Thougts on socialism and capitalism

[IrishHand]

The thread about medical products in Canada inspired me to share the following thoughts. I've lived in both Canada and the US, and I'd like to think I'm reasonably familiar with both. The UN quality of life index has consistenly rated Canada ahead of the US, and after a few years of disagreement, I've come to the conclusion that they're absolutely right. It's not about whether it's better to be an intellectual or economic elite - it's where you'd rather live if you were the average joe. In that case, the answer is pretty clearly Canada. However, ignoring the specifics of the US/Canada comparison, here are some thoughts on socialism vs. capitalism, which I hope will inspire some of you to consider some of the 'truths' you've got ingrained into you. (Keep in mind I'm not some extremist socialist - I'm just aware of their arguments.)

Socialism is, according to its advocates (and different socialists have very different ideas about what "socialism" would look like), superior to capitalism for the following kinds of reasons: It would dramatically reduce poverty and economic inequality (possibly both among and within nations). It would largely eliminate useless segments of the economy (e.g. insurance, advertising). It would give workers more control over their lives at work and over the production process. It might reduce the number of hours people need to work (arguably thereby improving their lives in other areas--their family and community relationships, for example). It would improve people's democratic control over the government. It would allow for faster Third World development. It would help prevent environmental destruction. It would reduce racial and/or gender inequality. The list goes on.

I have a couple responses to the typical "capitalism provides incentive to innovation and hard work" argument. First, there may be more important things than innovation and hard work (see all the arguable advantages in the previous paragraph). Second, people work for more reasons than just economic necessity. They work because they enjoy it, in many cases. Under socialism, some say, work would be improved for many people, making them much less reluctant to do it than they are under capitalism (where somebody else gets the profit, and they have little control over it, for example). Some people think that under socialism, everyone would work voluntarily. Personally I happen to disagree--I think that you always need to provide disincentives to slacking off at others' expense. But I can imagine a variety of economic models that are "socialist" but still provide incentives to work that aren't quite as draconian as those under capitalism. Third, innovations happen within organizations (universities, think tanks, labs, particle accelerators, etc.). If you're worried about innovation, just create organizations where people are paid to come to work everyday and create innovations. Why do you need the profit-motive for that? Loads of innovations happen in non--profit organizations (universities, think tanks, labs, particular accelerators, etc.). In short, I don't buy the "capitalism provides incentive to innovation and hard work" argument because I can imagine other (equally effective) ways to provide that incentive, and I'm not sure those are the most worthy goals anyway. (Not that I endorse Russian communism, but they did put a dog in space before the Americans--that sounds like innovation. They also kept pace in the nuclear arms race for a long time--hard to do if you can't innovate. That alone proves capitalism doesn't have a monopoly on innovation.)

Just some thoughts, as always...
Irish

[HDPM]

The Soviet Union was the perfect example of a collectivist economy. It doesn't work and violates the most basic of human rights. I would not rather live in Canada. I don't think my life would be better for all kinds of reasons. (I consider the US pretty far down the socialist path BTW, but we are still hanging on to some freedoms.) And Canada is objectively a very good place to live overall. But look at the countries where there is a lot of innovation. The freer they are the more innovation. Don't ignore the obvious empirical evidence of what socialism and communism actually do. BTW, what "incentives" would you give people to work that are "less draconian" than the inherent and uncoerced incentive in capitalism? Reeducation centers? There is nothing draconian in capitalism. It's all individual choice.

[andyfox]

"they did put a dog in space before the Americans--that sounds like innovation. They also kept pace in the nuclear arms race for a long time--hard to do if you can't innovate"

-They put up the first satellite (Sputnik) and the first human in space (I think: Yuri Gagarin). I don't think they ever kept pace in the nuclear arms race, but were constantly trying to catch up, spending themselves into bankruptcy in the process.

Totalitarian states are not innovative. They are at war with innovation. The state assumes its grand plan to remake society and human nature must be followed rigidly because it knows best. Any "local knowledge" or deviation from the totalitarian ideology and resultant programs ain't allowed.

The Soviet state put a high priority emphasis on "defense" and space exploration. That's why they took the lead in space exploration and spent so much time, money, energy and brainpower on nuclear capability.

It's when the stranglehold of The Plan is released that innovation takes place. Southeast China, which has been freed from Beijing's tight grip in the past 20 years, is a prime example. The people's lives have been markedly improved because they have been allowed to innovate economically and politically.

[marbles]

Ego-centric as always, I have to put myself in the middle of your point.

I am a competitive person by nature. I find it very rewarding to work hard and finish ahead of others. What place do I have in a socialist economy?

[IrishHand]

I agree that the Soviet Union had major flaws - given the choice, I'll take U.S.-style capitalism (and I'll take European capitalism over that). And the USSR certainly disregarded human rights - but so does the U.S. government (feel free to check out Amnesty International's current concerns). Saying the U.S. is "pretty far down the socialist path" is ludicrous. By what standard or metric? And how do you define "freedom"? Freedom to exploit workers and pillage nature?

Under capitalism, unless you're rich, if you don't work you starve. That's why businesspeople don't like welfare and social programs - it gives people less of an incentive to work for low wages. I can imagine a system where everyone receives an annual grant from the state that allows them to live a basically tolerable, if simple and to some people too restricted, life. Then if you want more (as most people would) you work. Nobody starves, nobody sleeps on the streets, people don't have to work in [censored] conditions so someone else gets rich, but just as many people still work overall.

[Gary Teitelman]

Do you ever work? Are you paid to surf the net all day? Isn't that an example of taxpayer subsidized socialism at work?

Actually Social Secuirty, the 8 hour day, and medical benefits are hard won liberties that Laissez Faire capitalism denied for years.

[adios]

Actually the USA economy and the Canadian economy are "mixed" economies i.e. they have elements of socialism and capitalism. It's the mix that differs. In order to decide which is better I would think one would have to compare economic goals of each. If they differ greatly that's enough to justify the difference right there. In the USA the economic goals are generally accepted to be:

1) Full employment
2) Equitible Distribution of Income
3) Price Level Stability
4) Economic Growth
5) Economic Freedom
6) Economic Effeciency
7) Economic Security
8) Balance of Trade

I have no idea what the Canadian economic system has as it's goals but I suspect something very similar. To compare systems I think it's necessary to compare how well each system is meeting it's goals and compare that fuzzy concept of "utility" of the participants in each system. If the economic goals are vastly different, then IMO it's comparing apples and oranges.

I would say that most likely Canada does achieve at least some of the above stated goals more effectively than the USA does.

[brad]

pretty funny.

minimum wage too. which is a joke as its not indexed to any inflation or anything.

but probably the biggest and most obvious socialist program that has destructed is pubic schooling. (and note how up to 1/3 of little boys are on ritalin because they cant sit still (probably when theyre being taught how to get in cars with strange men so they can be 'wise like the greeks'. actual quote from a mass. school thing.)

[brad]

a good essay would be the difference between reality and propaganda in 1-8.

[Ray Zee]

i think living in canada would probably be a better life than in the u.s. mostly. as long as you were in the right places and economic situation. but the real question no one has mentioned is that-- would canada be such a nice place or a place that has so much to offer if it wasnt for the u.s. sitting below it supplying innovations and products.

[HDPM]

"Under capitalism, unless you're rich, if you don't work you starve"

What do you think life is all about? What happened to the caveman who didn't work (hunt, gather, make tools, etc...?) He died. What happened to the early farmers who didn't farm? They died. What happens to the lion that won't hunt? Look, life's a bitch. And socialism makes it so that one person forces another to do the hunting for them. Did one caveman have the right to tell another one from over the hill to go get him a mammoth because he wasn't a very good hunter? Hell no. Now the caveman had a reason for sharing with his village, but that is different from coerced theft of work product.
It is not nuts to say the US is pretty socialist. Anytime your tax dollars are forcibly taken from you and spent on those who don't work, it is socialism. Social security, welfare, etc... are all facets of a socialist country. You criticize capitalism, but we are not a capitalist country. Tom Haley below was right when he said we have a mixed economy. I want to change the mix.

[andyfox]

"up to 1/3 of little boys are on ritalin"

Is the percentage that high?

As an aside, I'm now on a drug called Neurontin and I understand the Neurontin business is a $2 billion business. So maybe your "up to 1/3 is correct."

[adios]

"a good essay would be the difference between reality and propaganda in 1-8."

After reading through them I concur.

[nicky g]

"What happened to the caveman who didn't work (hunt, gather, make tools, etc...?) He died. What happened to the early farmers who didn't farm? They died. What happens to the lion that won't hunt?"

There's such a thing as progress. Most of us don't want to live like cavemen or amimals, and there's no reason we should. There's no need for people to starve in a world that produces vastly more than it needs to feed itself.

[HDPM]

We progressed because of individual effort that flourished in conditions of freedom to one degree or another. In most cases we progressed in spite of church, government, stupid beliefs, etc... Look, if you take any system where progress, individual freedom, and creativity are not valued as in collectivist systems like the USSR or in primitive tribes with bizarre beliefs who can't break from tradition laden BS and their basic way of life, there is not going to be progress. There is not going to be medicine to give away. There's just nothing. I don't want to live in such a system and think the fact billions of people have lived in such systems is a tragedy. The American dream was really something and helped to change the world. (With a solid foundation in the western European enlightenment.) We are giving it away for the same tired beliefs that have held humans back for thousands of years. If we tried a truly capitalist and free society (which does not mean unregulated or lawless) there would be no starvation. The standard of living would be phenomenal, and not just economically. Someday maybe it will be tried.

[nicky g]

"Look, if you take any system where progress, individual freedom, and creativity are not valued as in collectivist systems like the USSR or in primitive tribes with bizarre beliefs who can't break from tradition laden BS and their basic way of life, there is not going to be progress."

Er, of course there isn't. Noone's arguing against creativity, or in favour of the USSR or paganism. Can't you see that putting a cap on the amount a company can charge on drugs, which doesn't hinder it from making a reasonable profit, is not tantamount to Stalinism. Nor are basic social security measures. I know you disagree with them, but you can see for yourself that a social democracy such as Sweden, with high taxes, high standards of living, and socialised medical care, is not a totalitarian state economy. Your examples just aren't reasonable. Just because you believe in extreme capitalism dosn't mean your opponents believe in extreme communism.

"If we tried a truly capitalist and free society (which does not mean unregulated or lawless) there would be no starvation. The standard of living would be phenomenal, and not just economically. "

Could you describe this truly capitalist society and how it would lead to a phenomenal standard of living in a bit more detail?

[eMarkM]

It would dramatically reduce poverty and economic inequality

It would create economic equality, everyone would be equally poor.

It would largely eliminate useless segments of the economy (e.g. insurance, advertising)

Why, exactly, are insurance and advertising useless? I pay a premium to protect myself against disaster and ads, while often annoying, inform as to what products are available that I might not otherwise know about.

It would give workers more control over their lives at work and over the production process

Huh? And capitalism doesn't provide for this? I can quit my job today and start my own business tomorrow. A group of workers can go ahead and buy their own business if they want to own the "means of production". Many do by owning stock in their companies. In capitalism I have a myriad of choices and great control over many aspects my life. Not all, of course, but much more than any collective that socialism implies.

It might reduce the number of hours people need to work

This is a result of capitalism. In the old days you broke your back from dawn til dusk on some susbsistance farm. Now with all the innovations and division of labor of capitalism people have far more leisure time because of the great advances in productivity precisely because of the incentives provided by the profit motive.

It would allow for faster Third World development

The 3rd world sucks because no one has any transferable property rights. Either you can't own property or there's no way to really sell it. Property rights are the cornerstone of capitalist society that are lacking in most of the third world. Capitalism and rule of law would help these countries, not socicalism.

It would help prevent environmental destruction.

One word: Chernobyl

It would reduce racial and/or gender inequality

How? For this to really happen you'd have to set up an all powerful government to make sure this happens. Anytime you give a group of individuals all encompassing power over another group, they just end up using it for their own purposes. This is a main failing of socialism in practice. The party in charge becomes the "elite" of society at the expense of everyone else. There's no equality here.

people work for more reasons than just economic necessity

Very true, but without profit motive you lose all vitality. It's been proven throughout history over and over.

Some people think that under socialism, everyone would work voluntarily. Personally I happen to disagree--I think that you always need to provide disincentives to slacking off at others' expense

No, just provide incentives to work and innovate, like the prospect of getting rich if your business idea flys. Socialism fails for the reason you state, the free-rider problem. If I get paid the same in some welfare program as I would if I held a job, well of course I'm not going to work. Disincentives? Like some kind of punishment if you don't work? Sorry, I'll take vagaries of capitalism any day.

If you're worried about innovation, just create organizations where people are paid to come to work everyday and create innovations

This already happens. Lots of people work at companies and are paid to come up with new products that they then don't get to realize the full profit of if it takes off. They accept the trade off of getting a steady paycheck vs having to dump their own capital in a product that may fail where they would lose all their money.

In a free society, which is naturally a capitalist society, I can form my own commune where me and my followers can all practice socialism. Or form my own company where I can put in my own capital and risk it all to see if I can make an even bigger profit. Or I can take a job with a company and take the relative security of a paycheck that doesn't involve me sinking my own money in it to.

[brad]

ive heard that but perhaps only in certain areas.

as an aside of my own, theres so many single women ive met and talked to who have kids that are on ritalin that it really freaks me out.

[Chris Alger]

If by socialism you mean states like the PRC or pre-1990's Eastern Europe, then perhaps you can find a nice job with the party or the police and compete at trying to suck up to the state better than others do. Beyond that your prospects are dismal.

Most defenders of "socialism" mean a democratic, decentralized economy. Under this system, there would be more opportunity for creative work and competition than there are for those working within the private sector tyrannies that dominate modern capitalist countries. At least that's the theory.

[marbles]

"Most defenders of "socialism" mean a democratic, decentralized economy."

--Okay, this is going to sound like a smartass response, and I really don't intend it that way:

I know what each one of those words means, but can't comprehend that sentence. What is a democratic, decentralized economy? Please dumb it down for me... Where would I go to buy groceries? Does the "state" run everything? Nothing?

This is why I don't get too involved with these capitalism/socialism debates... I just don't understand it. I'm not saying I'm super pro-capitalism; I just know what it is because I live in it. That said, I like the competitive features of the capitalist system that I live in.

[Chris Alger]

Think of it as a process by which public consciousness and participation in the economic system grow to point where seperate state control over the economy becomes less necessary or relevant. For example, imagine voting under a complex formula that weighted your various preferences for particular tax rates, interest rates and so forth, knowing who benefits the most and the least of the short-, intermediate- and long-term, receiving and understanding feedback on the effects of your decision, rather than our current system of elite domination over these decisions and general beffudlement by the masses. No, you wouldn't buy groceries from the state or have to make due with one brand of government beer or victory cigarettes and the like.

Socialism can be defined as is a process whereby people obtain the system they want, where (modern state-dominated) capitalism is a process by which people are persuaded that they must make do with capitalism.

[eMarkM]

For example, imagine voting under a complex formula that weighted your various preferences for particular tax rates, interest rates and so forth, knowing who benefits the most and the least of the short-, intermediate- and long-term, receiving and understanding feedback on the effects of your decision

First off, this is simply too vague and impossible to provide. Who's coming up with this "complex forumla"? Where are you going to come up with this perfect information? Besides, isn't that what you already do under capitalism? You vote with your wallet. Interest rates, for example, are determined by supply and demand. When I apply for a mortgage on a house, I'm having a small (ok, very small) influence on interest rates. Same with when I buy any product. That business only survives if it meets my and other consumer's needs. Capitalism already provides the very feedback mechinism that you seem needs to be created.

[Chris Alger]

"Interest rates, for example, are determined by supply and demand."

Interest rates move virtually in tandem with the lending rates set by the Fed. As the editor of Grant's Interest Rate Observer recently noted, the weird secret of capitalism's greatest living hero, Alan Greenspan, is that his job is fixing prices.

I generally agree with the reality of market efficiency, but markets exist within a framework set by the political system. Then tend to operate in a manner that benefits those with the greatest influence over the political system, and when they don't, the political system intervenes to right the wrong. The growing disparity of income by class in this country, for example, is not the result of some "invisible hand" of the marketplace, but from deliberate government policy.

[adios]

"Interest rates move virtually in tandem with the lending rates set by the Fed."

What interest rates? If your talking about anything else besides less than 2 year treasuries that's simply wrong.

"I generally agree with the reality of market efficiency, but markets exist within a framework set by the political system. Then tend to operate in a manner that benefits those with the greatest influence over the political system, and when they don't, the political system intervenes to right the wrong."

Whose going to bat for the airlines they're almost all broke? What about consummer electronics? The prices are constantly falling, who could this not be a benefit to the consummer? In fact when I think about it what markets is the consummer really being exploited in? Food, energy, automobiles, housing?

"The growing disparity of income by class in this country, for example, is not the result of some "invisible hand" of the marketplace, but from deliberate government policy."

The personnal distribution of income has no doubt shifted in such a way that the top two quintiles of wage earners, especially the top quintile are receiving a bigger portion of the total income than they did 20 years ago (it tracks the onset of the Reagan administration). Yes it does have a lot to do with government policy but I suggest that it's due to the reduction of entitlements and transfer payments as well as a decline in the manufacturing sector.

[IrishHand]

Mr. Alger brings up a valid point - one that had almost caused me to give up this thread since people don't seem to be able to separate the concept of "socialism" from "Stalinism" or some variant. Regarding his definition of "socialism", however - it seems like an unnecessarily complicated (though reasonable) response to the last question.

Think about it like this: pro-capitalists hate socialism (in large part) because they think it concentrates too much power (in the government). Socialists hate capitalism (in large part) because they think it concentrates too much power (in corporations, the hands of large shareholders, and the largest privately held firms). The question is: How do you disperse power amongst people so as to avoid the problems of concentration? Some people believe markets do this very well (pro-capitalists). Some people believe markets do this very poorly (socialists).

My personal opinion is that state-run economies (like the U.S.S.R.) are a bust--they provide for a reasonably even distribution of wealth (the U.S.S.R. was actually very egalitarian, with relatively little poverty), but they concentrate way too much power in the hands of the central planners (the government and Party). But I don't think capitalist countries do all that much better--think about how much power Bill Gates enjoys, for example. Fortunately, there are some controls on the exercise of certain kinds of power in society--but there are not enough, and of course one thing the powerful control to some extent are how much controls there are on the exercise of power. The final question, then, is whether there's any superior (and feasible) system, which doesn't have any other massive downsides. I believe there are other choices, but most people don't. (Though most people are brainwashed into thinking the only options are central planning or free market capitalism--what I would like is a more open and less-polarized discussion. You'll note I both critique Soviet communism and point out that in some ways, it was superior to U.S. capitalism.)

Socialists' biggest dilemma at present is how to organize an economy without the kinds of market mechanisms that they believe over-concentrate power. There used to a be a very fuzzy but beautiful vision (Marx's) to organize around, which actually involved a minimal state. Then it seemed like a state-planned economy was actually the best chance for socialism, since at the same time the USSR and other Communist countries were building up their centrally-planned economies, capitalist countries were simultaneously enjoying tremendous growth and historically unprecedented social equality through a mixed approach--where states became somewhat more involved in economic planning, but left a large part to private for-profit firms.

The problem now is that the Communist model is totally dead, and the ruling ideology in capitalist societies it to get the state out of the economy as much as possible. So what's left for a socialist's guiding vision?

[IrishHand]

Why, exactly, are insurance and advertising useless? I pay a premium to protect myself against disaster and ads, while often annoying, inform as to what products are available that I might not otherwise know about.
Insurance is certainly useful... under our current system (capitalism) where individuals and households are put in competition with each other for scarce resources, and if you happen to get some dread disease you better hope you've bought your insurance. Oh wait! That's only true for the U.S. In Canada, if you get some dread disease you don't need insurance, because society has organized health care for everyone without insurance! And look at the benefits: the vast majority of Canadians enjoy health care equivalent to that in the U.S., but Canada only devotes 9% of its GDP to the health care industry, while the U.S. devotes 13%--because they have to pay all those insurance brokers and HMO administrators! Don't you hate that (private sector in this case) bureaucracy?!

Advertising does let you know what's available. But so does walking into the appropriate store. Do you really think the advertising industry spends as much money as it does just to let you know what's available? They're out there (a) to manipulate you into buying a product from company #1 rather than #2; and (b) to get you to buy more in general (even things you might not have any use for whatsoever). I personally consider those useless functions.

Huh? And capitalism doesn't provide for this? I can quit my job today and start my own business tomorrow. A group of workers can go ahead and buy their own business if they want to own the "means of production". Many do by owning stock in their companies. In capitalism I have a myriad of choices and great control over many aspects my life. Not all, of course, but much more than any collective that socialism implies.
Wow, I suppose those billions of people around the world who live on less than $2 a day just need to wake up and realize that all they have to do is walk down to Bank of America and they'll get all the start-up capital they need! Get real. Most people in the world (and a slightly lower but still high proportion of people in the U.S.) do not have the kind of opportunities you have. You should look around and realize that if you're black and poor and went to a high school where they didn't have enough money to stop the roof from leaking (much less buy the fancy computers white middle class students get) you don't have much control at all.

This is a result of capitalism. In the old days you broke your back from dawn til dusk on some susbsistance farm. Now with all the innovations and division of labor of capitalism people have far more leisure time because of the great advances in productivity precisely because of the incentives provided by the profit motive.
I'll say more about the issue of work hours in a minute...


One word: Chernobyl
A few words: Three Mile Island! The Union Carbide Bhopal poison gas disaster! The U.S. produces more greenhouse gases than any other country in the world!



How? For this to really happen you'd have to set up an all powerful government to make sure this happens. Anytime you give a group of individuals all encompassing power over another group, they just end up using it for their own purposes. This is a main failing of socialism in practice. The party in charge becomes the "elite" of society at the expense of everyone else. There's no equality here.
See previous post about dispersal of power.

Very true, but without profit motive you lose all vitality. It's been proven throughout history over and over.
That's an evasive comment if I ever heard one.

[IrishHand]

Excellent reply Nicky. The key here is talk about the advantages and disadvantages of different systems, which may add up to one or the other being superior overall. Far better than assuming that one sytem is worse in every single respect and then make yourself look like an ass in trying to defend an untenable (and intellectually juvenile) position.

If we tried a truly capitalist and free society (which does not mean unregulated or lawless) there would be no starvation. The standard of living would be phenomenal, and not just economically.

Free market ideologues have this utopian vision of a totally "marketized" society. It's been tried (see Britain, mid-nineteenth century, or Russian mid-1990s). It's a disaster. What happens it that people can't stand it, and do things to mitigate its worst effects. Then the free market "shock therapists" come along and say that people (and the government--oddly enough, it takes a draconian government to impose radically free markets) didn't try hard enough. And they say that the "lack of commitment" is what caused all the problems (not the fact that the vision was hopeless in the first place). Because nobody ever goes far enough and tries it, they can sustain the delusion that a radically free market society would be perfect.

[IrishHand]

I suppose some models of socialism wouldn't have to exclude competition--it's just a question of what kind of competition. You could always have chess tournaments, basketball leagues, spelling bees, quiz shows, whatever.

In the economic sphere, you could probably also still have some people busting their asses to win prestige and maybe more money too. But the "losers" (who under capitalism are often people who started out with major disadvantages, like being born poor) wouldn't face the same problems they currently do--like living under the nearest overpass begging for change from passers-by.

So I guess competition is not incompatible with socialism.

But many socialist visions DO de-emphasize competition for the simple reason that it's stressful for a lot of people, and it's not necessary. Why have an economy where you compete by working 90 hours a week and ruining your family life in the process? Wouldn't it be better to have people agree that 35 hours a week is a reasonable length of time to work, and generally stick to that limit?

[marbles]

Irish,

Before I begin, thank you for answering my question as clearly as you did. I think I have a better understanding of your vision now. Correct me if I'm way off base as I rephrase...

"Irish's definition of socialism, translated to Marblese:
As a community (or, as a nation, if you prefer), we all agree to focus our energies not on getting ahead of others, but rather on contributing to the common good. We all agree to work hard, making sure to focus on our individual strengths, but to take time to smell the roses as well... Under this system, we build a society that, at an aggregate, is better than the one we started with."

Without putting any of my opinions into it, is that basically the concept?

[Chris Alger]

"While interest rates are somewhat market-driven, the Federal Reserve does control what is called the 'discount rate.' . . . In most instances, all financial interest rates tend to rise and fall in tandem with the discount rate."
http://216.239.39.100/custom?q=cache:_oVQwO8LiYAC:www.hotelsmag.com/0200/0200rush_fin.html+prime+rate+tandem+discount+rate+ &hl=en&ie=UTF-8

I always thought it was well-accepted that the Prime Rate and most other interest rates are closely correlated with the Fed's discount rate. After all, the market doesn't hang on Greenspan's every word because he controls the price of 2-year Treasuries.

"Whose going to bat for the airlines they're almost all broke?"

Actually the federal government is and has been for years, through its bankruptcy system.

But that's not the point I'm making. While individual firms and even sectors of the economy stand and fall as markets dictates, the state does what it can politically to ensure that the overall pattern of wealth distribution (or maldistribution, depending on one's values) remains intact. Privitizing public resources like the forests and airwaves, tariffs, "free trade" agreements, pro-wealth and pro-business tax policies, limited public services, "deregulation," and an interventionist military are all part of this system. Sure, lower prices benefit consumers, but for the bottom 40% of households that own 1% of the nation's wealth (compared to the top 20% which owns 80%, with 30% owned by the top 1%), "freedom to consume" isn't much of a benefit.