I had an epiphany last night and I have realized that Capitalism is the best system for humanity. I have read many works both on Capitalism and on Communism, and I have always knew that Capitalism is better, because Communism has 1 fundamental flaw, namely that it collectivizes risk, and thus if 1 person falls off the cliff, he drags everyone with him, and thus it promotes idiocy as the majority of dumb people will hold back the rest... also called Tragedy of the Commons, the greed is collectivized as well, and if everyone is selfish, the entire system implodes. And then of course you have violence.
Some words on Communism
We knew that the Soviet Union was not Communist, but Bolshevist, which is a State-only-Capitalism, like the State becomes a giant Corporation that controls the entire economy. However nobody asks the question why it wasn't Communist? Was it because Lenin was powerhungry? Probably, but that is the whole point, his greed and his partner's greed have superseded their principles, and then that led down into a Totalitarian Police State. Why? Because the risk was collectivized, everyone must come together, and outsiders are not welcome. Well this is more like Fascism rather than anything else. So every attempt at Communism has turned into Fascism. Stalin was not much better than Hitler in his methods, and in terms of body count, he was actually worse.
Capitalism
Real Capitalism is different, here the risk is quarantined to the individual. Of course I should mention that what we have now in the USA is not Real Capitalism, I mean you have all sorts of socialist programs there that bundle people together like sticks under the fasces, and of course if 1 falls, all fall. Yeah I should mention a few:
- Bank Bailout = If the bank loses money, everyone else must lose his money
- Social Security = If the pensioners have no money, taxpayers must back them up
- Healthcare = If a person is sick, everyone must back them up
.... and so on.
Now this doesn't quarantine risk, it actually removes it, well it doesn't, it just makes it look like it's removed. And don't get me wrong, I am not a monster, I don't want pensioners to go live in the streets or people die from illnesses, but nature is not so much forgiving. And if you create the illusion of no risk, then everyone will take maximum risks, furthermore if everyone is bundled together through force, then it drags everyone down, thus the entire society collapses.
Nature is risky, very risky, and only the fittest survive. Now we can ignore this, or pretend that it's not true, but unfortunately it is. And I am not saying people who are unlucky should just die, but if they don't realize that they can die from their mistakes, then they will never improve themselves.
How will the smoker or the drinker realize that what he is doing is fatal, if there are no consequences for it? Same thing if somebody runs across the road and gets hit by a car, he could die, so he better understands the risks.
And in this Hedonistic society, nobody understands the risks, only the Capitalists, because that is the basis of Capitalism, risk management. If you manage your risks well, you make money, if you don't you lose, and could lose a lot more than your money.
The market is a perfect metric for measuring risks. A perfect efficient market is a flat horizontal line. Whenever the market moves, it means that the risk profile of the market has changed. It doesn't necessarily have to be an event, but even the anticipation of an event.
If you find out that the CEO of a company has brain cancer and has 6 months to live, you bet that stock will plummet in price. But the CEO is still alive there was no event, only the anticipation of an event, and who knows maybe he has a 10% of survival with adequate therapy, but the market already reacts to this. And the market factors this risk in perfectly, people with money are very good forecasters, collectively speaking, so this is a perfect metric to measure risk.
If nothing happens with that company, then the stock price probably goes up, but at a decreasing pace, logarithmically, since as the equity (assets-liability) of the company expands, the stock price goes up, but at a decreasing pace, and probably somewhere the price just becomes flat, or flat-like with some variance.
But that almost never happens since there is always something happening, the market is not always rational and the investors might sell the stock early or manipulate the price or whatever, but usually it returns to a stable level.
Risk in a Society
Now expand this concept to the entire society. Everything is like a market, because in every faucet of our lives we have risk, and that risk can be traded, or expanded, but it can't be destroyed.
Risk can't be destroyed, but it can be expanded or extended. This is why the morons who believe in the Keynesian theory of economics, think that stock market should always go up, as in risk-free. Well that is only possible if some central bank is pumping that up with debt.
And trust me, once that debt bubble pops, the risk will be far far worse than what would have happened with a tiny correction. Thus Central Banking only shifts the risk into the future, but it doesn't get destroyed, it actually accumulates, and it will come back real hard and bite people real hard afterwards.
This is the problem with Central Management, it doesn't let risk float freely, and it doesn't quarantine the risks, it actually accumulates it until it becomes so big that it destroys everything.
In Capitalism, the risk is always quarantined. If 1 business fails, maybe the person becomes alcoholic and suicides himself. Okay that is a tragedy, it happened many times. However if you don't let them fail, and create a "safety net" to catch him, that only bundles the risk of many people together, and when that collapses, the situation will be far far worse, literally the entire humanity could go extinct, maybe it would provoke a global unrest, civil war, or even Nuclear Apocalypse.
I start to think that maybe a Nuclear Apocalypse is inevitable at this point, after all so much risk has been accumulated in the Military-Industrial Complex, it has to come out somewhere, and most humans are very bad at risk management. Who knows, but I hope the current political situation can be diffused somehow, but even the de-escalation of conflict, could have massive consequences, not necessary military, but it can manifest itself in other ways.
As I said risk can't be destroyed, it just transforms itself into something else. The monetary system could collapse, the debt levels are already huge, and that is again, a collectivized risk. After all most risk is in the Government Sector, where everyone must pay for that, and if a person can't pay his mortgage, he always runs to the Government for a bailout.
How many foreclosure victims have petitioned the Government to help them bail them out. Or even the banks, the too big to fail banks, are always bailed out. You see what I am talking about, they are just escalating the risk, they are not diffusing it.
So the situation is pretty bad. Government power is expanding, the burden of the risk is being shifted on everyone, and especially extended into the future. So the entire future of humanity is now staked on the stupidity of the current population.
Fixing the Problem
Well the only way to fix the problem is to start quarantining the risk. People have to assume the consequences for their actions. Those who made shitty financial decisions should not be bailed out, and so on... Otherwise the entire fate of humanity is at stake.
And then bring back Capitalism. It might be a long struggle, but socializing losses always leads to disaster. By the way look at this pathetic attempt to socialize losses in the recent ETH hack:
They want to socialize the losses, from the ETH recovered from the White-Hat hackers, of course this is pure theft from the project they recovered from. So basically those tokens that lost a lot or all coins, want to steal away money from those tokens that lost a few and more can be recovered.
This happens all the time: bailouts, pension ponzi-scheme, and the rest of it. This is what is destroying the economy. This way nobody is learning from their mistakes.
People need to be punished from their mistakes, otherwise they will never learn, the too “big to fail” and “social safety net” concept is very dangerous, because if the net breaks, all of us fall into the abyss.
Bring back real Capitalism, Free-Market Laissez Faire Capitalism, that will save humanity from all problems.
Sources:
https://pixabay.com
