MovieChat Forums > Inside Job (2010) Discussion > Capitalism: A flawed system

Capitalism: A flawed system

posted 14 years ago by cisned
25 replies | jump to latest

First of all the buck stops here, the ultimate blame for this Worldwide Financial collapse was me, you, and everybody who was blinded by greed. When the father of capitalism, Adam Smith, says that greed is the ultimate engine of capitalism, you know that this system is flawed.

We are all responsible, not only were the bankers greedy for exploiting a broken system to make money, but the people who burrowed the money were greedy for making those loans which they couldn't pay. Also the investors and the rating offices were greedy to manipulate this loaning scheme to make more money. While the government that we elect to represent us, was or chose to be ignorant through deregulation of the whole scheme, just as the average person was and still is of the financial situation. Everybody had a part in it, and although some were more responsible than others, it would of only taken one part of the system to stop this economic collapse from happening.

The problem is that this world is controlled by Corporate America, they have manage to hide this modern empire by using their ultimate weapon, economy. Why bother controlling multiple countries with armies, when you can as easily do by controlling their economies, which is what now drives a country in prosperity or chaos. With america companies not only highjacking foreign countries but also America, we hold our destiny to the choices of a few CEO's monopolizing the market. Just as those few CEO recently manage to bring all major economic sectors into a world wide depression.

Capitalism like any system before is flawed, but the problem is that our education system in America and culture thinks its either a perfect system or at least a needed system for economic prosperity. The problem is that while there is capitalism in a civilization, true democracy will never flourish. We have seen the problems of what political corruption can bring to the world through the war worlds, now we begin to see what the economical corruption can bring to the world. The sad part is that this is only the beginning as what they did was simple negligence and ignorance of the consequences of their actions. If they could cause this by mistake imagine what they can cause if they actually knew what they were doing, and we have made few to none actions to prevent a full scale corporal corruption of the world.

[–] spielbergos 14 years ago

Nature itself is greedy. All life has greed or it ceases to exist. It is part of our nature, and the reason for survival and progress.
Capitalism may have flaws, but it is not only inevitable, it's necessitated.
Individuals are not responsible, no more than a baby is responsible for pooping themself.
Governance IS responsible, and IS needed, its unfortunate it's too retarded and self-serving to benefit all of us....

[–] deeveed 14 years ago

Capitalism may have flaws,

Definitely. But we had a "work-around" for awhile. It worked for a specific time span and with a specific technology. I'd think if it's to have some further viability in our economic system it may have to change in the sense of taking into account new ideas and new technology that have kind of invaded the way of making money in today's modern world. Some may say "communism" should be the new venture. I don't know but it's track record is worse than capitalism. Well, in fact, it brought down state and its republics. I don't think its revitalization is on the horizon. But there could be hope for capitalism. All it needs is new "software" making sure some virus protection is in there. But we've got to watch out for the "trojans" they can kill us.... like they almost did.

[–] cisned 14 years ago

I actually don't believe it, nature is the most balanced system we can find. If you believe in evolution and science, we can find that everything is interlinked to each other, and if something becomes too greedy there is an equal and opposite reaction to prevent it from overcoming nature, of course humans are out of this equation because we are too fast for nature to react to our greediness. I'll explain though, the plants and plankton are needed to capture the sun's energy, the source of all our energy. The soil and herbivores prevents the plants to overgrow and use up all the water, the predators prevent the herbivores from eating all the plants, and the predators are dependent on the herbivores population to live. Too few herbivores and the predators will start to die off too. The use of oxygen is recycled through various organism, and so is soil, and energy. The bodies of all living organism is used for the bacteria to transform the deceased into alternate energy for the living.

We can even find some mechanism for nature to control the human population, through viruses, bacterias, and genetic mutations. Ultimately we will control our own population as there is only so much land for food, and water we can use. Every ecosystem has a number of how many individuals can live before they start to die off. As we are responsible for transporting organism to different ecosystems like plants and animals, we soon find out that those invasive species have the possibility to destroy the whole ecosystem including themselves. So in a way, uncontrolled greed will lead to the destruction of an environment rather than the continues existent. And we can see ourselves as a worldwide invasive species, that through pollution and deforestation will lead to a massive extinction that may include ourselves, as everything is interlinked in nature.

[–] spielbergos 14 years ago

Nature is balanced in its entirety {when change is slow};
but each individual component struggles the utmost for itself, often choking itself in desperate greedy ignorance(think rabbits,deer). Ants and humans are already creating quick, disastrous imbalances.
So many deride global change - do they REALLY believe the Earth is too big to affect?
Hell yes...
of ignorant bliss they be.

short,short away, in a planet very near...
the people brought the earth to a level like arid Africa today.

The best time in life is somewhere between the second and third Martini"

[–] jdciaravino 14 years ago

Sure Capitalism is flawed, but it's the "least" flawed system I know of. The only alternative to Capitalism I see is more government involvement? what many people, including the creators of this film fail to realize is that government regulation and political pressure actually fueled this crisis as well.

For YEARS before the crisis government pressure was put on lenders to accept more low quality borrowers for mortgages. Legislation had been passed over the years forcing banks to make loans to low-income minority areas that they would not have they followed basic economic theory and logic. If they didn't they faced all kinds of opposition from special interest groups and regulators, which could lead to them being shut down and incur huge losses.

So new inventions were though up to get poor people into homes that they couldn't afford. Absence of Lending Standards, Perpetually low interest rates, floating rate mortgages, teaser rates, no doc mortgages, FRAUD...etc

So Housing prices soared for years and there was this built in expectation that prices would continue to rise based on past empirical evidence(similar to the stagflation of the 70s), plus the lenders were incuring little to no risk by selling these *beep* mortgages to Wall Street, who were either cluelessly or fradulently selling these to investors.( My theory is a good mix of both, but just more stupidity than most people think.) Moody's infortunately had such a bogus rating model that they could't even identify the *beep* mortgages in these securities, bonds, and CDOs.

And I don't see credit default swaps as such a terrible thing for the market. If we want to clear out the stupid, blind and irresponsible what better way than have them fail when they set up bets behind their assets. It's essentially an easy way to "short" these mortgage backed securities, which if you read up on this you'll realize that some very smart people did this before the Wall Street firms had a clue and got rewarded big time. Not until much closer to the meltdown were Wall Street firms buying CRSs on subprime, and at this point it looks like it was more just to hedge their risk.

I do however take a few good things away from this film, the incentive on Wall Street to sell MORE securities rather than QUALITY securities is clearly an issue. The extent of the fraud is probably more widespread than I'd like to admit. The regulation of bond rating firms, I'm not sure but it seems almost nonexistent. Claiming their ratings are "opinions" cleverly to abolish them of all blame. Seems like another mix of flat-out incompetence and fraud.

And the assault on Economics as a profession is neither new nor original. The claim that economics is bought out by politicans and special interest is pure B.S. The way economics is conducted at my university is economic position papers are written/published and then used by politicans to support their platforms. My one economics teacher had been contacted by several politicans running for mayor on his theory of city taxes. Several flip-flopping privately on whether to hire him, simply based on how the polls favored it. I cannot speak for these select few in Ivy League schools, but the fraud and dishonesty suggested by this film seems to be outlandish and overly critical of this fact.

Lastly, I know I've been long but it should be no surprise that the people selected to regulate these financial markets come from these very same markets. It's called Capture Theory and is evident is most government agencies. It's classic government failure. The only people knowledgable to regulate these markets come from the markets so their is an incentive problem. What we should realize is this does not necessarily mean the regulators will behave dishonestly. As history has proven. So it was somewhat laughable to me that the film went to the extent to point out that rahm emanuel worked for some out of the way firm for some insignificant salary. Whether this industry is captured? I can't say with any real knowledge I haven't studied it enough outside of this film. Ask yourselves that question

[–] 14 years ago

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[–] deeveed 13 years ago

Capitalism is a flaw of humanity in and of itself.

I'd guess most things developed by us are "flawed" in some way. It's the nature of man-made things. The financial distress we've been expereincing came for a "loophole". Capitalism apparently "works" but if there are too many "loopholes" that exist and to fix then the whole wall will comepletely lose its integrity. That's what I think we need to watch out for.

[–] 13 years ago

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[–] LLOwens 13 years ago

Wealthy people work in government, wealthy people make the rules, and they are mainly interested in preserving their status and wealth.

In harmony with several comments on this thread, I'm from the school-of-thought that believes that capitalism requires continued economic growth which will inevitably deplete the finite natural resources of the earth. Meaning: everything is expendable--be it the environment as well as the social welfare of its people in the quest to preserve the wealth of the power brokers.

When the financial sector commands a whopping 51 percent of all profits how can this in any way be considered a fair distribution of wealth, healthy for the real economy and of benefit to working class Americans? All this mostly does is drive up costs of virtually everything--being the lion's share of profits are going to the wealthy--while the cost is passed on to everyone else.

[–] 13 years ago

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[–] deeveed 13 years ago

Basically if you support capitalism you support withholding food from millions of people so they die. That's the big picture. What fuels capitalism? Materialism. I should stop ranting..

A bit in the neg category,no? I can see your frustration but from a look at some of the "isms" which floated around it's kind of the best economic system we've got. I agree there are problems but they pale to say what communism did to people and governments. Capitalism in the US obviously isn't perfect. Also, I'd think one of its tenets isn't shooting, executing and jailing individuals. Kind of counts for at least something I think. And I can see the success of China making some clamor for the Chinese "model". Let's hope some don't get carried away.

[–] 13 years ago

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[–] LLOwens 13 years ago

It's not so much a question of whether capitalism works--but rather for whom is it working for. Now--more than ever--it benefits business execs and the wealthy. From a U.S. perspective, this however could change if our trade policies were overhauled in favor of tariffs on imported goods. This would level the playing field a bit by forcing multinational corporations to think twice about moving their factories overseas--which would in turn restore manufacturing jobs in the U.S. as well as lead to an increase in federal tax revenue.

[–] deeveed 13 years ago

Good points both....I think it's intriguing that some nations today are thriving with their capitalism as result of imitating and applying Western economic traditions. As one writer noted by focusing on property rights, competition, medicine, science, consumerism and the work ethic, the West made a world that worked for generations. It can still do that.

[–] LLOwens 13 years ago

....I think it's intriguing that some nations today are thriving with their capitalism as result of imitating and applying Western economic traditions.

I too believe that capitalism has the potential to work for the majority like it has done in the past, yet we should never assume that even if the economy in a particular country is thriving with increased trade by way of privatization and deregulation that this will automatically lead to a higher quality of life and an increase in wealth for most of its citizens. Like this documentary clearly pointed out--the wealth generated did not trickle down but was instead locked in at the top--with business execs earning record salaries while the downsizing was in full swing. So for capitalism to benefit the masses, there must be a way to ensure that humans and the environment are placed above profits and percentage returns on investment--which at the moment are mutually exclusive.

[–] 13 years ago

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[–] LLOwens 13 years ago

Those who deny that capitalism corrupts is blind to the fact that the moral hazards prevalent in capitalism today would not exist in a system designed to eliminate fraud. Like you mentioned, corporations that benefit most from globalization and free trade thrive on cheap labor which usually amounts to exploitation. So if such as system unjustly rewards the most exploitative and ruthless corporations--such corporations will continue to exist.

Our entire economy appears to be geared for the downward pressure on wages--which like you referred to--requires an insatiable consumption of goods. In the short term most people believe that cheaper products are in the best interest of the majority. However, what good is having cheaper products without enough jobs that provide incomes to be able to afford such products? Additionally, while Americans may save some money by buying products made in China, the cost is eventually passed on to the consumer through higher gasoline prices--China after all needs more and more oil to fuel their ever expanding manufacturing machine. Ultimately, financing the ever growing consumption of goods will eventually result in higher amounts of debt as evidenced by the credit crunch and housing market meltdown.

America has gone from an agricultural society, to a manufacturing society, to a technical and service society, which is supposed to be progress. However, some would argue that a country that does not produce most of what it consumes could be regraded as a third-world country citing our current trade imbalance. While the elite and the educated thrive in such a society--what about those who can ill afford a college education which is prerequisite to attaining a high paying job. "Mind workers" such as executives, doctors, engineers, attorneys, and scientists can command high wages even during times of economic recession, while service workers are unable to compete directly with workers in third-world countries and suffer most during an economic downturn. This is one of the primary reason for the widening of the income gap. Unfortunately, like this documentary also highlighted, higher education is becoming more and more out of reach to middle/working class Americans. Case in point: College tuition in the state of California has increased by 300 percent over the past decade. According to the Economic Policy Institute, it is estimated that over the next decade or two, globalization is on pace to essentially erase all wage gains made since 1979 by workers without a four-year college degree. With labor unions under heavy pressure today--and losing much of their clout--it sure appears like this could very well come to fruition in the next 10 to 20 years.

Some analysts are now saying that the world is going through a period of deglobalization--so I say it's about time to bring back tariffs on imported goods and set import quotas which will level the playing field a bit for blue collar workers/unskilled laborers and lessen the trade imbalance. President Obama's "Buffet Rule" proposal--which in essence will overhaul the U.S. tax code by forcing millionaires to pay their fair share of taxes, is also a step in the right direction--although even if this bill passes--there are perhaps lots of loopholes for CPA's to take advantage of.

[–] deeveed 13 years ago

Based on the analyses above, I'd think it is apparent that capialism the way it is operating today will have to be malleable in the world's future to be able to sustain the changes caused by globalization impinging on its action. I think this is true as the sun rises and sets. I'd sugegst that at this particular time in the world economic order we are experiencing probably the first real challenges to the operating of this Western economic style.

With regard to what is actually happening today in society, I'll only point out an observation. Ever take a look at say Google offices? We've gone many years from those 'assembly' line days of the earlier Industrial Revolution. After seeing how 'work' appears in some of the Internet companies like Google it looks to me as if we're back to the future not with auto but with technological assemby lines manned by kids at cubicles with headphones intently studying images on their screens. Things change but some things stay the same. With the forces being bent on Western economic society, some things will have to change and much more extensively. You wonder whether it will take the heat or more importantly make the tough decisions that will have to be made to insure a better world for all who inhabit this planet of ours.

[–] LLOwens 13 years ago

Speaking of Google, a few days ago it was revealed that Google is secretively working with a major global outsourcing firm and is hesitant to reveal how many jobs it plans on outsourcing from its Michigan based offices.

According to a L.A. Times article released a week ago, it quotes some data from the Census Bureau highlighting a record 46.2 million Americans who now live in poverty in the U.S. What's even more staggering is that this number could be a lot higher if it were to include all the young adults who stayed at home or moved back in because of the inability to find gainful employment. We're also looking at 1 in 6 Americans without health care coverage and 1 in 8 Americans who currently receive food stamp benefits. Our national debt continues to spiral out of control while the gulf between the wealthy and the poor is at its widest gap since the Great Depression which is largely due to the tax cuts passed during the Bush administration that benefit the wealthy. So this is consistent with the trend that poverty and inequality are occurring everywhere on earth in large part because of economic globalization.

[–] deeveed 13 years ago

And I guess the question is whether or not our government has the wherewithal to solve the increasingly intractable problems in our society. And when I say government I mean the individual leaders who would responsible for leading the way. I figure where's the Washington and Adams of our times to lead us. In a way, we are kind of at war both within and without ourselves.

[–] 13 years ago

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[–] 13 years ago

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[–] LLOwens 13 years ago

Agreed ej. Without some form of social justice, moral principles, code of ethics and human rights in a capitalistic society, I believe the strong will absolutely dominate the weak. When housing prices were skyrocketing during the housing bubble, many financial experts were saying this was healthy for the economy--which was true only in the short term. The part they left out was if wages fail to keep pace with rising home prices that this would eventually lead to financial disaster. Most would be content to live without the luxuries of life. However, when wages aren't keeping up with prolonged inflation of basic commodities and life's necessities for an extended period of time--I'm not talking about normal wage-price spirals and cycles--pain is inevitable for millions of people who don't have enough of a nest egg to ride out a financial storm.

Some intellectuals argue that as man evolves and progresses, our society becomes non-zero-sum--meaning a win-win situation for the majority. However, what we're seeing today is the exact opposite--a zero-sum game scenario--where a tiny percentage (1 percent) of the population commands a hugely disproportionate amount of the wealth (40 percent).

"Man has dominated man to his injury."~ Ecclesiastes 8:9

[–] 13 years ago

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[–] LLOwens 13 years ago

Basically if you support capitalism you support withholding food from millions of people so they die. That's the big picture.

As shocking as this statement sounds--there is truth in these words. Economic globalization ideology--which forms the foundation of capitalism in our day--regards self-sufficiency as anathema. So in third world countries where people over the past centuries have planted their own food and lived off the fat of the land--globalization has destroyed the livelihoods of millions of people--and these millions have become dependent on globalization policies which in turn has lead to starvation for those who cannot afford to purchase food from multinational food corporations such as Monsanto and Cargill. Besides contributing to poverty, export driven globalization is the single greatest contributor to ecological destruction. So when speaking of globalization/neoliberalism/new world order/free trade, it is obvious that the ideology behind its policies has not delivered on what it had once promised.