Does Free Market Capitalism Only Work for the Richest 20% of Americans?

Question

If "free market" capitalism works best and America is its lead exponent, why then:

-- is poverty high and rising in the world's richest country;

-- incomes stagnating;

-- higher education becoming unaffordable for the majority;

-- public education crumbling;

-- jobs at all levels disappearing to low-wage countries;

-- the nation's vital infrastructure in a deplorable state;

-- 3.5 million or more homeless and heading higher in the wake of subprime defaults;

-- the standard of living of most in the country declining; and,

-- the nation, in fact, bankrupt according to a 2006 study for the St. Louis Fed.

In America, according to census figures, the share of national income going to the top 20 percent wage-earners rose from 44 percent to 50 percent from 1973 until present.

In wealth, disparity in America is even greater, with the richest 1 percent controlling 38 percent of national wealth.
The richest 20 percent of Americans own 85 percent of stock wealth. (2003)

I didn't even mention healthcare...

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Answer 1

Actually it only works for the top 5% of Americans & should be called "Corporatization." This "Globalization" is designed to provide cheaper labor to coprorations & increased profits for the World's investor class. Cheaper foreign labor allows them to bypass the labor market in the US & get the cheapest labor in the World. Another plus for the investor class is the corporations out sourcing labor can crush their smaller privately owned competition & eventually obtain a monopoly that will allow them to raise prices & further increase profit.
The outsourcing of American jobs is almost complete & they are currently "insourcing" jobs to lower wages in fields that cannot be out sourced. Once people could bargain with corporations on the price of their skill... now corporations simply import cheaper labor to fill that position.
Unfortunately, the trade balance with China has put them in charge of American foreign policy & the US is no longer able to manufacture even the limited war materials needed to sustain the troops in Iraq. The Chinese can pull the plug on the US economy anytime they wish & have threatened to do so. China has used this trade imbalance to build their military & they plan to use their might to control everything west of Hawaii.
The investor class has embarked on a very dangerous & SHORT sighted ploy.

Answer 2

1. Free market capitalism does work.

2. America is not a capitalist economy. You got that wrong. The USA is more like a mixed economy.

Actually Hong Kong would be a better example of capitalism. Most of the public instrumentalities are partially privately owned, and income tax is flat 16%.

3. "why is poverty high and rising in the world's richest country"

Poverty in America is actually less than what it was 100 years ago. But you know, there will always be some poor people, and we can't do anything about that.

4. incomes stagnating?

Whose income are u taking about? Your income?

5. higher education becoming unaffordable for the majority?

You have obviously never heard of scholarships. The government is paying the tuition of millions of students throughout the country. If you are one of the unlucky ones who didn't get a scholarship, you can go to the local library and get an education there. And it's totally free.

6. public education crumbling?

Yeah, because schools are not allowed to compete. The government has a monopoly on education. It's called public schools. I am in favor of school vouchers!

7. jobs at all levels disappearing to low-wage countries?

That's because we have too many environmental regulations in America. The EPA is too strong. You can't have clean air and polluting factories at the same time. You got to choose. Americans are choosing clean air, and they're paying the price for it!

8. the nation's vital infrastructure in a deplorable state?

Are you blaming all of our government's failures on capitalism or what?

9. 3.5 million or more homeless and heading higher in the wake of subprime defaults?

Life has its ups and downs, and that has nothing to do with capitalism or socialism. Are you saying that subprime defaults are the direct result of capitalism? Are you crazy?

10. the standard of living of most in the country declining.

Our standard of living is higher today than it was 100 years ago. And our standard of living is likely to be higher 100 years from now than it is today. Are you saying that the trend is going to reverse and we're going backwards?

11. the share of national income going to the top 20 percent wage-earners rose from 44 percent to 50 percent

That's another way of saying that the middle class is shrinking. It's not shrinking because of capitalism. It's shrinking because of socialism. The laws are creating an uneven playing field. The laws reward certain groups of people and punish some other groups of people. Those groups which are punished get smaller obviously.

12. I didn't even mention healthcare...

But let's talk about it.
Healthcare and drugs are becoming unaffordable, because of laws which allow lawyers to sue doctors and large drug manufacturing companies. If the laws would limit how much money these lawyers and people can get, the costs would drop. Let's say that I take XYZ medication and I die from taking it. My family sues the drug maker company and wins 50 million dollars. Part of that money goes to the lawyers, of course. The drug maker company has no 50 million dollars in hand, so what they're going to do is raise the price of drugs, so they can pay the 50-million-dollar fine. A large portion of the money you pay for healthcare in the USA is going straight to lawyers and those people who got hurt from medications. It's simple as that. Yes, there is a problem in the system, but this problem has nothing to do with capitalism.

This is why learning Economics & Business is a good thing. If you study economics, you'll understand why things are expensive, why prices are going up, and why the unemployment is rising or falling, etc. If you know nothing about economics, you'll be confusing things and keep blaming everything on capitalism.

I suggest you start educating yourself before you make ignorant accusations like you just did. I recommend you read Economics in One Lesson by Henry Hazlitt. It's a good book.

Answer 3

'Only' is too strong a word. A few percentage of people in the lower ranks make it to the top. In fact, I think about 30% of the fortune 100 are from poor backgrounds. But that is 30 people out of 300 billion, so your chances aren't that great.

Basically capitalism works by making winners and loosers. And the more the winners win, the more they try to make it so they can't loose. Eventually the take over the state so that it becomes an instrument to serve them. At this point, it is up to you to call this capitalism or not, but is certainly the result of capitalism.

And of course it is true that we don't have a completely capitalist system. But I think that is why are economy is doing so well for so many, despite capitalism. But other countries have less inequality and better social services with a bit less capitalism, which is what I think we should do.

Answer 4

First, Capitalism is the worst form of economics except every other that has ever been tried. I'm an architect and this has been the worst three years of my career. The "bailouts" and TARP have done nothing to help and have wasted a lot of money and three years. Is it capitalism's fault. No, it's my fault for choosing a career that is so heavily dependent on the economy. My doctor friends are still doing fine. I could have been a doctor just as easily. I had the grades etc...It was just that architecture was more interesting to me. Rich people do not make you poor. In fact, in countries where no one is rich, everyone is poor. What makes people poor is lack of education, intelligence, ambition and their own poor choices in life.

Answer 5

No, it freedom works for everyone.
Incomes are not stagnating,

No increases in cost of higher education are an example of a failure of the government controlled economy not the free market. State operated colleges, and private as well, plus financial aid from the government remove the any incentive from the institutions to be efficient.

Crumbling public education is another example of the failure of the government controlled public sector not the free market.

Crumbling infrastructure is again an example of the failure of the public sector economy to properly prioritize expenditures for the maintenance of public controlled infrastructure, roads and bridges. Not a failure of the private sector free market.

The nation is in fact bankrupt which is due not to a lack of tax revenue, which is in fact increasing, but due to the burden of socialist spending.

The distribution of wealth has not changed significantly for about 100 years. But government regulations, licensing, and tax policies make it more difficult for the average person to start or run a business, which is the surest way for them to increase their wealth.

Answer 6

Pareto's law applies to most things. But times change. Unless you can maintain being in that 20% then you will go down. Look at the rise of pop stars. It is usually the government and taxation which makes the diference. The government decides who it will extract tax from depending on its budget needs.

Answer 7

I have read in many sources that the percentages are actually worse than that. I have read that it is more like the richest 1% controls 90% of the resources in the world. This is a deplorable state of affairs! *sm*

Answer 8

yes