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18. The Political Left/Right Cycle. Capitalists (i.e., those of the right) and socialists (i.e., those of the left) don’t just have different self-interests—they have different deep-seated ideological beliefs that they are willing to fight for. The typical perspective of the rightist/capitalist is that self-sufficiency, hard work, productivity, limited government interference, allowing people to keep what they make, and individual choice are morally good and good for society. They also believe that the private sector works better than the public sector, that capitalism works best for most people, and that self-made billionaires are the biggest contributors to society. Capitalists are typically driven crazy by financial supports for people who lack productivity and profitability. To them, making money = being productive = getting what one deserves. They don’t pay much attention to whether the economic machine is producing opportunity and prosperity for most people. They can also overlook the fact that their form of profit making is suboptimal when it comes to achieving the goals of most people. For example, in a purely capitalist system, the provision of excellent public education—which is clearly a leading cause of higher productivity and greater wealth across a society—is not a high priority. The typical perspective of the leftist/socialist is that helping each other, having the government support people, and sharing wealth and opportunity are morally good and good for society. They believe that the private sector is by and large run by capitalists who are greedy, while common workers, such as teachers, firefighters, and laborers, contribute more to society. Socialists and communists tend to focus on dividing the pie well and typically aren’t very good at increasing its size. They favor more government intervention, believing those in government will be fairer than capitalists, who are simply trying to exploit people to make more money. I’ve had exposure to all kinds of economic systems all over the world and have seen why the ability to make money, save it, and put it into capital (i.e., capitalism) is an effective motivator of people and allocator of resources that raises people’s living standards. But capitalism is also a source of wealth and opportunity gaps that are unfair, can be counterproductive, are highly cyclical, and can be destabilizing. In my opinion, the greatest challenge for policy makers is to engineer a capitalist economic system that raises productivity and living standards without worsening inequities and instabilities. 21.
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Ray Dalio (Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail)