Capitalism And Doing Good Are Not Mutually Exclusive

from the tie-them-together dept

Over the last few years, it's been great to see more people realize that capitalism and philanthropy are not mutually exclusive concepts. When Google launched its philanthropic foundation, the biggest news was the fact that it was designed as a for profit entity, rather than the typical non-profit. The NY Times is now writing about this trend for new philanthropic organizations to also be for-profit organizations, recognizing that many of them have found they can do much more "good" by also focusing on a way to make a profit. As we pointed out when Bill Gates called for "kinder capitalism," a full understanding of capitalism would suggest that there's plenty of kindness baked in. There is benefit in doing good, and just because there's a profit motive behind some things, that doesn't mean it's at odds with doing good. It's great to see that more philanthropic organizations are recognizing that as well.


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  1.  
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    Anonymous Coward, Feb 26th, 2008 @ 9:22pm

    "Capitalism And Doing Good Are Not Mutually Exclusive" is not grammatically correct, you want this: "Capitalism And Doing Well Are Not Mutually Exclusive."

     

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  2.  
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    Zubin, Feb 26th, 2008 @ 9:34pm

    Always a worthwhile topic. While there will probably always be place for non profit philanthropy, there is certainly a place for for-profit philanthropy as well. Think of how much more good the OLPC Association could be doing if it had been better prepared to reap the available benefits for the Give 1 Get 1 campaign.

     

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  3.  
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    Peter, Feb 26th, 2008 @ 9:50pm

    Re: Capitalism and Doing Good

    I hope you are as smart and witty as this comment requires you to be . .

     

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  4.  
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    Anonymous Coward, Feb 26th, 2008 @ 10:16pm

    Re:

    But he's trying to speak the dialect of those that argue against the basic rules of economics.

    They generally have the vocabulary and argumentive skills of a fourth grader.

     

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  5.  
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    Investor, Feb 26th, 2008 @ 10:26pm

    Not at the cost of profit!

    Doing "good" is fine as long as it doesn't reduce profits. When I invest in a company I expect that company to follow the law and maximize the return on my investment, not piss profits away doing "good" deeds. If I want to give to charity then I'll do it on my own. It would be like if I owned a shop and discovered that an employee had been giving away merchandise to people he/she felt "sorry" for. I would have that employee arrested because that merchandise wasn't the employee's to be giving away. Likewise if I invest in a company and find out that they've been giving the shop away, I'll be filing a lawsuit against them.

    Now that isn't to say that it can't be smart to do for a company to build a sympathetic public image even if doing so entails investing some funds doing what appear to be "good deeds". That's OK as long as it's done to actually increase profits. For example:
    1.Improve public relations and thus increase sales.
    2.Improve public image so as to influence legislation in a favorable way.
    3.Obtain tax breaks, contracts or other government favors.
    Those are legitimate capitalistic objectives. And a company should always avoid doing things for which the punishment is greater than the profit.

    There's only thing that matters in capitalism: PROFIT. Period. This is something Wall Street understands well. It's nothing to fee guilty about and there's no reason to try and pretend it isn't so. Anyone who thinks otherwise can try selling stocks on Wall Street in a company that does "good deeds" instead of making money and see how far you get. Or better yet, just send me your money. I'll put it to "good" use.

     

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  6.  
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    Tim, Feb 26th, 2008 @ 10:39pm

    Re:

    Is this comment supposed to be sarcastic? If not it's just plain wrong.

     

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  7.  
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    Le Blue Dude, Feb 26th, 2008 @ 11:28pm

    Re: Not at the cost of profit!

    Um. Actually, doing good can increase profit.

    Have you ever heard of enlightened self interest?

    Basically what goes around comes around. The disadvantaged of today are the customers of tomorrow is one aspect.

    There are other aspects too. I mean, look at Microsoft. Then look at Google. One of them does good. The other is a corporation that has no concept of good or evil, only profit. Which is making more? Which is doing better?

    Economists are stupid if they forget the human factor.

    Doing good also helps attract the best and the brightest (since they tend to be idealists) and makes for good employee relations... and so on.

    Altruism exists because helping others survive helps you and your relatives survive.

     

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  8.  
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    Buzz, Feb 26th, 2008 @ 11:28pm

    Re:

    I believe "good" is a noun, not an adverb, in this particular title.

     

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  9.  
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    Theresa Carpenter, Feb 27th, 2008 @ 12:45am

    Re: Not at the cost of profit!

    There are billions of poor people on this planet. That's an enormous market if you can figure out what they want, as more and more businesses are doing.

    Mobile phones. Microfinance. Web development. Basc computer training. Business consulting. Providing agricultural market data.

    There's a huge difference between taking money away from stockholders in order to give to charity and building your business model around social development. The reality is that people pay for services that are useful to them, especially services that have the potential to increase income/ generate revenue.

    No one is saying that an enterprise should do good INSTEAD of making money. What we're saying is that it's entirely possible to make money by doing good.

     

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  10.  
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    Anonymous Coward, Feb 27th, 2008 @ 12:47am

    Re:

    Either you are an asshat trying to poke at people are you truly are a moron, good sir, and I am sorry for you if that is the case.

     

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  11.  
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    Investor, Feb 27th, 2008 @ 1:35am

    Re: Re: Not at the cost of profit!

    Um. Actually, doing good can increase profit.

    As long as it maximizes profits, then that's fine. That's in line with what I said.

    There are other aspects too. I mean, look at Microsoft. Then look at Google. One of them does good. The other is a corporation that has no concept of good or evil, only profit. Which is making more? Which is doing better?

    You mean, which one is doing a better job looking good? PR and a good image can be useful if it increases profits. Read what I wrote above.

    Doing good also helps attract the best and the brightest (since they tend to be idealists) and makes for good employee relations... and so on.

    As long as it increases profits, then like I said, that's fine. I never said that good deeds should be avoided even if they are profitable. In fact, that would violate what I said. If "doing good" happens to align with maximum profits, then so be it. But if not...

    Altruism exists because helping others survive helps you and your relatives survive.

    You've obviously never been in battle. Life is a competition with winners and losers and sometimes it's you or them. If you aren't prepared to be a winner, then prepare to be a loser.

     

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  12.  
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    Investor, Feb 27th, 2008 @ 1:46am

    Re: Re: Not at the cost of profit!

    No one is saying that an enterprise should do good INSTEAD of making money.

    Well, if you aren't maximizing profits, then that's exactly what you're doing.

    What we're saying is that it's entirely possible to make money by doing good.

    As long as it maximizes profits, fine. But that's what I expect my investments to do: maximize profits. And that's generally what the law expects publicly traded companies to do also.

     

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  13.  
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    jeannie, Feb 27th, 2008 @ 2:41am

    Re: Re: Re: Not at the cost of profit!

    But you seem to be assuming that the business venture is covertly doing good deeds at the expense of profits - if the stated intent is to both do good and turn a profit, then investors can assess their own risks accordingly.
    And there is no law that compels publicly traded companies to be financially successful, although that certainly would be handy. Investments fail for all kinds of reasons, and not generally because they are being too nice for their own good.

     

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  14.  
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    Peter, Feb 27th, 2008 @ 3:17am

    Re: Not at the cost of profit!

    This was the heated subject of my first module of an MBA - business ethics. Your stance was mine, but I was awoken to the modern principle of a triple bottom line - People, Planet and Profit. I have to say I buy into it now. There are too many companies, especially in the USA, who have proved that following a business model that focuses on all three equally improves a company for all stakeholders more than simply chasing profit.

    But I'm sure we can argue it forever. We certainly tried to in class!

     

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  15.  
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    Haywood, Feb 27th, 2008 @ 3:30am

    Re: Not at the cost of profit!

    You are what is wrong with this country. People used to take the long view, doing what was right and reaping rewards down the road. Todays business is focused directly on bottom line, and at that, only in the quarter they are in, right or wrong anything for a buck. To hell with long term planning or public perception, we need a big profit this quarter, next quarter we'll do it again. You aren't the entire problem though, the Government constantly shifting policy and tax liability, makes long term planning more difficult as well.

     

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  16.  
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    Anon, Feb 27th, 2008 @ 4:15am

    You are what is wrong with this country. People used to take the long view, doing what was right and reaping rewards down the road. Todays business is focused directly on bottom line, and at that, only in the quarter they are in, right or wrong anything for a buck. That's not the impression I got from the post. Firstly, nothing was said of short or long sighted business models. If it is for profit, than a business SHOULD do all it can, legally, to succeed. That includes long-term business models, not just for the quarter. Now, companies that find legal loopholes, while still staying technically legal but going against the spirit of the law, that is another matter... To hell with long term planning or public perception, we need a big profit this quarter, next quarter we'll do it again. You aren't the entire problem though, the Government constantly shifting policy and tax liability, makes long term planning more difficult as well. Again, why is talking of profit mean you have to be short-sighted? Yes, the government does shift policy and such, but who runs the government? This is just another example of people's lack of interest in their government, and how it comes back to bite them later. We vote in Congressmen and such to represent our feeling and beliefs of what is right. The laws passed intend to keep companies from committing crimes against society. Ultimately, blaming the government is blaming the people... we are accountable for our governments actions. Profit and good can, and many times do intersect. The point of the article and Investor's post has nothing to do with whether or not it MUST intersect or MUST be avoided (nor did I read anywhere that Investor claimed good must be avoided).

     

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  17.  
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    Ian Ward-Bolton, Feb 27th, 2008 @ 5:06am

    Re: Re: Re: Not at the cost of profit!

    Life is not a competition. How do you collect your winnings at the end when you are dead? And don't say Heaven because there is no way you will be going there with your questionable morals.

    Treating life like a zero-sum game always leads to misery and fear because for you to win others have to lose and when you are ahead you live in fear of losing what you have. Money should never the end goal as it is a finite resource. Happiness, on the other hand, can always be increased for everyone if you focus on being happy and making others happy rather than accumulating material wealth.

     

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  18.  
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    Alimas, Feb 27th, 2008 @ 5:48am

    Re: Re: Re: Re: Not at the cost of profit!

    Life is little else than a competition!
    All of life competes with all other forms of life to survive!
    We compete with nature and the basic forces of reality!
    Humans have even taken it to the next level and made themselves as well as nature among their biggest competitors!

    What kind of soft, easy environment, cut-off from the rest of us, did you grow up in?

     

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  19.  
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    Hellsvilla, Feb 27th, 2008 @ 5:53am

    Re: Re: Re: Re: Not at the cost of profit!

    And there is no law that compels publicly traded companies to be financially successful, although that certainly would be handy. Investments fail for all kinds of reasons, and not generally because they are being too nice for their own good.

    Yes, yes there is. They have full legal liability to the shareholders to be successful.

     

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  20.  
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    Anonymous Coward, Feb 27th, 2008 @ 8:51am

    Re:

    Actually it is grammatically correct. "Good" is used as a noun in this case.

     

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  21.  
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    Anonymous Coward, Feb 27th, 2008 @ 9:39am

    Re:

    Try:

    "Capitalism" and "Doing Good" are not mutually exclusive.

    Where "Doing Good" refers to "doing good works" or "performing good acts" or "acting on behalf of the good of society."

     

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  22.  
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    Anonymous Coward, Feb 27th, 2008 @ 9:48am

    Love of money is the root of all evil.

    The question becomes: if a company does X, it makes $X; if it does Y it makes $Y. Either way, after accounting for the costs $C, the business is making a profit and, in fact, growing. Is the company doing harm to the shareholders if it makes a profit, but not *as much* profit as, maybe, it could? And how far of a look-ahead do you want? If doing X now maximizes profits for the next two years, but costs the company in the long run, is it an offense to share holders? If doing X now isn't *maximizing* profits in this quarter, but will doubnle or triple profits over the next two, is it an offense? What if it's not for five years?

     

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  23.  
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    Anonymous Coward, Feb 27th, 2008 @ 9:54am

    Re:

    The post inquestion talks about maximizing profits. He doesn't put any time bounds on that, he just says, "whatever, as long as it maximizes profits." And he goes further, saying that things which achieve LESS than maximum profits ought not be done.

    The problem that the post you argue against sees is that, all things being equal, we can only have confidence in what maximizes profits now. When you say, "whatever, as long as (and only if) it maximizes profits," then you fall into the major problem that post points to where companies are short-sighted, concentrating only on this querter's profits. If you plan for the future, there's a real chance you aren't squeezing EVERYTHING out that you could, you aren't maximizing your profits, and so you are offending your shareholders.

     

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  24.  
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    Anonymous Coward, Feb 27th, 2008 @ 1:00pm

    Re: Love of money is the root of all evil.

    Is the company doing harm to the shareholders if it makes a profit, but not *as much* profit as, maybe, it could?
    Absolutely. And it would be illegal.

     

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  25.  
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    gregg, Feb 27th, 2008 @ 1:13pm

    Re: Not at the cost of profit!

    That's why capitalism and you suck.

     

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  26.  
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    Another Investor, Feb 27th, 2008 @ 1:20pm

    Re: Re:

    The problem that the post you argue against sees is that, all things being equal, we can only have confidence in what maximizes profits now.

    That's absurd. If that were true, every profit driven business would immediately sell everything they own RIGHT NOW for the first offer they received. You could buy Microsoft for $1 because they couldn't be absolutely sure that someone else would offer them more in ten minutes. Like I said, that's absurd.

    Companies are well aware of the value of investments. In fact, investing is the whole basis of capitalism: Invest your money so that it does the work instead of you. There are different kinds of investments, some are short term and some are long term. Profit, however, is still the goal. The question then becomes simple whether a series of short term investments or a single long term investment will ultimately yield the greatest profit. The answer to that question depends on the opportunities available to the investor and isn't always clear.

     

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  27.  
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    Le Blue Dude, Feb 27th, 2008 @ 4:02pm

    Re: Re: Re: Not at the cost of profit!

    Actualy, being prepared to lose can lead to taking less damage over the battle, leading to a later victory.

     

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  28.  
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    Le Blue Dude, Feb 27th, 2008 @ 4:06pm

    Re: Re: Love of money is the root of all evil.

    There are no laws against failing to maximize profits, and further more there are serious advantages to not maximising profits... Unless you include non-monetary profits. Money isn't the only value in the world. Once you include non-monetary value in profits then, yeah, go ahead and maximize.

     

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  29.  
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    IT WILL NEVER WORK THIS WAY, Feb 28th, 2008 @ 10:27am

    NEVER NEVER NEVER NEVER NEVER

    Don’t believe one optimistic word from any public figure about the economy or humanity in general. They are all part of the problem. Its like a game of Monopoly. In America, the richest 1% now hold 1/2 OF ALL UNITED STATES WEALTH. Unlike ‘lesser’ estimates, this includes all stocks, bonds, cash, and material assets held by America’s richest 1%. Even that filthy pig Oprah acknowledged that it was at about 50% in 2006. Naturally, she put her own ‘humanitarian’ spin on it. Calling attention to her own ‘good will’. WHAT A DISGUSTING HYPOCRITE SLOB. THE RICHEST 1% HAVE LITERALLY MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. Don’t fall for any of their ‘humanitarian’ CRAP. ITS A SHAM. THESE PEOPLE ARE CAUSING THE SAME PROBLEMS THEY PRETEND TO CARE ABOUT. Ask any professor of economics. Money does not grow on trees. The government can’t just print up more on a whim. At any given time, there is a relative limit to the wealth within ANY economy of ANY size. So when too much wealth accumulates at the top, the middle class slip further into debt and the lower class further into poverty. A similar rule applies worldwide. The world’s richest 1% now own over 40% of ALL WORLD WEALTH. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. ITS A SHAM. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the current US recession. The middle class can no longer afford to sustain their share of the economy. Their wealth has been gradually transfered to the richest 1%. One way or another, we suffer because of their incredible greed. We are talking about TRILLIONS of dollars. Transfered FROM US TO THEM. Over a period of about 27 years. Thats Reaganomics for you. The wealth does not ‘trickle down’ as we were told it would. It just accumulates at the top. Shrinking the middle class and expanding the lower class. Causing a domino effect of socio-economic problems. But the rich will never stop. They will never settle for a reasonable share of ANYTHING. They will do whatever it takes to get even richer. Leaving even less of the pie for the other 99% of us to share. At the same time, they throw back a few tax deductable crumbs and call themselves ‘humanitarians’. IT CAN’T WORK THIS WAY. This is going to end just like a game of Monopoly. The current US recession will drag on for years and lead into the worst US depression of all time. The richest 1% will live like royalty while the rest of us fight over jobs, food, and gasoline. Crime, poverty, and suicide will skyrocket. So don’t fall for all of this PR CRAP from Hollywood, Pro Sports, and Wall Street PIGS. ITS A SHAM. Remember: They are filthy rich EVEN AFTER their tax deductable contributions. Greedy pigs. Now, we are headed for the worst economic and cultural crisis of all time. SEND A “THANK YOU” NOTE TO YOUR FAVORITE MILLIONAIRE. ITS THEIR FAULT. I’m not discounting other factors like China, sub-prime, or gas prices. But all of those factors combined still pale in comparison to that HUGE transfer of wealth to the rich. Anyway, those other factors are all related and further aggrivated because of GREED. If it weren’t for the OBSCENE distribution of wealth within our country, there never would have been such a market for sub-prime to begin with. Which by the way, was another trick whipped up by greedy bankers and executives. IT MAKES THEM RICHER. The credit industry has been ENDORSED by people like Oprah, Ellen, Dr Phil, and many other celebrities. IT MAKES THEM RICHER. Now, there are commercial ties between nearly every industry and every public figure. IT MAKES THEM RICHER. So don’t fall for their ‘good will’ BS. ITS A LIE. If you fall for it, then you’re a fool. If you see any real difference between the moral character of a celebrity, politician, attorney, or executive, then you’re a fool. WAKE UP PEOPLE. ITS ALL ABOUT THE MONEY. The 1% club will always say or do whatever it takes to get as rich as possible. Without the slightest regard for anything or anyone but themselves. Vioxx. Their idea. Sub-prime. Their idea. NAFTA. Their idea. Outsourcing. Their idea. The commercial lobbyist. Their idea. The multi-million dollar lawsuit. Their idea. $200 cell phone bills. Their idea. $200 basketball shoes. Their idea. $30 late fees. Their idea. $30 NSF fees. Their idea. $20 DVDs. Their idea. Subliminal advertising. Their idea. The MASSIVE campaign to turn every American into a brainwashed credit card, pharmaceutical, love-sick, celebrity junkie. Their idea. All of which concentrate the world’s wealth and resources and wreak havok on society. All of which have been CREATED AND ENDORSED by celebrities, athletes, and executives. IT MAKES THEM RICHER. So don’t fall for their ‘ good will’ ‘humanitarian’ BS. ITS A SHAM. NOTHING BUT TAX DEDUCTABLE PR CRAP. Bottom line: The richest 1% will soon tank the largest economy in the world. It will be like nothing we’ve ever seen before. and thats just the beginning. Greed will eventually tank every major economy in the world. Causing millions to suffer and die. Oprah, Angelina, Brad, Bono, and Bill are not part of the solution. They are part of the problem. EXTREME WEALTH HAS MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. WITHOUT WORLD PROSPERITY, THERE WILL NEVER BE WORLD PEACE OR ANYTHING EVEN CLOSE. GREED KILLS. IT WILL BE OUR DOWNFALL. Of course, the rich will throw a fit and call me a madman. Of course, their ignorant fans will do the same. You have to expect that. But I speak the truth. If you don’t believe me, then copy this entry and run it by any professor of economics or socio-economics. Then tell a friend. Call the local radio station. Re-post this entry or put it in your own words. Be one of the first to predict the worst economic and cultural crisis of all time and explain its cause. WE ARE IN BIG TROUBLE.

     

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  30.  
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    Anon, Feb 28th, 2008 @ 10:58am

    Capitalism

    As opposed to what? should the government take in and take some money from the rch to give to the poor? That's called communism, and that has been tried, and failed quite horribly. While communism is a wonderful idea, it does not account for human greed (which, as you pointed out, is quite rampant). So, if greed is as rampant as you say, what makes you think that the idea of communism will work? Because those greedy humans will let their cash be taken away and be trusted not to rape the system for power?
    The reason for this recession is not as much the greed of humans, although that is a factor, but more the stupidity. Yes, the credit card and loan companies have been playing people for years, but people were stupid enough to get played. Do you know how many people I know alone who bought a $500 a month car when they can hardly afford to pay rent because it makes them feel good? Homes people knew they culdn't really afford when they originally bought them? Vehicle trading in non-stop? People were stupid and "bought" things they couldn't really afford to make them feel better, and now they are paying the price. People who bought homes in their price range, bought cars they could afford, and lived within their means are not really suffering from this recession (or rather, imminent recession).
    "Capitalism is the worst form of government... except for everything else that has been tried". Capitalism IS a morally horrible system. But it works. It counts on one sure thing to work... human greed. Yes, those rich people are greedy. But so are thos middle class who tried to live rich because it felt good and are now paying the price. Does government need to step in and regulate things somewhat? Of course. Things are not black and white, and a line needs to be drawn between total and no regulation (unless, of course, you are a libertarian :p jkjk).

     

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