The Power of Capitalism

Graham_Devon

michaels wrote: »

High property prices are not a failure of capitalism, capitalism would allocate more resources to building houses until price was pushed down to marginal cost.

Would it?

Does this only apply to houses? Or all goods?

Only there are many goods where the supply is restricted in order to maintain the price of the goods.

Cars for example seem to be a two tier market. The mass production car and the high end luxurious car.

If your analogy were true, surely Ferrari would be knocking out cars until prices were pushed down to marginal cost?

Dolce and Gobbana would be knocking out dresses as fast as they could sell them until prices were pushed down to marginal cost?

Oil would be pumped out of the ground as fast as it possibly could be until prices were pushed down to marginal costs? (instead we have cartels physically cutting off supply specifically in order to raise the price).

It would be foolish (and I'm not pointing the finger here) to ignore the issue that the fewer houses that are built, and more specifically, the price of the land which is often traded, the higher the prices..... and therefore the profit the company can generate.

Generali

Gangaweed wrote: »

Not really. In the third world family units are tighter therefore folks don't need pensions to the same degree as the developed world.

If you reread my posts, you will note that I don't disagree with you, but I point out problem areas, which it is dangerous to ignore because they will get worse.

I agree that these are potential problems but most can be addressed simply by people working longer. Older people will be sad to discover that they are unable to claim welfare for 30 years as promised but I don't think that it's likely to be existential as a problem.

Mistermeaner

House prices in uk is nothing do with price of building a house the main cost is in the planning permission which is independent of capitalism. Just look at cost of land vs cost of land with pp.

Other issues mentioned such as cost of student debt, pensions etc are again not capitalism issues - they are problems we are 'lucky' to have because everything else is so good but primarily caused by socialist interventions in the capitalist model. Not saying they are bad things but a full capitalist system whereby you only get retirement and healthcare if you can afford it would have no issues with pension deficits and funding for the nhs. It might not be a nice place but dont lay issues of social policy at the door of capitalism as it is capitalism that affords us what we have, even if what we have is not perfect - under any other model it would be much worse.

Other countries don't have pension deficit problems as there is either no pensions or every is dead

[Deleted User]

http://www.bbc.co.uk/programmes/b06drxls

michaels

zagubov wrote: »

Has no city ever planned itself well? Have the best cities just let market forces dictate urban expansion and house building?

I'm not saying that letting the market decide what was built would produce well planned cities, but it would lead to lower prices.

zagubov

michaels wrote: »

I'm not saying that letting the market decide what was built would produce well planned cities, but it would lead to lower prices.

It sounds like it would produce US-style cities where cars would use up all the space and congestion, pollution and its associated diseases and disorders would expand.

I'm not sure the market and its private players see the bigger picture.

michaels

zagubov wrote: »

It sounds like it would produce US-style cities where cars would use up all the space and congestion, pollution and its associated diseases and disorders would expand.

I'm not sure the market and its private players see the bigger picture.

Entirely consistent with classical economic theory that notices that there are externalities where economic interaction takes place for which there is no market and thus efficient outcomes are not achieved. The text book examples being air pollution and traffic congestion.

cells

Graham_Devon wrote: »

Would it?

Does this only apply to houses? Or all goods?

Only there are many goods where the supply is restricted in order to maintain the price of the goods.

Cars for example seem to be a two tier market. The mass production car and the high end luxurious car.

If your analogy were true, surely Ferrari would be knocking out cars until prices were pushed down to marginal cost?

Dolce and Gobbana would be knocking out dresses as fast as they could sell them until prices were pushed down to marginal cost?

Oil would be pumped out of the ground as fast as it possibly could be until prices were pushed down to marginal costs? (instead we have cartels physically cutting off supply specifically in order to raise the price).

It would be foolish (and I'm not pointing the finger here) to ignore the issue that the fewer houses that are built, and more specifically, the price of the land which is often traded, the higher the prices..... and therefore the profit the company can generate.

the premium expensive end of markets is sold to buyers for their status and high price not their utility value

That is to say a £80,000 cars value isn't just the car its the fact the the buyer can show off their wealth.

Moby

Generali wrote: »

http://www.worldbank.org/en/news/press-release/2015/10/04/world-bank-forecasts-global-poverty-to-fall-below-10-for-first-time-major-hurdles-remain-in-goal-to-end-poverty-by-2030



So not only is the proportion of people living in absolute poverty collapsing, the number of people in absolute poverty has also fallen massively: down 22% in just 3 years.

The reason? Economic growth caused by globalisation coupled with a small welfare state enough that a set-back such as sickness in the family doesn't just pitch a family back into absolute poverty.

Kapow!!! Take that doomsayers!

Of course the article is far more measured in what it says than the spin you put on it and in any event everything is relative cf. the response from Oxfam:-

https://www.oxfam.org/en/pressroom/reactions/oxfams-reaction-world-banks-announcement-about-fall-global-number-people-living

Generali

Moby wrote: »

Of course the article is far more measured in what it says than the spin you put on it and in any event everything is relative cf. the response from Oxfam:-

https://www.oxfam.org/en/pressroom/reactions/oxfams-reaction-world-banks-announcement-about-fall-global-number-people-living

As Oxfam state:

“We welcome the Bank's announcement about the fall in the global number of people living in extreme poverty. It should also be a fillip for everyone engaged in in the new sustainable development goals, especially that to eradicate extreme poverty by 2030. However, the fact remains that 702 million people are still living today in extreme poverty. That figure remains unacceptably high. Much remains to be done."

So they welcome the fall in poverty as does the World Bank. Unbridled good news I think we can all agree and hopefully the goal of all people being out of extreme poverty can be met by 2030.

The World Bank and Oxfam both agree that there 702,000,000 more people to help out of extreme poverty but the fact that such a huge number have been lifted into a position where they can fend for themselves and improve their futures is fantastic.

Surely you can't be so bitter that you can't accept that capitalism has done this. Can't we simply welcome the achievement?