Is the problem with capitalism that people save too much and that leads to poverty ?

One cannot offer a solution unless the problem is defined.

What do you mean by ”...the problem with the rich…”?

@zenvelo I changed the answer. The problem is poverty. Not just the rich but every citizen saving too much.

Savings does not lead to poverty. Savings is good for the economy; it is how people can get ahead and take care of themselves in the future.

@zenvelo What if everyone saved a high amount. Few would get paid. I was told that businesses depend on Christmas and income tax returns to make a profit.

If everyone saved a high amount, it would mean there isn’t poverty because those people are saving. They wouldn’t need to get “paid” because they have their savings to lean on.

Really, you can’t simplify a complex dynamic system like an economy into generalizations like “everyone saves”.

Japan actually had a too high savings rate in the 1990s. They did not grow.

@zenvelo Ok Thanks. Just asking for fun.

It’s too complex to sum up in one problem or one paragraph.

But no it’s not about savings, though it might help if money expired and did not “earn interest”, so that people would use money as soon as they could to get valuable things done. Though that model also relies on someone printing and handing out expiring money all the time, but that’s not exactly “the one problem is…”.

I’d say more central problems have to do with the charging compound interest on loans, and the ability to form enormously wealthy/powerful corporations with all-for-profit charters, and the speculative for-profit stock market, and that those have consolidated most of the planet’s wealth and power in a group of inter-owned international bank corporations, and other industries and financial sectors which have been dominated by the same ultra-wealthy bloc, along with most of the media and governments And that the thinking of this “we won the Monopoly game” bloc seems to still be focused on winning that game more and consolidating more and more power and domination, instead of wanting the planet to sustain life or for people to be happy. They’re afraid people will at some point catch on and switch the power game to something that unseats them.

@Zaku Awesome thanks. Money that expires sounds fun to discuss. I will ask this question now and give you the credit.

follow up question

No. The money flows uphill and not equally all around.

I’m not sure that there is a problem with capitalism in the first place. In a theoretical sense, it is the the most efficient way for mankind to handle trade and goods and services without government intervention.

The problem, if there is one, is when their aberrations and interventions to the capitalist system. As soon as you start messing with forces of supply and demand, you introduce a wildcard which messes things up. There are zillions of examples – take the wage and price freezes of the Nixon years (do some research, it won’t kill you) and learn how to really screw up an economy.

The reason why socialism and communism, (and your idea about taking everyone’s surplus at the end of the year) will never work is that they take away any incentives to work and be productive. If there is no incentive or reward for doing something, people won’t do it. That’s economics 101.

Capitalism in this century is not perfect. But it isn’t as harmful as any of the alternatives.

@kritiper – why should it flow equally and all around? That sounds a lot like socialism. Shouldn’t you have to earn your wealth?

The average American (in the U.S.A.) has less than $1000 in savings.

I don’t save money in a bank, I invest in the stock market where many corporations use my money to grow, hire more workers who help the economy.

You think that taxing my investments would by good? That money was already taxed when I earned it. The corporations pay taxes on the money that they earn. Those earnings are taxed again when the corporation writes me a dividend check. On top of all that I’m hit by a capital gains tax whenever I do some profit taking. My investments are already taxed 4 different ways and you want to add another tax?

People are taxed far too much already. That may be part of the reason that most folks have so little savings.

@elbanditoroso That’s what I’m talking about. But there are more than 20 types of socialism and the perfect type hasn’t been invented. Yet.
And, yes, you should have to earn your wealth, but not at the wholesale disadvantage of others.

What about different classes of currency? One for necessities one for luxuries and a third account for durable goods like dish-washers. Like food stamps but for different types of goods to be purchased.

Why do you want to make the system inefficient? Inefficiency is detrimental to the health of an economy. What good would different types,of money do, except exacerbate black markets?

@zenvelo I don’t I’m just searching for unique novel ideas. Maybe my ideas could be put in a board or computer game? Also I enjoy bouncing ideas from Jellies.

Too much savings can be a problem for an economy. Some of the Asian countries have this problem, and the government tries to encourage their people to spend.

It doesn’t seem to be a problem of capitalism if you look at America. We suck at saving on average.

However, I do see how lack of social systems does cause people to save. For instance, a lot of my savings is me worried about a rainy day. If I felt confident my healthcare would be taken care of by the government, and that I would always have reasonable housing, I might not be so worried about saving saving saving. Then what? I drop dead with a million dollars in the bank? Either I could have enjoyed it, which would likely mean more people could have jobs, or someone else could have used it.

No, the core problem with capitalism is the power differential between the minority of financiers and the majority of workers, that results in the exploitation of the latter, and them not getting the payment they earned.

@ragingloli Yes.

And, come people and organizations treat economy as being about power and domination and competition and survival and some of them have greatly succeed in dominating that game, to the degree that they have dominated governments and laws to the point that they will continue to dominate that game more and more, until/unless that gets transformed somehow.

Groups of allied and inter-owned massively wealthy cooperations and the extremely-wealthy people who run and own them continue to leverage that dominance to get more dominance, so that the richest 1% or less take 85% of the world’s generated wealth, and also continue to increase their domination of power with pro-corporate law changes, control of government representatives, information dominance through owning the mass media, etc.

Meanwhile everyone else is continually losing wealth and power relative to them, and are increasingly put in positions where they are struggling just to get by and meet their basic needs, as needs become increasingly commercialized and expensive.

The problem with capitalism is it tends to generate disparities in wealth leading to a superwealthy class that has more money than it knows what to do with and others who just get by and are too poor to save. The middle class tends to disappear. That is why government is necessary. Not government by the rich but government by all the people.