The GOP lie about free market capitalism and why the middle class is shrinking
buy moncler jackets Myths, Folktales, and Fairy TalesAs defined by the Oxford Dictionary, a myth is, “a widely held but false belief or moncler coats for women idea.”
America faces an uncertain future. Can we sustain our preeminence of the latter half moncler outlet mall of the 20th century in the 21st century and beyond? Our country has over 320 million citizens with very little in the way of consensus producing only gridlock and inaction, preventing the decisive action we need. buy moncler jackets toronto An earnest dialogue is long overdue, discount moncler outlet and at the very moncler jackets toronto least we must begin by dismissing our political myths.
Something moncler jacket online is rotten in the state of Denmark, err, the United StatesWe all can feel it. To believe it to be true, it moncler coats for kids almost feels unpatriotic. But our instincts are right. Regular people have been getting a raw deal for quite some time moncler outlets uk (see my other post, A rising tide.). The middle and working classes are shrinking and have less and moncler jackets for women less despite hard work and trust in the system. Our economy continues to moncler outlet ny consolidate into oligopolies resulting in disproportionate negotiating power between consumers and cheap moncler coats for women producers, workers moncler jackets men and employers. It is no coincidence that the growth of oligopolies has occurred at the same time as historic highs for corporate earnings and profits. These successes have unfortunately been borne by consumers and workers stuck with anemic price competition and wage stagnation.
The mythFirst off, I support capitalism 100%. Capitalism is the most efficient system to allocate labor and resources and facilitate economic growth. Government intervention reduces the efficiency of our markets. Let me repeat, I support capitalism 100%. However, contrary to what politicians and the moncler outlet woodbury media tell us, capitalism is much more nuanced than you’re either a moncler outlet online capitalist or a socialist.
Generally speaking, conservatives declare they support free markets and free market solutions. To the lay person, free market advocates are capitalists and their opponents therefore are socialists who favor regulation and big government. This characterization is patently untrue. Leaders who espouse this are mindlessly repeating a mantra without considering its validity. A more sinister interpretation is they are a wolf in sheep’s clothing, only concerned with their re election and their large donors.
monlcer down jackets For voters on either side of the issue, I sincerely hope you can set aside your pre existing beliefs moncler outlet usa to consider a different characterization.
What precisely, are free markets and free market solutions?In a capitalist economy, free markets occur when there is no outside intervention such as government regulations. Free market solutions, accordingly, are the mechanisms which self correct and self police prices, participants, and behaviors. This is sometimes referred to as the ‘invisible hand’ of the market.
moncler mens jackets As shown in the following diagram, as supply and demand https://www.kinkhost.com change, so do prices and moncler outlet wages. With higher or moncler jackets on sale lower than equilibrium prices or wages, market participants change their behaviors and new market participants may enter or leave the marketplace due to the imbalance. Eventually, these mechanisms return things to equilibrium and fair value cheap moncler jackets is reestablished.
moncler outlet sale While the diagram is an oversimplification, you can still see how free markets should behave. The most important takeaway is this; free markets gravitate towards equilibrium and equilibrium reflects fair value. Why is fair value so important? For lack of a better word, fair value is important because it is, well, fair. The market corrects over and under priced goods and services. The market corrects above and below market wages. If prices or wages aren’t fair value, someone is getting the short end of the stick. Fair value is fair, because it’s the value buyers and sellers would agree upon with a fair and level playing field.
On a more practical note, fair value is also important because being out of equilibrium for any sustained period is detrimental to the economy itself. For example, if wages are suppressed, workers are less able to buy goods and services making it difficult for companies to grow and increase sales. This might lead to cost cutting or layoffs, further reducing wages or the number of jobs, and thus a downward spiral begins. Picture a shopping mall slowly dying, one store at a time. On the flip side, if a shortage of labor yields sustained high labor costs, running a business becomes less profitable and the risk of bankruptcy increases. Think, union wages and Moncler Factory Outlet the big three auto makers.
Don’t ignore the fine printIt sounds like the question on capitalism has been womens moncler jackets asked and answered. Free market advocates are clearly in the right, end of story. Let’s not get ahead of ourselves. The devil as they say, is in the details.
moncler sale outlet For self correcting markets to work, there moncler chicago are a few conditions that have to be present and are assumed to always be in place. These assumptions are collectively known as perfect competition. Some of the conditions are:
There is a large number of buyers and moncler jackets cheap sellers, workers and companies
moncler sale No cheap moncler jackets outlet one has too much power to set prices/wages or negotiate unfair value
There are no benefits from economies of scale, meaning small companies can enter an industry and compete with big firms. One word. Walmart
cheap moncler All buyers, sellers, employers, and employees have full and equal information
All products, goods, services, employees, and employers are identical and interchangeable
All employers, employees, consumers, and sellers are 100% mobile. For example, a worker will select the best job available, ignoring the fact that one job may be thousands moncler jacket outlet of miles away
cheap moncler outlet First, in our diagram of a self correcting market, all of these conditions are assumed to be in place and non competitive characteristics do not exist. The reason this is important is self correction (and thus fair value) only exists when there is competition. Without these conditions, this topic quickly changes from discussing the costs and benefits of free markets, to quibbling over how an imaginary state of the world may be more right or less right.
cheap moncler coats Put another way, when market participants; buyers, sellers, employers, and workers, have equal moncler outlets usa negotiating power, markets will self correct and fair value will be the prevailing price. This is where a second and very important benefit comes in. With competition also discount moncler jackets comes self policing mechanisms. For example, if there were two competing dry cleaners and one of the cleaners was sloppy in disposing of their chemicals, consumers could factor that into who they do business with. When market participants are on a level playing field, both sides can affect the other. When both sides can affect the other, unethical behaviors either self moncler outlet kids correct or are forced out of the market. This self policing mechanism can only occur in competitive markets.
So, what kind of markets do we have? Consider the assumptions above. Ask yourself, how do these assumptions increase competition and create a level playing field? How would their absence eliminate competition and a fair fight? Do you think we have competitive markets?
Can prices/wages be set or negotiated away moncler jackets outlet from fair value?Real estate is a great example of this. Most of the time, the number of buyers and sellers is fairly equal and as such most real estate deals reflect fair value.
But when there’s a shock, like the 2007 housing bubble, moncler jackets canada all of a moncler coats sudden sellers are vulnerable. Buyers have lots of properties to choose from and can dictate prices. I personally like the nomenclature “fire sale.” While disastrous for the seller, this is a natural price fluctuation caused by the bubble popping.
moncler outlet Can an oligopoly control rents regardless of the real estate market’s heath? Many people don’t realize just how concentrated commercial cheap moncler jackets wholesale real estate is. Nationally, the number of public company real estate investment trusts (REIT) is surprisingly small. Industrial real estate is dominated by eight firms. Office property only has nine major players. Shopping malls? Eight. Student housing? Two. Apartments? Eight.
cheap moncler sale If we look at industrial and office rental data, the housing bubble clearly had no impact on rental rates. This is a stark departure from what residential property owners experienced. Oligopolies can and have controlled rents, immune from natural market forces.
Can we quantify the degree of moncler outlet uk competition, or lack thereof?We can infer that our markets aren’t competitive. We intuitively know perfect competition assumptions do not exist. We can cherry pick specific examples where there is little to no competition. But can we quantify this?
cheap moncler jackets I propose that our markets are not competitive and this can be demonstrated by the prevalence and size of oligopolies. An oligopoly is similar to a monopoly, but more importantly, it can and often produces many of the same consequences. There is the potential for price gouging and abuses of power. The real disaster Discount Moncler Coats is economic power eventually transforms into political power, further entrenching an oligopoly.
moncler outlet online The Economist had an article on March 26, 2016 entitled “Too much of a good moncler outlet store thing” where they discussed the consolidation of businesses into fewer and larger companies. credit card issuers, passenger car rental, full service restaurants, etc.) and measured the share of total industry revenue moncler uk sale (%) earned by the top four firms in 1997 and 2012 (the most recent data as of the article publishing date). Across all industries, the average percent share of revenue earned by the top four firms increased from 26% to 32%. What does this mean? The biggest firms got bigger.
moncler outlet store Why is this moncler coats sale significant? Looking at Chart 1 (top), consolidation into oligopolies isn’t just cheap moncler a moncler outlet online store change in the number of companies. It leads to marked gains in profitability and these increases Official Moncler Outlet typically come from two places; cost reduction (wage stagnation) or price increases. In other words, consumer and worker health is inversely related to the health moncler coats cheap of oligopolies. It’s moncler jackets mens clear that oligopolies are quite healthy.