Government should intervene to right the economic wrongs of capitalism.

------------- SUMMARY RESPONSE: In all cases, government intervention makes things worse than before. ---------------- DEFINITIONS: I accept my opponent's definitons and offer new ones to clarify parts of my case: "positive-sum"- When a transaction results in new wealth "negative-sum"- When a transaction results in less wealth than before "zero-sum"- When a transaction results in no change of total wealth between both parties Source: Economic Facts and Fallacies, by Thomas Sowell (Synopsis: . http://search.barnesandnoble.com... ) ----------------- MONOPOLY: I would like to call for clarification as to what my opponent considers to be a monopoly before I contend this point. 1. At what pont is a company a monopoly? (please be specific) 2. How do you propose that government intervenes? (there are many ways, and it would be tiresome to debate all) 3. How should the government divide assets between the various new sub-companies? ------------------ RECESSION: My opponent brings to point market failures. "The market alone cannot deal with this effectively. Government must intervene in the form of tax cuts and stimulus spending to pump more money into the economy, convincing consumers to spend again. " a. However, market failures are not as harmful to the economy as 'government failure'. b. Industries that do not produce wealth through voluntary transactions should fall out of a market economy because they are not producing the wealth that capitalism requires to succeed. c. Recession is a natural part of the business cycle. Businesses change or fall during recessions, and other businesses take their place and fill the void. Recession is the time for businesses to adapt to market change. . http://www.referenceforbusiness.com... d. Often times, government intervention tips a market so that it recedes, through inflation, deflation, regulation, changed taxation, changed minimum wage or other problems. . http://recession.org... . http://www.wisegeek.com... e. Recessions end up righting themselves as long as the government does not intervene (as they have throughout history). (32 recession cycles in U. S. history: . http://www.nber.org... ) It was government intervention during recession that caused the Great Depression to last so long (Says economist Thomas Sowell: . http://www.redding.com... ) Unemployment was low, until the passage of tariffs during this recession lead to the depression (same source). My opponent proposes that government gives: a) tax cuts b) stimulus spending First, because taxes are a form of government intervention in the economy, a tax cut would be a reduction in government intervention, and would not coincide with my opponent's case. Finally, stimulus spending is uncapitalistic. - Government money can either be taxed, printed or borrowed. If printed, it creates another problem (inflation), and if borrowed, debt grows and can be a future problem. - To give it to consumers will not necessarily lead them to spend it. Most people took their stimulus checks and used them to pay debts or added them to their savings accounts (which diminished in value because of inflation). Taxing and redistributing is zero-sum. - To make transactions involving the government with the money would lead to negative-sum transactions in which money is spent unnecessarily. Again, in economics, wealth is produced from voluntary trades in which both sides benefit (positive-sum). Unnecessary spending does not create wealth as voluntary spending does, and ultimately the wealth is lost. - Unnecessary infrastructure projects (as proposed by John Maynard Keynes) not only take land away from private enterprises (further hindering the system), but also create unnecessary transportation routes. Again, if they had been necessary, they would not have been done otherwise. All of such projects are ultimately negative-sum. CONCLUSION: Spending just to spend makes a depression worse. ------------------------------------ INEQUAL OPPORTUNITY: "Because there is no true equality of opportunity without any government intervention" Again, my opponent argues that the government is the solution without explaining what the government would do to solve such a problem. So, I cannot contend yet. 1. Pick an example that can be specifically argued. 2. Show how you propose that government solve this example. ----------------------------- REFUTATIONS OF MY CASE: ---------------------------- 1. "Wealth is produced through labor" Labor produces wealth through voluntary transactions. People are hired and they exchange their work for wealth. Ultimately, both sides benefit because the person who hired the worker must have benefitted (or he/she would not have agreed to do so) and the worker benefits because he/she obtains wealth that he/she felt was fair. However, with government, people do not produce anything that society ultimately needs (other than the justice system and the military, bot necessary transactions of government). Ultimately though, if the government makes unnecessary courts, it is not producing wealth, because society does not benefit. If the government expands the military to an unnecessary point, society no longer benefits. It is because of this that government cannot produce wealth and expand as companies can. "If the government just started mining for coal one day, it would be producing wealth. " Not necessarily. The money it gets to fund this coal industry would ultimately come from money involuntarily taken from taxpayers. The transaction was not voluntary; therefore, it did not produce wealth (the miner makes wealth, but society loses it). ------------------------ 2. My opponent contends that markets only produce wealth in times of non-recession. "The free market doesn't do a very good job of getting itself out of recessions" False. Recessions occur naturally when the market is changing (already sourced). The free market has gotten out of recessions. The United States has gone through 32 recession cycles. . http://www.nber.org... "The results of things like bank failure will hurt everyone especially badly if the banks are not insured by the government" Actually, government intervention makes the problem worse than it would have been. When banks are insured, they feel that they can lend more money than they actually can. The ultimate result is irresponsibility and then failure. When government regulates banks, they also feel safer, so they take more risks. When banks take more risks, they can make more failures. The increase in risk that businesses take when they are regulated is called regulatory arbitrage. In regulatory arbitrage, a business treats risks differently because they mistake regulated limits with true economic limits. Regulatory arbitrage leads to more high risk loans, more sub-prime lending, and other unsafe banking practices. . http://www.businessinsider.com... Ultimately, government regulations do more harm than good to banks. Society suffers as a result, as we have seen with the "Sub-prime mortgage crisis". ----------------------------------- 3. (see above) ---------------- CONCLUDING THOUGHTS: While there are problems with capitalism, government operations are incapable of solving them without creating greater problems. I will leave it as that, and turn it over to my opponent.