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Luke Hutchison

TED Fellow, Google

TEDCRED 50+

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Is capitalism sustainable?

Bono stated in his TED2013 talk that the numbers show that we can eradicate all poverty worldwide by 2030. While I really hope that is true, it begs the question: Is capitalism sustainable? Is it possible to have a rich and middle class without a poor class? The sad reality of capitalism is that if there is an exponentially small number of people with exponentially large wealth, there has to be an exponentially long tail of much poorer people who are each contributing to that wealth. Not that we necessarily need an exponentially small number of people with exponentially large wealth, but would the world keep running without capitalistic incentives that increase the separation between rich and poor? Can we eradicate all poverty without the rich sharing their riches? What happens to civilization when nobody is willing to work in the factories and orchards, or build roads?

(Please don't take this question the wrong way! Personally I wish that nobody had to work menial jobs. I just don't understand how we can eradicate poverty when so many jobs will always translate into low-paid labor.)

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  • Mar 10 2013: Capitalism is a tremendous wealth creator, and I like to think that it can be made "sustainable" with a few careful tweaks.

    Some ideas that could help:

    1. Restructure GDP, why are we counting government spending and healthcare in this thing?
    2. Automate jobs that can be automated.
    3. Bare bones federal government that enforces only laws that make us safer and protect natural resources.
    4. Politicians cannot campaign and our automatically forced to resign if the government runs a deficit.
    5. 10% flat income tax on everybody that covers all government salaries.
    6. A progressive tax on corporate profits, covers a few gov programs that keep people from starvation, but not much more.
    8. Debt cannot be used for consumption, only to finance production/investment.
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      Mar 13 2013: Wrong Shaun. Capitalism is a tremendous wealth POLARISER. The capital, as a factor of human labour, exist anyway.
      • Mar 14 2013: Joanne, you are right that the capitalism we see today is a wealth polarizer. But I'd argue that this is cronyism, not capitalism. For example: the 2008 housing crisis. In a truly capitalistic society, the banks, GM, and AIG would have been allowed to fail. Instead, they were propped up by our government in an effort to prevent a depression. While we probably did avoid a depression, these large corporations used this event to grab more of the pie. They were acting in their own self interest, which is fine. Whats not fine is giving them this opportunity to risk other peoples money and then get bailed out consequence free. The reason wealth is so polarized is government has given companies opportunities like the bailouts, which a normal market would not provide.
        • Mar 15 2013: Sean, the banks knew they wouldn't be allowed to fail. If the money ran out in the cash machines and garages would only take cash for fuel, most firms would have come to a standstill within a week.
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          Mar 15 2013: Sean, leave out please, if they disturb you, words like cronyism and capitalism, (please again! you will attract Pat! and I say that lovingly Pat :)). These words only illustrate, and poorly too, what is essentially the condensation of capital or labour through a process of limited choice aka exploitation, into a small section or elite of society. We can easily observe the negative consequences of this phenomenom, you have mentioned some incidents yourself. There are those who would argue the benefits of this, the INVISIBLE benefits, lol but we can really only argue this if we present the alternative. I present the alternative now. The Nordic Model. Iceland. I have my ticket booked.
      • Mar 15 2013: Be that as it may, we have certainly done ourselves no favors. All we have done is set up a larger bubble that is going to burst in the future. When American debt becomes worthless all the hardship we avoided in 08 will come back ten fold. Companies know this too, the wealthiest 1% (and China) and loading up on real assets like gold because they see whats coming.They will be fine, its the middle class, the savers, and the mainstreet guys that are going to be wiped out.
      • Mar 15 2013: We are in agreement that individuals ARE being exploited, but not WHO. In the social democracies, I'd argue that the producers are being exploited for the benefit of the labor force. Since the sustainability of an economy hinges on investments in the future, I believe that the welfare model is not as sustainable as a free market. The whole model hinges on high employment, which as we saw in 08 can change overnight based on global economic circumstances. If producers see a drop in demand and cut jobs, the heavy tax burden cant be supported. While this system is great for the general population disinterested in production, it hurts those who drive the economy and is not robust enough to survive financial adversity.

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