Topic: Can capitalism survive as an economic system.

Anagrams. Anagrams are the rearrangement of the letters from one word to
another word or set or words. Anagrams are interesting because they often tell us
surprising things about words they’re derived from. Dormitory for example can be
anagrammed into dirty room; Elvis into lives, George Herbert Walker Bush into huge
berserk rebel warthog. Economist can even be anagram, it can be anagrammed into
income sots, S-O-T-S, which Merriam Webster Dictionary tells me is a Middle English
word for a habitual drunkard. After the most recent economic crisis many people
are beginning to believe that economist have earned their anagrammed name and
in the United States today our capitalist system has overheated, we‘re facing
unprecedented economic problems and some people are suggesting that we do
away with our entire way of doing business in the united states, literally. Which
makes it incredibly important that we ask ourselves today’s question, can
capitalism survive as an economic system? Today we are going to see the clear
answer is yes, but only if we reform the way we implement capitalism. First of all,
by learning that we must encourage competition rather than discourage it. Second,
by learning that we must break the rules of capitalism in order to save it. And third
and finally, by realizing that capitalism in restraint is capitalism that will be
successful.

First though; many people are criticizing the capitalist system because the
way in which it has destroyed America’s industrial giants. Some people are saying
the capitalist system is simply unstable, that it always leads American business to
push themselves too far and collapses into a funk; the example most people cite is
General motors, and General Motors has suffered a precipitous decline. Just a few
weeks ago General Motors was worth 7 dollars a share, that’s a far cry from the 40
dollars they were once worth, but it is a lot better than the 75 cents per share that
General Motors cost when it went into bankruptcy protection just a few weeks ago.
A physical share of General Motors is now worth more as a collector’s item than as a
stake in the company. General Motors went it went on sale in the 1940’s was priced
higher. Capitalism, it would seem, erased a century of growth for America’s biggest
automaker, and yet as the New York Times’ reports on June Second, that isn’t the
full story. General Motors has been going through an, almost, endless period of
restructuring ever since the 1970’s. They have been trying to increase their market
share, but ever since the 70’s it has been slowly decreasing. General Motors hasn’t
made any progress because as The Economist news magazine in a June Twelfth
article titled “Detroit-o-saures Rex” writes; the American government has been
intervening in ways that have harmed GM. We have been anti-competitive trying to
make GM big, but in the process making it bad. For example, The United States
government, when we implemented our C.A.F.E. standards to improve fuel economy
in the United States, exempted SUVs, classifying them as light truck - So GM didn’t
have to change it’s line-up. We blocked the importation of Japanese cars for years
to keep them from competing with American automakers. The truth is the
Government made GM bad through its excessive intervention. Capitalism can
survive as an economic system but only if we return to its fundamental principle of
competition. We should look to that if we hope for capitalism to survive.

But second, we need to look at the way in which we can reform our capitalist
system to make it work better if we learn to break some of it’s rules. One of the
central pennants of capitalism is that almost any intervention in the economy is
going to be a bad idea because it will artificially alter the way our economy is
functioning. And yet capitalism is producing a series of significant problems for the
US, most notably the recent recession has devastated the lives of millions of
Americans but as Paul Krugman writes in his book “The Return of Depression
Economics and The Crisis of 2008” there really is an unbelievably simple solution to
recessions. Recessions are easy economic problems: production begins to outstrip
demand, therefore production is reduced to match demand, but as production
declines, demand decreases further; people are laid off and business start buying
fewer goods and services. The solution according to Krugman, is to introduce more
money into the economy: to pass a stimulus package, which will artificially recreate
the demand that was lost. The New York Times reports on June Eighth that our
stimulus package will probably not have the desired result. Americans were right to
be skeptical of such a massive expenditure of Government dollars, but we all have
to recognize the significance of breaking capitalism’s rules every once in awhile.
The economic system is not perfect, sometimes it needs to be repaired: because we
delayed so much on passing the stimulus package, most of its money will not be
dispensed until six months into next year and as the wall street journal on may
fifteenth, the recession may be largely be over by then; because we failed to act
swiftly, because we were not bold enough to break the rules of capitalism in order
to save it, it seems like the capitalist system is dead. If we learn that lesson,
capitalism can continue to exist as an economic system.

But third and finally, Capitalism’s survival is predicated on our ability to

understand that sensible regulation is 100% required in order to make sure that
capitalism is a functional economic system. As Paul S. Blinder, a professor at
Princeton University, noted in a recent interview, our economic crisis was largely
brought on by a shadow banking system; a banking system that existed out of the
sight of most Americans, and certainly out of the sight of federal regulators. That
shadow banking system was something that we intentionally created; as Barnes
reported November seventeenth, a bipartisan commission fed, headed by Phil
Gram, passed a bill that deregulated the credit default swap market. Credit default
swaps formed the foundation of our ineradicably unstable house of cards banking
system; credit default swaps were functionally a form of insurance, one bank would
issue insurance to another, be paid a flat fee and then promise to pay a flat fee to
that bank if their investment went sour. They produced almost nothing but pure
profit, because they were almost made on safe bets, like the American housing
market, which immediately went sour, sending our banking system into collapse. If
we hadn’t deregulated, we wouldn’t be facing these problems, capitalism in
restraint is still capitalism and it can survive into the future, if we learn how to
implement it.

Can capitalism survive as an economic system? Today we have seen that the
clear answer is yes, but only if we learn our lesson: First, making sure that we
encourage competition as opposed to avoiding it, American corporations shouldn’t
be coddled, they should be forced to compete in the capitalist cycle; Second, the
capitalist system can be saved if we make sure we learn how to break capitalism’s
rules to invest when necessary; Third and finally if we make sure we implement
sensible regulation to ensure that our capitalist system is under control. Until we
start to implement these sorts of policies our economy is likely to suffer, unless we
truly change our ways Economist will still be known as income sots and our
economy will still be in crisis.