Discussion in 'Off-Topic' started by Birdjaguar, Mar 26, 2019.
People who are responsible for setting up incentive plans, of course.
But it seemed to be written in reply to my post just above it. Odd. Pretty sure people setting up incentive plans don't read this forum.
Because it's a pretty common saying, ever to those that don't set up incentive plans. I've heard it in many management training seminars.
And i have set up incentive plans. Which is one reason why I have some insight on them.
Incentive/bonus plans can be used as employment enticement and when done correctly have been shown to improve productivity.
But when done incorrectly can lead to bad behavior. Pretty straight forward.
Planning isn't unique to capitalism at all. The point of my post was to point out that there are reasons why central planning fails> One is that the central planning enthusiasts are mostly unskilled or incompetent in how to plan. Another big one is that they put the political agenda above the planning success and the conflicts cause failures. Most bureaucrats don't want to do the hard work to create large scale central plans and most ideologues want quick solutions that meet ideological needs. Those two items alone pretty much doom the Marxists to planning failures.
In a capitalist environment the profit motive will usually override political motivation and creates an atmosphere where good planning can take place. At the building, factory, community level great plans are written and completed. This happens because of the narrow focus As you scale up into public private partnerships are regional development plans it gets harder because there are more players and more conflicting agendas.
Now, there are excellent large projects being done by governments, for example, fast trains in China, Japan, Europe etc. China in this instance is our Communist example, but the need for the fast train project is the growth in private business there. There would be no need for those trains if China had not been building a western style economy for the past 20 years. The success of the Chinese economy and it growth is tied directly to its role in supporting and imitating western capitalism. In some areas, the centralized power of of the state has enabled very fast development because there is no discussion or exchange of ideas among those affected by the project. They succeed by throwing money and labor at the project to force a quick outcome. They have big successes and big failures, but their planning process is actually terrible to non existent.
Off-topic tangent here.
One area the millennials have neglected to both take the boomers to task on or to take advantage of, is the fact that there are hundreds of thousands of boomer owned companies for which the owners do not have a succession plan and when the boomer owner dies or retires, the business will close. There is a huge opportunity here.If there are old white people running businesses you patronize and which are engaged in something you think will continue for a decade or two more, you might inquire about how you could work your way into ownership.Successful people don't like to see their hard work just disappear and having someone carry on with their success can be very attractive.
that company is not only money, but also their baby.
And in B2B to mostly a lesser degree, their long standing similar sized customers part of their family feeling.
You're not wrong. I can casually think of Boomers that run small businesses that are unable to Legacy the business. Every time they try, the business struggles severely.
Off the top of my head, I can think of one that had to be passed on to family. One where the Boomer had to come back to work. And one where the business folded. Good Golly.
But we were talking about incentive plans for senior leadership on a systemic level. You don't set those either, at least not a meaningful scale. They are set by the culture of modern-day capitalism.
And my point was that the very same things doom corporate planners to failure. Most companies fail eventually, and pretty much nobody is above politics. They are played out on the office floor and in boardrooms daily as much as they are on the national stage. Short term profit-orientation also mean execs want quick solutions all the time - because that's what they get paid for or what lets them keep their jobs today.
Yes the same issues are challenges to all planning. If the goal is to create success projects that produce benefits, then capitalists will generally do a better job. If your Marxist dream is to have any chance of success, you better learn how to plan in a very practical way that is less tainted by ideology.
Can you demonstrate any central planning successes by Marxists that aren't tied to war efforts? War distorts things and it would be quite remarkable to require tying central planning success only to war time or crisis conditions.
Well since it was part of the discussion I was having, you might notice that I was also talking about bonuses for other than senior leadership.
I think you're still missing the crux of the matter: Problems with planning are universal. Your bald assertion that capitalists do it better is unconvincing. It's just that failures of planning in Soviet-style command economies and in capitalistic economies have different ultimate results. You've seen those of the former, which is why you're so smug about it, but those of the latter are still being played out (though we've had multiple tastes of it by now). Lest you forget, that's why this thread was made - because by all indications, current and upcoming generations are pretty screwed.
Keep in mind, war and defense are almost universally considered to be within government's task list. There is a pretty strong consensus. So, in some ways, we already intuitively understand the government's ability to engage in defense. When it comes to free market considerations, defense is a huge market failure, and so we use government.
I was looking into the claim about the Soviets being impressive because they were able to arrange their society in order to eventually defeat the Nazis.
It leaped out to me as untrue, because the Soviets were remarkably incapable when it came to their assault on Finland in the 1939 era. Turns out, Finland was also under fairly heavy Central planning at the time. Their defense was not really bragworthy when it comes to Central planning. But it looks like the economic prosperity they enjoyed before the Soviets could not convince them to willfully join was awfully centrally planned.
We are looking at a world where a mix of broad strategy, deliberate government intervention, and harnessing Market forces leads to the superior outcomes.
I realize over the last few years that I think of the government being best at defense and protection, but that I reframe what we want them to defend against. Beating Nazis? You want strong government. Defending against ill-health? It looks like government is a strong player. Like, imagine what would have happened to Ebola, polio, smallpox, Etc if we had depended 100% on Market forces.
And it's not the end of the world because the whole idea is that markets should kill companies off. But when we centralize planning in the hands of a government and it fails, it's vastly more catastrophic than Lehman Brothers failing. In one case, it's a feature. In the other, it's an enormous bug.
In our modern economies, you want a steady series of bankruptcies. For basically the same reason why you want death in an ecosystem. It can become imbalanced, but you still want it to be there. One of the warning signals of the current economy is that large companies are only seeing the their profits rise. Which means someone else is going into debt
Planning problems are universal, but market based capitalistic solutions have been much better than Marxist based ones. I'll ask again, please show me some examples of Marxist central planning that has been successful in reaching the goals it was set to reach. I'm an ignorant American; educate me. Show me some of those "still being played out" examples. Capitalism has a multitude of problems, but it also has improved life for billions of people.
Now it is OK to claim that the current (Millennial?) generation and those to follow are economically screwed. So far I've seen these reasons:
College debt: $1.5 T by students and families; 44.7 million people; average senior debt in 2017 was $28,650; 40% of all student debt was for graduate or professional degrees in 2012
Houses where they want to live are too Expensive for most to buy
Wages are too low and in real dollars are about the same as 40 years ago
Not enough non service sector jobs that pay sufficiently to live like the boomers did at the same age
Boomers ignored climate change
Boomers are selfish in how they spend their money
Here are some BB and other stats:
75M BB were born and there are about 68M still alive
For comparison, there are 83M Millenials alive today
Median 401k amount for BB is about $178,000
45% of BB have no retirement savings
10,000 BB are retiring every day
75% of GenX earn more than BB did at the same age
As of 2016 15% of Millennials while 25-35 years old lived with their parents; for GenX it was 10% and for BB 8-11%
In 2016 GenX and Millennials made up over 50% of the electorate
Most business activity is by companies that are not owned by individuals
OK, but if if you want to own a business with less than $50M or so in sales, there are many to be had that are currently owned by Boomers. Owning a small company that has just a few million in sales can provide a very nice living.
That works only as long as the companies do not become big enough to fight the market to the point where the market cannot kill the company off anymore.
The inherent mathematical result of unchecked capitalism is the concentration of wealth and thus the centralization of power. If you let it run long enough, you are back to central planning.
Hmmm... @uppi perhaps that is what is going on Russia with their oligarchs. Corrupted capitalism for the very few.
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