Tuesday, April 17, 2018

Why this Global economic mess? Has Capitalism failed? No, Capitalism has 'nt failed.


Why this Global economic mess? Has Capitalism failed? No, Capitalism hasn’t failed. But interference in the working of Capitalism is the root cause of global economic crises.
Today most large corporations in the manufacturing sector are managed to satisfy stock market expectations at any cost. Every manufacturing organisation has investment in land, buildings, machinery, and people. When the market is not growing the easiest way to increase profit and satisfy stock market is to sack people as it is the easiest thing to do. When people are sacked and don't find alternative jobs economy gets affected. The companies in their blind urge to satisfy stock market will cut more jobs to cut costs and kill the economy further. This is a vicious circle.

Myopic managements are not realising that there will be no company in the absence of customers.
Unions and minimum wages act further to kill jobs by forcing companies to employ automation and robots. Myopic managements, trade unions, and advocates of minimum wages do not realise that automation and robots will not require holidays, clothes, soaps, detergents, processed food, air travel etc. What will happen to the economy?

Bloated government with massive debts and ever-increasing taxes further shrink the economy and create job losses.
Capitalism is blamed for global economic mess. Some economists call for government spending. Some other economists call for more government regulations. Some economists say capitalism has failed. All of them are wrong. Capitalism hasn’t failed. But capitalism has been made to fail by government intervention; following policies of economists recommending either increased government spending, or increased government regulation , or controlling money supply, or fixing interest rates, or by fixing minimum wage rates, or allowing greater say for trade unions; by allowing mainstream banks to enter speculative business and off balance sheet trickery.
Capitalism is closest to human nature. Every human being wants to be free, is born, and dies. In Capitalism companies will be born and some will die. Problems in capitalism arise when dying companies are rescued by government but individuals dying in debt are not only not rescued but downgraded in their financial rating to compound their problem.

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