World War I was the endgame of hereditary elites. They fuck up, because giving people power based on birth produces a lot of leaders of very normal intelligence and abilty, and a lot with subnormal intelligence and ability, along with a few bright ones whom history has demonstrated are not enough to make up for the rest.
The nobility once held absolute power, derived from God himself (“divine right of kings,” anyone?) but they lost it because, on the whole, they were idiots. Barbara Tuchman’s “The Guns of August,” a history of World War I, is a great demonstration of this. Most of the generals threw away lives by the millions because they just couldn’t figure out that mass charges against entrenched machine guns did not work. Repeatedly. This is what will happen to America if we let oligarchies get so entrenched we can’t get rid of them. Ruin, basically.
If the oil companies stopped providing gas I would be unable to go to work and lose my job and all my income. All of Microsoft would be unable to run and Gates would never have acquired his money. Since my income and Microsoft’s success is totally dependent on the willingness of the oil companies to pump gas, how much do we owe the oil companies? Do we need to share with them the fruits of that success?
No, we payed them fair market value for the gas and that is all we owed them then and we owe them nothing more now.
If a company wants to freely choose to pay tens of millions of dollars to an executive, that is no business of mine, yours or anyone else who isn’t a stockholder in that company. If they signed a contract then the executive is entitled to everything the contract says they should get, unless you think that companies should be able to break contracts with employees whenever they want to.
The difference is that the elected representatives, not being a class, are not necessarily loyal to overclass interests – unless they also are of the overclass, or dependent on it for campaign funding, etc., which most of them are but needn’t be.
What bearing does that have on the question? A socioeconomic elite class has value to the majority of people, now back to the start of the agricultural age probably. It allows people to lead simple lives instead of living in a hunter-gatherer mode. Most people prefer someone else to be in charge. They may complain about those people to no end, but they rarely take action to change the situation, because they see value in it.
I think you bring up an interesting example that may also highlight some of the issues being discussed here. I’m thinking of the General Motors streetcar conspiracy. If you are unfamiliar with the case, it did result in actual convictions I’m lazy today so I’ll throw in a Wikipedia quote:
In 1949, Firestone Tire, Standard Oil of California, Phillips Petroleum, GM and Mack Trucks were convicted of conspiring to monopolize the sale of buses and related products to local transit companies controlled by NCL and other companies; they were acquitted of conspiring to monopolize the ownership of these companies. The verdicts were upheld on appeal in 1951.
So, following from this logic, the companies in question are increasing earnings through measures that actually impede the efficiency of the transportation industry. They are benefiting society by providing gas, but also hindering optimal use of the resources available to society and to some extent manipulating the political system for their gain. They are able to do so because of their wealth and power.
I don’t think the situation with Bill Gates is one of those John Galt sort of things either; Bill Gates is not Niklolai Tesla; he did not invent anything that was completely new to the world, his business cornered the market for a new technology and used its early entry to thwart the ability of anyone to compete. As with the previous example, his business is providing something significant to society, but also hindering the developement of optimum market efficiency and skirting the law - enter wiki quote stage right:
“the company has been in numerous by several governments and other companies for unlawful monopolistic practices. In 2004, the European Union found Microsoft guilty in a highly publicized anti-trust case. Additionally, Microsoft’s for some of its programs is often criticized as being too restrictive as well as being against open source software.”
In conclusion, I think that it is an oversimplification of the situation to rest at “this is all fair and good because we willingly pay for these needed goods and services that benefit us”. In both these cases the acquisition of power and wealth occurs through a 2 part process of providing needed products but also eliminating more efficient, less costly alternatives.
Both of your examples are incorrect. Streetcars were not cheaper or more efficient. Buses drove on the same streets as car and those streets were paid for by the government. Street cars ran on tracks which had to be maintained by the trolley company. If you look at ridership trolley car ridership peaked in 1920, 20 years before the “conspiracy” and lost ridership every year after that to buses. Buses were cheaper, faste,r and they didn’t let passengers out in the middle of the street. Here is a good article about it (pdf) It is not a good idea to get your history from movies starring a cartoon rabbit.
Microsoft was ordered by the EU to produce a version of Windows that did not include the Windows Media player. So the result of the case was that people who bought Windows got a worse product without a piece of software that had previously been free. Because operating system get more valuable because of network effects it is a market with a natural monopoly because having everyone use and develop for one system is more efficient than having everyone try to connect with a bunch of different systems. Even with this natural monopoly, plenty of alternatives exist and even in the US where the Windows Media Player was never ordered off the operating system it is no longer a dominant player in the market.
You make a good points, In think they are very good points and provide a meaningful rebuttal to the the points I was making. I was not claiming to be an expert either - I just said what your examples brought to mind. I provided cites to back up my understanding, so I just don’t understand the snark about getting my history from cartoon rabbit, if I said something offensive, please let me know what that was, I was not intending to come across as offensive.
Actually, given that most Congressmen have to pass the money primary before they get on to the dog and pony show that our elections have become, I’d say that they MUST be loyal to the overclass, as they are dependent on them for funding. Almost every one of them.
It’s fine until it becomes a de facto hereditary class where hecto-millionaires and billionaire CEOs and investment bankers, having all sent their kids to the same elite private schools, place them in key leadership roles and position each other on the boards of their companies.
Large companies influence the lives of thousands or millions of people, often whether those people want their lives influenced or not. Those companies have the potential to cause immense economic damage if run ineptly or corruptly. That’s why we have regulatory agencies like the SEC and Big-4 audit firms.
OTOH, if an executive makes a company billions of dollars, why shouldn’t he get a piece of that? The whole reason we enjoy a high standard of living is because smart, successful people create, run and grow companies that make all the products and services we use.
There is also a question of whether a company is good for society in the first place. Walmart is typically held as a controversial example. For all intents and purposes, Walmart serves as an arbitrage between Chinese labor markets and American consumers. And most of the value generated goes to the Walton family. To me, a single family amassing more wealth than the combined wealth of the 2 million people they employ, plus another 88 million people strikes me as an imbalanced system.
Well, the are arguments for a progressive tax system. 10% of Bill Gates income is not much of a hardship, but for someone who earns $20k a year, it’s a much more significant portion of their income because a lot less of their income is disposable. I’m not in favor of confiscatory levels of taxation against the wealthy, but having rich people pay a bit more more than poor people seems fair to me.
If incompentent people are being placed on company’s board then those companies will lose market share to those companies who place competent people on their boards. This hypothetical defect is then self correcting.
Walmart’s creation benefits Chinese labor by giving them jobs and benefits american consumers by giving them cheap products. It is difficult to find out what Walmart’s total payroll but the estimates I have seen are around 35 billion dollars for non executives. Jason Furman, Obama’s former CEA head, estimated that consumers get 50 billion dollars a year in lower prices. That means for just its workers and customers, ignoring investors, Walmart generates 85 billion dollars in value per year. The highest total for all the Walton family heirs I have seen is 144 billion dollars. Thus the value Walmart creates for its employees and customers in a year and a half surpasses the value it created for its founding family. Walmart has been around for 50 years so the value it has created for society dwarfs the value that the Walton family has kept for itself.
I would prefer a progressive consumption tax but a progressive income tax system is okay with me due to the diminishing marginal utility of money, notwithstanding the impossibiltiy of comparing interpersonal utility. However, what is being envisioned by many are confiscatory tax rates not for the purpose of funding government but for the purpose of keeping people from becoming too wealthy.
In the US at least the issue was not the operating system itself, but how Microsoft leveraged the natural OS monopoly for other products. Not just the media player but the web browser too. Back then downloads over dial up lines were not as trivial as today, and installation procedures were not as simple. I installed browsers for several computer newbies who were scared to do it themselves. Today I have several media players, all free, and the ease of getting them makes what Microsoft pre-installs less important.
Microsoft did other nice things like forcing PC makers to pay for Windows licenses for all machines, even if they were intended to get Linux loaded.
That a monopoly will naturally collapse in ten years in no way eliminates the cost of that monopoly today, so in the long run monopolies die argument doesn’t work.
That is my recollection as well. IE was installed free with every OS while Netscape had to convince people to download its software or install via disk. This made it harder for Netscape but better for the consumer since they got a free browser with a product they were already paying for. Economic effeciencies mean the consumer is better off and not necessarily the competitor.
I don’t see how this made it better for the consumer. Microsoft wasn’t packaging IE with Windows out of the goodness of their hearts. They were doing it for the money. (And Netscape was putting their “free” browser out there for the same reason.)
What would have been best for the consumer would have been if both companies had been allowed to include their program on new computers on an equal basis and the consumer was able to choose which browser he used. But Microsoft told manufacturers that they were not allowed to bundle any products that competed with a Microsoft product. And because Microsoft had control of the Windows operating system, the manufacturers did what Microsoft wanted.
How anyone can look at this situation and claim there was a free market in operation is beyond me.