[ExI] Japan's young turn to Communist Party ...
neptune at superlink.net
Mon Oct 20 11:23:51 UTC 2008
On Monday, October 20, 2008 12:14 AM Stathis Papaioannou stathisp at gmail.com
> Why do you assume a shift towards socialism will hurt their economy?
Because socialism does not work. It's not that it's never been tried in
practice. It's been tried close enough and economic theory points to why it
won't work -- in the same way that physical theory points to why perpetual
motion doesn't work.
> They've been in recession or near-recession for 20 years while, if
> anything, becoming more right wing economically. What does that tell
> you about laissez-faire capitalism?
What, indeed, does it tell us about "laissez-faire capitalism" or free
markets? Not much since Japan is a heavily regulated economy -- not a free
market. Part of the reason for its 20 year recession is because it has a
central bank system and this system has basically kept pumping the money.
Another reason is the price system is very rigid theory, especially on the
labor side. So, instead of allowing the recession to clean up the economy,
the government has interfered to keep unsustainable firms going. Further
socializing Japan's economy won't resolve this problem. It'll only shift
more of the costs to either direct taxpayers or everyone else in their
economy via inflation (which acts as indirect taxation*).
* It's a form of indirect taxation because by lowering the value of money
(through increasing the money supply), everyone who holds money or is paid
according to fixed prices loses purchases power. It also creates a business
cycle, since inflation never instantly flows through the whole economy, but
generally goes to the biggest debtors first and raising prices in an uneven
fashion, leading to a distortion in investments and the capital structure.
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