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Bill Matthies

CEO, Coyote Insight, LLC

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Do most people differentiate between forms of government and economic systems? How does what they think impact what they do?

Communism, socialism, fascism, capitalism and a few more variations of one or more of these, are all economic systems. Democracy, dictatorship, republic, and anarchy, also with variations and degrees, are forms of government. Any economic system can be put in place by a democratic government, or imposed by a dictatorship.

Do you think most people understand this or do they confuse economic systems and forms of government? In other words do most think communism only comes with dictatorship, capitalism only with democracy?

To the extent they are confused, how does this impact what they do both politically and economically?


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    Nov 14 2012: these things are intertwined. fascism (stripped from its historical ideological baggage) is as much a social construct as an economical one. and it is no surprise at all. the economy is not a separate entity from life in general. it is part of it. there can not be, for example, economic freedom without all other kinds of freedom. such distinctions are artificial.
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      Nov 14 2012: Let me see if I have this right?

      These different forms of government are not theoretical, but are in my face even though I don't see them?
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        Nov 14 2012: i'm not sure about that. i'm not convinced that the classification the o.p. made is actually correct. how would communism not be a form of government?

        so please ask more precisely what do you have in mind
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          Nov 14 2012: I guess I'm the "o.p."? Not sure but I'll attempt to answer your question Krisztiån just in case.

          First of all the disclaimer. My questions and this response are my opinions. I'm not saying that anyone who feels otherwise is wrong or that I'm even right. This is just what I believe.

          A "form of government" is how a nation creates its laws, not what those laws are. The form of government in the US is representative democracy with citizens voting for individuals to represent them, who, in theory, create laws under which its citizens wish to live. For the most part our economic system is capitalism (I'm putting aside the nuances of what that means) but we could vote for individuals who, in turn, would vote for a different system of economics. Indeed, with the re-election of Obama, the country is moving somewhat to increased socialism, although how much so remains to be seen.

          Over the years there have been many openly communist political party candidates in the US, none of which have done very well in elections. However had a sufficient number of them been elected at the same time, they could have passed laws changing the US economic system from capitalism to communism. We would have still been a democracy but with a different economic system.

          We see this now in Venezuela with the re-election of Hugo Chåvez. Most would agree that Venezuela is a socialist economy, one democratically elected, allegations of election abuse aside. Likewise the People's Republic of China has a hybrid economic system of state controlled capitalism, which, in many sectors, is much more capitalistic than it is communist. However unlike the US and Venezuela the citizens of PRC did not have a direct say in their form of government or the economic system under which they must live.

          None of this is meant as a comment of "right" or "wrong", just my opinion regarding definitions and examples of the differences between the two.
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          Nov 14 2012: Krisztian

          What I had in mind is the question do people have any idea that this stuff effects them and their lives?


          My question is what is your definition of somewhat?

          and the definition of remains?
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        Nov 14 2012: what we actually have is a mixture of all these, and the "new" ideas proposed are usually too. alas, we don't learn that in school, and thus don't recognize it when we see it. most people think that socialism is the thing when you are taken to the gulag for dissent. in fact, socialism is all around us, especially in europe.
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          Nov 14 2012: So would an example of this be that the European's main concern in life is what they are going to do on holiday and the hours they have to work or how their medical insurance is free?

          Where as the denizen of the free market is more concerned with purpose and goals and how he can serve his customer? How else do you explain that the denizen works more hours with less security yet is happier more determined and infinitely more productive and creative?
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        Nov 14 2012: Pat you asked "Bill My question is what is your definition of somewhat? and the definition of remains?"

        I assume you're asking that in relation to my statement "Indeed, with the re-election of Obama, the country is moving somewhat to increased socialism, although how much so remains to be seen."

        If so I have no idea and don't believe anyone does. There are too many unknowns and variables, too many assumptions yet to be proved/disproved. Stereotyping (always dangerous) President Obama based on his rhetoric, I believe he will push for more social centric legislation but how much and how successful he will be is unknown.
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          Nov 14 2012: Bill, I don't think that the current administration is overly concerned with legislation as they are implementing White House Rural Sustainability Act with includes the Cap and trade, education, and significant green programs. This is essentially United Nations Article 21 and all it took was Executive Orders and no in fighting to prevent implementation or concerns about funding.

          Businesses and states are ramping up for the implementation of Obamacare. As a CEO the amount of your employees will make a difference but by in large you will certainly, like others, make some trade offs to stay afloat. The decision of many is to reduce hours to 29 per week or to assess the fines involved and choose the lesser of two evils.

          With Obamacare, cap and trade, and rising costs of electricity, raw materials, and fuel your position is in for a rough ride even with the best of decisions.

          I wish you well. Bob.
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          Nov 14 2012: Bill

          You are more euphemistic than I.

          I don't think it takes too much guess work to project what is going to happen. LBJ instituted medicare with a projected cost of 9 billion for part A by 1990 but ended up costing 67 billion in 1992. This is just example of many of how much the cost is going to geometrically increase. If I were to guess I would say the single biggest drain on the UK economy is their healthcare system which is the second biggest organization in the world second only to the Chinese army.

          Who knows how much Obama's consumer protection legislation is going to cost but an example of something similar is Sarbanes Oxley they estimate the cost to the economy to be around 1.5 trillion dollars per year. This is cost in regulations on business not tax revenue. In 10 years they have yet to find one single financial irregularity.

          Not to mention that just the debt service is 250 billion at 1.5% interest when it returns to a more normal 5% it is going to be 750 billion or 30% of the revenue

          I don't think you have to be a prophet to project bad things?

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