February 3, 2006
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MAJORS: Philosophy, Business, Sociology, Psychology
COURSE: Money & Society
ASSIGNMENT: People often criticize companies and individuals for being greedy, and for pursuing profits and personal wealth, while those who with less money suffer. What are the benfits and drawbacks of individuals pursuing profits? How are the fortunes of some individuals and companies related to the wealth or poverty of others? Feel free to address any of these questions, or come up with questions of your own to answer.
(to hear me “lecture,” and to participate in this discussion, please view and leave comments)
Comments (9)
ASSIGNMENT: People often criticize companies and individuals for being greedy, and for pursuing profits and personal wealth, while those who with less money suffer. What are the benfits and drawbacks of individuals pursuing profits? How are the fortunes of some individuals and companies related to the wealth or poverty of others? Feel free to address any of these questions, or come up with questions of your own to answer.
Today, I began thinking, “what if nobody bought books or magazines?” I personally never buy magazines. I’m interested in reading from too many different magazines, so, I simply read them for free whenver I’m in a book/magazine store. For $0, I can ingest all of the magazine reading I wish. When I’m not near a store but I want to read something, I usually have a book loaned for free from the library. Occassionally I will “splurge” and buy something, but on the whole, I consume a lot of things from books and magazines, for free.
Luckily for writers and publishers, there’s millions of people who don’t do this. People for the most part pay for books and magazines. As a result, book stores and book publishers stay in business, and profit off of people who spend money to consume books and magazines.
Essentially…I’m “free-riding.” I get all the benefits (I don’t get to own the books or magazines, but I get all of the words, all of the content), without having any of the costs.
What would happen if everyone did what I did? What if nobody bought books or magazines? Book stores would close, because they wouldn’t be making any money. Publishers would close because they wouldn’t be making any money. And writers wouldn’t be able to get their words out to an audience, because they wouldn’t be making money writing, and wouldn’t have the publishers or stores to get their words out to the public.
Without people spending money to consume, there wouldn’t be such easy access to such a wide variety of books and magazines. It seems we would all be WORSE OFF. Without people (writers, publishers, book stores), looking to profit off of people spending money to consume, it seems we would all be WORSE OFF.
It seems, that because there is the potential to profit off of people consuming, there is also the potential of people using their creative talents to create almost anything. This is my partial view of how capitalism works. Since I think having access to so many books and magazines is a good thing, I think this is an example of the benefits of capitalism.
The problem is, what happens when there is no money to be made in essential things like medicine? Poor people in Africa NEED TO CONSUME Aids medication, and preventitive mosquito nets, and food…but the people who produce those things are only bound to seek profit. It’s a free market, people can produce and sell what they want, for however much they want. Therein lies the human downside of capitalism.
One person’s, or group of people’s, desire for profits should not lead to another person’s, or group of people’s, early death. Nor should it lead to another person’s struggle to make enough money to purchase adequate food, shelter, and medical care. Nor should it prevent another person from having adequate FREE TIME to spend with their loved ones, or to pursue leisure activities.
That is turning into the struggle of our time, of this civilization. The struggle to ensure the entire world has “freedom” and “democracy,” have become the buzzwords of the current leaders of America. And I agree, that those are pieces of what we as human beings are capable of creating. To be able to freely elect your political leaders, and to live in a country where you have freedom of speech and expression, are all important things. And while we struggle to create that system in foreign countries, in America, the supposed model of freedom and democracy, we now begin turning our attention to the NEEDS OF THE POOR. We also turn out attention to the realities of our own hiccups with creating a system that is both democratic and free. I will continue this next class…
Sweet. Lucky thing I was gearing up to wax about economics….
I’m just getting warmed up here.
Regarding the distribution of wealth in America (and the world)…
Uhh…Financial inequality has been a facet of the human condition since people invented money. This is not a “new” development. And of course it follows that people with more money have more opportunities and power. Money aids influence. Money opens doors. Money allows business savvy individuals to make lucrative, exclusive, closed-door deals to further develop individual and corporate wealth (which some view as greedy self-interest). …Money also funds philanthropies. But money, and the accumulation of it, is neither evil nor wrong. Just like a tire iron isn’t evil or wrong. It can be used to change a tire or club a person over the head.
Further, the division of “the rich” and “the poor” cannot be blamed (justly) on any one cause. Lately (although the idea has been around for ages) I’ve heard a circulating sentiment purporting somewhere there exists a room full of the most rich, powerful, evil men who do nothing other than plot the repression of everyone else. This notion, while not fully preposterous, has shaky foundations in logic and reason, and is left lacking in motive, machination, and proof. Anyone found to be complicit in such a scheme would be figuratively lynched by the media, financially lynched by their own stockholders, legally lynched by “watchdog” groups, and literally lynched by an angry mob. The successful rich become wealthy (in part) by constantly running cost/benefit analyses, and weighing risk against reward. The risk of intentionally and cruelly repressing any group and then being discovered far outstrips any potential rewards. I can’t argue that those with money and power will fight to cling to both. But I also cannot condemn wholesale anyone with wealth and power; I cannot vilify “the rich” simply because they have money. To do so would be the class system equivalent of racism.
You have touched on educational reform from time to time. What follows is my favorite “most important and most neglected” sector of education. Most people aren’t educated about the intricate nuances of cash and capital, and how to handle personal finances. Quite often, a person has no concept of his or her credit rating unless it is awful. People are also often oblivious to appreciating and depreciating assets, good credit versus bad credit, and the trappings of consumerism. The word “savings” has become a mirage for many people today.
There are no mandatory education programs about such aspects of money management, and it is doubtful any will be created in the near future…there is no corporate money to be made in such programs. Would Citibank stand by and let public schools enact new curriculum that focused on personal financial management? Imagine if all high school juniors were required to take a class that taught them about the pitfalls of credit cards, interest, and revolving debt. Chances are slim that lobbyists of credit card companies will ever permit any such large-scale program in public education. And so Americans will likely continue to learn about finance and money management the hard way. In our capitalist nation, no one is teaching or preaching responsible capitalism, or if they are, the words never reach the ears of the public. Odd.
http://news.yahoo.com/s/nm/20060109/od_uk_nm/oukoe_uk_economy_wealth
More later, including comments about taxing the 1%.
Have a good weekend.
Go Steelers.
It is a fascinating question but I would point to something not in your question. We all know that companies and individuals will try to make the most they can for themselves that is capitalism and the best system we do have out there in the world that exists. But I would point to something others have stated before and that is capitalism does not take place in a vacuum. And the question I would pose it what is the responsibilities of both companies and individuals to address the externalities that occur through the process of capitalism? How should the rights of the collective good of us all be governed? Those two questions in my view are the underpinning for a lot of our current social ills today…
I was reading a bit about the historical roots of “liberalism,” on wikipedia. Here’s what I picked up:
The American Revolution was based on this idea that all men should be free to rule themselves in a democratic way. This is political liberalism. From the revolution, we had the Bill of Rights and our first ammendment freedoms, and later those freedoms were extended to include all people, regardless of race, sex, or ethnic background.
As a result of the industrial revolution, machines began to replace human labor. As a result, the supply of workers outpaced the demand for human labor. Unemployment rose, and wages fell. This was a new problem for these budding democracies. One camp, the modern liberals, believed it was the role of the state to protect those who were unable to fend for themselves in this new economy. The other camp, the classical liberals, held that the freedom of private property was supreme, and that the state should not intervene with the market to fix these problems.
Leonidas…you bring up a good point about the negative externalities of capitalism. Not just those who are left behind financially, educationally, medically, which are mostly related to labor and income, but also the negative externalities of companies on consumers, culture, and public health. It is worth exploring further this idea of negative externalities, as well as the questoin, “How do we address these externalities?”
I recently was reading about excise taxes. For example, people who consume unhealthy food, end up costing tax payers money in health costs. The traditional way to change things is with financial incentives. Tell a company they will get tax breaks if they produce healthier food. Ultimately, the problem won’t go away until cultural leaders arrive who can get people to change their lifestyle habits, I think.
There is relative poverty and then there is absolute poverty. There is nothing wrong with some people having more than others. Some people work harder than others, some people are luckier than others, and some people are content with fewer material goods than other people are. (I am NOT saying that those with less are lazy, as some would have you believe. There are a bunch of variables, and hard work is just one of them.)
There is something wrong, though, with absolute poverty, when the system is unable to provide essentials such as food, clean water, shelter, education, and health care to its citizens while others live in luxury. There are needs and there are wants. The way I see it, everyone should have access to the things they need, while access to the things we want can be left to circumstances.
There is nothing wrong with profit, but there is something very wrong when someone pursues profit by exploiting others.
Kregg, that was a very interesting article on attitudes towards saving. Obviously we have a bit to do when it comes to financial education.
~Bethany
Bethany,
I’d like to do some more critical examining of the idea of “absolute poverty.” Some might argue that this really doesn’t exist in the US, at least when we compare it to Africa. How much money does a person need to sustain themselves in America? I’m talking about 3 square meals a day, some water, and snacks. I’m also going to go so far as to say, “nutritious eating,” which some people think might cost more.
Is it $5 a day? Can a person put together a food budget on $35/week? $10 buys a lot of fruit, another $10 buys a lot of vegetables, another $10 buys a lot of rice and beans. With the extra $5 and the money that is probably left over from the first $30, a family can begin to buy condiments and other assorted food products. Certainly, $5 a day is pleanty for a person to live. But, I’m assuming most people don’t view that as the minimum level, do they? Do people need just enough to eat so they can live, or do they need money to meet their food spending habits that go beyond what is necessary to sustain themselves nutritionally? Do we need to make sure people on welfare or on food stamps can afford jell-o pudding, eating out at McDonald’s, buying a gallon of fruit punch?
How about housing. Granted, the real estate market is not as friendly as the market for buying food. A family living off of a minimum-wage type income, cannot afford even the lowest rents in many cities. So, that’s why we have subsidized housing, which I believe on a federal level is known as Section 8 housing. Suddenly, a person can pay $200 for an apartment while a mile or two away people might be paying upwards of $1,000 for an appartment. Even people who cannot work, or even perhaps lazy people who do not work and claim benefits (i don’t know much about how welfare works), are able to have a place to sleep at night. But, do people just need a roof over their heads to prevent them from the rain? Or do they also need a mattress to sleep on, various amounts of furniture, working heat?
Now, let’s talk about health care. This is the most expensive of the basic needs most people agree should be available to all people. Certainly, this is also the most expensive. A simple visit to the doctor can cost hundreds of dollars, a trip to the hospital can cost several thousands. How much should people have to pay? For what sorts of illnesses should people be treated for free? With limited resources, these are the decisions that have to be made. The ideal would be that there would be enough doctors, so that any time you felt ill, you could go and receive the best treatment, and any time you needed surgery or medication, it was readily available. This isn’t the case though.
Of the three things we’re talking about, food, shelter, and health care, I’d say health care is the most complicated and challenging. Nutritious food can be provided at minimal cost (granted people realize how to eat nutritiously w/ minimal cost). Housing, while more costly, can be obtained and while less luxurious, families can survive in tight quarters (although there are psychological disadvantages to living in certain poor communities). Health care I’ll leave for further discussion.
On a higher level, I would define absolute poverty as the absence of hope and opportunity. In more practical terms, if you don’t have enough relatively nutritious food you won’t be able to pay attention at school or put forth your best effort at work. Ditto if you can’t get a good night’s sleep (overcrowded housing) or if you’re sick (inadequate healthcare). Absolute poverty is the inability to help yourself, to improve your situation.
I agree, too, that absolute poverty doesn’t exist in the U.S. to nearly the same degree it does in other parts of the world.
Re. your comments on Tuesdays with Morrie-I think that’s the only way we’re going to produce change, one person at a time. The way I see it, if what I say and do improves one person’s life, that that will have a positive ripple effect. You get stuck on the big picture of changing the world, you get disillusioned quickly because things don’t change as quickly as you think they should.
~Bethany
Bethany,
well said i think, both on defining poverty by the absence of hope and opportunity, as well as the side-effects of poverty…or the “negative externalities,” which is what economists say. You can also add fear to that list, as in the fear of getting sick or the fear of losing one’s job and how that will affect a personally financially.
also agree that people become disillusioned when they see the big picture. i know a lot of people who choose to ignore politics because of that very reason. sure, on a national level, individuals have even less voice, but ultimately, the purpose of politics is just to figure out how to create the best society, and so people should be concerned first and foremost w/ their local neighborhoods. while poverty in Africa gets headlines, my friend has to deal w/ the fact that at 2am there’s still people screaming in the bars below. to get more basic than that…family politics. i think most people struggle w/ family and community so much, that it’s impossible to worry about all “the others,” in the bigger community.
-dan
p.s. I’m organizing a camping trip w/ NOLS & Outward Bound people in late feb., if this go well, i’m hoping to do frequent trips and maybe try to see if people in other cities can’t also begin to organize alumni camping trips…which might ultimately lead to a real Outward Bound community where you can use OB for professional networking, for outdoor netorking, for meeting people in new cities…etc. Will keep you posted.
On a different note, I’d love to participate in more OB alumni stuff. I’d even be willing to travel, esp. if it were within driving distance of Baltimore/DC. The swap-yas are great, but they only happen a couple of times each year. Most of the events seem to be in big cities, and not any big cities near me. I’d love to take another course, but that’s just too expensive right now. (Well worth the money, but still out of reach at this point.)
Definitely keep me posted.
~Bethany