Friday, January 27, 2012

An unqualified opinion on the economy.

This might be a little after the peak commenting time, but various parts of this have been coming up in conversation from time to time and I figured I would write about them to no one. 

I have never been a huge fan of the Occupy protestors.  It is in many ways everything that is wrong with liberal protests – no clear leader, and a bunch of people that don’t exactly make for great interviews.  But, I like what the Occupiers are trying to say.  I think.

The two things I think I think are that:

1.       Capitalism has not grown as fast as transportation.
2.       Profit margin expectations are unrealistic, and hurtful to the overall economy.

Capitalism is a good thing.  It keeps prices in check, it keeps competition going.  But now that you can get products from countries with economies that nowhere near similar to ours.  And you can charge prices in one part of the world that not in line with that area’s economy – such as charging Western European rates in rural Africa while paying the local staff, local wages.

My proposition is that capitalism works well in small geographic areas.  But once you bring in different economic regions is where the problems begin.  This, might bring a mild increase in the local economy, but it creates an inflated profit margin in the home economy.  Once these economies become accustomed to these inflated profit margins – it creates an environment where economies become less diverse and ultimately a top heavy society with a diminishing middle class.

Look at our economy.  Thirty years ago, a factory worker could support their family and have a decent house.  Today this is a near minimum wage job and does not provide near enough to provide what it once did.  This is in part because of the profit margins that shareholders have started to expect and that in most cases, you could do this work for much cheaper in other countries, so a company can only pay their workers slightly more than their savings on shipping.

If capitalism were to move to more of a fair trade model, it makes moving business abroad based on resource availability, and not solely on cost.  Additionally, if shareholders started valuing long-term sustainability and not immediate windfall profits, then there is a greater chance that the profits would be invested back into the company’s employees. 

OK, am I am idiot for thinking this?  Sound off