Does unregulated capitalism look like China?

Great Debates
41

Regulation has almost nothing to do with the quality of goods. It has a lot to do with their safety.

The computer industry example is actually a very good one. The government doesn’t give a shit if Windows crashes ten times a day or if Intel’s chips are faster than AMD’s.

However: There is substantial, and growing, regulation in the area of disposal of computer hardware, because it contains potentially hazardous compounds that can’t simply be tossed into a landfill, and because the industry demonstrated it was perfectly happy to throw its hardware into the landfill absent any rules to the contrary.

So thank you for offering an example that proves our point and undercuts yours.

42

[QUOTE=Sam Stone]
If the Pure Food and Drug act is what saved people from the horrors of run-amok capitalism, would any of you like to explain why we don’t see endless shoddy products in industries that are largely unregulated? Say, computer hardware?

[/QUOTE]

I can speak to that. In fact, we did see shoddy products in computer hardware, until the Japanese started beating us up. In the early 1980s, Teletype had to closely track parts from major component vendors, including Intel, because you could easily get the lot you rejected back. (Intel was mostly making memories back then.) About that time the Japanese sent a letter to HP basically saying your products suck.

I was sensitive to this, since AT&T did care about quality. A switch going down got a lot of attention - from a bunch of regulators.

Another example. Early Commodore 64s had a defect in the graphics chip that caused a sparkle problem on the monitor. I knew a VP there quite well, and he said that they were well aware of this issue and decided to ship anyhow and let consumers test for it.

As for China, a few years back motherboards started failing. It was discovered that the motherboard vendors had bought shoddy capacitors from a supplier. This affected a lot of different products.

The biggest difference is that a lot of computer products go to sophisticated customers. If you have one PC that craps out, you might think it is a fluke, but if you are an admin running a server farm with a thousand machines, you see problems very clearly, yell at your supplier, and dump low quality suppliers.

Finally, when I was in grad school my wife was the quality control director for a family owned vegetable cannery, fairly small. They had an extensive QA department, which sampled incoming cans, outgoing products, and audited the manufacturing process. She sent back traincars full of cans that didn’t meet spec. Cans that went through the process were held before being shipped - once a foulup had a batch removed for storage without being cooked. They blew up from bacteria. The owners were good people, but they spent a lot on quality, and I’m quite certain they would have tried to find ways of cutting corners if not for regulation.

Bottom line, a broken C64 is unfortunate, but bad food kills people. How many deaths will you accept while the industry figures out that there should be quality without regulation - if it ever does.

43

[QUOTE=Sam Stone]
But my point is that even absent any regulation, these other industries still produce goods of high quality and low defect rates. Which would seem to be a good counter-argument to the idea that if the government doesn’t regulate business, business runs amok and floods the market with crappy goods.

[/QUOTE]

So, The Jungle was a fantasy novel? The reason the novel had the impact it did was that the stuff Sinclair wrote about was actually happening.

The purpose of Sarbannes Oxley was to ensure that managers signing off on financial reports actually know what they are signing. (Which you remember Lay said he didn’t). I’m not expert in this, but I’ve read articles in trade rags saying compliance can actually save a company money, by getting the financial processes in better order. That was certainly true when manufacturing companies started cleaning up their processes for the quality push in the late-80s. I’m not denying that execs cry big tears about how these regulations make them noncompetitve, but that always seems to be the case.

44

[QUOTE=Dominic Mulligan]
For a start, I’d argue that food and computer hardware are qualitively different, in that it’s obvious when hardware is faulty, whereas it’s not obvious when, for instance, your food is tinged with arsenic.

[/QUOTE]

I wish that were true! In fact, there are many defects that escape tests and show up later in the field as customers exercise the hardware in ways the tests didn’t. There are also sensitivities to cosmic rays, that might cause problems. High reliability computers expect components to fail, and have a substantial amount of checking hardware and software to deal with limiting the impact of the failures. It’s far easier to detect arsenic in your soup than it is to detect a subtle defect.

45

[QUOTE=xtisme]
I’m asking you a question…one that seems pretty relevant to your post above. You asked how an oppressive government would allow defects to be exported. I’m asking you if you really don’t understand that oppressive governments have corruption. Seems pretty cut and dried to me. Maybe you should go back and re-read it again in light of what you wrote, ehe?

-XT
[/QUOTE]

I am aware that China has been hip deep in corruption since long before the Maoists took over. It’s documented in Stillwell In China. Not only that, but every Chinese government since the 1930s has declared that corruption has been eradicated.

I’m also aware that corruption does not guarantee intentionally poisoned food. Argentina is also corrupt, but they sell us a lot of perfectly safe beef products. When was the last time a million cans of intentionally poisoned Argentine corned beef were recalled?

My question that you are so concerned over, “If China has such an oppressive government and heavy regulation, from a business viewpoint, how did all these defective products get exported?” was in reply to Freddy the Pig, who used those phrases to describe China, after he accused me of agricultural handicrafts. He seems to be alone in believing that Chinese industry is “heavily regulated.” I didn’t mention corruption for the sake of brevity. I have to watch myself, lest my posts get long and boring. :smack: Even a rookie China-watcher knows about the inherent corruption.

XT, the simple fact is I probably would not have come back at you and Freddy but for that strawman accusation. I started this thread to find out the various positions on the issue. Then you two slung mud on me, and I defended myself. I would have been happy to hear your opinion without that nastiness.

46

AskNott: Your OP strikes me as more than an impartial question; your description of China as “nearly unregulated capitalism” where government doesn’t “ride on the businessman’s back” seems designed to elicit a particular answer. Even so, I perhaps should have clarified that I was responding more to posts #6 and #7, which gleefully ran with the premise of China as libertarian hell. Several subsequent posts seemed to accept this as a given.

I’m not much interested in whether the situation in China is best described as “heavily regulated”, “corruptly regulated”, or “arbitrarily regulated”; for my money all of the above are correct. The point is, it isn’t anything close to a free market under the rule of impartial law. It’s an object lesson in the evils of an overly powerful government.

47

The goal of capitalism is to maximize the return to the owner. This means that the business needs to be run as cheaply as possible and the price charged for the product placed as high as possible. Competition will police the latter but does nothing about the former. All businesses try to run as cheaply as possible.

One way to run cheaply is to dump your waste products into the river or the atmosphere. Another way is to usechild labor. Another way is to eliminate plant safety features and let society at large pick up the tab for injured workers.

A way to get rid of the price policing by competition is to enter into agreements as to prices charged, market dividing, or simply buying or running your competitor out of business.

All of the above are features of unrestricted capitalism. China of today is the US of the late 1800’s and England of earlier still.

48

[QUOTE=David Simmons]
The goal of capitalism is to maximize the return to the owner. This means that the business needs to be run as cheaply as possible and the price charged for the product placed as high as possible. Competition will police the latter but does nothing about the former.
[/quote]
Of course it “does something” about the former. Competition limits how cheaply you can run a business, because you have to bid against rivals for labor and raw materials.

Unless, of course, you’re in a place like China, where you can bribe a corrupt official to put your competitors out of business, or where you can enforce the “hukou” system to prevent your workers from leaving.

Which is a tort–unless you’re in a place like China, where the worst polluters are state-owned enterprises immune to either market discipline or legal action.

49

Thanks for clarifying, Freddy the Pig. Now, I’ll go back to the sidelines. This discussion goes more smoothly without me.

50

[QUOTE=mazinger_z]
I’m bored sitting in an airport while my DS re-charges…so, I will ask the following: WTF does this link have to do with your supposed “argument?” Capitalism requires regulation. When people say “free market” they mean, as at least one poster has eluded to: enforced property laws, equal protection under the law (that is, a means by enforcing contractual relations, however, capitalism can probably exist without this requirement, it just wouldn’t be very efficient); privately owned means of production/resources; etc.
[/QUOTE]

They are unregulated and have A SLEW OF CASES. It is not that hard to follow.

51

Whats interesting is these are hybrid companies. Walmart has a city in China with many of their suppliers moving there… They are American Corporations going to China to get low wages. The corps are making huge profits. China is on a building boom as long as corps continue to build there. The wages are low on an international scale but at least they have jobs and taxes collected where were none before. Win for profits and executives. Win for China. Lose for workers in the US.

52

[QUOTE=gonzomax]
Win for profits and executives. Win for China. Lose for workers in the US.
[/QUOTE]

If the goods were produced here wouldn’t they have to cost more? So wouldn’t that be a loss for…everyone else (besides these mythical American manufacturing workers) who shops at Walmart?

You really have no idea do you?

-XT

53

Yes the goods would have to cost more if they paid a living wage here. The short term profits are huge. Is there a future problem? Sure. If Americans buy less because they are making less will Walmart make less. Not if they can sell their junk to new markets. Of course in China they wont have to pay the prices we do.
It will take a while for our wages to reach a world average but that is where we are headed. there is no reason to pay American wages. They wont.
The future is grim for American workers. As a matter of fact ,even infrastructure work is being outsourced to Mexican workers to cut wages. Go to any working site and see. The government is letting immigrants come in and work . They could do a better job of stopping them on entry. They could prevent companies from hiring them. There is a paper trail for employees. They have no intention of stopping them. There is nothing special about America to a corporation. It is just another market .

54

[QUOTE=gonzomax]
Is there a future problem? Sure.
[/QUOTE]

I hate to break this too you gonzo…but the US hasn’t been a manufacturer of those kinds of goods for decades. And yet your ‘problem’ has not materialized. I’m sure its poised to strike any decade now however…

[QUOTE=gonzomax]
If Americans buy less because they are making less will Walmart make less.
[/QUOTE]

Um…do you have a cite showing this trend?

[QUOTE=gonzomax]
It will take a while for our wages to reach a world average but that is where we are headed.
[/QUOTE]

Cite?

As for the rest of your post…best we don’t mention it I think. If you would be good enough to provide the cites for your other (less, um, interesting) assertions however I would be much appreciative…

-XT

55

A cite for the future. WOW Ask much.

http://www.elecdesign.com/Articles/Index.cfm?AD=1&ArticleID=10062

http://findarticles.com/p/articles/mi_m1153/is_n10_v120/ai_20198260/pg_6 I can do this all night.

56

Nitpick: It’s spelled Wal-Mart.

57

[QUOTE=gonzomax]
A cite for the future. WOW Ask much.
[/QUOTE]

You should probably read what I wrote again. I asked you to cite the trend. And YOU made the assertion after all.

And a cite by bonddad, much as I’m sure he’s an authority on the Daily Kos, isn’t exactly what I’d consider the optimal source. Think you could maybe dig one up somewhere else? Also, even if I accept that wages HAVE dropped 5.2% (in 7 years), its going to be a rather long time before they are the equivelent of wages in China.

Your elecdesign link (gods know what that is) took me to an ad page btw. Why don’t you quote out what you think are the important parts instead of these drive by links where I’m supposed to guess what point you are trying to make? Just to try something new, ehe?

-XT

58

[QUOTE=Siam Sam]
Nitpick: It’s spelled Wal-Mart.
[/QUOTE]

Yes it is…quite right! Apologies…I can’t spell my way out of a wet paper sack. I’m sure that now gonzo see’s the correct spelling it will all fall into place for him! No more drive by links, no more cryptic broken sentences! And from me? Definitely no more content free posts. It will be peace on earth, and good will toward men…cats and dogs living together! Etc etc…

-XT

59

Seems to me xt if you do not know of the downward effects of outsourcing and manufacturing in China ,you are being very selective in your reading. Why do you think we are building factories in China,a good will gesture for the Chinese? We must like them a lot. If we take our jobs and manufacturing to a place with lower wages ,what will the impact be on our wages.
In your wettest dream can you see wages going up? It is simple they move to pay less for wages. They move to escape environmental regulation. They move to escape product regulation. Sure it will create short term profits and the Wal mart family will become even bigger billionaires. I guess that that is worth it for you.

60

[QUOTE=Freddy the Pig]
Of course it “does something” about the former. Competition limits how cheaply you can run a business, because you have to bid against rivals for labor and raw materials.

Unless, of course, you’re in a place like China, where you can bribe a corrupt official to put your competitors out of business, or where you can enforce the “hukou” system to prevent your workers from leaving.
[/quote]
Which is, of course, unrestricted capitalism and typical of the US in the 1890’s.

The typical response to competition in an unrestricted capitalistic system is to eliminate the competition. You buy they out, you force them out, or you come to an agreement with them. Standard oil wasn’t in competition with anyone for a price on moving their oil. They owned the railroad.

Sure and the average person or even city doesn’t have the resources to outlast US Steel. Such dumping went on right up until those meddlesome tree huggers started in.

One result of that is that US corporations move their operations to places where they can dump.