Democratic Capitalism Vs. Capitalistic Democracy 
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Index    Nominal Definitions            Government Functions              Government Investment              Education

Nominal Definitions

Democratic Capitalism

is an economic system modified by Democratic Principles. Russia was Totalitarian Communism where Communism was modified by Totalitarian Principles. Today, China and Russia use Totalitarian Capitalism, and Great Britain and most of Europe follow Democratic Socialism where Socialism is modified by Democracy Principles with a bit more capitalism since Ms. Thatcher influenced a country and then a continent. In the south she didn't take hold.  Change is in the wind!

Only Businesses Makes a profit.

Capitalistic Democracy
is a political system defined by its capitalistic nature. Government activities make a profit. Financial companies gaming the regulation process pay fines so steep the Justice Department is a profit  paying for the Defense Department.




Government Departments make a profit and
come under the supervision of the General Accounting Office and Comptroller of the Currency.

Government Functions are needed to
regulate and control society.

Preface: makes no attempt to control use of economic data

1. Regulators protect society from improper behavior associated with white collar crime with an undisciplined fine system.

2. Federal, state and local parks are for everyone and carry a nominal fee and cost society a lot of money.

3 Civil Courts are to settle disputes and cost society a great deal of money.

4. Citizen rescues by governments are free in most cases and cost society a great deal of money.

5. Prisons are to rehabilitate, not punish, white collar crime is not punished severely, and the system has a tremendous cost to society.  Example: Mike Millikan cost society $40,000 to  imprison for about 2 years.

6. Treasury and the Federal Reserve are manned by capitalists who used big money from Wall Street to get their appointments. These people believe Wall Street is the heart of capitalism and protect it, and when finished with their government service, return to wall street.

7. Congress people are  helped with the design of legislation by assistants who get free information from lobbyists.

8. Entitlements follow a defined benefit philosophy. SS, Medicare, Disability, and other government social programs get a defined lifestyle.

9. Unions help workers achieve benefits not easily provide by owners.

10. Federal government employees are unionized and can't be fired.

11. Worth while government programs are assumes to be cost affective.

12. Congressional committee power is based upon seniority.

13. Members of Congress and citizens are often affected by lobbyist and think tank studies when trying to understand complexities related to the economics and unintended consequences of ethanol, electric cars, Fracking, future water needs...
14. Investment Banking Regulation based on too big to fail

Government Functions are provide to
enhance the ability of free business to compete internationally.

Preface: requires only one specific measure be applied to a specific economic problems

1. Regulators charge fines that cover all costs plus a reasonable return on invested capital. Example, the IRS and FBI fraud division,  should be profit centers paying all of its cost plus a 10% return on invested capital. Whenever possible, investigations would be contracted with the federal government paying a percentage of the collections.

2. Parks of all types charge what the traffic will bare and must cover all upkeep cost plus a reasonable return on investment.

3. Civil courts provide a service and should charge enough to cover all costs plus a reasonable return on investment.

4. Citizen rescues due to negligence would be charged all the traffic will bear.

5. Prisons are to keep dangerous people away from society, white collar crime is punished severely, but those convicted must pay their way out based on the ability to pay principle.  A profit must be made based upon a reasonable return on investment. Example: Mike Millikan must pays his way out at 5% of his equity per year, for his10 years sentence.

6. Treasury and the Federal Reserve are manned by equally apportioned bankers, company finance people, academics, and career civil servants.

7. Congress and citizens make decisions concerning legislation based upon materials from a newly created Congressional Information Office. It would  to replace lobbyists, authors, educators, and think tanks. Like the Congressional Budget Office for budgetary information, it would be the most reliable source of  information required for decision-making. Note is now the best source of

8. Entitlements follow a defined contribution plan where the total contributions from the current contributors and tax allotments determines the benefit received. For example, if people receiving the disability payments goes up 20%, and annual contributions are flat because of recession, benefits go down.

9. Union benefits provided to all eliminating cost to companies.

10. Federal employees with 4 or more employees reporting to them are managers, are not allowed join unions, and are fired for lack of performance. GSA and GAO will audit GS 15 to see that their managers are conforming or they to will be fired.

11. A small random samples is used to measure the cost effectiveness, integrity, and unintended consequences of all programs. How many families on food stamps are also receiving multiple Pell, grants after five years, after ten years. If the U.S. lowered its military spending from 45% of the world's military, would our German, Japanese, South Korean ... allies make up the difference?

12. Committee membership would be based upon a draw from a pool of reelected House and Senate members.
13. The GAO, GSA, CBO and when necessary a special panels should provide necessary analysis.
14. Investment Banking Regulation maximizes skin in the game for all parties with commissions paid over instrument's life.

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Government Investment

1. Investments in areas like defense, education, and aid to the poor are made based on lobbyist activity as long as there is a perceived positive marginal benefit.
2. Expenditures are expensed so capital expenditures made to foster growth which are good for the economy are not distinguished form non capital expenditures for salaries, Medicare, Medicaid, and Obamacare.
3. Human capital investment in government employees favors non college graduates who earn about 36% more than their private sector counterparts. Those with a  bachelors degrees earn 15% more and those with a doctorate earn about 18% less than their private sector counterparts
source: business insider
4. Investsments are divided equally among cohorts.

5. IRS is managed as a typical government agency begging money form congress,

Government Investment

1. Investments  are always funneled to the areas with the largest measured marginal benefit.  Areas like defense, education, and aid to the poor must compete with each other, and with basic research, health care, and lower taxes.
2. Expenditures for capital investments like R&D, education, defense hardware, and infrastructure are capitalized and depreciated over an expected useful life.  Non capital expenditures for salaries, aid to families with dependent children, Medicare, Medicaid, and Obamacare are expensed.

3. All employees are paid about the same as similar private sector workers resulting in some making substantially more than government workers with a similar education.

4. Investments maximize return with much directed toward cohorts yielding the largest return. People with minimal ability are made employable and those with superior a maximum investment.

5. IRS is an incentive based profit center which throws a party for its biggest clients the rich who pay a lot of taxes


1. Primary and secondary education is managed by academics who aim to maximize critical thinking skills for all students. Schools are judged on student success at critical thinking tests. 
Result: Over 20% of our young people do not finish high school. This means we can't give education away. Well over 50% of the high school graduates attend college when only 23% of the jobs require college degrees and another 10% require post-secondary training. Wages for college graduates fall and many college graduates can't compete in the workplace.

2. Education spending is increase continually with the goal of  improve quantitative measures. The school year is from an agrarian society and classes meet 180 days at six hours a day or 1080 hours and have a 10 week break in the summer and about four week vacation. 
: The U.S. spends more per head than other industrial countries.

3. College acceptance is for everyone and an attempt is made to minimize individual cost. 
: U.S. has a lot of poorly educated college graduates in academic areas not in high demand causing salaries of college graduates to dropping, and many college graduates over the past twenty years have had to work in jobs not requiring a four-year degree. Twenty-five percent of the students drop out, some, because they realize they have better things to do with their lives, but the vast majority are in that group that do not carry their own weight


1. Primary and secondary education is managed by educators based upon a normal distribution of abilities described by Multiple Intelligence Theory . The aim of education will be to determine which kind of intelligence a student excels at and to enhance that intelligence. Schools are judged by the percentage of students who finish high school and the percentage of students with high math and/or verbal intelligence who are accepted at academically rigorous competitive colleges.
Results: Curriculums will become more diversified, less structured, and with students able to enhance there own particular intelligence, life success will be improved. 
2. Education systems are designed to be cost affective with additional salary based on output. The economic concept of diminishing returns and diminishing marginal diminishing utility is applied resulting in four hours of classes, and a forty-eight weeks school year. (48X5X4 =960 hours. All schools go to double sessions. Triple sessions would be appropriate if desired by students and parents. 
: Poor schools are closed. Teachers work one session and get paid for additional classes. Teachers wanting to accumulate classes to take extended leave could do so. Students wanting more classes would pay extra, students wanting to work in day care for younger children can do so in class rooms available because of efficient use of classrooms. Who gets what sessions would be based on parent needs and student grades.
3. Colleges acceptance will be based upon the measurement and differentiation principles displayed by the companies portrayed in  The Talent Masters by B Conaty and R. Charan. Only highly talented, productive individuals will receive federal government support. States and local governments can set parameters for those they want to help.
Vocational schools would prosper, live skills would be stressed and working part time would be stressed. A lower minimum wage for part time students not requiring payroll taxes would help.

FOR ANOTHER VIEW OF THE RELATIONSHIP BETWEEN CAPITALISM AND DEMOCRACY SEE Pyramid Theory-Version-3 looks at capitalism as practice the US democracy and

Human History the West vs. the East


1. Politicians Controlled by Interested Groups set policy.

2. Payroll taxes are maximized.

3. Capitally gains taxes are minimized.

4. Excise and , inheritance taxes are minimized.


1. Administratively expensive taxes like tolls are not allowed.

2. Margin Requirements higher.

3. Capital gains divided into long, Intermediate, short and immediate rates, With rates inversely related to time.

4. Naked hedge funds are taxed as immediate capital gains.

e-mail Walter at  with thoughts and opinions.