Bloodbane wrote...
The amount of money a person makes compared to their education and other factors can be debated to eternity, but it is proving the point that the capitalist system is broken. Instead of saying teachers complain about only getting paid 50K a year, the question that needs asking is why are they complaining about only getting 50K a year. 100 years ago 50K a year would make a person rich beyond dreams, whereas today it is around middle of the pack depending on locale. Market prices have gone up and up constantly whereas incomes have not followed suit. Example: Why is gas over $3 a galleon in the States, whereas in South America it is around 30c a galleon? In theory we should be getting the same stock market reports, and all the worldly crap should be affecting both areas. So why the difference? It could logically be summed up as simple as price to wage ration. In South America the majority of people are dirt poor, and therefore they cannot afford high prices for everything. So what does a good capitalist do??? Put the price at a rate where people can afford it, so they can make money.
The disconnect is in North America big business believes, and rightly so, that they can get away with anything and everything. OBVIOUSLY we have been gouged on gas for the past 5+ years, but they do not fear the people doing anything about it. Now I am not saying that South America is any better off, or the businesses have more morality towards the common man, but the only logical explaination is the difference in the wage structure. Discussing supply and demand does not work anymore because it is not followed anymore by big business. It all revolves around the wage structure. In Alberta they produce tons of barrels of oil for gas everyday, but yet I do not hear many Albertans making fun of the rest of Canada because they get 30c a galleon gas prices, while the rest of us are at around $1 a litre. But yet those prices can be achieved in countries like Eucador and Venazuala. The reason? In those two countries $15 a day might be the going rate for a job, if a person even has a job, while in Alberta the going rate is around $20. Gas companies can afford to gouge us more here because we get paid more. If we were radically getting paid 1940s wages I can guarentee that gas would not be as high as it is now in North America.
The same reasoning can be applied to any type of product in which you need to exchange money for the goods or services. I only picked gas because everyone likes to complain about it now.
Capitalism will eventually implode on itself because the sole purpose of capitalism will force itself to stop fuctioning. Capitalism, by its very nature, wants to buy low and sell high. In order to do so it wants to save every penny possible at every juncture. Lower wages means more profits. But eventually people will stop bying item X because they do not have enough money to buy it, thus forcing changes to be made. GM is the prime example of this deterministic theory-based approach. It wanted to cut costs, and thus make more profits, by shipping good paying American jobs to Mexico, where people were paid at a fraction of the price. As GM was cutting those American jobs, it was finding out that business was suddenly not as good. The reason??? Less people were buying GM because they did not have the money to buy a 20K car, when they are only getting paid $5 an hour. So to raise profits again they close down more American plants and send them to Mexico. This then forces more people to stop buying new GM cars, and thus the cycle repeats itself until GM goes bust. As said by a news report last week GM is now either going to merge with Chrysler, or be bought outright by Chrysler. Capitalism at its finest and worst.
It does not take a genius to figure out that in the future capitalism will eventually turn into some form of quasi-communism/socialism, since the inherient nature of capitalism is to destory itself. It might not happen in 10 years, or 100 years, but it will happen.
There are a lot of problems with your argument.
First off, you said you chose gas because people like to complain about it. However, gas is one of worst offenders for inflation and plays right into your argument. With the exception of food and gas, inflation has actually been very low for a long time. Even when we had amazingly high inflation in the great depression, it didn't cause the fall of global capitalism. Why would it now?
Example: Why is gas over $3 a galleon in the States, whereas in South America it is around 30c a galleon? In theory we should be getting the same stock market reports, and all the worldly crap should be affecting both areas. So why the difference? It could logically be summed up as simple as price to wage ration. In South America the majority of people are dirt poor, and therefore they cannot afford high prices for everything. So what does a good capitalist do??? Put the price at a rate where people can afford it, so they can make money.
The defies the basic idea of capitalism. Gas merchants would not jack the prices up in the US so they could sell gas at a loss in South America. Why would they? If they weren't making money with whatever price they offered in South America, they would be better off not selling gas there at all and so they wouldn't. After all, Dell doesn't sell $20 modern computers there just because people can only afford to pay $20 for a computer. They just don't get any up to date computers if they can't afford to pay a price on which Dell can make money. Gas is cheap in South America both because labor costs pennies in some of the country and some South American countries have their own oil. They might also have gas tax. You have to remember that a significant chunk of that $3 in the U.S. is paying for labor for service, transportation, etc, and going to gas tax.
I don't think it is accurate to say that the US has been gouged on gas for the last 5 years on a widespread scale. There is no nationwide oil conspiracy, and competing companies have incentives to offer lower prices than rivals. It is true that gas prices jump up immediately when oil goes up but fall gradually when oil goes down. No one is going to take a loss, but the low price wars happen in increments. There is no need to have the lowest possible price, simply one lower than competitors. However, that is the extent of gouging, if you can even call that gouging.
Your example model with GM might be accurate for GM, but you don't look at the larger picture at all. What happens to the money GM invests in Mexico by moving jobs there? Someone spends it somewhere, whether through consumption or investment. It doesn't just vanish. If your reasoning is correct in this particular case(and I tend to doubt your GM model, do you have any statistical evidence?), GM might have doomed itself, but there are plenty of other companies doing the same thing that are quite successful. Moving a number of the cheap labor jobs abroad doesn't hurt the global economy in the way you seem to indicate. In fact, by the theory of comparative advantage, outsourcing, as a general rule, actually increases the total amount of material wealth in the world.
Finally, you neglect the fact that the amount of material wealth in the world changes. Generally, it goes up, as we invent more efficient ways to do things and such, but a large natural disaster can destroy some wealth. Or, in the case of the current financial crisis, people might think they have more wealth than they actually do, and so the effect is similar. Capitalism doesn't necessarily need to implode, there is plenty of room to expand. If we keep going towards socialism, it is because of our social justice values, not because the entire system is in danger of collapsing.