Freedom is nothing but a chance to be better. ~Albert Camus
Question #93367 posted on 03/17/2021 7:54 p.m.
Q:

Dear 100 Hour Board,

I've grown up hearing the narrative that capitalism, while not a perfect system, does generally improve the living standards of the society as a whole. For example, even though the wealthy get astronomically wealthier than the poor, the poor's standard of living is still higher due to the system. (I recognize we don't have "pure" capitalism in the U.S., and that it would be a disaster if we did; probably any good system is going to be a combination.) I've lately talked with people who disagree with this though, and I'm definitely open to changing my opinion. I know that economics is very complicated and it's difficult to predict, but I'm curious about what other economic systems are in place and how they are functioning.

First of all, I'm curious about what your opinions are on capitalism, and what you think would be the ideal economic system for maximizing living conditions for as many people as possible.

I'm also curious about systems that other countries use. This might be difficult to figure out, but what country has the best living conditions for the greatest number of people? For example, I don't care if everyone is paying 50% taxes, I care how much money they have left after taxes and how much that money is worth. Also it would be worth considering what those taxes are paying for, and if that is significantly improving quality of life for a lot of people. To be clear, I'm not interested in what countries have the most equal living standards for everyone; I could care less if a few people are making a billion dollars, as long as everyone else is financially doing fine.

Finally, I would be interested in any resources that I could learn more from. I've read Freakonomics, Naked Economics, and parts of Nudge, and really anything that could broaden my understanding would be great.

Thanks!

-The Raven

A:

Dear Raven, 

We've answered a similar question in the past, so I'd encourage you to check out Board Question #93257

The TL;DR version that we all seem mostly set on is that pure capitalism gets out of hand really quickly. Yes, capitalism is better than OTHER forms, but without a mix of some elements of socialism to counteract human nature, greed and hatred take over and you end up with the flaming garbage can of social problems and inequality. That's not really what we want. 

It seems like you get it. There will always be inequality, and that in itself isn't a bad thing. To be honest, I don't really want to live in a society where people who are legitimately lazy get the same life as someone who works hard (we'd still want to make sure the people who don't try as hard don't die in the streets... because if you live in a wealthy society it's totally possible to prevent starvation and death, therefore you SHOULD). I want a meritocracy just as much as my archnemeses in the econ department. The thing is, right now we don't have that. Our inequality is based on family background, race, ethnicity, how much money your parents have and who they're friends with, where you grew up, etc. It's actually not ~totally possible~ for anyone to make it up the ladder. There are too many structural barriers in the way. 

Frankly, answering your question about 'who has it the best for the most number of people' is a topic more fit for a dissertation. I think different people would measure it in different ways. In a vague, roundabout way, I would say that first-world countries that offer housing, basic needs like food, family-promoting policies, and affordable healthcare are the best systems. I have SERIOUSLY considered moving to Canada for that very reason. Obviously countries like Canada or Sweden aren't perfect either, but we've held this answer over for far too long and you seem motivated to do some of your own learning too. 

I've done a fair amount of reading, so I think I can recommend some books/articles to you. None of them can tell you the 'best' system, but they'll help you understand why America's version of capitalism is deeply, deeply flawed. 

First, read and understand this PDF from Pew Research called "Pursuing the American Dream: Economic Mobility Across Generations." Take special note that the middle class experiences mobility, but ~40% of the poorest American children stay in poverty as adults. Also note that the increase in wealth that we often consider when bragging about the power of capitalism only applies to the wealthiest Americans, and everyone else really hasn't experienced much growth in a generation. Just for the record, this is my absolute favorite set of data visualization. It tells the story of stratification and class inequality so clearly it's undeniable. It is very direct, doesn't try to 'explain' everything - it just tells you the facts. We're failing at creating the American Dream. 

Whatever It Takes - Paul Tough

- think about how much money it took Geoffrey Canada to help the Harlem kids perform better than everyone else. It's obvious that it's not because they're dumb or lazy, they just need structural support and people who care about them. And that takes a LOT of funding. But those kids come back and make the community stronger, so it's a crucial investment that pays off. 

$2.00 a Day by Kathryn Edin and H. Luke Shaefer 

- Why are there ~3 million kids living in such deep poverty they can't even afford a gallon of milk? What happens when we slash our welfare spending? Is this better or worse for society in the long run? 

Gang Leader for a Day by Sudhir Venkatesh

- What happens when social institutions abandon communities that need it? How could society benefit from the obvious work ethic of the people it has rejected? Why is it important to put money and value on every citizen? 

The Almost Nearly Perfect People: Behind the Myth of the Scandinavian Utopia by Michael Booth 

The Broken Ladder - Keith Payne 

These two I haven't read yet... but they sound amazing and I think it would probably help to answer some of the thoughts you're mulling over. 

Hope that helps. I'd love to chat in more depth over email if you'd like - Pebble and I were talking about this on our walk yesterday even. Hit me up at guesthouse@theboard.byu.edu

Cheers, 

Guesthouse