is delivering education to those who are poor enough to not afford it for themselves. Not doing that would limit how much of an educated workforce was available in the future, to the detriment of everyone.

But why does private education deliver a worse product? Part of the problem is that parents aren't as good of judges of the quality of their children's education as they think they are. So private schools are incented to do things that make parents think they are doing a good job at the cost of actually doing a good job.

Incidentally education isn't the greatest illustration of the problem. Public health provides much better ones. For instance patrons of a restaurant are not in a position to judge whether sanitary procedures are being followed in the kitchen. Residents are unable to judge how good the water they receive is. Which is why public health was one of the first areas where economists came to understand why the invisible hand of the market didn't do a good job of provisioning the need.


Your view is basically the consensus in western democracies. However, the more radical left claims that this kind of balance between a democratic state and capitalism can never work because capitalism will always be able to corrupt the state.

It's this reasoning that allows them to put the entire blame for the current crisis on capitalism in spite of the fact that it's the governments and central banks of the world who inflated the credit bubble by providing easy money for so many years.


> In spite of the fact that it's the governments and central banks of the world who inflated the credit bubble by providing easy money for so many years

Yes, but they're doing that to profit - capitalism at its most pure :)


Profit? Really? Taking on debt is not considered profit in my books...


Really! Getting lots of other people to take on debt results in many other people making immediate profits to the short term benefit of all.

Consider. We get Sally to take out a large mortgage on her home. The person issuing the mortgage takes the mortgage, sells it to an investment bank, and makes an immediate profit. At the investment bank they take those loans (small investments with considerable risk), bundle them into a deal, and slice and dice off several (rated) safe tranches that they sell for a profit. The purchasers of said debt get to take money that wasn't making interest and put it into something that makes money, resulting in an immediate profit on the books.

All of those companies along the way record profits, and pay generous bonuses to the people who did those things. Those bonuses are a profit to the individual that is kept whether or not the organization runs into future problems. Which creates perverse incentives. There were many individuals who realized that they were doing something unsustainable. But if you don't do it, you'd lose your cushy job, while if you do it you make nice bonuses. From their point of view the possible eventual failure of Lehman etc were externalities and they were motivated by their current bonuses.

Furthermore back in the neighborhood, Sally didn't sit on her money. Instead she spent it. The various businesses she spent money at get to record profits on those sales, which in turn goes to hiring people, paying healthcare premiums, etc.

None of that would happen if Sally didn't take out that mortgage.

In short what has happened is that the taking on the debt results in causing money to circulate. As money circulates, multiple people record profits. This is well understand, and is why standard macro-economic theory says that money is effectively created when debt is taken on. And, on the whole, this is a good thing.

The problem, of course, is that just as money gets created by the taking on of debts, money gets destroyed when debts are abandoned. And when people take on debts they can't afford, they do get abandoned. Which is the current problem we are dealing with right now.


Perhaps not, but it is (or was) down as a profit on their books, which is how the whole sub-prime fiasco came about.

Or at least if not "profit", it was certainly a means for them to make profit.


Well, i think we could do a better job of protecting government from corruption than we currently do. It would make a big difference if we had, for instance, publicly funded elections.




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