Asked and answered.
That’s not entirely true any more. The current trend in larger companies is to buy up the innovators. Google was a main driving force for innovation, now they look for smaller companies they can buy. Eventually they get so big that they’re better off splitting the company into smaller business units which is what might happen with UBS and HP.
The thing is, where will this trend end? So salaries for workers should be lower - how much lower? Profits and money for the top 10% should be higher. How much higher? What is the ideal disparity between the top and the bottom?
The standard of living for 60% of the population is going down - where should it bottom out?
Should the middle class be essentially non-existent? Are they bad for a functioning economy?
Low enough that it matches their perceived value.
Like I said, right now a company can open a factory any where in the world so why should they choose the US? What does the US and it’s citizens have to offer that Canada doesn’t? From your wiki link, Canadians cost almost $6000 less than an American. But opening in Canada means a more stable political climate and they don’t have to fuck around with health care.
Is there an ideal? Obviously it should be low enough to allow economic mobility, but high enough to encourage economic mobility.
Are you sure about that? Life has never been better. We have access to things people couldn’t even dream of 50 years ago. DVD players are practically free. Weren’t Blu Ray players in the thousands when they came out? Now they’re down below $65.
No, the middle class is essential for a functioning economy. Problem in the US is that the middle class seems to hate other middle class to the point that the do everything in their power to fuck everyone else. They don’t realize that helping others helps them, and that taxing themselves is a good thing. Frankly, the middle class in the US is so easily brainwashed they kind of deserve the fate they get. Grow a pair and vote for some functioning policies.
You know this recession was the result of the middle class spending their home equity and maxing out their credit cards. They did it to themselves.
Great - perhaps you could convince the homeless guy that he could get a cheap DVD player. Or tell that to the parents who have to choose good food or new shoes for their kids. Perhaps we could let them eat cake too.
This, I can certainly agree with.
cough French Revolution cough
Like IBM crushed those upstarts Micro-Soft and Apple? Or K-Mart and Sears crushed Walmart? Or the way the entire centuries-old news and publishing cartel crushed the web?
Competition is alive and well, even though all the powers that be discourage it. I’m all for removing barriers, but your “reality” is just not true.
Has it happened with Google? Or Apple? Or Microsoft?
And when a ginormous company buys up a smaller company, does that create jobs? Or reduce the number of them?
Don’t see how corporations “buying up” innovators is fundamentally different from all the innovation being churned out of existing corporations. The point is that no new companies or industries are being created. There are more profits, but this does not translate into more jobs.
I’m not saying that we’ve run out of ideas and there’s no ingenuity left. Just that our society has a lot of niches filled and those entities that are occupying a niche are doing their damndest to snatch up the new ones as soon as they arise. A company can’t just be in a stable equilibrium in a capitalistic society. For reasons that I don’t understand, companies must grow for them to be “successful.” But this pressure doesn’t promote diversity in the marketplace, and it makes taking a chance with a new company extremely risky.
It makes everything risky, actually. As we are seeing.
With the huge increases in productivity (150% is cited pretty often) over the past two decades, why aren’t they worth at least the same amount as they used to be? With wages not increasing, they’re doing one and a half times as much work for the same pay.
Lack of demand. No matter how great your product is, you don’t put money into it if no one is buying. If your factories are running at 50% capacity, you don’t hire more workers and buy more equipment.
I understand that very well, and said so. It is not happening now. Industries are cutting wages by cutting hours, and still the problem continues.
The reason the economy crashed, among other things, is that workers were not making enough, and were keeping the economy up by consuming based on credit and unsustainable house prices.
Your first link says deflation is good. I don’t have to read any more. In a deflating economy, it is ill advised to spend since your money will buy more if you hold on to it. In a mildly inflating economy, there is an incentive to spend before the value of your money decreases. You do remember the fear of deflation in 2008, don’t you?
Easy. Productivity is increasing, in no small part from fewer remaining employees doing more. But profits from this are going to the company, not to the workers. The increase in profits is not matched by an increase in sales.
If you read a book about doing a business plan for a startup, the first thing they tell you is that you can’t say - Leading company X has 70% market share - I can easily take 10% of that. Company X has that market share for a reason. Plus, high profits means that the competitor has room to lower prices and crush you like a bug.
New companies thrive when the big companies don’t see them as competitors. IBM was a mainframe company - you can see that even today Microsoft is not. And remember IBM enabled Microsoft by giving them a position on their new computer, something that was not expected to be game changing. Even today IBM dominates the consulting space, which is not where Microsoft is. Similarly, newspapers had no idea of what hit them. They killed themselves by putting content up for free, but the web was well established before this happened.
On the other hand, Microsoft did crush Netscape when they saw them as a competitor. There is competition, but there is also crushing.
Is the quality of life the number of DVDs you can watch? I grew up in the '50s, and I assure you we didn’t feel deprived from not having 200 channels we never would watch. I think a lot of people would happily trade their cheap DVD player for a world where you didn’t live in fear of getting fired all the time, and could come home at 6 and forget work.
BTW, I hope you are feeling deprived and miserable for not having 3-d holographic movies in your living room and virtual presence games.
1950’s America is gone and it isn’t coming back. It arose from a very special and exceptional set of circumstances which won’t be repeated. Sound American economic policy in 2011 has to accept that.
The thing is, this is completely untrue. There are new startups forming all the time.
Ah Dopenomics, always good for a laugh.
America currently has some economic woes so…let’s all work for less, like they do in poorer countries. Heck, let’s set up some sweatshops. Then we’ll be rich!
Or…
If corporations are making record profits…then that should promote competition since there’s money to be made.
So if wal-mart are making record profits, that just means it will be easy to start your own supermarket chain…
Yes, and that’s why unemployment rates are falling and no one is talking about how the government is stomping on small businesses and all the storefronts are teeming.
Oh, there are new businesses starting up all the time. If you can’t get a job and have some modicum of talent, that’s what everyone tells you to do. Start a business. Over the past six months, two new businesses opened up down the street from where I work. Every time I pass by, there is no one inside in either one of them. One of them is a computer and iPod repair store, and I gave the guy my business. Great guy, great service, great price. But no one knows he’s there because no one except me and homeless freaks walk down that part of the street. The guy next door is running a new restaurant. Wonderful food, fantastic prices, slow-ass but pleasant service. But I’ve always been the only person in there…during the lunch hour! Because the lunch crowd trickles down the other end of the street, to the Subways, Quiznos, and the fancy Suntrust cafeteria. People are too lazy to walk four blocks up to a no-name restaurant.
I give them a couple more months. I say this because the businesses that came before them lasted about that long.
“Just start a business!” is great advice…if you can find the right niche. And that is getting harder and harder to do, it seems.
Deflation is good in that it gets you to the point where people want to start spending again, as you say.
So which is it? You can’t have profits without demand.
You’ve now said there is both a lack of demand, and an increase in profits, which is it?
If demand falls, profits will fall. If productivity is increased, profits will go up.
If in the end, there are INCREASED profits, that means that as the same level of demand there is room for more competition. And it also means there is room for the price to fall.
If there is enough demand to allow for increased profits, there is enough demand for new players to provide competition.
So which is it, lack of demand or high prices? If prices are inflated, there is room for a new player to come in and offer the product at a lower price and gain market share, there by creating jobs.
I don’t really care which one you want to argue, but at least pick one.