Someone named Charles Ivy posted a question on this topic asking “Is it possible, in your minds, for government to be too big and too expensive? Is there even an upper limit?”
After posting my answer there, it struck me that I had made a larger statement on Capitalism itself, so I decided to expand that answer here.
Here is my answer –
When you can no longer provide additional value to the tax dollar, that is cannot add more necessary roads and bridges (or repair the ones we have), cannot remove more people from homelessness or poverty, cannot make people any more likely to be economically productive (which is the root for healthcare, unemployment insurance, pensions, Social Security, Medicare, Medicaid, etc) or add any more real security or safety (as opposed to the false “security” of the TSA), that is when going further would be too much.
I am a capitalist, and a firm believer in systems such as Social Security, Medicare and the public commons. Social Security enables the retirement of the elderly from the working pool, preventing the added and underperforming workers from dragging down the wages. I am for higher education funding because it makes workers more valuable in a technology driven economy, but I am also in favor of expanded vocational training to support that economy, something long ignored in this country. I am in favor of Medicare for all because it would ensure maximum productivity from my workers through being healthy. I am in favor of minimum parental leave upon birth of a child for both parents, as well as child care supported by the system, which would reduce the insecurity of workers, making them more productive.
All of these would increase my workers’ disposable income. And disposable income turns workers into consumers, driving up my total profits. If it cost me pennies on the dollar more to generate that profit is irrelevant, as my total profits have grown. Remember, these things, like the cost of my workers, are taken off of company profits, hence, not taxed. My total profits would be higher, and because my business would have more customers, I would need to hire more workers to fulfill the demand. This would create a cycle of growth and prosperity.
But to have this would require the structure to be in place, both the physical supports like the roads, phone networks, air traffic control, clean water, and so forth, and regulations so that I can trust my business partners to also be on the up and up. Otherwise, eventually one will try and wiggle their way into a slightly better advantage, which then causes another to, and another, until eventually this elbowing starts to cross the line, and instead of working within the system, they step over it, stepping on others. This is the cause for the financial crisis, lack of regulations causing the onset of a culture of deception. No one will lend because no one can trust. The markets froze, the economy tanked, and the world plunged into recession.
One of my teachers once told me, if I wanted to understand Capitalism, I had to read the works of two men and understand that they both are correct. Those men are the picture at the opening of this piece, Adam Smith and Karl Marx. Adam Smith gives the foundations for why Capitalism works. Karl Marx gives the understanding of why Capitalism stops working. I thank Mrs. Carter every day for that lesson, for it helped me to understand better the world around me, and more importantly, to understand that being a Capitalist, and being a decent human being by helping my fellow man, goes hand in hand.
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