The Folly of Capitalism and Money-System Bashers

I do not pretend to be an economist nor do I pretend to be a financial guru. In fact, I am quick to admit that I’m not really the most business or financial savvy guy. What I do appreciate however, is common sense and critical thinking. Last week’s news about Mt. Gox going belly up reminded me of a debate I had with a Kool-Aid drinking uber-liberal dolt a few months ago. She is one of those capitalism/money bashers who believe in and promote alternative exchange systems because of her loathing of money and the money system. In essence, she believes in the tired cliché that says “Money is the root of all evil”. She abhors the idea of having to work at least 40 hours a week just to make money in order to pay the bills. In fact, very much like those sheep-like minded “Occupiers” who have nothing better to do but defecate at public parks and demand that the government take from the 1% to be distributed to the 99%, she enthusiastically agrees with (and promotes) the meme that says:

“Imagine if EVERYONE stops paying their mortgage payments, car payments, credit card payments, taxes, etc. WTF are the powers that be going to do about it?”

monetary_systemWell, strictly speaking for myself, I think that to believe that money (or the money system) is evil reflects a catatonic intellect; to promote intentional delinquency on financial responsibility just to advance a bankrupt ideology is harebrained. Not only is this mindset irresponsible, it is also unjust. A big irony, really, for even the dime a dozen bleeding heart liberal who is supposed to be all for social justice and equality.

First of all, money is merely a tool. It is a tool that allows us to exchange goods and services with one another. Sure there are other tools or means for people to trade with one another without money such as barter. However, as Fox News columnist Peter Morici stated, money “eliminates the inconvenience of barter”. For instance without money, how can I do business with someone who has nothing to offer that I find value in nor I’m interested in? Let’s suppose I am a landlord offering housing to interested tenants. An applicant comes along with nothing to offer but to cook me a pot of “pinapaitan” every end of the month. What if I hate “pinapaitan” (which I really do hate)? How about if the applicant can only offer sexual favors? What if I’m not interested and what if I find the applicant repulsive? The philosopher Immanuel Kant once argued that the worst thing a person can do to another person is to treat him/her as a mere means to an end. If we use toilet papers (as means) to clean ourselves up after taking a dump (as the end), then what difference in value would a human being have over a piece of toilet paper if the human being is also being used as mere means for an end? So you see when money ceases to be the tool where human beings can exchange goods and services with one another then human beings may very well become the tools of human beings. Humans are then reduced as mere means to an end.

Now what about other tools for exchanges? Since we touched on Bitcoin, let’s take that as an example. According to Wikipedia:

Bitcoin is a peer-to-peer payment system and digital currency introduced as open source software in 2009 by developer Satoshi Nakamoto. It is a cryptocurrency, so-called because it uses cryptography to control the creation and transfer of money. Conventionally, the capitalized word “Bitcoin” refers to the technology and network, whereas lowercase “bitcoins” refers to the currency itself.

Bitcoins are created by a process called mining, in which participants verify and record payments into a public ledger in exchange for transaction fees and newly minted bitcoins. Users send and receive bitcoins using wallet software on a personal computer, mobile device, or a web application. Bitcoins can be obtained by mining or in exchange for products, services, or other currencies.

As Peter Morici avers, the problem with this alternative tool for exchange is that these are not guaranteed for safety by financial regulatory agencies (e.g. FDIC, Federal Reserve). No country in the world has declared Bitcoin to be legal tender to buy goods, services and even to pay taxes.

Some people advocate other forms of tools other than Bitcoin such as time-based currency, for instance. According to Wikipedia:

In economics, a time-based currency is an alternative currency where the unit of exchange is the person-hour.

Some time-based currencies value everyone’s contributions equally: one hour equals one service credit. In these systems, one person volunteers to work for an hour for another person; thus, they are credited with one hour, which they can redeem for an hour of service from another volunteer.

Try to imagine a scenario where person A gets a bucket of fried chicken from person B in exchange for one hour of person A’s time to clean person B’s house. What if person A is a slob and doesn’t really know how to clean a house well? The problem with a time-based currency, according to Dr. Gill Seyfang’s study of the Gorbals Time Bank, is that: “there is no guarantee that every person’s needs will be provided for by a Time Bank…. the supply of certain skills may be lacking in a community.” Besides, what do you think the BIR or the IRS or the CRA or any other government tax body would tell you should you offer to pay your taxes by cleaning their toilets for an hour?

So to follow Morici’s line of thought, money allows a carwash attendant to buy a hamburger from a McDonald’s employee who gets his shoes from the Shoe Mart department store. All of them accept money because the government they fall under declares their money to be legal tender for public and private debts. Sure the carwash guy can try to barter with a McDonald’s employee and the McDonald’s employee can try to get a pair of shoes from SM in exchange for a Big Mac combo. However, can we imagine trying to pay the BIR a free carwash or a Big Mac or a pair of shoes come tax season? In reality, employees and suppliers would expect to be paid with money and the tax agencies would require payment with money even for income earned through barter.

Now that we see that money itself should not be looked at as evil per se, but merely a preferred (and sensible) tool for exchange of goods and services, we can now look at the call for not paying our financial obligations in order to advance an agenda (agenda such as sticking it to the evil 1 percenters and those “Corporate fat cats”). Of course this call was borne out of the uber-liberal’s favorite type of warfare – Class Warfare. You have the “good” (the poor and the so-called 99 percenters) versus “evil” (the rich and the so-called “1 percenters”). The concept makes for good theater and drama but for some reason I personally find this idiotic call to be quite unnerving as it seems to promote that a disgraceful behavior is okay if you dress it up as a big “F-You” to the powers that be. I’m sorry but I still look up more favorably towards a balut vendor walking the streets of Manila selling his product than towards a looter who simply prefers to take what others have earned.

Wait a minute. Did I just equate those “Occupiers”, demanding for the wealth of the “evil” 1 percenters to be redistributed to the “victimized” 99 percenters, to looters? Well, if one is to think about it there is really not much difference between the two. In essence, taking from those who produce makes one simply a looter or a thief. Just because Henry has money doesn’t make him any better or worse, as a person, than the average Juan. What matters is how Henry got his money. If he obtained his money by creating value then money merely serves as a token of honor. If the average Juan simply took money from Henry without having to create value then there’s no honor there. Looting (or theft) can never be honorable despite the “good intentions”. Unfortunately, most people who demand that the “rich” get taxed more in the spirit of “equality” seem selective when it comes to the overall scheme of things. Did the average Juan create the same value and did he take the same risks as a, say, Henry Sy? Taking from the “rich” to give to the “poor” maybe a good political rhetoric to win the “masa vote” but where is “equality” and “fairness” in that?

Anyway, so what if people don’t pay their mortgage, car payments, credit card bills, and taxes? How are the home builders supposed to be compensated? How can a car factory worker be paid for his labor? How about the many men and women who work to produce the goods and services used by a person who refuses to pay the credit card bill reflecting the consumed goods and services? Where is the justice in getting stiffed by those who have a big beef against people who make more than they do? The way I see it, the whole call to stiff the powers that be just to promote (financial/economic) equality and social justice is a big puerile contradiction.

At the end of it all, the argument of the sheep-like minded uber-liberal dolt, very much like the many dime-a-dozen Occupy Movement peddler, hinges on the evils of inequality. For her and her ilk, they cannot accept that capitalism results in unequal outcomes. That’s really their main argument – that it isn’t fair that they have to work their butts off on a Sunday morning or for at least 40 hours per week just to make chump change compared to the fat lazy cats of Wall Street. They consider themselves as the “have-nots” calling for equality with the “haves”. Of course, the “haves” are any folks with more than what they have. Never mind the fact that most of us (and I daresay even most of the Occupy proponents) are also “haves” compared to others. So remove the romanticism of dissent and sticking it to “the man” and what they have is merely petty selfishness and envy. As author Mark Goldblatt fittingly described it: “It’s more of a self-righteous grunt, a narcissistic demand to be heard despite an inability to form meaningful sentences”.

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35 Comments on “The Folly of Capitalism and Money-System Bashers”

  1. Our country is teeming with wide-eyed liberal-leaning zombies who think it’s happy ever after if we eradicate currencies and eliminate enterprise. The outcomes of their daydreaming will be the very paradox of their fantasies.

    1. The most important mantra for the “wide-eyed liberal-leaning zombies” is equality. So eradicate the money system, Wall Street, enterprise, capitalism, etc. all in the name of equality. They want to live in a world where no one has a leg up over another. Perhaps they should move to the jungles of the Congo where everyone is equally dirt poor and are all pretty much “have nots”… except for a few warlords who would hack people’s legs with a machete. But hey… at least everyone is pretty much equal and no one can have a leg up over another (literally and figuratively). Thanks for reading, PHguy! 🙂

  2. Speaking of the Occupy Movement (they who think that corporations are evil), they have their own DEBIT CARD SYSTEM now!

    http://saverocity.com/pfdigest/the-occupy-wall-street-debit-card-has-more-fees-than-the-wall-street-debit-card/

    (They partnered with VISA, and the fees are WAY more expensive than your standard card.)

    Simply put, the Occupy Movement sold out to those they were fighting against in the first place. I suppose that all those who joined in the hype have been taken for a ride.

    1. Yes, those who joined in the hype have been taken for a ride. It’s probably partly because of bandwagon mentality for those who embrace an entitlement society fueled by envy. Thanks for reading, MidwayHaven!

  3. Hector,

    I imagine you will be hearing a lot of profanity and scatological remarks from the economically illiterate, anti intellectual poltroons who’ll be rehashing all sorts of specious non sequiturs from NAFTA to the 2008-2009 economic crash.

    1. Hi Johnny Saint! Well, that comes with the territory. A conservative –leaning piece often becomes a target by uber-liberal dolts. Which is fine… as long as criticisms are based on facts and are focused on the topic. The dolt that I had to deal with a few months ago merely resorted into personal attacks and tried to turn the debate into a debate about my “super-inflated ego” daw. 🙂 hehehe

      With regards to your point that democracy and capitalism is more about equality of opportunity rather than equality of outcome, yes I am aware of that. However, speaking about how the uber-liberals see democracy and capitalism, for them it is more about the outcome rather than the opportunity. These folks don’t really value opportunities as much as they value entitlements. There are lots of opportunities around! Although sure to get to these opportunities sometimes one has to overcome various levels of challenges. There are so many success stories of folks coming from dirt poor backgrounds overcoming challenges from gender to skin color to lack of money. These “Occupiers” want success to be delivered to them and without them having to break a sweat. Also, for them it is a zero-sum game. They think that there is only a fixed amount of wealth present in the world and rich persons only became rich by taking from the poor. Thanks for reading!

  4. All of world’s currencies are fiat currencies, meaning their value are base on ‘trust’ on the government (http://en.wikipedia.org/wiki/Fiat_money). The government controls then supply of money circulating.

    The percieved problem with this system is that the government can generate more money, hence reducing the problem.

    Bitcoins, called cyptocurrencies, relies on crytography to ensure the their uniqueness. Unlike fiat currencies, there is not central agency, like the government, to generate money.

    From http://en.wikipedia.org/wiki/Cryptocurrency

    Fundamentally, cryptocurrencies are specifications regarding the use of currency which seek to incorporate principles of cryptography to implement a distributed, decentralized and secure information economy. When comparing cryptocurrencies to fiat money, the most notable difference is in how no group or individual may accelerate, stunt or in any other way significantly abuse the production of money. Instead, only a certain amount of cryptocurrency is produced by the entire cryptocurrency system collectively, at a rate which is bounded by a value both prior defined and publicly known.

    In centralized economic systems such as the Federal Reserve System governments regulate the value of currency by simply printing units of fiat money or demanding additions to digital banking ledgers, however governments cannot produce units of cryptocurrency and as such governments cannot provide backing for firms, banks or corporate entities which hold asset value measured in a decentralized cryptocurrency. The underlying technical system upon which all cryptocurrencys are now based was created by the anonymous group or individual known as Satoshi Nakamoto for the purpose of creating an economy within which the practice of fractional reserve banking would be fundamentally impossible.

    BitCoin does not intend to overthrow capitalism as some say, it simply replaces fiat currencies as a legal tender.

    Practically, I am observing how well bitcoins will work in real work. I would love it replace the current system that uses fiat money, but right now it’s unpredictable value when being converted to other currency is simply unbearable.

    1. ‘ more money, hence reducing the problem’

      I mean generating more money faster will cause faster inflation rate.

      I’m sorry for some error like this. I’m replying from my tablet 😉

    2. Hi OnesimusUnbound! As Peter Morici said:
      “The creators of Bitcoin and advocates of virtual currencies are riveted by the temptation of governments to print too much and destroy its value through inflation. However, inflation is hardly a problem in the United States, Europe and Japan, and central banks in other countries hold dollars, euro and yen to back up their currencies. … Detractors of paper money have always been fixated by the absence of gold to back it up, but they fail to recognize what really makes a currency accepted and secure — the government guarantee and the good sense of the sovereign not to abuse its franchise.

      It’s not the gold but the face of Caesar — the promise his image carries — that makes a coin money.

      There is no “Bitland” where a government has declared the Bitcoin legal tender to buy goods and services and pay taxes. Lacking such a tangible connection to the real economy, it is very hard to value day-to-day.”

      Thanks for reading!

      1. Thanks for the reply.

        To summarize, I’ll say that it depends on how trustworthy the issuer is, for our case the government. For an example

        1. Iraqi Swiss dinar (http://en.wikipedia.org/wiki/Swiss_dinar)

        This is one case where the government, the issuer, printed so much money, causing inflation. Even if the swiss dinar was replaced by the government as the legal tender to buy and sell, still people in Kurdish region of northern Iraq uses it as their medium of exchange, and they avoided severe inflation.

        2. Zimbabwean Dollar (http://en.wikipedia.org/wiki/Zimbabwe_dollar)

        Zimbabwe, the so call land of of the “millionaires” suffers from inflation due to mismanagement of the government reserve bank to genrate more money. Most people and companies in Zimbabwe uses stable currencies like US dollar, Euro, South African rand. Inflation was so bad that Zimbabwean dollar wasn’t used.

        Basically, my points are

        1. fiat currencies are as good as the issuer, that is, if the issuer is trustworthy enough not to cause severe inflation

        2. you don’t need the government to enforce a currency as a legal tender. I’ll go as far as to say as as long as two or more people agree that a currency has a value as a medium of payment, regardless of government enforcement.

        So, why Bitcoin is ideally a good replacement to fiat currencies because it relies on cryptography to control the creation and supply of the currencies, hence it’s impossible to generate too much coin to cause inflation. Moreover, anyone can run bitcoin miner to generate coins in predefined rate.

        For my case, bitcoins has a value as long as people and companies “trust” it as a medium of exchange.

        Again, to be honest, I’m still observing how well it will work in real work.

        1. Protection from government. If someone were robbed of their bitcoin, they cannot come to the government for assitance since it is not legally proptected.

        2. Price volatily. Simply unberable.

  5. i think there should be a balance of thought. indeed paper currency is the preferred method due to its stability and comfortability in dealing in our daily lives. the issue here is that banks and governments are continuing to print more and more worthless paper money that caused instability and high inflation courtesy from the advent of fiat currency. of course capitalism did many wrongs but i dont see how communism survives to its ideology.

    1. “the issue here is that banks and governments are continuing to print more and more worthless paper money that caused instability and high inflation courtesy from the advent of fiat currency.”

      Which countries are we talking about now? The inflation rate of the Philippines certainly has gone up over the last month. As of January 2014 it was at 4.1 percent. Up from around two to three percent in the last quarter of 2013. If you are talking about the United States, inflation rate in January 2014 was 1.6 percent. From 2012 to the end of 2013, the inflation rate hovered between two to three percent. And while the US Dollar continues to slip in value, it hasn’t exactly turned into ‘worthless paper money.’ So — what are you talking about?

      “…capitalism did many wrongs but i don’t see how communism survives to its ideology.”

      What ‘wrongs’ exactly did Capitalism supposedly commit? Are you referring to that hoary old staple that labour organisations like to drag out in their street protests — problems of worker safety?

      The truth is that worldwide, workers’ lives have actually improved significantly over the last hundred years or so. The number of workplace injuries have steadily dropped since the start of the 20th century. And this didn’t happen because companies adopted Communist principles. Nor was it because of certain governments imposed regulations.

      The simple truth is that even without state regulation, the PRIVATE SECTOR set their own standards for businesses to follow. Even the most ruthless capitalist understand that protecting workers is less expensive than hiring and training new ones.

      1. the US dollar is founded merely on confidence of the world along with its dealings with middle eastern countries known as petrodollars.

        1. I’m sorry, but so what? ALL modern currencies are based on the value our economic and political systems imbue them with. We haven’t used the gold standard for decades.

          You still haven’t explained why money is supposedly worthless. The Dollar has dropped in value because of poor US policy but it still remains robust.

    2. Hi Megaman101! In addition to my response to OnesimusUnbound, I agree with you that this is probably more of a question of human nature than ideologies – an ethical issue. Surely if this is human nature then greed and oppression could not just be exclusive to the rich and the tycoons. Thanks for reading!

  6. “For her and her ilk, they cannot accept that capitalism results in unequal outcomes.”

    That isn’t exactly the case. It’s more accurate to state that our culture of democracy and capitalism emphasises AN EQUALITY OF OPPORTUNITY, NOT AN EQUALITY OF OUTCOMES. The only ones who ever made the specious guarantee of ‘equal justice’ were Marxists and the watered down Communists of to-day who slept on the street to ‘occupy Wall Street.’

    Under a democratic system, each of us have the opportunity to work hard and do the best we can in order to ‘get ahead.’ All things being equal, anyone participating in a free market can become wealthy playing by the rules.

  7. Money is a currency tool, a means of exchange , for value, to be used for Good. If money hoarders filthy rich people, hoard their money, in offshore banks; then, they are not being used for good. In our country; the “Rich politicians” steal from the “Poor People”, thru deceit and Pork Barrel Funds.

    Viewing from Technical Perspective…there will be: “E-Paper”, for which all the informations of your current bank accounts, will be contained. As computers, go smaller and smaller; more sophisticated; and cost less and less…E- Paper will be a changing factor that will revolutionize human advancement in our technology. Including our currencies and banking systems.

    If you buy those birthday cards; that when you open them: they sing: “Happy Birthday to you!!!…Happy Birthday to you!!!” …The power of that small computer circuit; is more powerful than the advance war tools of Hitler,and the Allies combined. during World War II. Computers then, were still in the infant stages…

    1. Hello Hyden Toro! Would a person from modest means be any less evil than a rich person if he/she decides to save his/her money for future purposes? For me, it is one thing to condemn people who steal from others but it is a different issue to condemn people who decide to save or park their money for future purposes. I don’t particularly see anything wrong with people who decide to keep their money in banks (locally or offshore). People don’t keep their stash away just for the sake of keeping them away. Most likely they do it for future use, benefit or even profit. Thanks for reading!

  8. capitalism is not innocent but it encourage the principle of free market in which everyone has a chance to succeed when they are competitive and work hard. unfortunately there is the bad side where bosses exploit their workers taking all the money reaping the results of the worker’s hardwork without being considerate. i think rather than switching to marxism. capitalism should be reformed for the good of all. one thing more in the philippines, the oligarchs are oppressive all it needs is that there should be competition so they will buckle up their belts and cooperate.

    1. You can reform Capitalism, by Anti Trust Laws. If Capitalism is unhindered, it will become business monopolies. Marxism can become Capitalism also, like China and Vietnam.

  9. The issue about money too is how it is inflated without restrictions not improving the quality of life among the lower classes like a medieval fiefdom in the philippines. greed and overconsumption gives money bad name for the oppressed. communism wont work even its leaders are into opulent lifestyle so its more of the question of human nature than their ideologies. there is oppression from the rich evil tycoons but thats another issue its an ethical issue.

    1. I agree. No matter how ideal a system is, someone will find flaw in the system and take advantage of it.

    1. Not necessarily. Money is just a number. I love numbers (though I suck at it) if you work within the “boundary” I don’t see why it’s “evil”. If someone has a bigger goals – Let’s just they looked-up Gates & Buffet.

        1. Yes its the love of money I am pertaining and I don’t see it as evil as long as you work “within the boundary”.

    2. Hi berto! Yes, but the dolt I dealt with actually had a beef against money and the money system specifically. Thanks for reading!

  10. I think the Occupy Fad and this anti-capitalist/anti-money system thing is connected to the tin foil hat squad. You know, the guys that believe the Rothschilds control the world monetary system, that the banks or the Illuminati/Freemasons/New World Order controls everything, from wars to scientific discoveries to our consumer habits, and they do it through mind control or chips implanted in our heads and hands. Even today, all the drivel hasn’t been proven.

    1. I think so too. The uber-liberal dolt I debated with was so into these conspiracy quacks as well… spreading conspiracy theories featuring “The Cabals”, the “Illuminati”. The “Fourth Dimension”…. whatever! You try to debate them with facts and objective arguments and you get criticized not for the reasons and arguments you present but for being too blinded by your “super-inflated ego” and being a “Mr.-Know-It-All”. 😀 lol Now how on Earth are you supposed to have a fruitful discussion with a dolt like that? Thanks for reading, ChinoF!

  11. thanks for all your comments! i just want to say it is okay to be rich when you worked hard no credit taken from them what i hate about the rich is that they cared more about materialism than having good character ethics. what i hate about the poor is that they have the same sense of entitlement ie pinoys. i commended the poor that they fought for EQUAl Rights but equal results are different issues.

    the usa dollar has “value” because of the soveregnty of its government right? how about the philippines? how valuable is its currency? an economy kept afloat by remittances? whats scary about money fiat ones if the government abused its power like the romans they will fall from grace? base on the confidence of the market of the united states dollar as a beacon of financial stability the image it projects.

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