As I See It: Socialized capitalism

Trump ­— COVID —­ Trump — COVID, time to change the subject.

Civilized nations practice socialized, democratic, capitalism. A hybrid system that recruits the free market to solve as many problems as it can while at the same time having a social safety net such as: food stamps, basic health care, public education, roads, and parks to do those things that capitalism doesn’t provide because there’s no individual profit even though the nation does profit collectively. These things are not privileges, or entitlements, whatever that word means. They are investments in our future. Capitalism is the engine that creates the wealth to make other things possible. Does anyone believe that they can run a modern business with ignorant, sickly employees who cannot travel? That was how slavery was, and it produced very little compared to free markets. Plantations were self-contained microcosms that depended on the rest of the world as customers.

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Boston Commons was not always just a park. Commonwealth of Massachusetts, Pennsylvania and Virginia, are not new socialist labels, they are the titles of three English colonies, now states, that recognized that the residents have many interests in common and were willing to pay taxes to ensure that some things were available to everyone. Things like mail, parks, water, pastures and roads.

Today, the largest obvious commons is the sea. Advanced nations patrol this commons to assure safe navigation for all, even those unable to support the effort. An intangible commons is the ether, airwaves. Governments regulate its use to make it available for wireless communication for the greatest number. In both cases, a few rogue nations restrict access to a commons for their own use or benefit; in the case of the ether it is censorship or propaganda. China and Russia try to restrict sea access for selfish political goals that contradict international custom.

One way that government protects the commons is the chartering of corporations. The charter creates an artificial person with limited rights. The strictest charter is an investor owned public utility. The utility gets a monopoly to provide a certain service and to earn a certain regulated profit, if they fail to provide the service, they can be dismantled. Investor owned utilities have an excellent record of providing communications, electricity or gas 24 hours a day, 365 days a year.

Other corporations are given more license to provide what they make and more leeway to decide what they will provide. There are no restrictions on profit, unlike utilities they can lose money as Amazon did for years. Many years ago, there was a lot of noise that Bethlehem Steel’s profits had increased 400% from the year before. The net profit the year before was 25 cents. Bethlehem went bankrupt in 2003 after 146 years of providing low-cost steel that built America. There is nothing inherently evil about corporations or corporate profit. Corporations are an economic construct to allow people to pool their resources to do what they cannot do individually. Profit has two main definitions, net and gross. Net is basically what they should pay taxes on. Gross is the income before many expenses are deducted. Gross profit serves two purposes, obviously to pay back investors who took the risk of buying stock with their hard-earned money. The other is to provide additional capital for growth. Growth can be more product, new products, more locations and by the way more jobs.

Unions and local government are also corporations with specified missions. Unions to represent the collective interest of their members in negotiation with employers that are probably, but not necessarily corporations. Corporations may be family owned with no outside stockholders.

Many utilities are government owned corporations; their record of reliability is not as strong. Compare USPS to UPS, and locally, DWS to Hawaiian Electric.

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One way that corporations minimize taxes is to pay dividends, as they should. The other way and here is the real scandal they pay some executives outrageous salaries. Traditionally, the CEO earned about 20 times what a worker earned, now it’s over 200 times more, even as they run their corporation into the ground. Goodbye Kmart, Borders, and remember Pennsylvania Railroad, once the largest corporation in America.

Ken Obenski is a forensic engineer, now safety and freedom advocate in South Kona. Send feedback to obenskik@gmail.com