Capitalism is not democratic without very tight regulation. It is profitable.
There is a whirlwind of capitalism profit-motivation engulfing us as prices increase.
Inflation
An office helper costs more than it did a few years ago. Fortunately, that one helper’s wage expense is less than one percent of the operating costs so it will increase operating expenses by very little.
Capitalism says that a business needs to make a profit off the wage expense. Expenses are not black holes sucking cash. They are to be covered by a markup in the revenue collected from customers.
Pay the Price
The customer in our current social construct will choose to pay the posted fee, go elsewhere for the service, or deny themselves the service. These options do not give the customer much control over what they are offered for service or cost.
There are capitalists who say, “There is a sucker born every minute and they are fair prey for businesses.” This is cute, but does not make a healthy social structure because it disrespects the value of all customers. It certainly does encourage businesses to seek out ignorant audiences – people who don’t have a deep understanding of the product they seek or that is being pushed in front of them.
Value of a Dollar
When a price is increased by one dollar, the profit is increased by one dollar. In capitalism, there is no incentive to keep a price within the value scale of the customer. This means that businesses can collect high cash values for products of lesser relative value to their community.
| Capitalists can collect high cash values for products
of lesser relative value to their community. |
Because capitalists consider themselves to be deserving of every dollar they can collect, their conscience can be comfortable with that. Or not.
The Investor
The original land and construction costs are probably covered by a mortgage. That mortgage payment is one of the demands on the company’s cash flow. It does not change over time. It does not inflate. Because it is fixed, it actually deflates – becomes a smaller share of cash flow. Hence, the mortgage payment contributes to keeping prices low.
A mortgage is a single financial contract. There could be several investors by personal loans or stock mechanisms. They hope for a return of more than 100 percent of their investment, because they are capitalists, too. They can tell their consciences they are right in harvesting money from someone else’s business operation for which they have no moral obligation. The distance from the day-to-day operation provided by the loan paperwork is seen as protection from responsibility.
Businesses commonly do not fund their depreciation expense. Depreciation is a fund that a business needs for “repair and replacement”, like a savings account. “Depreciation” is usually an unfunded expense. It only imitates funding for repair and replacement of aging structures. When the time comes, a new mortgage is not necessary. The “depreciation” fund is available. It was built as an income deductible operating expense.
However, a banker will encourage you to spend your daily cash flow so you will need to borrow their money to repair and replace, later.
Improvement expenses can be anticipated but are customarily debt funded. That and unfunded-depreciation is are incentives to keep the finance markets circulating at the expense of every business and customer.
Everyone’s a Customer
Because every businessman is a customer too, they ought to respect the value of an unencumbered life for everyone. Increasing their fees will come around to them as general inflation or focused inflation in their industry – computer services, insurances, and smarter competition.
The Solution
A government authorized by the people to control profiteering and provide public infrastructure, healthcare, and poverty prevention. We know all governments with a one-person leader fail to deliver health, wealth, and happiness. Do you want to invent a new kind of government or continue build on the republican democracy of the U.S. Constitution?
