As usual, **Sam Stone **is one of the few voices of reason.
The government allows itself to be driven by big business because the people want it. People don’t want free markets or care about regulation. They want whatever they think will make their jobs secure, give them more benefits and increase their income.
Also this “brain drain” thing is bullshit. What makes these “delicate geniuses” so smart anyway? You mean to tell me they can’t replace them from the pool of thousands of other Harvard and Warton MBAs and have them throw darts at a dart board?
If California were a country, it would have one of the largest economies in the world. California is essentially bankrupt. Its debt load is crushing. Its state pensions are under-funded. Would you call that a failure of government?
How about the 55 trillion shortfall in the Social Security system? That number is almost as large as the entire wealth lost worldwide in the current downturn. Will you be calling for government to get out of the pension business after screwing it up so badly? Many states are also running big shortfalls in their pension programs.
The U.S. federal government is running a 2 trillion dollar deficit this year, and instead of trying to control spending, Obama has grand plans to increase spending even more. Will you call that a failure of government and demand that we turn more government functions over to the free market?
The Department of Education didn’t exist 30 years ago. Since then, its budget has increased dramatically every year, and is now something like three times NASA’s budget. And yet, test scores have declined over that period and over 20% of young adults don’t graduate high school.
Will you admit that government has failed, and work to help the free market try its hand?
The Kefauver amendments to the Pure Food and Drug Act greatly expanded the FDA’s mission into determining not just safety, but efficacy of drugs. The cost of certifying a drug when from a few tens of millions of dollars to over a billion dollars, and it takes more than 10 years to get a drug through the expanded FDA process. And yet, measured against things like drug recall rates, this expanded regulatory effort hasn’t made any difference in drug safety. The expansion of off-label uses for drugs means the efficacy standard is useless, and drug costs have skyrocketed. Will you admit the government has failed, and allow people more choices?
The war on drugs consumes billions of dollars per year, and now America has one of the highest incarceration rates in the world. And yet, drug use patterns have hardly changed. Mexico has been destabilized and may become a failed state right on the U.S. border as the result of the high profits of the black market drug industry. Will you admit government has failed in this area?
Every president since Richard Nixon has promised to end America’s dependence on foreign oil. Today, America is more dependent on foreign oil than it ever has been. Will you admit that government has utterly failed in this major goal?
Fannie Mae and Freddie Mac helped kickstart the housing boom and subsequent collapse through sub-prime mortgages, and by creating a system whereby risks could be monetized and sold to government-backed agencies, which then resold them with the implicit promise of federal protection. The regulators didn’t try to fix the problem - they helped create it and made it worse. Will you admit government failed, and that its failure is partly responsible for the crash?
The Federal Reserve, by all accounts, maintained a low interest rate policy that was imprudent and led to increasing efforts to find higher returns for capital through new investment vehicles, while simultaneously stimulating the borrowing of money by those who couldn’t pay it back if conditions deteriorated even a bit. Will you admit government failed, and this falure was partly responsible for the crash?
The government borrowed 700 billion dollars in funds that were explicitly set aside to buy up ‘toxic assets’. That money is almost all gone (about 135 billion left), and every single toxic asset is still sitting in the banking system untouched. Will you admit this program failed?
I’m just asking, because the left sure was quick to blame capitalism for the financial collapse, and demand more government control.
These types of regulatory capture are not partisan. They are endemic to government in general. It’s not just sugar subsidies. Another example is the capture of education regulation by the teacher’s unions, which most decidedly has the support of the left, and which has been destructive to education.
Good luck with that. This is little more than a denial of reality as evidenced by the last 50 years of government behavior. It’s typical of liberal thinking - sure, governments have failed repeatedly in the past - but all we need is the right people in charge, and we’ll avoid all the failures of the past. And now we’ve got the right guy, so let’s give government even more power!
In the meantime, any failure of capitalism is proof that capitalism as a whole is a failure and government needs to have more control.
I should clarify about the pension shortfall - 55 trillion is an estimate of the total unfunded liability in all entitlement programs - Social Security and Medicare being the major ones.
No private pension fund could get away with that kind of shoddy bookkeeping.
No silly rabbit. Government is not to blame. It is never to blame. The real reason California is bankrupt is that they didn’t tax Steve Jobs and other billionaires at 90%. Yep, that would solve everything. However I do notice sometimes there’s a news story about regular non-millionaire citizens upset with taxes:
I’ve been told over and over that “government is run by the people” so I’m having a little trouble understanding why the voters can’t easily rework the taxes to make it fairer. Oh well, I won’t let my lack of understanding distract me from the real issue: Steve Jobs and his plush Apple stock options!
On a related note, I also believe Steve Job’s salary is $1.00 a year is too high. It should be capped at 5 cents. That way, the other 95 cents can go to California’s state fund because they obviously know how to spend it.
This has nothing to do with leftie-libruls, tighty-righties, or any other party name-calling.
It has to do with checking, controlling and reducing government power. Big business has no power if government can’t do anything for them. Their lobbying money will be wasted.
The way to have government ‘by the people’ is to take back that power for yourself. To make decisions for yourself, to measure the risks and rewards according to your own desires, and then live with the consequences.
Like Ocean Annie, your posts have become a jumble of cognitive dissonance. You claim over and over again that you want power for yourself and for the ‘people’, and your answer to get there is…to disempower yourself. To give government more power. To willingly hand them rights that you now possess for yourself. In this case, the power for the government to determine the wages that someone else should earn.
You have made no case here for anything except that government gets things wrong sometimes.
Social Security? Go read a history book and consider what social ills we had when there was no Social Security. Also consider that Social Security in the US is one of the least generous among industrialized countries. Consider where we’d be today if Bush had gotten Social Security privatized as he had wanted to do…the horror we’d be faced with today is unimaginable had that happened.
Department of Education? Can you show that it is to blame for falling test scores? Maybe test scores would have gone down anyway and this department mitigated how far they fell. Not saying that is so but you are making a sweeping generalization without backing up any of it.
Control spending? You mean like Bush did? He had a surplus when he entered office. Also, a lot of these bailouts started under the “fiscally conservative” republicans. Most economists agree the government needs to spend now. Yeah it sucks, yeah the deficit is alarming, but we are stuck with it given the current situation.
Dependence on foreign oil? Gee…wonder why that is? Was it libruls demanding protection for and dependence on oil or was it mega-sized oil industries defending their business? If government failed in this WHY did they fail?
Fannie & Freddie caused all this mess? Hardly. They were in there to be sure but show me where they put a gun to the heads of Wall Street and banks and made them leverage themselves to their eyeballs and make bad decisions.
You will not see me defending Unions in general. I despise most of them and at the top of my list is the teacher’s union. I understand why unions came to be and in their day they made sense. No more (and a whole other discussion).
And so on and so forth.
Yeah, the government has lots of silly policies and inefficient programs.
Yet despite all that the US has the largest economy and most wealth of any country in the history of the world. When regulation was non-existent or too lax we got the rise of the Robber Barons. A clear drive to monopoly/oligopoly that would outright squash the free market and capitalism out of existence. Lessons learned and regulation spurred by the Great Depression? Remove those regulations and it took all of 8 years (or so) to get to the next Great Depression.
But sure…throw the yolk off business. Government can only get in the way, never help. :rolleyes:
Your unfailing faith that a free market and a removal of restrictions is the way to go really does boggle the mind. The history books are replete with where that gets us and none of it good. Current news tells that story as well. How you can repeat this tired and failed mantra is beyond me.
You and Sam repeat your mantra like a religion and have about as much to back it up.
So, in order for the people to exert control over businesses that make terrible decisions that are not in the public’s interests we need a toothless government?
Giving power to a government “of the people” is disempowering those very people?
Huh?
In theory our government is there to execute the collective will of the people. It can do things we cannot do as individuals.
Please explain, in detail, how the people will be empowered and better off if they take all power away from the government to regulate business. I’m really curious about this. Enough with the “faith” that is will all just work out. Show me. I am fascinated to see how you can upend history on this which says you are patently wrong.
First of all, no one believes in total unregulated laissez-faire capitalism. So let’s dispell with this strawman right from the start.
Here is what you anti-free market types seem to not grasp. The “collective will of the people” (whatever the heck that means) is not excersized by the government deciding which companies should stay or go. It is decided by people voting with their dollars. If GM goes out of business, it is because it was a horribly run company. It should go out of business. That is the market working.
When you put control into Government’s hands, they don’t let companies fail. They will continue to throw money at it no matter if they have to tax for it or print it out of thin air. Where do you think our huge deficit comes from? It comes from the Government throwing money at all these various programs and initiatives that are “too important to fail”. Both Republicans and Democrats are equally guilty. They both throw money at whatever projects they feel are important or politically valuable.
The market forces people to make tough choices between what really is too important to fail and what must fail because there are no longer the resources to sustain it.
Maybe the problem is that some people see the role of “business” differently. Business is the mechanism by which the will of the people transforms raw materials - coal, oil, iron, intellectual capital, etc - into the goods and services people need. If people don’t need or want it, there’s no need for that business to exist.
Other people seem to think the role of business is to provide the working and middle classes with an income and finance their lifestyle.
You talk about America being the wealthiest country in the world. Where does that wealth come from?
“The greatest trick the Devil ever pulled was convincing the world he didn’t exist.”
Talk about a lack of grasp on what the issues are.
Who here is saying it should be a command driven economy ala Socialism? Who is saying that if no one wants widgets we should still produce widgets? Who is saying that business should just exist to give people a job, nevermind how unneeded that business is?
It is about regulation which is absolutley, positively necessary. It is required.
Do you think business has its interests aligned with the good of the people and the good of the country? It does not.
Again, look to history to see how well business aligns its interests with that of the people or the country. Where lacking regulation would see ALL of us living in a hell hole. Read The Jungle or look to coal miners in the past (Ludlow Massacre just one instance of many) or look to the joys of toxic waste dumping (e.g. Love Canal). Or hell, even legal waste dumping where regulations are ignored (e.g. TVA Kingston Fossil Plant coal fly ash slurry spill).
Those are just examples. I can come up with LOTS more.
That is what business, on its own will do. Even with regulation they may flout the rules. Without regulation business will positively race to the bottom.
I am not about punishing business. I am about setting reasonable restraints on their activities. Again you lot seem to just hand wave away the very real, very common lessons history has taught us and continue to tout a hands-off approach.
At the beginning you seemed to suggest you do not believe in a laissez-faire system. So in your view regulations ARE needed and necessary.
So what are you arguing against? Reminds me of the old joke:
Man: Excuse me Miss. Would you have sex with me for $1 million?
Woman: Yes I would.
Man: Would you have sex with me for $10?
Woman: No! What kind of woman do you think I am?
Man: We have already determined what kind of woman you are. Now we are just haggling over price.
So you are into regulation yes? You are just haggling over the particulars?
This thread is about executive pay. So how does a regulation limiting executive pay do anything to stop companies from illegal dumping, allowing dangerous work environments, committing fraud, or engaging in any other illegal or immoral activity? The answer is it doesn’t, so raising any of those issues is simply anti-corporate rhetoric designed to distract from the issue at hand.
The government should regulate things like what activities companies can or cannot conduct business in. They should regulate how companies provide accurate and transparent accounting of their business activies to investors. They should regulate how companies are expected to treat their employees (within reason).
I don’t think the government should be telling companies how to run their business, however.
Business should only have interest aligned with their investors and customers. How does one decide if a business is “in the best interest of the people or the country”? I mean other than obvious stuff like selling rocket parts to North Korea? Can a business be in the interests of some people and not others? Who decides?
As I said far upthread it is an attempt to align the executive’s income with the long term health of the company. Remember I am not saying they can only earn $5,000, period. I am saying they prosper and prosper more when their company does.
As I mentioned before, but no one really answered, why did these executives make such staggeringly bad decisions in running their companies? Were they that stupid, couldn’t read a balance sheet sort and this whole thing was just a big surprise to them? Or did they realize the risks they were taking but ran down that road anyway? I am guessing these are pretty smart guys who actually have a clue so WHY did they let things play out as they did? Could it be, I dunno, because they would make a staggering sum of money in the short term and who gives a crap what happens after that? Incentives, bonuses, golden parachutes and voila…they toddle off into the sunset with tens of millions of dollars.
Please tell me how their compensation made sense? And do not start with the “it’s between them and their investors”. That has been dispensed with already, the problems extend far, far past that right into my wallet.
So how would you have it work? Thousands of pages of regulations trying to deal with every financial instrument out there and every accounting practice out there as a preferable solution? Then build massive government regulatory agencies to police them? Even though the regulators are often ineffective, the stuff they are policing beyond them and the people running the regulators often overly friendly to the people they are to oversee? Or show me where the SEC and Treasury did their job well in all of this.
Seems to me THAT is more telling business what to do.
Or, as I would like to see it, incent the people running the show to make decisions that are long-term healthy for their companies. Remove any incentive for insta-profits. If insta-profits make sense fine, they can do it but presumably they would not do it if the insta-profits came at the expense of long term health of the company.
Perhaps my particular idea is not the best way to achieve that goal and I am certainly willing to hear other options. I do however think that is a better regulation. Go to the root of the decision making process and not try to deal with the myriad issues that crop up when the “best” decision is one that fucks the company but sees someone rewarded handsomely for doing just that.
I get what you’re saying but how do you regulate it? Why do compensation committees at these companies feel that it’s worth it to pay gigantic bonuses to these executives? Why does no one feel they need to be subject to the same risks as the employees they manage?
That’s how the system currently works. There are entire multi-billion dollar industries dedicted to accounting and compliance and regulatory advisory services. After Enron and Arthur Andersen, they created Sorbanes Oxley. All I can tell that it did was create more jobs for accountants, lawyers and consultants.
Near as I can tell executives have undue control over their Board. Also as I understand it these tend to be incestuous relationships. I sit on your Board. You sit on my Board. Remember when you are designing my compensation package I’ll be doing the same for you in a few months.
Because you will decide for yourself whether or not to engage with a particular company. Whether or not you will buy their products or services. And then you will live with the consequences of your decision.
That’s it. That’s all there is to it. Not very complicated, is it?
I did not engage with AIG. Or Merill Lynch. Or Lehman. Or Freddie or Fannie. Or General Motors (never owned a GM car). Not even one eensy little bit.
They are taking my money though.
Your turn.
ETA: Also, it is far more than that. Maybe a company uses child labor in a sweatshop to lower the price on their products and beat the competition. How is your method going to stop that?
I’m not following you. Are you in favor of regulation?
How is this better? The stockholders, represented by the Board, are the collective owners of the company. By having officers (doesn’t matter what you call them) who own large amounts of company stock, you align the interests of management and owners. Maybe preventing officers from selling stock during their tenure would be a good way to make sure they focus on long term goals. (I don’t happen to know current laws around this)
No, I’m not going in circles. You didn’t answer me clearly at all the first two times I asked. You may think you did. But I didn’t see anything clear at all. I saw a lot of muddled thinking and cognitive dissonance.
The two answers I have from you are (I’m summarizing here, from your posts above)
Yes, IdahoMauleMan, the $800 billion stimulus bill was bad. I wrote my Congressman and told him not to do it.
But they went ahead and did it anyway. That’s just the way it is. Can’t you accept that? That ‘that’s just the way it is?’
I tried to have my say. The ‘will of the people’, so to speak. But it just didn’t work this time.
But now…now, that we have the chance to cap CEO’s pay…Now! That will work. Now my Congressmen will listen to me. Now I will have my say. Now the ‘power of the people’ will come to bear. They will do exactly what I want. This time.
I’m going to throw good money after bad, and grant Congress yet more power to control and regulate. This time, it will work. Because I - Whack-A-Mole - have the power. Not Congress. Congress will do exactly what I want. Even though they didn’t do what I wanted to before.
Somehow, some way, they got corrupted by special interests and lobbyists in the previous instance. But that won’t happen this time. This time, the ‘power of the people’ will prevail.
There were ‘Knock on’ effects from the banking system that require government involvement.
IdahoMauleMan asked me to explain in detail how ‘knock on’ effects work. I didn’t answer him.
Even though ‘Knock on’ effects are the underpinning of my whole argument as to why the government needs to get involved.
‘Knock on’ effects somehow didn’t come to pass in the Enron bankruptcy, the bankruptcies of Aloha, Braniff, Piedmont and a bunch of other airlines. Along with Bethlehem Steel.
As well as the Delphi auto parts BK of 2005. Somehow, in all of those other business failures, the assets were redeployed, resources were reallocated, and customers still managed to get their product at more-or-less the same price. Or even a better price, since industry resources were being used more efficiently.
The ‘Knock on’ effects didn’t come to pass in those cases. Those cases also happened to be businesses that weren’t nearly as regulated as much as the banking and financial sector.
But now, when large banking institutions fail, the ‘Knock on’ effects come into play. And it’s absolutely, positively certain that the free market is to blame when ‘knock on’ effects make a dent on me and my wallet.
It couldn’t be the government to blame. ‘Knock on’ effects aren’t the result of government intervention. It couldn’t be that ‘Knock on’ effects are the result of government guarantees of depositors’ funds and government use of fiat money and poor regulation of banking reserves and asset quality.
The failures are the result of the free market. That much is clear.
Even though ‘Knock on’ effects didn’t seem to happen in those non-banking sectors as described above, where the government is less involved.
The fact that ‘Knock on’ effects are happening in the banking sector, where the government is so involved you can’t swing a dead cat without hitting a government regulation, isn’t the government’s fault. It’s not the fault of a poor regulatory environment.
It’s the fault of the free market. That is obvious to all. So let’s give more power to the government. Because after all, now the ‘power of the people’ will come to bear, and we’ll all have our say.