Is capitalism bad?

Capitalists have a bad moral reputation. People see them as bad because their economic theory is based on self-interest. Even though I am an unrepentant capitalist, I totally agree many people who are capitalist are not good moral humans and lack love and compassion. Further, many are just plain jerks and think this economic system is some new-found religion and are rigid in their thinking.

The rich are stereotyped as greedy and heartless because of a large amount of earnings they make and yet no clear value to society. They are almost seen as parasites off the sweat of others. However, this is where people get confused. Capitalism itself is not bad, nor are all capitalist. Capitalism is good. People confuse capitalism with corporate America and do not consider the alternative socialism for what it is, fake.

Jealousy is the cause of people thinking capitalism is bad, not compassion

People think capitalist lack compassion and an alternative system like socialism will bring more peace and justice to the world. In fact, people think they are better people just believing in anti-capitalism. Wrong. The real poverty in the USA is spiritual poverty, not material poverty. The poor in America would be super rich in most places in the world. If you think capitalism is wrong, live in a post-communist country for a few years.

Socialism capitalism’s alternative

I live in Poland a post-communist country. How many anti-capitalists do I meet here? Hmm none, well one but she is American and rich. Polish people know socialism is all fake. It is the government and those in power taking power from the productive.
Capitalism has transformed the world I live in from poor to rich. Not just some people most people. What about the poor? The poor live better than they did under socialism.

What about greedy capitalists? You know what, some people are. Really they are heartless people. But most people who make a lot of money give a lot to charity and are kind gentle people. I know, I lived around them most of my life growing up in preppy Connecticut. They are not rich and greedy, rather they are rich and live very modestly. Look at Warren Buffett he practically wears the same shoes he was married in, and did not he and Bill Gates give away all their money basically?

People fill their heart with resentment towards capitalist because they feel somehow when someone else wins someone else must lose. The reality is life is not a zero-sum game. To understand and meditate on what this means is important. It means that when someone wins someone else wins. Always, except in extreme cases.

Who is bad in the capitalist world?

I would say large corporations are pretty scummy. I am an unrepentant capitalist, but I believe that corporate America does not uphold the ideals of Adam Smith. Adam Smith was a moral philosophy and believed in enlightened self-interest, not Ayn Rand selfishness. It is too complex to explain in a short post, but there is a big difference from being a capitalist and working for working for corporate America. A capitalist is creative and risk-taking and wants to add value to society. Corporate warriors are more about a paycheck and bonus, two different things.

Next time you ask the question is capitalism good or bad, consider the capitalist vs the large corporation (corporate socialism). Consider Capitalism as we have in free America and the socialism that Poland or Russian had during communism. I think you will see the answer that capitalism is not bad at all.

What capitalism does

It allows you to express yourself and give you the freedom to choose. It does not promise to make everyone equal but rather lets you decide what you want to do with your life. Is capitalism bad? No. The self-expression does not sound too bad to me. This means whether it is setting up a yoga school or writing a book or being an electrician like Lech Wałesa.

Posted

Economics

Mark Biernat

This is my Youtube Channel: EconLessons

Comments

28 responses to “Is capitalism bad?”

Travis Mccann

I feel your are totally correct on capitalism. I enjoy the competition that capitalism gives you the ability to compete with the undying market. I also agree with you about corporations they do have no self regard for others. For instance look at walmart an average income for someone other than a Manager gets about 9 dollars an hour. There is one thing you left out in your rant, you left out the minimum wage topic. The reason why these corporate ceo’s can get away with underpaying employees is because minimum wage is only 7.50 an hour. America has to low of a minimum wage and that is a major issue. I’m not taking Corporate off the hook alot of corporations health benefits and dont take care of their crew. I also feel some people have a unfair advantage in coming up the corporate ladder with being born into a rich corporate company.

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1. Mark Biernat
  
  I am living in EU and people are shocked how low the minimum wage is in the USA. They ask how can Americans afford to live, added to the fact that University, medical care and retirement is not paid for by the goverment in the USA.
  I also agree I see corportate families etc, but this is not the rule more the exception.
  The reason capitalism seems unfair in the USA is because we do not really have it. We have a large industrial military complex and social state that does not directly benefit the average guy.
  Americans pay the same level of taxes if not more than the European social states but do not get the benefit.
  If the USA had real capitalism the average worker would get paid a lot more than today as excess government regulation and hidden taxes reduce margins.
  The unfair amounts that management gets paid is relative. Someone else’s wealth should not affect your happiness, it is unfair, but the main question is what are you personally going to do about it to increases your wages.
  So I think capitalism works for everyone, not just the rich, but it does not work when government creates spends more than it has.
  It drains productive energy from the average person by crowding out private investment.
  Either have a European social state or be capitalistic but what we have not is something strange. That is taxes, spending, bailouts, debt,and inflating the currency but no benefits like Europeans.
  I vote to try capitalism again as it made this country rich (citizens).
  Ron Paul would be for repealing the income tax for example.
  
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Technologist

I am an American. I grew up Oklahoma (arguably the most capitalist part of America). My family is upper-middle class and have jobs making six figures working for oil companies, as lawyers, and defense contractors. We have done well so far from capitalism.

That being said, I don’t necessarily think capitalism will always continue to be the best system. Software is reaching unprecedented levels never seen before. Soon, all sorts of jobs will be able to be automated. Automated factories to produce automated good and cars. Automated farms, and automated construction.

It is more efficient, safer, and quicker, and I support it. But, I think we will have large social problems when many people’s jobs are taken by machines. The Rich are getting richer, and the poor are getting poorer here. In some places, I feel it is becoming a game of monopoly. Soon enough, no one will be able to afford a house, and everyone will be renting from only a few rich people. True capitalism is basically anarchy, and in anarchy, the rich create their own empires.

I believe society has evolved governments because they are more efficient in many ways. Socialism will eventually be more efficient because it encourages innovation and education, while capitalism keeps the poor weak and forced to work to make enough money. I think it is a dangerous path that could lead to collapse.

Also, the lack of regulation has a lead to a system which is much more wasteful in terms of resource usage than any other. This has worked while we have cheap oil, but won’t last forever.

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1. Mark Biernat
  
  I lived in Eastern Europe. Explain to me how government does things better than the private sector. Government does and continues to destroy, whether you are talking Moscow or Tehran or Washington.
  
  I mean your arguments are along the lines of people who thought efficiency gains in the Internet would create fewer jobs. There are plenty of jobs and money to be had out there. You just have to be creative and daring.
  
  What is a better company UPS or USPS?
  
  What has more innovation the silicon valley or some CA state-run office that is bankrupt?
  
  But it is not just a matter of efficiency, it is a matter of freedom. ‘I would rather sit on a punkin all my own then a crowded cushion of velvet’. – Henry David Thoreau
  
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FGBSDFR

Everyone thinks the only alternative to Capitalism is Communism. Why? If we all used our heads we could come up with a better model upon which to base our society. Oh and look up ‘poverty’ on the Web. I believe it is a word you have never heard. These people don’t get equal opportunity.

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1. Mark Biernat
  
  I doubt you will write back but your statement is nonsense. Why have I not heard of poverty? I lived in Eastern Europe a good part of my life and I can tell you the poor in the USA are the super rich in other countries. Capitalism with its imperfections is eons beyond other economic systems that treat humans as cattle to be steered to which pasture they graze in.
  
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Marc Jordan

You stated “Americans pay the same level of taxes if not more than the European social states but do not get the benefit”.

American’s like to think that they are highly taxed, but the truth of the matter is we are among the least taxed in the industrialized world, near the bottom of the list actually. I’ve traveled extensively throughout the world and like to speak to locals about their system of education, healthcare and taxation, and you of all people, living in Europe, should know that the French, Italian’s and German’s pay through the nose. The United States is 14th on the list of effective tax rates. All this according to a very reputable publication, The Economist.

http://www.economist.com/blogs/graphicdetail/2012/10/focus-4

You also said “If the USA had real capitalism the average worker would get paid a lot more than today as excess government regulation and hidden taxes reduce margins.”

It’s a buyers market and American’s get paid what the market will bear. Back during the Go-Go 90’s, McDonald’s around my area (Miami) were paying workers over $10 an hour simply because they couldn’t get people to fill the positions. When there’s a shortage of labor, wages go up, when there is an abundance of available workers, wages go down, due to, you got it – and the word you love to use the most – competition.

Once again contributors here are down on America but let me once again say what I’ve been saying here for the past year since I started reading this blog, you pessimists have been around for a very, very long time – since the creation of the Republic and although the country has lived through bleak times, it never turned Commie or Socialist or Fascist, even when the influence was at it’s highest in the 50’s. If this blog had been around in 1982 you would have been writing the identical thing, word for word, “Oh we are doomed” ,”The sky is falling the sky is falling”, “America’s best days are behind us”. So get over it, will ya.

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1. Mark Biernat
  
  Effective tax rates, you are just looking at personal tax rates at a Federal level. What about the corporate tax rate, we are almost the highest in the whole world. Corporate tax rates are important as this is a huge drag on the economy. It could be said it is more important as firms are organized wealth creation points.
  
  Basically you aggregate taxes, local state, sales, fees, property etc, deficient spending or debt which is a tax on the future and it takes the life out of growth. If you can not see this I can not explain it to you.
  
  I am a EU citizen as well as US. I lived a good part of my life in Europe. Sure you pay, just like the USA, but you get healthcare, free education to the University level, great public transport, a lot of niceties that you do not get in the USA. More vacation, better treatment for maternal child relationships and daycare.
  
  Guns or Butter
  Americans like to say how upset the Europeans are with their social system. The Europeans I know are pretty happy, they do not like the corruption in their governments, but the social system they think is pretty nice, and further, it is unbelievable that in the USA you have homelessness and social problems or people living in trailers like in Florida or ghettos like Detroit.
  
  In the USA we get endless wars of imperialism and a cult of militarism that is confused with patriotism. The amount of money that goes into this massive industrial military complex and the lobbies associated with this is insane.
  
  I am in the USA now as I love the weather, but if you look at the nicest places to live in terms of quality of life in the world many are in Europe.
  
  Both Europe and America are nice places but the taxes are high and in the USA you do not get a lot. Relative wealth generation will not only be in the USA as Asia is in the game and people there can do our jobs for less. This combined with taxes will drag the USA. I mean come on the Soviet Unions real collapse was caused by excess military in the cold war.
  I am not a doomsayer, you never know the future. The US could benefit from the shale oil or innovation but we will not rock until we address this government spending, debt and waste. It will be more slow growth.
  
  All that being said I still believe the following.
  
  Less taxes more wealth
  Basically my underlying premise is give people more liberties and freedom so we can all figure out to to serve each others through enlighten self interest. If let the government taxes – which I am against, we should at least get some benefit for it.
  
  Life can not be measured by wealth alone. But the freedom to live the life you want.
  
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  1. Marc Jordan
    
    It sounds like we are in agreement with a few things here (how could that be?).
    
    First, I need to make one thing clear, some states (not mine, thankfully) have an income tax and California’s is something like 12%. But also keep in mind that state and local taxes are deductible from your federal tax return, so it’s not as if a person in the 28% federal bracket and 10% state is paying 38%.
    
    You said
    “I lived a good part of my life in Europe. Sure you pay, just like the USA, but you get healthcare, free education to the University level, great public transport, a lot of niceties that you do not get in the USA. More vacation, better treatment for maternal child relationships and daycare.”
    
    Time and time again American’s have stated that they like things a ‘a carte and wouldn’t put up with a system that provides all of these (great) services if it costs them one more penny in tax. I’m not sure why, but that’s just the way it is. I happen to like the European way, just as you do. American’s just have a “every man for himself” mentality (I don’t) and that’s one thing that’s never going to change.
    
    I agree that the US puts its nose into everything and I, for one, am tired of it. Our defense budget is quickly approaching $1 trillion a year, which is the same amount as the 17 largest military budgets of the world – combined. A trillion a year and the Dept of Defense is crying over budget cuts of a few billion, as if the entire US military complex is going to implode.
    
    I agree with you on spending. But here is a fact that most won’t believe, Obama is wildly known as a spender but according to this article, from a reputable source, it just ain’t so.
    
    marketwatch.com/story/obama-spending-binge-never-happened-2012-05-22?pagenumber=1
    
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    1. Mark Biernat
      
      We are in agreement on some points. What the government spends on or who spends is not the issue on my mind. I seem to hold contradictory views. I seem like a Libertarian Democrat. But I am not. I am just saying if there must be spending I prefer internal investment over imperial wars. However, I am still against deficit spending. Until the hole is plugged I think there is a drag on wealth creation. Americans and the world have tolerated debts as a way of life. Not in my book. I personally do not have any debt. If I make something I can spend. If not I do not. I have zero debt. What is wrong with that?
      
      I have no debt. I have a great credit score and earn money and spend frugally. What is wrong with that? I have an organic vegetable garden, go fishing daily. I pay cash most transactions. I am a technomaniac and very progressive, but no need for a smartphone debt or payments. I invest my savings. Why should I be frugal yet other people spend money they do not have including state and local governments as well as the US government and banks and automakers homeowners I am supporting or wasteful military?
      
      Therefore, the idea that Obama does not spend or spends relatively less than other presidents against some GDP scale or percentage increase is not as much of an interest to me as there is not balanced budget amendment or decrease in spending. I do make statements like Obama has had a wild party and now we have to pay for it. But so did Bush. Bush accelerated spending and Obama followed through.
      
      The bottom line is spending is out of control since the budget is not balanced and obligatory payments for the Federal governments are still rising. The budget is still out of control because at some point if you look at the Office of Budget we will have a perpetual fiscal crisis under current tax rates. Obama and the GOP are talking about stopping the rate of increase but not decrease.
      
      So it is more an abstract philosophical basis I oppose Obama. But I was not a Bush fan either for the same reasons.
      
      I do not spend more than I can earn. Why should the government? Why should we allow government to crowd out initiative?
      
      That being said you can understand, if we accept the government will spend, I prefer butter to guns. I prefer to be the waste and inefficiencies to be the forced redistribution of wealth to go to Americans via something like education and roads, rather than destroying and rebuilding Iraq. The only weapons of mass destruction in Iraq was brought there by the American Army. So if you ask me do we need to crank out nuclear submarines or bail out banks. Well, I do not know. But if you ask me if we need more tanks and soldiers collecting disability from a war with questionable motives or an investment in education and health, I would choose the latter.
      
      However, this is if I must choose. I prefer to keep my own money in my pocket and invest in my health and education of my family. I prefer a balanced budget. I have to save and scrape by. Why should someone else get the fruits of my labor unless with my own free will I want to give it to them? Why should my family go without so some bailout or military project is on the budget. It is mostly waste.
      
      So to say Obama was not that bad, I think it is not all his fault. But we need a guy to ride into town and balance the budget. We need a guy like Ron Paul. Every dollar the budget is leaking, regardless of the relative size it is a drain on the potential for wealth creation.
      
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  2. Bob
    
    How is health care free when you still pay taxes on it can you explain that two me.
    
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    1. Mark Biernat
      
      It is not free of course. The main idea behind health care is there is a social optimal point which is not the same as a market optimal. There is dead weight loss associated with looking at a market equilibrium vs a social equilibrium.
      
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Christopher M Dunn

Have you ever asked yourself what kind of inventions and innovations the ultra rich have contributed to society? The answer is nothing. The ultra rich and their corporations stymie inventions that may benefit mankind to benefit their own pockets. If a cure for all cancer was found, do you believe it would be given to the public? A cure for cancer could save tens of millions of lives now and in the future, but would it be good for the ultra rich and their bottom line? No, it wouldn’t. They would fight it every step of the way, or buy the patent and seal it. Capitalism does not care if people need the medicine, capitalism does not care if our citizens are educated and cultured. All capitalism does is give the ultra rich a moral reason to ship their manufacturing arm to Taiwan and pollute where it is cheaper. Capitalism has no sense of right and wrong, only profitable and non-profitable. If people die, but a profit is realized then great for capitalists, they don’t have to care.

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1. Mark Biernat
  
  The rich do a lot, including having large charitable foundations like Bill and Melinda Gates, Warren Buffet, the Andrew Carnegie foundation and the Rockefellers to mention a few. However, some people have said that capitalism feeds more mouths than charity. When we all work we all contribute to satisfying needs of humanity. That is what work is. If people do not want it the demand is low. High tech to biotech entrepreneurs are looking for new ways to serve humanity even if the profit motive is behind it. Compared that to forced government work on threat of prison, I think a free market is a nice thing. It is like free science. When there is a free discourse and exchange of information rather than government directed then society as a whole benefits.
  
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2. Plasticmoney888
  
  You are talking of Crony Capitalism or Communism where innovation is dangerous to a system of total control and statism. Despite more an more bureaucracy Government parasites and idiotic regulations America remains one of the great countries for bringing ideas to market.
  
  The specialty of non Capitalist countries as always been spying on free markets economies inventions. 35 years ago the computer you are using to post you comments would have cost several million dollars, take an acre of land and be less efficient than what you have now.
  
  The problem with health care is not cause by free markets it’s that the Government pays for 50% of it and it does not negotiate prices It’s a total and scandalous racket. Thanks to lobbying etc.. Hospital can show loses and executives are multi millionaires. It’s a cartel It could never exist in a free market and now they are going to make mandatory. Thats is a form of fascism
  
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Marc Jordan

I don’t believe a single word when you said that a cure for cancer would be sealed and that the rich would fight it every step of the way.

First of all, whether you believe it or not, I think I read somewhere that the wealthy also get diagnosed with cancer.

Some inventions and discoveries are bigger than a single person or group of people. Conspiracy theories like this have been around for decades and I submit to you to Mr Dunn to list inventions or discoveries that were stifled or delayed because it would have cut into rich peoples earnings. It certainly didn’t happen with the polio vaccine (what about shareholders in companies that produced iron lungs, did they fight the discovery?)the manufacturers of telegraph equipment when the telephone was invented.

And as Mark points out, some of the wealthiest people on the planet do a tremendous amount of good.

I’m sorry Chris, your argument doesn’t hold water.

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Ralph Spyer

Did the military industry complex cause the Vietnam war, Iraq war, Afghanistan war, and now wants a War with Iran or Syria? Does the Federal Reserve control our money supply, the largest private bank in the world? Does the richest country in the world have a better health care system than Cuba? How can we have 20 million illegals, who running the show?

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Josip

All right wing views are wrong, which means capitalism is bad. When the world falls out from underneath those who succeed at the expense of others, I want to be there to catch them- then step out of the way.

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Peter

Capitalism is based on greed. In a capitalistic society not everyone can be rich, the rich need the poor more then the poor need the rich. There is only enough room for so many rich in a society and to take your place there you must be extremely lucky along with having any gifts such as great intelligence, being a great athlete or singer etc. The rest build their wealth based on psychopathic behaviour where no regard is given to the rest of society. They will destroy environments, send children down mines, encourage people to put toxins into there bodies. Whatever it takes and unfortunately the rich own the media which constantly sells under the veil of deception that greed is good. Like all systems gone before it capitalism will fail and it will be by what it built itself on, pure greed.

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1. Mark Biernat
  
  Do you live in the time of Charles Dickens? Most capitalists like Bill Gates or Warren Buffet give their money away? Others like Steve Jobs created wonderfully imaginative works for people. That was their joy. Capitalism is nothing more than bringing your talents to market. It allows you to strive to be better and create value for others to enjoy. The corrupt ones and immoral would be that way under any economic system. Do you not think immoral economic abuse of power did not take place under communism or socialism?
  
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Ashiq Ullah Mangal

Capitalist is the main cause of wars being here on the earth. They make such a way that they can easily get money. I hate capitalism.

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1. Mark Biernat
  
  Why specifically is capitalism bad? Do you own a cell phone or car? Is not the owning of basic material posessions based on capitialist creativity? Read Concious Capitalism by John Mackey the CEO of Wholefoods. You can do positive things with a system that allows choice. The main idea is it is freedom to do good vs freedom to do bad. However, that exisits in all forms of economics just in different forms.
  
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Pop

The rich own all the resources (oil, energy, gold and other commodities). Exploiting these resources only helps to make you richer, hence capitalism makes the rich, richer.

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1. Mark Biernat
  
  If we were living in the 19th and 20th century what you say might be true. However, not fully as many of the descendants of the richest families have lost their wealth if you trace it through time, life always reinvents itself. However, capital of value today is intellectual capital. Intellectual capital from Google to Facebook to new types of Solar panels to medical technology to writing the next Harry Potter series is always from your own brain. The more technology advances the more it is brains not physical resources that are of value.
  
  Analogously physical strength was important and now it is mental power.
  
  Think small scale, start to build your own house and grow your own food and search the web on ways to make money. I know a few millionaires just from websites and you tube videos. Money is like water, it will flow to the most intellectually productive. It is not always fair but I prefer it to the alternative of social engineering by government.
  
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  1. Sam
    
    There is absolutely nothing wrong with the minimum wage. The minimum wage is something that is meant for teens to have to save up for a car or something like that. It was not however designed for someone to live off of.
    
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SapphireSpire

Free markets are based on an equal right of individuals to copy and produce whatever they think the can sell utilizing their land, tools, materials, and whatever knowledge they possess. That’s what maximizes competition which is what keeps quality up and prices down. America has never had a free market because of monopolism. Not only the monopolization of entire industries but of art and technology. Artists and inventors deserve recognition for their work but exclusive publishing and production rights have nothing to do with recognition and everything to do with the disparity of wealth and poverty.

The purpose of monopolism is not to benefit consumers or to promote the progress of art or science but to protect publicly traded companies from competition and to simplify the collection of income taxes from working people. It turns free markets into captive markets. The same laws that protect companies from competition are what prohibit their employees from employing themselves and paying their own taxes.

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Jalon Faherty

Thank you! This is an excellent post. It’s simple and informative. Because of Capitalism, our homeless have more money than the man who is forced to work 12 hour days in Somalia. Most of the world live on $2/day! When we look at their country’s infrastructure, it’s not Capitalism. That should speak volumes to this new generation, BUT it doesn’t bc they aren’t researching anything for themselves, as they are simply going off of the person next to them. That person has done no research, and the person who told them, hasn’t done research. I don’t understand why people are just taking someone else’s word about something so critical, that they’d be ok with changing our entire economic system! It’s baffling.

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1. Mark Biernat
  
  Yes, travel to countries without capitalism, like North Korea or Venezuela, and then travel to counties and places with capitalism like Switzerland or Florida, or Connecticut and see where you feel you could live a better life with your family if you had to.
  
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