Essay on Capitalism Weeding

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What it Is – How it Works?

By Rick Kahler MS CFP® ChFC CCIM www.KahlerFinancial.com

Rick Kahler CFPWhat is capitalism? How does it work? For some time now I’ve been meaning to write a column on that topic, but it has seemed to be a daunting task more fit for an economist than a financial planner.

Then I remembered this story from my childhood. But, it is an allegory for doctors, too!

The Story

One summer, we were visiting my grandparents. I was about ten and my brother was seven. Our grandfather hired us to weed his garden, paying us a dime apiece.

That seems like a paltry sum, but it wasn’t such a bad wage for a couple of kids at the time. After all, a bottle of soda only cost a nickel.

We started off to work. The day was hot. The garden seemed huge. I kept thinking about getting a bottle of soda and sitting in the shade. Pulling all those weeds seemed like a huge price to pay for that reward.

Then I had a brilliant idea. “Dave,” I said, “How would you like to earn an extra nickel?”

My brother was interested. I offered him the opportunity to weed my half of the garden for half of my dime. It seemed like a good idea to him, and we made a deal.

David weeded the entire garden. I bought a bottle of Coke with my nickel, sat in the shade, and watched him work. When the weeding was finished, he was tired and hot but had fifteen cents to show for his labors. I was broke, but I had enjoyed relaxing with my soda instead of having to work in the hot sun.

It seemed like a win-win situation to me. My grandfather didn’t see it the same way. In his view, I had taken advantage of my innocent younger brother by coercing or manipulating him into doing my work for me. I’m not sure Granddad ever forgave me for what I did that day.

A Willing Seller and a Willing Buyer

I suppose there may have been a tiny grain of truth in his perspective. After all, I was three years older than my brother. However, I don’t remember any bullying or manipulation being involved. I simply offered him a deal, and he took it. The transaction involved One thing of value—his work—was exchanged for another thing of value—my nickel. He benefitted from receiving more money, and I benefitted from not having to perform manual labor.

Thinking about it all these years later, it occurred to me that what I did was exactly the same thing my grandfather did. Each of us paid someone else to do a task we didn’t want to do. And each of us got the job done at the lowest cost to ourselves.

For Granddad to accuse me of using my position as the oldest to take advantage of my brother wasn’t quite fair. After all, one could say he used his position as a grandfather to get cheap labor out of a couple of little kids. I suppose one of his aims was to teach us about the value of hard work and the satisfaction of being paid for our efforts. The lesson I learned wasn’t exactly the one he had intended to teach.

Capitalism

Micro-Capitalism

The whole process, though, was a small example of capitalism at work. It was a lesson I took to heart.

Assessment

My brother must have done the same. He’s still a hard worker, and he’s certainly been a very successful capitalist. And when his son was a teenager and I hired him to do my yard work, I had to pay him a lot more than a nickel.

Conclusion

How does this story relate to ACOs, pre-paid healthcare, managed care, the PP-ACA, MC/MD or the direct pay model of medicine? If, at all?

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

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Capitalism Blame Does Nothing to Offer Solutions

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Blaming it on capitalism does nothing to offer any real solutions

Rick Kahler MS CFP

By Rick Kahler MSFS CFP®

http://www.KahlerFinancial.com

Recently, a respected colleague noted that the “capitalistic goal of accumulation, consumption, and collecting” is responsible for a collective mindset in Americans that “I consume, therefore I am” and “more is better.” He passionately feels the “more is better capitalistic mentality” assures a predictable future of dwindling resources. He is not alone in his views.

Certainly, identifying our self-worth by what we accumulate or spend does not produce emotional, physical, or financial well-being.

Those who embrace a money script of “I consume, therefore I am” are likely to eventually encounter financial and emotional pain. Either they will run out of money to spend, lack products to buy, or discover the futility of trying to use money and possessions as a substitute for genuine self-worth.

More is Better?

What I found curious was my colleague’s attribution of the money script “more is better” as the product of capitalism. That money script has been around a lot longer than capitalism, which according to Investopedia originated during the Middle Ages when a variety of factors, including a labor shortage caused by the Black Plague, caused the collapse of the manorial system. More is better” was part of the human condition much earlier.

For example, in the Hebrew Scriptures, Ecclesiastes 5:10 says, “Whoever loves money never has money enough; whoever loves wealth is never satisfied with his income.”

Greed

Greed, whether for money or food or anything else, is not produced by an economic model. Whether people live under a capitalistic, socialistic, or communist system—or in a Stone Age tribal group—greed is alive and well in all of them. Every human being experiences it in some way and on some level. It has been considered one of the seven deadly sins since the early days of the Christian church.

Definition

“Capitalism” is defined by Merriam-Webster as “an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market.”

There is nothing in that definition about greed or any goals of “accumulation, consumption, and collecting.”

Core to capitalism is a method of distributing limited resources in the most efficient manner possible, where the dynamics of the free market and competition drive down prices and improve quality. I find no other economic system that delivers this outcome. In fact, systems controlled by central planning have a track record of producing the opposite: economies where shortages prevail and those in charge prosper on the backs of the masses.

Research

Research shows capitalism has lifted more people out of poverty than any other economic system. Since 1945 the number of those living below the poverty line has decreased 57%, from 35% to 15%, while income inequality has risen just 15%. Any American earning over $30,600 is in the top 1% of income earners globally. Even the bottom 1% of Americans are in the top 33% of income earners globally.

Certainly there are business owners and wealthy people who are greedy, selfish, and materialistic, because such people are found in every walk of life. These traits are not tied to any particular economic system. They are signs of people who are trying to satisfy spiritual and emotional needs with material things that can never meet those needs.

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buy-sell-merge

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Assessment

Because one of the qualities that helps people create financial security is frugality, I actually agree with my colleague that excess consumption is often destructive and can be a genuine problem. Blaming it on capitalism, however, does nothing to offer any real solutions.

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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Do New Socialists Really Want Socialism?

Do New Socialists Really Want Socialism?

By Rick Kahler CFP®

Increasingly in the US, it’s becoming more socially acceptable—perhaps even fashionable—to be anti-wealth and anti-capitalism.

Even identifying as a socialist is no longer the dominion of the far left but is gaining popularity. A number of mainstream politicians, including Presidential candidates, are self-identifying as “socialist.” According to a February 19 article by Mike Allen in Google’s Axios, polling shows younger Americans are souring on capitalism and don’t find the label “socialist” scary or demeaning.

Interestingly, the meanings I see thrown about for socialism and capitalism rarely agree with the traditional definitions.

For example, some self-proclaimed socialists call for higher taxes on the rich, more funding for massive infrastructure improvements, and expanding social welfare programs with proposals like “Medicare for all.” These are not necessarily socialism, but rather an expansion of social programs. There is a difference.

Socialism is an economic system in which the means of production and distribution of goods are owned and controlled collectively or by the government. It is characterized by production for use rather than profit, equality of individual wealth and incomes, the absence of competitive economic activity, and government determination of investment, prices, and production levels.

A truly socialistic economy has no privately owned business. Since all business are government-owned, there is no competitive force serving to improve services or drive down prices. Prices are not set competitively but by government policy. Everyone is economically equal, with no rich or poor. At least in theory.

Embracing increased taxes on fossil fuels and more government spending for health care or green initiatives is not inherently a call for a socialistic economy. It is a call for bigger government and placing more restrictions on free enterprise, which is only a step toward socialism.

For example, the Scandinavian countries have massive social programs. Yet they are not socialistic economies. Their systems allow for free markets and the private ownership of business, meaning their social programs are funded by capitalism and free enterprise.

We have yet to see a society that has successfully tried real socialism. Countries that have attempted it, according to Forbes, are China, Cambodia, Cuba, East Germany, Ethiopia, North Korea, Poland, Romania, the USSR, and Venezuela. Even though many of them have abandoned socialism, the effects are long lasting. Of these countries, according to the Economist, in 2016 Poland had the highest standard of living, ranking at 68 worldwide.

Israeli David Rubin, author of the Trump and the Jews, says in a February Yonkers Tribune article, “I must warn my many American friends to learn some critical lessons from Israel’s socialist past.” He points out that Israel’s founders created a socialist-based economy intended to provide financial security for its new citizens, including millions of refugees. The country struggled with economic stagnation, soaring inflation, low wages, and high prices. In the 1980’s Israel began a shift to free market capitalism, and today its economy is thriving.

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An idea strongly identified with today’s self-identified socialists in the US is the “Green New Deal” resolution which failed to pass in the Senate. In addition to proposals to aggressively reduce greenhouse gas emissions and require the use of renewable energy, it also calls for “guaranteeing a job with a family-sustaining wage, adequate family and medical leave, paid vacations, and retirement security to all people of the United States.”

Assessment

Imposing stringent regulations on property owners and businesses isn’t inherently socialistic, although it would raise prices for everyone, especially the low-income Americans the proposal intends to protect.

However, guaranteeing a lifelong sustainable income for every person in the US, and placing health care under the dominion of the government, does take a giant step toward socialism.

Your thoughts are appreciated

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