[RD] Capitalism, Prosperity and Social equity

[Patine]

McDonalds does pay more in wages in Australia and New Zealand.

We don't have the dollar item menu and a big Mac combo is $6.50 USD. Our minimum wage us around $13 an hour.
A lot of decisions can be made though a few cents more can cover a large increase in money to the producer.

A lot of the richer places also have a certain amount of resilience. Australasia was barely effected by the GFC for example.

Our economists are predicting 11-13% unemployment here, in the great depression it hit 15%.

You don't get the same shocks as the USA gets to it's economy. 26 million unemployed in a month ours went up 30k. Even with the size difference per capita that's still less than a million. Probably gonna get more later. Not good but not Armageddon like USA.

It's because of a lack of regulation in the USA in regards to capital. A lot of the stupid stuff is illegal outside the USA.

For example no financial crisis 1929-87. We've had 3 in 33 years because they've been stripping away the laws regulating the finance markets. Those laws were put there for a reason.

But New Zealand is where our Canadian Prime Minister Brian Mulroney and Finance Minister Michael Wilson got the inspiration for the Goods and Services Tax (GST) from. Of course, unlike in New Zealand, most Canadian Provinces already had their Provincial Sales Tax, and the GST was just added on...

 

[Zardnaar]

When you say that the immiseration of workers in the developing countries to produce stuff for people in the developed countries is a positive thing you are absolutely dismissing their concerns! The whole point of outsourcing manufacturing to these countries is so that the companies that do it don't have to worry about the health and safety of the workers. If they did worry about it they would not be outsourcing in the first place.



The whole example of West/East Germany only tells us that the US poured investment into the West while the USSR basically stole everything it could out of the East. Many examples of "failed" Communost countries have similar themes: the US does everything possible to sabotage the country then when the sabotage works, naive people claim the country failed because of the inherent inferiority of its social and economic system.

As inno has already noted terms like "capitalism" and "socialism" often obscure more than they reveal in a discussion like this. Insofar as socialism means worker control of the economy there is an argument to be made that the "capitalist" West actually had more socialism than the "Communist" countries ever did given that the former had democratic governments elected by near-universal suffrage along with powerful independent trade union movements, while Marxist-leninist countries were governed by dictatorships which simply claimed to operate on behalf of the workers.

USSR primarily failed because of internal stuff. The west propped them up starting from the 70s.

The countries had big major problems ignoring the focus on heavy industry.

1. The governments just printed money. It wasn't worth anything because of this. Here it's fueled by debt but as long as that debt gets paid people percieve it as having value.

2. Price controls. Partly related to one. A lot of stuff was really cheap in the USSR. Theoretically. But you often couldn't by it because it wasn't worth producing even in their internal system. It was also so cheap the people who could buy it bought it out. So hence lines for food bread was 1-2 cents a loaf. 15 kopeks a loaf. Kopeks not with anything. Even now a rouble is worth 2 cents.

Soviet citizens could save money which was deliberate policy. That's because they couldn't buy anything.

They could go on cruises to the west but it was like winning the lottery. They weren't allowed to own foreign currency except on these cruises. They were allowed to write to people in the west. Those people could send gifts but cash was illegal.

So they would buy stuff for basically free in the USSR for pennies on the dollar. The only stuff people in the west wanted was vodka and one of the Soviet cameras was good. Cavier as well.

So you would have Soviets tourists trying to barter Vodka or whatever for Levi jeans which weren't illegal to wear in the USSR. Levi jeans were popular. Finnish tourists could get to Leningrad and get drunk for cheap and go home with Soviet wife (marrying a tourist was one way to leave USSR).

In communist countries this leads to corruption. The few things the did produce that the west wanted tended to disappear into the black market.

The doctors were also poor, they got paid similar to farmers. So to get a good treatment you bribed them often via gifts of food. Money wasn't worth anything. State farms couldn't produce enough because the state prices didn't make it worthwhile. A large % of the food game from the private plots the farmers were allowed to have or private gardens they grew at their dachas.

 

[Patine]

1. The governments just printed money. It wasn't worth anything because of this. Here it's fueled by debt but as long as that debt gets paid people percieve it as having value.

Money is already inherently worthless in EVERY country in the world, and has been for decades. Fiat currency means no national currency has any INHERENT value.

2. Price controls. Partly related to one. A lot of stuff was really cheap in the USSR. Theoretically. But you often couldn't by it because it wasn't worth producing even in their internal system. It was also so cheap the people who could buy it bought it out. So hence lines for food bread was 1-2 cents a loaf. 15 kopeks a loaf. Kopeks not with anything. Even now a rouble is worth 2 cents.

So much better in the Western Worlds to have prices be able to skyrocket far beyond what they're worth by manipulative and sensationalist marketing techniques to drive up empty corporate margins, isn't it?

In communist countries this leads to corruption. The few things the did produce that the west wanted tended to disappear into the black market.

Corruption is also highly rampant in many Western countries, and rarely punished, or even taken seriously. There may not be big Black Markets (outside obviously criminal goods and services), but vulture industries like pawn shops and fly-by-night e-Bay emulation sites fill a similar, and just as untrustworthy, role.

 

[Birdjaguar]

The "business world," is the current economic establishment, and a pretty rotten at that, and an artificial construct like all of it's analogs and equivalents in history. It is not INHERENTLY the best or greatest, the finest or most productive for all, or the most deserving, by accomplishment, of being the establishment, nor should economic development and evolution just stop in the hands of these corrupt and despotic plutocrats who run this broken system. Also, "Anti-Capitalists," are no not united in ideology or bloc, and many very much DO understand how the business world works - fueling greater disdain, and even hatred, of it - but more justified, BECAUSE of their understanding of it.

So how would you distribute the wealth created in my scenario?

 

[Lexicus]

yes, the anti capitalists often have no understanding of how the business world works and when faced with a pretty simple real world problem of how to distribute wealth, they are unwilling to answer.

I didn't want to be a jerk, but if you're gonna fire the first shot then my response to your "simple real world problem" is, uh,

It is easy to talk theoretically, but that is often not productive.

 

[civvver]

So how would you distribute the wealth created in my scenario?

Set aside a certain amount for employee raises and bonuses cus otherwise they might get disgruntled and leave for other jobs and hiring is an expense. Set aside a certain amount for cash reserves in case next period we have a down turn or whatever. Return a certain amount to the investors as dividends. Use some for investment if we need like new computers or machinery or whatever.

The trick is the ratios, that's all up to the directors etc. The nuance of it of course depends highly on the situation.

At its simplest it's not that much unlike a household budget. You get paid and (hopefully) have some extra after minimum expenses are paid out like rent and utilities. Then you decide what you want to spend on food beyond the minimum to survive like buying snacks or eating out. Then you choose if you want to spend some on entertainment, or if you want to save and if you do save if it's just in a general rainy day fund or for retirement or to buy a specific thing later. You might invest in some stuff like go get an oil change so your car's engine lasts longer, saving you money in the long run. Or maybe you buy a fancy espresso machine to save money on coffee down the road. Or maybe you buy yarn and knit and sell the stuff later like a capital investment.

 

[Patine]

So how would you distribute the wealth created in my scenario?

Designing a functional and working new economic system is NOT something one does on the fly...

 

[Birdjaguar]

I didn't want to be a jerk, but if you're gonna fire the first shot then my response to your "simple real world problem" is, uh,

Your not being a jerk. I know I set my self up for that. Thread dynamics change things.

 

[Zardnaar]

Money is already inherently worthless in EVERY country in the world, and has been for decades. Fiat currency means no national currency has any INHERENT value.



So much better in the Western Worlds to have prices be able to skyrocket far beyond what they're worth by manipulative and sensationalist marketing techniques to drive up empty corporate margins, isn't it?



Corruption is also highly rampant in many Western countries, and rarely punished, or even taken seriously. There may not be big Black Markets (outside obviously criminal goods and services), but vulture industries like pawn shops and fly-by-night e-Bay emulation sites fill a similar, and just as untrustworthy, role.

NZs one of the least corrupt countries in the world. Normally were top 3 currently 2 beaten by Denmark.

We had 5000 people living on the street, 35000 in distressed situation.

They're throwing a hundred million dollars at it. If you don't have a home you ring a number and they find you emergency housing.

It's probably a motel room. They will come and drop off food for you if needed.

Not perfect but the goal is to keep you off the street and fed.

GST sucks but it's a major source of income for paying for the social security system. Personally I would cut it a bit and put up top tax rates.

 

[Zardnaar]

Money is already inherently worthless in EVERY country in the world, and has been for decades. Fiat currency means no national currency has any INHERENT value.



So much better in the Western Worlds to have prices be able to skyrocket far beyond what they're worth by manipulative and sensationalist marketing techniques to drive up empty corporate margins, isn't it?



Corruption is also highly rampant in many Western countries, and rarely punished, or even taken seriously. There may not be big Black Markets (outside obviously criminal goods and services), but vulture industries like pawn shops and fly-by-night e-Bay emulation sites fill a similar, and just as untrustworthy, role.

Money's worth something because if perception. Same with gold, diamonds etc.

It exists for a reason. It's hard to carry my turnips to trade for clothes. Not everyone wants my turnips.

We can't really go back to barter, hunter gathering not an option either.

Even if you had some cashless system you would have to compel people to grow food.

If you didn't have to work stay in the cities and expect to be fed or go and grow food.

Most people won't work on a farm without compensation. If you had the choice you wouldn't do it for free you would do something else.

Ergo you would have food shortages. You would need slave labour again or seizing food.

 

[Birdjaguar]

Set aside a certain amount for employee raises and bonuses cus otherwise they might get disgruntled and leave for other jobs and hiring is an expense. Set aside a certain amount for cash reserves in case next period we have a down turn or whatever. Return a certain amount to the investors as dividends. Use some for investment if we need like new computers or machinery or whatever.

The trick is the ratios, that's all up to the directors etc. The nuance of it of course depends highly on the situation.

At its simplest it's not that much unlike a household budget. You get paid and (hopefully) have some extra after minimum expenses are paid out like rent and utilities. Then you decide what you want to spend on food beyond the minimum to survive like buying snacks or eating out. Then you choose if you want to spend some on entertainment, or if you want to save and if you do save if it's just in a general rainy day fund or for retirement or to buy a specific thing later. You might invest in some stuff like go get an oil change so your car's engine lasts longer, saving you money in the long run. Or maybe you buy a fancy espresso machine to save money on coffee down the road. Or maybe you buy yarn and knit and sell the stuff later like a capital investment.

Can you put some numbers to your thinking?

Designing a functional and working new economic system is NOT something one does on the fly...

I'm not asking for a system. I'm asking for a stab at a real world problem faced by capitalists and their opponents. Is there a correct answer? Probably not. But being specific forces one to make a commitment. It isn't a "gotcha"; it is trying to apply the philosophical to the real. How does one balance the needs of all parties concerned and then what are the implications of those choices.

 

[innonimatu]

yes, the anti capitalists often have no understanding of how the business world works and when faced with a pretty simple real world problem of how to distribute wealth, they are unwilling to answer. The wealth problem can only be answered at the company decision making level, because that is where the wealth comes from. A "tax the rich" approach is an attempt to change the corporate decision making process, but it only encourages workarounds.

Fact is the business world has no understanding of how to avoid running businesses into the ground. Why does a 3 month stop lead to the absolute necessity of state bailouts, else so much of the business world would go bankrupt? Whatever happened to planning for resilience?

And the fact is: executives, or small enterprise owners, will tell you they couldn't afford it because their competitors didn't pay for it, and would squeeze them out of market with slightly lower costs. Just as bankers will tell you that if they didn't made excessively risky leans their competitors would do those loans, book high profits wile the times were good, but out the cautions banks, fire their bankers, pay themselves a bonus, and ratchet up the risky loans now that they were bigger, perhaps "too big to fail".
You see, I do have a good understanding of how business works, what are the constraints and the incentives...

And how hopeless it is to pretend to solve them through small tweaks within the existing framework. These problems are beyond the ability of the businessman to solve, even if they want to solve them. Because the entire rules of the game demand them to do things that lead to crisis. This is why "theory", as in making the social rules for business to run under, matters. Lest someone forgets, it wasn't "anti-capitalists" doing the rules who led to the 2008 crisis. Or to the tremendous frailty exposed in this one. It was the most successful of executives walking through the revolving door between business and government. They are experienced in the real world all right. At privatizing profit and socializing loss. There is a huge accumulated body of experience at doing that. Buit is there any willingness fro those captains of business to fix the obvious problems with the rules? Is it a problem of a feature for them?

 

[Lexicus]

Your not being a jerk. I know I set my self up for that. Thread dynamics change things.

Fair enough. I thought your scenario lacked some information I would need to answer the questions. I also feel like you reckoned without some likely possibilities, including that the people who own the factory would sell it to a private equity firm which would liquidate the assets and use the bankruptcy process to leave the workers high and dry. Or move operations to Bangladesh where they can pay the workers 10 cents an hour while exposing them to toxic byproducts of production.

This is why "theory", as in making the social rules for business to run under, matters. Lest someone forgets, it wasn't "anti-capitalists" doing the rules who led to the 2008 crisis. Or to the tremendous frailty exposed in this one. It was the most successful of executives walking through the revolving door between business and government.

This is exactly correct: macroeconomics actually does matter. The "macro" environment actually determines to a large extent the "micro" choices available to individual actors, despite the pretense of mainstream economics for about five decades now that it can be the other way around.

 

[civvver]

Idk, it's a lot of trial and error with stuff I think and experience, which I don't have. I have no idea how much cash a company should save and have on hand. I know apple and amazon hoard cash but a lot of small companies never have any extra and even some big manufacturing companies like auto companies don't have a ton of cash reserves, they might have really good lines of credit available though.

With increases for employees I know my company does a baseline 3% increase per department and the managers in that department divvy that up among employees. There are of course ways to get more like a title change or whatever. HR sets all the guidelines. And I'm not in HR lol. I guess you study it and determine how much people make at other companies to decide.

Meanwhile a place like Netflix is famous (or maybe infamous) for paying top notch salaries and giving bonuses either in stock or cash, but is a super demanding job and they'll fire you at a moments notice for performance reasons. And then it's really hard to get hired there, tons of competition for that job. So maybe you have giant raises and bonuses to attract the best of the best.

And also maybe in a smaller company you just like your employees and want to treat them well so you give them all a 10% bonus or whatever if it's in the budget. Maybe you don't have to, but maybe you are grateful for having them. Mom and pop shops often operate like that. All that stuff is good for morale.

 

[Birdjaguar]

Fact is the business world has no understanding of how to avoid running businesses into the ground. Why does a 3 month stop lead to the absolute necessity of state bailouts, else so much of the business world would go bankrupt? Whatever happened to planning for resilience?

And the fact is: executives, or small enterprise owners, will tell you they couldn't afford it because their competitors didn't pay for it, and would squeeze them out of market with slightly lower costs. Just as bankers will tell you that if they didn't made excessively risky leans their competitors would do those loans, book high profits wile the times were good, but out the cautions banks, fire their bankers, pay themselves a bonus, and ratchet up the risky loans now that they were bigger, perhaps "too big to fail".
You see, I do have a good understanding of how business works, what are the constraints and the incentives...

And how hopeless it is to pretend to solve them through small tweaks within the existing framework. These problems are beyond the ability of the businessman to solve, even if they want to solve them. Because the entire rules of the game demand them to do things that lead to crisis. This is why "theory", as in making the social rules for business to run under, matters. Lest someone forgets, it wasn't "anti-capitalists" doing the rules who led to the 2008 crisis. Or to the tremendous frailty exposed in this one. It was the most successful of executives walking through the revolving door between business and government. They are experienced in the real world all right. At privatizing profit and socializing loss. There is a huge accumulated body of experience at doing that. Buit is there any willingness fro those captains of business to fix the obvious problems with the rules? Is it a problem of a feature for them?

Most successful businesses are pretty good at doing what they are designed to do: make money for someone. Most unsuccessful businesses are run by people who don't know what they are doing. There are lots of those.

i never said you didn't understand business. But you are widening the scope of my question adding a lot more complexity to it. The fundamental question regarding the expanding inequity of wealth distribution originates at the company level. All of the apparatus in place (taxes, laws, bank rules, etc.) are designed to influence company decisions. Often the various forces at work operate in conflict with one another because they are all applied piecemeal and independently. What I'm asking is for folks to apply their theory to a particular situation at the company level.

I'll ask you too: do you believe that we should allow held corporations?

 

[innonimatu]

I'm not asking for a system. I'm asking for a stab at a real world problem faced by capitalists and their opponents. Is there a correct answer? Probably not. But being specific forces one to make a commitment. It isn't a "gotcha"; it is trying to apply the philosophical to the real. How does one balance the needs of all parties concerned and then what are the implications of those choices.

The real world problem? They have to be even bigger sociopaths than their competitors, else the competitors eat them.

The solution? Don't continue playing the game, overturn the table. There is no other possible solution that works. This is something that only governments can do, it's a matter of changing the law.


And the obvious laws to be changed? End the free flow of capital across borders. Raise tariffs. Raise taxes. Don't let corporations pay taxes in other countries for their activity in your own. And let everyone who is dissatisfied with that and wants to leave, leave. Never allow them to return. That's the only possible balance of needs.

Cease falling for the tale of economic competition that devalues the individual. Cemeteries are full if irreplaceable great men. Cut-throat rules are neither a competitive necessity not an asset, they spread though military power and corruption. Which reminds me: get nuclear weapons before, I guess, if you're doing to do all this openly and suddenly. Or do it in a country that already has those - there are a few where this can be done already.

i never said you didn't understand business. But you are widening the scope of my question adding a lot more complexity to it. The fundamental question regarding the expanding inequity of wealth distribution originates at the company level. All of the apparatus in place (taxes, laws, bank rules, etc.) are designed to influence company decisions. Often the various forces at work operate in conflict with one another because they are all applied piecemeal and independently. What I'm asking is for folks to apply their theory to a particular situation at the company level.

The thing with what I said above was: it was the norm in the "capitalist " countries in the post WW2 decades. Apparently now it is supposed to be "impossible"... if we are to believe what many politicians say.

I'll ask you too: do you believe that we should allow held corporations?

There are many ways to skin that cat. One would be to break any that became too big if the business could be competitive, encourage employee ownership, and have the state provide for or manage all natural monopolies. Under these conditions there would be little threat of damage damage done by private corporations.

 

[Hygro]

Money is already inherently worthless in EVERY country in the world, and has been for decades. Fiat currency means no national currency has any INHERENT value.

You think human force and organization has no intrinsic value?

 

[Birdjaguar]

Fair enough. I thought your scenario lacked some information I would need to answer the questions. I also feel like you reckoned without some likely possibilities, including that the people who own the factory would sell it to a private equity firm which would liquidate the assets and use the bankruptcy process to leave the workers high and dry. Or move operations to Bangladesh where they can pay the workers 10 cents an hour while exposing them to toxic byproducts of production.

I was trying to keep things simple. How should a successful firm distribute its proceeds to the people involved? Of course there are lots of options for exploiting or profit taking not mentioned. One of the "benefits" of capitalism is that if offers numerous ways for owners to profit. One solution to my scenario is to minimize worker pay and maximize the return to the owners. That is the obvious capitalistic answer. I was hoping those less inclined to that path would offer something more interesting that is more inclusive.

 

[Hygro]

I was thinking of a more extreme portrayal the other day.

You have a savings and investment fund. A group, let’s say a union, has an endowment of a zillion dollars. They contract a fund manager to control that money. In the workers-get-everything argument, does that mean all the money in the fund belong to the fund manager? Or just 100% of the profits? And then how are we defining profits?

 

[Patine]

You think human force and organization has no intrinsic value?

IT has no value, yes. But the currencies of the world that are clumsily, inefficiently, unrepresentatively, and corruptly meant to be an "abstract symbolic value for these qualities," have no INTRINSIC - their value, and how well they stand (or supposedly stand) for these values of human endeavour are completely and utterly subjective, determined by arbitrary and unaccountable judgments of bankers, investors, stock brokers, economists, and other such people. There is no INTRINSIC or OBJECTIVE value to these currencies' worth.