Recessionomics

[iNow]

Fascinating. Thanks to both of you. I had no idea our country was so full of free loaders.

 

FWIW, I claim zero dependents as I don't want to have to bother coming up with money to pay them later. I'd rather give it now, then get some back, even if I operate at a slight loss by doing so (basically, I'm paying for convenience, as I'm too busy paying off debt and renovating my house to sink it all into savings which would allow the money to work "for me" until I paid it to them in April).

[Phi for All]

telephone services used to be state owned. I don't have stats of relative prices, but I'm almost sure prices came down when they were privatized.

The Bell System was never state owned. It was regulated as a public utility starting right after WWI (for national security reasons, the government didn't want a whole bunch of phone lines from different companies running all over the country). It was regulated by the states to provide service at a higher cost to more densely populated areas and lower cost to rural areas where it actually cost more to run and maintain lines, but where people could afford the service less.

 

When the Bell System was broken up (mainly because they also wanted to get into computers, which failed miserably, and were then assessed as the monopoly they had always been), the resulting Baby Bells actually charged more because owners of telephones were now responsible for their own maintenance, but at the same rates. Selling cheaper phones became a big business where before these insanely indestructible phones were given free as part of the service. It wasn't until microwave transmissions allowed competitors to bypass AT&Ts lock on the landlines that phone service became cheaper.

 

So that's not a good example of a formerly government-run entity that was taken over by a private corporation where prices came down. I keep hearing that this argument from pro-deregulation fans, but I have yet to see a credible instance. I have directly experienced the opposite though.

 

 

FWIW, I claim zero dependents as I don't want to have to bother coming up with money to pay them later. I'd rather give it now, then get some back, even if I operate at a slight loss by doing so (basically, I'm paying for convenience, as I'm too busy paying off debt and renovating my house to sink it all into savings which would allow the money to work "for me" until I paid it to them in April).

But if I were to ask you for a loan of several thousand dollars at no interest for 14 months or so, you'd probably say no. You like Uncle Same better than me.

[ecoli]

the resulting Baby Bells actually charged more because owners of telephones were now responsible for their own maintenance, but at the same rates. Selling cheaper phones became a big business where before these insanely indestructible phones were given free as part of the service.

Direct costs may have been higher, but how much where the taxpayers saving?

 

Also your example fails to demonstrate lower costs over time. Consumers may pay more initially, because the system is 'getting used' to being private. But prices rise or fall based on an equilibrium between supply and demand, which doesn't settle immediately.

 

 

Not to mention those awesome new phones that come free as part of the service is a product of a competitive market.

 

I admit, however, that that example just came to mind.. I haven't really studied that industry. However, what about airlines, for starters...

 

http://www.isil.org/resources/lit/privatization-english.html

(bad link I know, they don't site sources. I'm looking for a better one)

[npts2020]

ecoli; If the prices of telephone service went down because of privatization, I missed it somehow. What is it that profits incentvize? Near as I can tell it incentivizes making money (especially short term) to the exclusion of all other considerations. While the profit motive may be good for innovation, it also encourages cutting corners, creative bookkeeping, and collusion among other things. I guess I would agree capitalism works better for the citizens if only capitalists are considered to be citizens. You assume there is no way to incentivise the government to cut costs (and with the dumb-asses who vote in elections here it may well be true but that is a whole other matter) but I would argue that if executives and/or workers are given reason (proportional bonuses or some other mechanism) to do so it will happen. Good luck with the "market" keeping the worst of corporate abuse in check, you can't even get your food labelled with what is in it. Last time I can think of this being tried we had conditions like those described by Upton Sinclair in "The Jungle" and more than a few of those trying to change things murdered or beaten into submission.

 

I am not sure what you mean by giving corporations freedoms at the expense of individual and societal freedoms being a fase dichotomy. Maybe you can give me an example or two of where we have expanded corporate freedom and not impinged on individual and collective rights.

 

Assuming you are right that low wages and maximum employment is a good thing, why should we have a standard length of workweek, laws against children working, or allow retirement? In fact, we can go back to the good ole days of "Why hire a man for a dollar when you can hire a kid for a dime?".

 

While I would generally agree most corporations don't need big brother watching them 24/7, there is no codified manner in which they are supposed to act. Is it really ok that the only consideration is the next quarter's bottom line?

 

Maybe profit driven innovation only happens in a free market, but I would submit that innovation will happen regardless of the economic system. Would you claim that no innovations came from the Soviet Union or come from China, neither of which is claimed to be a capitalist country AFAIK?

 

The corporate anarchy I am referring to is what pretty much exists today and you and some others seemingly want to expand. A good example of what I am referring to is the Enron debacle. How many people have served jail time or paid fines for that (hint all of the convictions of those still alive are under appeal)? and Enron filed for bankruptcy over 7 years ago! How long do you think it will be before Bernie Madoff (what a great name for a con man) pays any fines or goes to jail? Do you think anyone will see the inside of a courtroom over the current financial crisis where more than a few executives knew exactly what would happen eventually and didn't care so long as they weren't the ones left holding the bag?

 

jackson33; So far as the discussion goes on this thread, it seems to me to be irrelevant whether it is the federal, state, or some other government spending money, the economic effects will be the same.

 

For some crazy reason I believe it is my right to be able to breathe clean air and not be subject to acid rain, yet the government has told power companies it is ok to pollute the air and cause acid rain. explain to me how my rights have not been subjugated to corporations in this instance? So far as losing rights to the government and not corporate interests IMO there is very little difference between the two. For as long as I can remember (at least back to the 60's) corporations have been bribing (promising cushy jobs, donating massive amounts of campaign money, etc.) public officials to do their bidding. This has led to increase of corporate rights and decrease of personal and societal rights, the freedom to do the things you mention are all predicated on having money to do them. A person who has to worry about whether they are going to eat, pay rent, or buy their diabetes medicine this month is likely only going to be concerned about the lowest price of things and not even consider any negative aspects of the way they are purchasing something. If cheap goods is the ultimate goal, why not just go back to the days of robber barons?

[Phi for All]

Direct costs may have been higher, but how much where the taxpayers saving?

Taxpayers had nothing to do with it. The Bell System was a corporation, who's prices were regulated by the government.

 

Also your example fails to demonstrate lower costs over time. Consumers may pay more initially, because the system is 'getting used' to being private. But prices rise or fall based on an equilibrium between supply and demand, which doesn't settle immediately.

I don't have to demonstrate anything. I asked you for an example of a formerly government-run entity that was taken over by a private corporation where prices came down and you cited the Bell System, which was not run by the government, ever. The system had plenty of time to get used to deregulated price structures and chose to keep them high. Again, it wasn't until microwave transmissions made it possible for companies like MCI and Sprint to challenge the Baby Bells before we saw an appreciable drop in prices.

 

But that had nothing to do with former government ownership being privatized and the price going down over time. I can't believe privatizing our roads would save anyone any money.

 

 

Not to mention those awesome new phones that come free as part of the service is a product of a competitive market.

But again, this is just an example of market competition driving innovation, not an example of what I asked for.

[iNow]

But if I were to ask you for a loan of several thousand dollars at no interest for 14 months or so, you'd probably say no. You like Uncle Same better than me.

 

I'm pretty sure you couldn't arrest me (and send me to prison with Wesley Snipes) for refusing to loan you the money. Also, you would probably use that money for things that had no impact on the life of me, my family, or my friends, whereas the government will be putting it towards things that benefit the whole system.

 

Even if my points above are wak (EDIT) weak, I want to make clear that it has nothing to do with "liking the government," and everything to do with their stangely effective methods of coersion.

Edited January 9, 2009 by iNow

[ecoli]

ecoli; If the prices of telephone service went down because of privatization, I missed it somehow. What is it that profits incentvise?

saving money to invest in the production of capital goods which, in turn, improves profits.

 

Competing firms direct resources in this way to gain an advantage over their competitors. Whoever offers the best product for the lowest cost gets a larger market share (usually meaning more profits)

 

Near as I can tell it insentivises making money (especially short term) to the exclusion of all other considerations. While the profit motive may be good for innovation, it also encourages cutting corners, creative bookkeeping, and collusion among other things. I guess I would agree capitalism works better for the citizens if only capitalists are considered to be citizens.

You're thinking is on the right track. The system is easily prone to corruption. Competition facilitates innovation, but only if things there's a strong government to make sure every thing is nice and legal.

 

Remember the term free in "free market" doesn't mean that markets are free from government. It means that entrepreneurs are free to enter markets.

 

You assume there is no way to incentivise the government to cut costs

I never claimed that... what I will say is that without profits there is less incentives for governments to cut costs than competing businesses in a free market. That is not to say that governments can never keep costs low or innovate (government funded scientific research produces great things!) but politicians are just as corruptible as CEOs but I argue that it's easier for politicians to get away with it (corporations change leadership more often than the senate, I'm thinking).

 

 

Good luck with the "market" keeping the worst of corporate abuse in check, you can't even get your food labelled with what is in it. Last time I can think of this being tried we had conditions like those described by Upton Sinclair in "The Jungle" and more than a few of those trying to change things murdered or beaten into submission.

When corporations get away with this type of illegal behavior it is not the failure of a free market (by definition, this market is not free). But government-corporate cronyism that allows illegal activity to occur, is the fault of a corruptible government just as its the fault of corruptible corporations.

 

I am not sure what you mean by giving corporations freedoms at the expense of individual and societal freedoms being a fase dichotomy. Maybe you can give me an example or two of where we have expanded corporate freedom and not impinged on individual and collective rights

I'm saying its a false dichotomy because corporations are owned and operated by individuals. I'm not really sure what you mean by "corporate freedom" here. Violation of individual liberties for profits isn't a 'freedom.' (well I guess you could make the argument...)

 

Assuming you are right that low wages and maximum employment is a good thing, why should we have a standard length of workweek, laws against children working, or allow retirement? In fact, we can go back to the good ole days of "Why hire a man for a dollar when you can hire a kid for a dime?".

Because societies have the options to stop practices like this at the expense of immediate profiteering.

 

But think of the problem in this context: children need to do something other than sit and play around all day. There are two options, go to school or go to work.

 

You can think of children as undeveloped adults which have not reached maximum utility of productivity. In other words, children are less productive than adults during their lives so far. So, which of these two options would result in maximum productivity?

 

Well it depends the standard of living (which plays into the quality of the schools available). If you get a good education, then this will improve your lifetime productivity, so it makes sense to make this "capital investment" to improve future productivity and increase your earnings potential.

 

However, if the quality of the school does not allow for this (ie. its a poor school where you gain nothing and just squander resources) than your lifetime productivity could have been greater if you just started working as a child (gotten on the job training and valuable life skills, etc). Perhaps delaying formal education would actually be beneficial to productivity, etc.

 

A company will higher children if doing so will cut costs while still retaining overall productivity. If this scenario exists in a free, competitive market than the result of this cost cutting practice will be cheaper goods/services in the marketplace. This will allow people to save money, diverting capital to other sources (like luxuries) and raising the standard of living. This results in improved infrastructure (like schools).

 

At this point, people (parents) can choose for themselves (or if society feels laws are required) to enroll children in schools, because improved productivity over one's lifetime is possible.

 

This sounds like a better scenario than mandatory education in schools which waste public funds and children's time. After all, time is money.

 

 

Maybe profit driven innovation only happens in a free market, but I would submit that innovation will happen regardless of the economic system. Would you claim that no innovations came from the Soviet Union or come from China, neither of which is claimed to be a capitalist country AFAIK?

I would say the Soviet union isn't finding itself all to productive these days. China, while the government is totalitarian in nature, relies on privately owned infrastructure to employ its citizens.

 

I should add here that since China has opened itself up to the globalization effects of capitalism, millions of people have been risen out of poverty into the newly formed middle class.

 

The corporate anarchy I am referring to is what pretty much exists today and you and some others seemingly want to expand. A good example of what I am referring to is the Enron debacle. How many people have served jail time or paid fines for that (hint all of the convictions of those still alive are under appeal)? and Enron filed for bankruptcy over 7 years ago! How long do you think it will be before Bernie Madoff (what a great name for a con man) pays any fines or goes to jail? Do you think anyone will see the inside of a courtroom over the current financial crisis where more than a few executives knew exactly what would happen eventually and didn't care so long as they weren't the ones left holding the bag?

Unfortunately, things like white collar prisons/priveledge exist whether it's through corrupt CEOs or corrupt politicians. This fact has nothing to do with "corporate anarchy."

 

Which, coincidently is something I don't support, since this is a term that I've never heard before and I assume you made up. What I support is something closer to "market anarchy" or "anarchocapilism" which is just a scary way of saying "free market" (which I defined for real above).

 

For some crazy reason I believe it is my right to be able to breathe clean air and not be subject to acid rain, yet the government has told power companies it is ok to pollute the air and cause acid rain. explain to me how my rights have not been subjugated to corporations in this instance?

Because property rights are not properly enforced. This is not a market failure but a failure of government to do its job.

 

So far as losing rights to the government and not corporate interests IMO there is very little difference between the two. For as long as I can remember (at least back to the 60's) corporations have been bribing (promising cushy jobs, donating massive amounts of campaign money, etc.) public officials to do their bidding. This has led to increase of corporate rights and decrease of personal and societal rights, the freedom to do the things you mention are all predicated on having money to do them. A person who has to worry about whether they are going to eat, pay rent, or buy their diabetes medicine this month is likely only going to be concerned about the lowest price of things and not even consider any negative aspects of the way they are purchasing something. If cheap goods is the ultimate goal, why not just go back to the days of robber barons?

 

But the robber barons got a pretty bad rap... yeah there was a lot of illegal corruption going on, but through their entrepreneuralship and investment capital, they helped rased the standard of living for everyone... you don't see anyone complaining about that.

 

And again, greed is human nature. The corporate-government complex you describe is the result of government's failure of its duties. Politicians tie themselves to corporations for money and power, and they in turn use their political clout to help corporations avoid the competitive effects of the free market.

 

So, again, the free market is not at fault here, but greedy CEOs (which we can't do anything about unless they break a law) and greedy politicians (Which voters can remove from office).

 

It's seems obvious to me which players in the corruption game are the easiest to stop (in our democracy, anyway).

---

Merged post follows:

Consecutive posts merged

I can't believe privatizing our roads would save anyone any money.

well I can, though I understand your not simply looking for economic theory on this one...

 

But again, this is just an example of market competition driving innovation, not an example of what I asked for.

Right, but I did post that link which had examples of canadian and british governments privitizing airlines. I admit that link wasn't very good, because the sources aren't cited. However, I promise better information tomorrow.. it's bed time now

 

edit: in the meantime, please chew on this:

http://www3.interscience.wiley.com/journal/118872914/abstract?CRETRY=1&SRETRY=0

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=226357

http://www.informaworld.com/index/4XPUUPTDH678VFAB.pdf

 

The last one gives some good examples, but comes to the conclusion that the cost of privitization is not so cut and dry. Maybe private ownership is superior to public ownership but the act of privitization comes with its own costs. I'll read that again in the morning when I wake up. *yawn*

Edited January 9, 2009 by ecoli
Consecutive post/s merged.

[npts2020]

ecoli; I am missing something in your argument. You seem to say on the one hand that strong (but appropriate) regulation is necessary to avoid the negative consequences of unfettered capitalism, yet say there is too much regulation of the market?

If the market is "free" there can be no such thing as illegal behavior only immoral or unethical behavior. The problem with allowing the market to control behavior, is that it is assumed that consumers have some way of finding out how a given corporation conducts business and have the wherewithal and alternatives to act on that information. IMO you are not going to weed out corruption and cronyism simply by making the market "free". It seems to me, the real argument is about degree and areas of regulation and not whether the market should be free or not. Having said that, I would be very interested in hearing what you or others arguing that the market isn't free enough would consider to be appropriate regulation and if there is any economic activity the government should be involved in. I would argue that the fact most people in America ever improved their economic situation had more to do with fighting capitalists tooth and nail than any consequence of the way capitalism works. Also, last time I checked we still had capitalism in the U.S. yet there has been little economic improvement for those in the middle or lower classes, but a vast improvement of accumulated wealth by the richest among us. If capitalism is so good for the majority, why has this situation occurred? Even Warren Buffet has said "there is class warfare going on, and my class is winning", what do you suppose he meant by that? Expecting the political system, as is, to fix the problem is a little like giving hundreds of billions of dollars to a group of people who lost many times that amount and expecting them to now invest it wisely and pay it back. While it is possible for corporate bad actors to be convicted of crimes, it seems to be an extremely rare occurance and happens only in the most egregious of cases.

 

ps I appreciate the constructive tone of this thread thus far as many of the topics being discussed are among the most controversial in economics.

[ecoli]

ecoli; I am missing something in your argument. You seem to say on the one hand that strong (but appropriate) regulation is necessary to avoid the negative consequences of unfettered capitalism, yet say there is too much regulation of the market?

yes... that statement is not contradictory. The government should be limiting itself to upholding civil liberties, property rights, contracts, etc. Preventing things like physical intimidation, corporate bullying, etc. The list doesn't include things like bailouts or targeting interest rates (amoung other things)

 

 

If the market is "free" there can be no such thing as illegal behavior only immoral or unethical behavior.

That's simply not true. As I said before, the word "free" does not imply unenforced social arrangements, it implies that entrepreneurs are able to freely enter markets.

The problem with allowing the market to control behavior, is that it is assumed that consumers have some way of finding out how a given corporation conducts business and have the wherewithal and alternatives to act on that information. IMO you are not going to weed out corruption and cronyism simply by making the market "free". It seems to me, the real argument is about degree and areas of regulation and not whether the market should be free or not. Having said that, I would be very interested in hearing what you or others arguing that the market isn't free enough would consider to be appropriate regulation and if there is any economic activity the government should be involved in.

See above.

I would argue that the fact most people in America ever improved their economic situation had more to do with fighting capitalists tooth and nail than any consequence of the way capitalism works. Also, last time I checked we still had capitalism in the U.S. yet there has been little economic improvement for those in the middle or lower classes, but a vast improvement of accumulated wealth by the richest among us.

This is simply false. Any type of product or service that you (or anybody else) uses in every day life has a 97% chance of being produced by capitalism.

 

http://eh.net/encyclopedia/article/steckel.standard.living.us

Take a look at the above link... scroll down to the chart of international comparisons. Take a look at the GDP per capital growth rate of capitalist country's from 1820 - 1998, from the very start of the industrial revolution to modern times. In highly capitalist nations, such as the United States, the growth rate has been large and consistent since this time. In China, there is zero growth until 1970s and significant growth by 1998, not coincidentally around the time it open ups its markets to capitalism. Next look at the jump in GDP in Japan between 1950 and 1973, Japan has become a highly industrialized nation, due to the globalizing affects of capitalism.

 

Now, is some of this growth simply the richest getting richer at the expense of the poor? Well perhaps, but its not that simple.

 

Its true that the upper echelon experiences growth faster than the lower, but that does not mean that its at the expense of the poor. Competition between business lowers the cost of living for everyone, the economy can grow at all sectors by improving productivity and economic growth at all income levels. In other words, the economy is not a zero sum game. That means that corporations benefit when lower income classes are richer; they can buy more stuff. This strive for innovation to lower the cost of living is what improves the quality of life for everyone.

 

Is there corruption, greed, and pollution? Well yes but there's also philanthropy, altruism and corporate environmentalism. Capitalism has done more to get rid of poverty and improve the quality of life for more people than institutions and governments (which traditionally use oppression to maintain their power) have ever done.

 

Think about it this way... would you rather live in Medieval Europe or work for Walmart?

[ParanoiA]

One thing we should point out is that an argument for free markets is not a pro-business argument. People hear "free markets" and immediately presume some dramatically favorable position for business to operate from. No. Big business, generally speaking, does not aspire to free markets. Once a business is fairly huge, then they begin to play "prevent defense" in their business practice. Guess what that is? Regulation for one (regulations make it tough for new entrepreneurs to enter the market, so through regulations government creates security for big business; hilariously enough, government aids the effect of monopoly). I'm not saying they lobby FOR regulations, but they lobby the dynamics of them, creating the right "cushion" for their asses.

 

These examples of corporate cronyism and the lobbying - that's business securing their market by manipulating government. That is not compatible with free markets. With a truly free market, Big business MUST earn your business or else another entrepreneur will enter that market and take it from them. Laws cannot create security for them, ever. They are required to compete until they die.

 

In case you've never really delved hard into free market philosophy, this is a great PDF on the nature of man, that explains the mechanics, the natural checks and balances of a free market system. The author goes a bit far in his bid for eliminating government entirely, and I found myself arguing with him internally from time to time, like any author, but the first 50 pages is a good foundation of logic concerning free market dynamics. Why we think it works better than overt government control, like we have today.

 

 

Another thing I've noticed about folks against free markets, or at least nervous about them, is that they indict corporate behavior as if it isn't human nature. They throw up example after example where business greed hurts people. The irony being that the whole point about the free market is that it checks human nature. It does this because it counts on human nature in order to work - it's built in the design.

 

In a free market when efficiency is sacrificed, or the consumer is exploited, the "signals" are sent and entrepreneurs enter that market and the exploitation ends. That's ideal. And it happens to work out that way in reality too. Except, when the government interferes and undermines the design, of course.

[jackson33]

 

jackson33; So far as the discussion goes on this thread, it seems to me to be irrelevant whether it is the federal, state, or some other government spending money, the economic effects will be the same.

 

For some crazy reason I believe it is my right to be able to breathe clean air and not be subject to acid rain, yet the government has told power companies it is ok to pollute the air and cause acid rain. explain to me how my rights have not been subjugated to corporations in this instance? So far as losing rights to the government and not corporate interests IMO there is very little difference between the two. For as long as I can remember (at least back to the 60's) corporations have been bribing (promising cushy jobs, donating massive amounts of campaign money, etc.) public officials to do their bidding. This has led to increase of corporate rights and decrease of personal and societal rights, the freedom to do the things you mention are all predicated on having money to do them. A person who has to worry about whether they are going to eat, pay rent, or buy their diabetes medicine this month is likely only going to be concerned about the lowest price of things and not even consider any negative aspects of the way they are purchasing something. If cheap goods is the ultimate goal, why not just go back to the days of robber barons?

 

In part and by design; US Federal Government addresses the needs based on the common interest of all 50 (today) States. State Government addresses the needs of based on the common interest of all the Counties/Parishes with in their State. County, City/Town or community governments address the needs and interest of their people. When thinking of some issue, keep in mind which has authority over that particular issue or in particular which do not.

 

Nealy every aspect of your day to day life, involves local or State Law and almost with out question never involves Federal. The most common error, is the assumption everything is credited or complained about, comes from the Federal. Education the most common I address, is as local an issue as any you will find.

 

No person of any authority or desiring to achieve authority, favors contaminated Air, Water, Streams, Oceans or anything having to do with the environment. Industry/Corporations/Business of any kind is made up of individuals, no less that your local PTA or Bar Room gathering. Their are always a few bad apples and always a majority you can accept. Each entity plays the game of acceptance by as many as possible, no less than you accept a neighbor, a boss or members of you bowling team. If to begin with, your looking for a problem, your going to find a problem. No business or person can be perfect to any other, much less the numbers of others involved in any social order.

 

Since mankind first began to reason, they have sought out means to help the helpless. Modern man/society, long before democratic governments formed or socialistic systems, FDR, even Lyndon Johnson or Obama, had/has been benevolent. Institution have formed and contribution have supported these organizations and had been doing no less through Church's/Civic groups long before them.

 

Now the one point you made that worries me; You "have the right to breath clean air and not subject to acid rain"....I assume your right includes defining just what 'clean air' and 'acid rain' means and the assumption mankind can prevent it or alter your environment in the first place. Hawaii, has been in the process of forming, since written history as been around. Volcano's erupt and are going to until the earths core cools (we will be gone by then). Acid rain has been around a very long time. We have 6.6 or so billion people living on this planet, each with equal rights to others for existence IMO. To sustain this level and I suspect in a short time (2200-2500AD) another 10-50 Billion, current technology that is practical, cheap and efficient and affordable to the majority has to be used. If this objective infringes on your rights then I am sorry, but I'll go with the billions who depend on those systems to work. I'll add, we exist only because our atmosphere progress over billions of years to some where around 21% Oxygen, with a atmospheric pressure around 30 and has been maintained by natural forces long enough for us to evolve. As we exist today could not be, if it fell below 15-16% or goes over 25% or so. Then where does our oxygen come from and whats the food source for that production???

[iNow]

Since mankind first began to reason, they have sought out means to help the helpless.

 

Actually, the first instances of reasoning most likely had more to do with finding food, finding shelter, and securing mating opportunities. If you're working from false premises, can we really trust your conclusions which are based on them?

[waitforufo]

Actually, the first instances of reasoning most likely had more to do with finding food, finding shelter, and securing mating opportunities. If you're working from false premises, can we really trust your conclusions which are based on them?

 

They must have been rather skinny, exposed, and sexually frustrated if reasoning was required for the activities you mention. How did we ever survive to the age of reason?

[npts2020]

ecoli; So I can take from what you have written that the sole activities you believe government should be involved in are legislating and enforcing laws and maintaining an armed forces? I guess we will have to disagree about whether or not expanding corporate freedoms infringes on societal and individual freedoms but I can't think of any cases off hand where they do not. By your description of a free market, it seems to me that without advocating corporate anarchy, all markets are free since anyone who can meet the requirements of a particular market is free to compete in that market.

I would not disagree that capitalism has been the best system for production of wealth but completely disagree with the implied premise that accumulation of wealth is the sole measure of a society or individual. If this premise were true, why would anyone post on this forum instead of doing some other activity more likely to increase their bottom line? For that matter, how many scientists have you ever met who are doing their job primarily because of the amount of money it pays relative to something else they could be doing? While there are things like philanthropy, altruism, and corporate environmentalism, they are not part of capitalism and run directly counter to what capitalism is all about. The social improvements you refer to IMO are more due to people who are not capitalists, using the capitalist system to do so. I am not so sure that your choice of living in medieval Europe or working in a sweat shop producing goods for Wal-Mart is really arguing in favor of your case, as neither seem to be an attractive option in comparison to what is possible.

 

ParanoiA; I agree 100% that large multinational corporations are more of an impediment to progress and competition than a benefit. The problem is in deciding exactly how big is too big. IMO needing a government bailout is certainly a good indicator of being too big.

 

jackson33; just two main points. Firstly, I do not disagree at all that state and local governments should be better than the federal government at determining the needs of their citizens. What I fail to understand about your argument is why the economy would make any distinction, whatsoever, between the levels of government doing spending on a given project? Secondly, I think most people would see a big difference between having acid rain caused by Mt. Pinatubo and acid rain caused by a power plant upwind from where they live. The difference being that one is very preventable. The debate about who gets to set limits is rather contentious, but it seems to me that allowing industries to set their own limits is a prescription for disaster, since many companies don't even live within the relatively few limits that exist now.

[ecoli]

While there are things like philanthropy, altruism, and corporate environmentalism, they are not part of capitalism and run directly counter to what capitalism is all about.

That's not true at all... corporations that pursue altruistic goals (even if it just involves treating their employees and customers better) are more competitive than their counter parts. Think about Google. It is the largest internet company, the most desirable to work at, and pursues many philanthropic goals (http://www.google.org/). This company is entirely a product of the free market.

 

Here's another philanthropic by product of the free market: http://www.gatesfoundation.org/Pages/home.aspx

 

Since image is inexplicably tied to the free market, consumers will choose products that treat them and the world better. This is why there is more altruism and private charity organizations than ever before (certainly more than in our non-capitalist pasts).

 

I am not so sure that your choice of living in medieval Europe or working in a sweat shop producing goods for Wal-Mart is really arguing in favor of your case, as neither seem to be an attractive option in comparison to what is possible.

Then you haven't understood the question. The standard of living for a walmart employee today is an order of magnitude higher than someone living in medieval europe. You probably wouldn't even have lived past 30 then, due to the high caloric diets and high quality medicines that the free market has turned out just over the past 100 years.

 

I know lots of Chinese citizens would agree with me... Many who have been living in abject poverty in a ruthless communist country have been lifted out of poverty into an emerging middle class by capitalism. While their government is still ruthless, the sheer numbers how have been lifted out of poverty to make cheap goods for American consumers is staggering. And guess what... those cheap goods is making life cheaper for us, letting us spend money on other things.

 

ParanoiA; I agree 100% that large multinational corporations are more of an impediment to progress and competition than a benefit. The problem is in deciding exactly how big is too big. IMO needing a government bailout is certainly a good indicator of being too big.

The best judge to say whether a corpoation is too big is if it can no longer efficiently provide goods that consumers want. However, you don't need government to break these 'monopolies' up, since they will simply fail on their own, freeing up resources for more efficient competitors.

[iNow]

Secondly, I think most people would see a big difference between having acid rain caused by Mt. Pinatubo and acid rain caused by a power plant upwind from where they live. The difference being that one is very preventable. The debate about who gets to set limits is rather contentious, but it seems to me that allowing industries to set their own limits is a prescription for disaster, since many companies don't even live within the relatively few limits that exist now.

 

Indeed, even Greenspan admitted something similar in '08. Well stated position, and very logical and accurate.

[Sisyphus]

ecoli, I agree with you on most points, but not about corporate altruism. Google tries not be evil because it's controlled by a couple of liberal idealists, not because of market forces. If it were controlled by a mass of anonymous stockholders whose only common interest was profit, they wouldn't be able to do that. Similarly, Bill Gates, being a generous individual with more money than he could ever personally use (and who is not the Microsoft Corporation, btw), can afford not to be a homo economicus. If he were just obeying market forces, he wouldn't be doing any of that, as market forces are driven by profit alone.

 

That's not to say that you don't have a point. Even faceless corporations with bottomless profit motive have cause to worry about image. But it simply doesn't happen on that kind of scale, and usually more is spent on publicity for charity than charity itself. Similarly, corporate environmentalism is real for the same reason, but even today it is far outpaced by greenwashing, as the profit motive dictates the appearance of social responsibility, not the thing itself. I suppose you'll respond that better informed consumers would fix that, and that might be true in theory, but where are they? If consumers are uninformed about such things today (and they are), what is going to fix that? What market force will drive that? You think Ralph Nader is motivated by profit motives?

[Mr Skeptic]

ecoli, I agree with you on most points, but not about corporate altruism. Google tries not be evil because it's controlled by a couple of liberal idealists, not because of market forces. If it were controlled by a mass of anonymous stockholders whose only common interest was profit, they wouldn't be able to do that. Similarly, Bill Gates, being a generous individual with more money than he could ever personally use (and who is not the Microsoft Corporation, btw), can afford not to be a homo economicus. If he were just obeying market forces, he wouldn't be doing any of that, as market forces are driven by profit alone.

 

I think that is kind of the point. The free market's functions are primarily based on greed and freedom, but that doesn't mean that the individuals are all greedy. Communism is based on (I think) forced altruism, but that doesn't mean that the individuals are altruistic. We like freedom and we're kind of greedy, so the free market works pretty well. But in no way are we required to be greedy (that would be quite sick).

 

[...] the profit motive dictates the appearance of social responsibility, not the thing itself. I suppose you'll respond that better informed consumers would fix that, and that might be true in theory, but where are they?

 

That does seem like a large problem. The free market models that I studied assume that the populace is perfectly informed, but of course that doesn't play out in real life. However, there is a solution. Deception in such things could be illegal or socially unacceptable (such that anyone responsible would end up in jail or too tainted to be hired again for a position where they might deceive the populace). As far as I know, there are already laws against blatant lying in advertisements.

[ecoli]

ecoli, I agree with you on most points, but not about corporate altruism. Google tries not be evil because it's controlled by a couple of liberal idealists, not because of market forces. If it were controlled by a mass of anonymous stockholders whose only common interest was profit, they wouldn't be able to do that. Similarly, Bill Gates, being a generous individual with more money than he could ever personally use (and who is not the Microsoft Corporation, btw), can afford not to be a homo economicus. If he were just obeying market forces, he wouldn't be doing any of that, as market forces are driven by profit alone.

 

That argument doesn't, esp. for google. You're claiming that google (which is a publicly traded company, btw) is only altruistic because of the personal politics of the founders? I doubt it's stock holders would hang around if those altruistic tendencies didn't actually pay off (in terms of dividends).

 

And as for the notion that liberal elitists are nicer/more altruistic... that's just a silly argument, without any basis in fact. I could argue the opposite, that liberal elitists don't feel the need to be altruistic, personally, because they believe the government should be altruistic for them.

 

It may be that my position has more data to back it then yours: http://townhall.com/columnists/GeorgeWill/2008/03/27/conservatives_really_are_more_compassionate

(don't take that link as gospel though, I don't know how the statistics were done)

 

as the profit motive dictates the appearance of social responsibility, not the thing itself. I suppose you'll respond that better informed consumers would fix that, and that might be true in theory, but where are they? If consumers are uninformed about such things today (and they are), what is going to fix that? What market force will drive that? You think Ralph Nader is motivated by profit motives?

 

I agree with this to a point... I don't think corporations trying to keep up appearances are any different than individuals or governments trying to keep up appereances. Like Al Gore's airplane trips/carbon footprint or government subsidies of inefficient corn biofuels. Everyone is advertising themselves for personal gain.

[Sisyphus]

I think that is kind of the point. The free market's functions are primarily based on greed and freedom, but that doesn't mean that the individuals are all greedy. Communism is based on (I think) forced altruism, but that doesn't mean that the individuals are altruistic. We like freedom and we're kind of greedy, so the free market works pretty well. But in no way are we required to be greedy (that would be quite sick).

 

I agree completely. ecoli was implying (it seemed to me) that the altruism was a result of market forces, i.e. that it wasn't actually altruistic at all. I was saying it's more despite market forces than because of them: not everyone, including not everyone in charge of large businesses, is merely a profit-driven cog. Hooray?

 

That does seem like a large problem. The free market models that I studied assume that the populace is perfectly informed, but of course that doesn't play out in real life. However, there is a solution. Deception in such things could be illegal or socially unacceptable (such that anyone responsible would end up in jail or too tainted to be hired again for a position where they might deceive the populace). As far as I know, there are already laws against blatant lying in advertisements.

 

There are such laws, but outright lying isn't really the problem. You can't make laws against being misleading or being unjustifiably boastful about your altruism. (Well, you could, but you shouldn't, as the enforcement would be arbitrary.) It's just too easy to fake, and this (combined with individual consumer apathy) means that government, as the representative of the people's collective interest, is still the only consistently effective agent for preventing externalities like environmental pollution.

Edited January 12, 2009 by Sisyphus

[ecoli]

I agree completely. ecoli was implying (it seemed to me) that the altruism was a result of market forces, i.e. that it wasn't actually altruistic at all. I was saying it's more despite market forces than because of them.

Well let me clarify, sorry. I'm saying that altruism is a result of evolution and that altruism benefits the market process (increased productivity through altruism makes everybody better off). Markets work because people are greedy (they won't bother if there's no profit) if everybody stands to gain from the market process, altruism will kick in.

 

From the stand point of the current recession, its the greedy hedge fund managers who are hurting the most right now from the shifting sectors... they're learning the market penalties of not being more altruistic (simplification, I know, but roll with it).

[Sisyphus]

Looks like we're cross-posting.

 

That argument doesn't, esp. for google. You're claiming that google (which is a publicly traded company, btw) is only altruistic because of the personal politics of the founders? I doubt it's stock holders would hang around if those altruistic tendencies didn't actually pay off (in terms of dividends).

 

The altruistic tendencies themselves don't pay off. But they certainly don't, in this case, prevent Google from being profitable, since they have an excellent product and an efficient business model.

 

And as for the notion that liberal elitists are nicer/more altruistic...

 

...which I didn't make. I find your defensiveness surprising. Do you now consider yourself fully in the "conservative" tribe?

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Well let me clarify, sorry. I'm saying that altruism is a result of evolution and that altruism benefits the market process (increased productivity through altruism makes everybody better off). Markets work because people are greedy (they won't bother if there's no profit) if everybody stands to gain from the market process, altruism will kick in.

 

Agreed on both points.

 

From the stand point of the current recession, its the greedy hedge fund managers who are hurting the most right now from the shifting sectors... they're learning the market penalties of not being more altruistic (simplification, I know, but roll with it).

 

I don't see that at all, sorry. They might be relatively hurting, but the cost is born by pretty much everyone, and a lot of us are a lot worse off because of it than those hedge fund managers ever will be (except those, I guess, who end up in prison).

[ecoli]

The altruistic tendencies themselves don't pay off. But they certainly don't, in this case, prevent Google from being profitable, since they have an excellent product and an efficient business model.

They're efficient because there employees and customers are happy. This type of altruism has directly lead to profitability. That, in itself, is a good business model.

 

...which I didn't make. I find your defensiveness surprising.

You made the claim that Sergey/Larry are altruistic because they're liberal elitists. I'm saying their altruistic because a)they're people b) they realize that being altruistic is a good business model that improves efficiency.

 

Do you now consider yourself fully in the "conservative" tribe

That's immaterial, especially to this discussion.

 

Employers and customers like doing business with the 'do-no evil' corporation. They like being part of the community/business. That directly leads towards profits which makes the shareholders happy. The fact they're liberal doesn't make the market process any more effective for google. The same would be true if the CEOs where conservatives.

 

 

I don't see that at all, sorry. They might be relatively hurting, but the cost is born by pretty much everyone, and a lot of us are a lot worse off because of it than those hedge fund managers ever will be (except those, I guess, who end up in prison).

Perhaps... but the media is only talking about how much money these guys are taking home at the end of the day.

 

When I read stories like this, I try to ask myself a couple of questions: Are they making a net profit (lots of these firms require huge initial capital investments)? If I majorly screwed up doing my job, wouldn't I still deserve my paycheck (even if I got fired)? Well these guys be able to find more work at the same pay grade?

 

Obviously there is no blanket answer to all these questions, but my gut tells me that the guys who are getting million dollar payoffs still are going to be hurting more than most of us (compared to their change in standards of living and their future employability)

[jackson33]

 

ParanoiA; I agree 100% that large multinational corporations are more of an impediment to progress and competition than a benefit. The problem is in deciding exactly how big is too big. IMO needing a government bailout is certainly a good indicator of being too big.

 

jackson33; just two main points. Firstly, I do not disagree at all that state and local governments should be better than the federal government at determining the needs of their citizens. What I fail to understand about your argument is why the economy would make any distinction, whatsoever, between the levels of government doing spending on a given project? Secondly, I think most people would see a big difference between having acid rain caused by Mt. Pinatubo and acid rain caused by a power plant upwind from where they live. The difference being that one is very preventable. The debate about who gets to set limits is rather contentious, but it seems to me that allowing industries to set their own limits is a prescription for disaster, since many companies don't even live within the relatively few limits that exist now.

 

Large International Corporations lead the way to efficiency and productivity. If thats not progressing forward, please explain this new version. Although, I have spent my life in Small Business, was reasonable successful in competing with Larger Competitor (Circle K, 7/11, Kroger's and the like) and continue to support small business today, there is no comparison in efficiency, progress or the benefits afforded the general public.

 

Congress has authority over the purse strings of the Federal Government and Congress is made up of representatives from all States. The House, with 53 Representatives from California alone, many States with around 15-20 and seven with one member may pass up to a thousand spending bills annually. The Senate with equal representation from each State, MAY pass on 50 or so bills for the Presidents signature/veto. In 2007 California contributed per capita/person, from all sources for Federal Revenue the US average of 8528.00/person, while most other States contributed well over, yet least represented the total. (Federal Tax Revenue, Wikipedia, based on 305 Million people and 2.67 Trillion total revenue from all sources). Short of some perceived emergency or the bidding process they have no authority to specify particular spending and cannot direct money to exactly where a problem may exist. In fact they issue primarily 'Block Grants' to States, which can come from any Federal Department, through congressional actions. This is hardly a scenario for prudent spending to assist economic recovery, as the recent 350 Billion bailouts suggest.

 

On Acid Rain; Your complaints are valid, but remain subjective. I might suggest Atmosphere along any major roadway, especially where trucks stops are present or many trucks travel are far more contaminated than down wind from power plants and probably for longer periods of time. The problem has been around for some time and has been addressed, successfully in Germany or France where Nuclear power has been adopted. The US headed this way and the same folks that complain about AP today from Coal or Gas Generated Energy, have fought Nuclear. Am sure you know China is building one coal powered facility, PER WEEK. Your going to come back with Wind/Solar/Geothermal, which are already available and much can be purchased today in most places, at a cost. Remember my earlier comments, that any source to sustain the 6.6 Billion has to be affordable to the majority.

 

iNow; Your not alone in listing -0- dependents. Added to this are the number of people who file Standard Deductions, feeling they will not be audited and the results amount to billions being loaned to government, interest free each year. However, I don't feel those that prefer to pay only what is due or take authorized deductions and paying when due are 'Freeloaders'.

[Sisyphus]

They're efficient because there employees and customers are happy. This type of altruism has directly lead to profitability. That, in itself, is a good business model.

 

But does it outweigh the cost? And do you really believe that is why they do it? Or is it more likely that...

 

they're altruistic because a)they're people

 

That's the key point. They're human beings, and human beings aren't all greed machines.

 

As for the argument about their liberality, I really don't care. That's not the point I was trying to make. You subtracted the word "idealist" (which was the important one) and added "elitist."

 

That's immaterial, especially to this discussion.

 

I know. I'm just personally curious. And if you see yourself as a conservative and me as a liberal (which I don't call myself, btw), then I'm the "enemy," and if that's the case then I'd like to know.

 

Employers and customers like doing business with the 'do-no evil' corporation. They like being part of the community/business. That directly leads towards profits which makes the shareholders happy.

 

True, true, and maybe but not necessarily true.

 

The fact they're liberal doesn't make the market process any more effective for google. The same would be true if the CEOs where conservatives.

 

Don't care don't care don't care. My only point is their reasons are ideological and/or personal, not profit-motivated.