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Robert Reich makes a good argument that corporations are underpaying workers by not sharing profits from tax cuts and increased sales and by not matching inflation. Some corporate employees have salaries low enough to qualify for federal aid. The currently large wage gap shows that Karl Marx’s complaint that Capitalist wages were too low in the 1840’s is still a problem 180 years later. A by-product of these low wages is an angry workforce and an economy sitting on a powder keg.
The switch to Capitalism started in earnest in 1992 after the old Soviet Union collapsed. Since then, 25 former Communist countries have made a complete switch, and the remaining 5 Communist countries are in the process of transitioning to Capitalism or are maintaining a mix of the 2 economic systems. The move to Capitalism is broad enough to say that pure Communism today only exists in isolated communities or in very primitive cultures. Why then, have so many Communist countries switched to capitalist systems?
The biggest reason for dumping the Communist system is the failure of the central planners to match production with demand in large, modern societies. Too often, there is a surplus of coats but a shortage of pants. Too often, the consumers are frustrated by market shortages.
There is no profit incentive in a Communist economy, so the quality and reliability of goods vary greatly among the many products needed to maintain a working society. The Communist system works more like a monopoly in a Capitalist economy. It is the only game in town, so the privileged people in government are treated well, but the vast majority must settle for mediocre goods or nothing.
Finally, Communist countries have trouble entering the Capitalist-oriented world marketplace without a Capitalist oriented economic infrastructure. Communism no longer fits in the modern world.
So, Communism is obsolescent and Capitalism is broken. There is only one choice. The tendency of Capitalist systems to revert to monopolistic practices and to undervalue workers must be controlled by a government that is not dependent on private businesses.
The Nordic countries have developed ways to control monopolies by restricting the use of abusive practices and strictly controlling mergers. Nordic countries manage the competitiveness of the economy by establishing price-controls that prevent profiteering, enabling easy entry of startups into the marketplace, preventing state-run businesses from undercutting private firms, and giving more power to labor unions. If the Nordic countries can establish controls that maintain a healthy Capitalistic economy, then so can the US.
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