Linked In Question : Does Capitalism work for the majority of the people?

http://www.linkedin.com/answers/personal-finance/wealth-management/PFI_WMG/115441-1903201

The accumulation and control of capital by individuals and corporations is the dominant economic system. But the majority of people don't own capital, only debt.

We all know capitalism works for the wealthier minority, but does it work for the majority?

My Answer

If you read the book of Josef E. Stiglitz, The Roaring Nineties, you will understand that Capitalism will work only with the right regulations.

Regulations by the governement must allow the re-distribution of richness. If you don't tax the capital, than it tends to accumulate. If you let the situation evolve like this all the capital can go to the same people and those people will eventually become the new kings of the world. They will own everything, and everybody who has debt will be a their service. Without regulations the winner takes it all.

Too much regulation is not good as well : It's called Communism.

After you have understood this you agree to pay up to 55% taxes as I do in Belgium because you understand that it's the price to your freedom. You also understand that we should reduce debt because its the a kind of new form of slavery... Between getting all your salary free of taxes and have everything taken by the government, the Belgian Solution is the compromise...

The only problem is that only labour is taxed like this, not capital.... With the Gloabilization of the economy we run a high risk because no government has the sovereignty over the whole world to regulate the capital flows.

So capitalism works ! With right regulations !

At the university I had an Political-Economy course and the teacher told us the following story.

During WW2, a man comes in a village with a big case full of cash. He asks the owner of a restaurant to keep the money until the end of the war. After the war, the mysterious man doesn't come to get the money. After several years the owner of the restaurant decides to borrow a part of the money to extend his restaurant. By doing so he pays some people of the village for the construction, then he can attract more customers and can reimburse the borrowed money. The people in the construction sector can buy new tools and make bigger constructions, so they can go more often to the restaurant.

Eventually the mysterious man comes back to the restaurant and doesn't ask for his money. The owner tells him he still has the case but the stranger doesn't mind : "This money is false" !!

The conclusion is : money is good when it changes hands !

So go and spend all your money : you will enjoy life and do a good action.

(But don't give it to the bank !)

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