Corporate tax law is certainly a valid subject to debate. However, most economists would agree that money in the hands of the people can be better than money in the hands of the government.
And, sit down for this one, corporations are the people. Sure, there are plenty of “fat cats” who benefit when a corporation performs well, but there are also millions of regular Joe six packs that do too. Don’t own stock directly? Your pension fund, insurance company, and mutual fund sure do.
And back to the OP: If not corporations, what? Do you think a Dreamliner, PS3, or Prozac pill is going to be developed and built by a mom and pop stand off the freeway?
Exactly. Tax shelters are a failure of government, not corporations. And individuals are probably just as likely to engage in the same sort of behavior as corporations-- the richer you are, the more attractive tax shelters look.
This whole idea that corporate fraud as seen in some recent cases is just “the tip of the iceberg” is nonsense. How many of the Fortune 500 are part of this iceberg?
All your other points have been effectively answered, but this one stood out to me.
The one and only reason for the existence of the legal entity known as a “corporation” is to shield the owners from liability for the business failing. That’s it - well, that and it makes it easier to have multiple owners, in some respects. It’s an organizational tool. “Company” does not equal “corporation” - many business are not corporations. Nor are corporations all big companies; most corporations are, in fact, small companies, and many are effectively just one person, or one person with a little bit of part time help. Corporations might have one owner, or millions of them. In fact, some corporations have no owners at all. No, really; the company I work for is a corporation with 1500 employees and zero stockholders.
“Corporation” is simply a particular way to legally organize a business.
First of all, the word is “businesses,” not “corporations.” Some big businesses aren’t corporations, and the negatives you’re describing apply (really or allegedly) to any big business, whether it’s a corporation, an income trust, a partnership, or what have you. You need to get over the practise of saying “corporation” when you mean “big business.” It’s a common linguistic convention these days, I know, and it’s factually wrong and very sloppy English; it’s logically equivalent to referring to all doctors as pediatricians.
If it’s your position that big business that are also corporations somehow behave differently from, say, income trusts or proprietorships or not-for-profits, then you need to explain the differences. Personally, I don’t see any.
Your complaints about corporations really have nothing to do with the distinguishing features of what constitutes a corporations. Corporations are oligarphic? By your definition, every large organization of people in the entire history of the human race is oligarchic. Let me assure you that that isn’t going to change if you geet rid of incorporation.
You can’t immunize yourself from the market. Saying you can do this by “practising oligarchy” is like saying I can avoid paying Canadian taxes by naming my house the People’s Republic of Rick. Trust me, sooner or later, federal agents will break my door down. And sooner or later, market forces will have their way with every business.
What market proponents actually believe can be difficult to ascertain, since every economist has their own view of the market(s). But lets see what been presented in this thread.
From John Mace: “market forces are always present, and you can’t cheat them by fiat…[and] a recognition that the laws of economics operate no matter what the government does.”
From msmith537: “The market is supreme in maximizing the needs and wants of the people, however it does not guarantee that everyones needs and wants are met. IOW, the market will generate the most amount of wealth but that does not mean it will be distributed equally.”
“Also, think of market forces like other natural forces like…say…gravity. Companies will be pulled towards whatever generates lower costs and higher revenues. You can resist those forces, just like you can resist gravity, but you will need to expend energy (or in the case of business, capital).”
From MGibson: "the market is made up of a lot of individuals and not an omnipotent presence that knows what is best for all. Yes, prices are set by the market based on how much of a demand there is for a good or service and how much of a supply we have or whether or not we have the needed labor force. "
From Sam Stone: "What conservatives typically believe is that it is the function of the government to make sure the market is functioning properly. Hence SEC rules, anti-trust legislation, and legislation aimed at correcting honest market failures. ‘Market Failure’, in the sense I’m talking about, does NOT mean “I don’t like what the market is producing”, but some barrier to exchange that prevents prices from reflecting the true cost and demand for a good or service. For example, a monopoly on a road going out of town, or asymmetric information that prevents one side or the other from knowing what it needs to know to set prices rationally.
What conservatives generally don’t believe is that the market should be manipulated and controlled by government in order to achieve specific social outcomes."
First, I find it ironic that conservatives and market proponents place such great faith in the power of the market and business, but not the government, when its the latter that lets them have an explicit voice in its decisions. They recognize the necessity of government to allow the legal structures necessary to establish and maintain markets, but refuse to grant it any more power than that.
I love the last bit I quoted above. Our government, a democratic social institution, should not try to achieve social outcomes, but business, a very undemocratic social institution should be allowed. I find a fatal flaw in that premise is that the market itself is a social institution. It is not natural, but entirely artificial. It exists only within the constraints that we put on it. Theories propound on how the market and business should be made more efficient - but efficient for what end? That is a determination of society, not natural forces.
People seem to forget that businesses and the market exist to serve society. Society does not exist to serve them.
My main premise (which I forgot when I wrote the OP or would have stated it then) is essentially taken from “New Industrial State” by John Kenneth Galbraith. As serendipity would have it, they are releasing a new edition and his son wrote a commentary on it for Mother Jones magazine.
He gives a good summary: "It was his effort to actually replace the prevailing economic model with something more meaningful and more real. In it he forged a vision of the business firm not as a simple seeker after profits but as an organization, and of the matrix of such organizations as the essential basis of advanced capitalism. Traditional economics, still in the thrall of a small-town view of business firms, largely rejected this vision, but the large corporation did not go away, and the world still needs the theory set out in this book.
Corporations exist to control markets, and often to replace them. Business leaders reduce uncertainty not through clairvoyance (or “perfect foresight,” as the economics textbooks call it), nor by confident exploitation of probability (“portfolio diversification”). They do it by forming organizations large enough to forge the future for themselves. In politics these are countries and parties; in economics, big corporations."
Since I read it, I have seen more evidence to support his premise than to refute it.
And in answer to a previous question, I am currently studying accounting, non-profit management, and economics with an emphasis on economic history and development.
And that is where everything gets so much fun. Accounting teaches one set of numbers, finance another, and economics yet another. ‘How are prices set?’ The economics textbook goes on about supply and demand and market equilibrium, short run and long run (the one where we are all dead), but with a dozen assumptions that never apply in the real world. And Galbraith’s critique is simply ignored. My favorite part was that to demonstrate the ‘market’ they had to use the commodities market - where many of their assumptions are still valid and the price is set by the market. Tell me though, how many consumers shop at the Chicago Mercantile Exchange?
The accounting and finance professors talk about cash flows, IRR, and how to do a cost-benefit analysis. For some reason I give them more credence. Same with the marketing department. ‘What will next year’s sales be?’ ‘What do you want them to be?’ The numbers are what you want them to be based on your internal goals - not according to the market.
As I tried to point out in the other thread, costs are determined by intrinsic values - how much labor is required to make the product at the price you want to sell at based on what your sales goal is. That determines what level you can afford to hire. The market might set the ‘price’, but production determines the cost. And your final cost is whatever you cut the check for, regardless of what the market says. The constraints are not due to the market but the limits of available capital.
And you know what? I like business. I like accounting. I like determining the numbers. I like determining what the costs are, what cash flows will be, what sales goal to reach. I like trying to increase productivity and efficiency - to do more with less. I like to read Drucker as much as Galbraith. But I also could not care less for profits and maximizing returns unless it is a win-win situation. More often than not it isnt. Which is one reason I am focusing on non-profits over other types of firms.
My major complaint with corporations is the oligarchic nature of the way they govern themselves, especially public corporations. The textbook name is the ‘principal/agent’ problem. Managers are supposed to manage on behalf of the owners. They are supposed to be the means to the end. But over the last century, as Galbraith noted, the managers use the firms as a means to their ends. They do not serve the shareholders or any other stakeholders other than themselves. All corporations? No. Only corporations? No. But it is the historic corporate business model that exasperates the problem. Their hierarchal nature and oligarchic governance allows the ‘agents’ to ignore the principals and other stakeholders. Is oligarchy a loaded term? You betcha! If the shoe fits…
Why do I think business should be more democratic? Because I believe people should have a say in the organizations they are a part of. The division of labor does not mean the division of equity. The concept of employers and employees is a remnant of feudal society, and I would love to see us grow past that.
I just finished my course in organizational behavior. Thankfully, it demonstrated that the trend is growing away from the ‘master/servant’ relationship to a true partnership-oriented model. It also demonstrated that model led to greater productivity when employees felt that an ownership stake in their firm, and it definitely did when they actually did have one. One of my favorite companies is actually a ‘corporation’ - SAIC. Amazing, aint it? How they dont have to screw over their employees to get a good return. My what an inefficient use of resources.
I also pick on corporations over other types of business models is that they are the ones that will purport to be ‘public’, and a ‘person’ and hide behind the liability shield when the shit hits the fan. Yes, there is always a person behind every decision, unless it was a committee or faceless memo, or any of the myriad ways people use to refuse responsibility. I have yet to hear a good argument why corps should not be liable. It only increases the odds of taking unnecessary risks and creating win-lose situations. With partnerships and sole proprietorships, that is far less of a concern.
I can’t speak for conservatives, I can only speak for myself. I don’t put “faith” in the market, I recognize what the market has been proven best at doing-- creating wealth. And I recognize what government is best at doing-- setting and enforcing laws, and providing for common needs that the market can’t take care of.
This is where you misunderstand what people like Sam and I are saying. We’re OK with the government trying to achieve social goals, but not thru wage or price manipulation. The reason for that is that when you interfere with those things, you undermine the wealth producing nature of the market.
So, let’s decide, democratically, what our social goals are, and provide for those thru taxes. For example, instead of a Minimum Wage (or worse, a Living Wage) mandate, use something like the Earned Income Tax Credit. Use taxes to invest in education and infrastructure and to provide a social safety net, but don’t tell people what products to produce, or how much to pay people for their work.
Now, I don’t think the government in the US meddles in the market that much. MW laws operate at the margins, and probably have very little effect. But when we start talking about mandating a Living Wage, about capping executive salaries, or mandating things like company supplied health care, then we’re starting to do some serious meddling. And once you do that, you’ll never know how many new jobs weren’t created or how many new companies weren’t started due to those policies.
The market is FAR more democratic than government. Every time I spend a dollar on something I am casting a ‘vote’ for that product or service over the competitor’s. When enough people vote for a product, the company that produces it makes more profit and is able to expand and serve more people. The companies that can’t get the ‘votes’ of the marketplace go under and are replaced.
Compare this to government, in which you may be presented with a limited choice of candidates, and you have to pick one. Then that candidate may or may not keep his promises to you. Gerrymandering and the advantages of incumbency means that the deck is stacked in favor of the guys who already hold the power.
Furthermore, once the candidate is in power he is typically beholden to various special interests who financed his campaign and helped him achieve power. So he may be far more interested in doing the bidding of special interests rather than keeping his promises to voters.
And because the government is immune to the forces of the market, they can make arbitrary decisions and not have to suffer the consequences of poor choices. They have the bottomless well of tax revenue to draw from. If a poorly run company enters the marketplace, it fails and goes away. If a poorly run or poorly thought out government agency is created and fails, we typically give it MORE resources. When was the last time any major government agency was retired? The Rural Electrification Administration was set up to provide electrical power to rural areas. Almost 100% of those areas now have electricity, yet the REA’s budget is bigger than its ever been.
Government has a unique role to play because it’s the institution we entrust with the use of force. Thus it is appropriate for it to maintain the police force, the army, courts of law, and provide regulation of behaviour where the market can’t do the job. But it’s lousy at managing an economy, running companies, or otherwise determining where society’s resources should be spent.
I never said anything remotely similar to that. I said the government should not manipulate the market to achieve social outcomes. That’s totally different than social policy that uses things like tax credits, food stamps, shelters, or other tools.
And again you are begging the question. Your claim that business is undemocratic is nonsense. Shareholders can vote. Customers ‘vote’ with their money. Any system of free exchange where people negotiate with each other and come to common agreement is by its nature democratic. And of course business is flawed - no one has said otherwise. Businesses are run by people. People make mistakes, people can be cruel or evil. But the same is true of government. And government has the most important monopoly there is - a monopoly on the use of force to achieve its goals.
Tell me: When comparing the history of government vs the market, which one has a greater history of becoming despotic and hurting the people? Which institution is more dangerous?
The market is nothing more than the aggregate of millions of transactions free people make every day - voluntary choices about what to buy, how to be entertained, what to study, where to work. It’s totally a reflection of our society. Why is porn such a big industry? Because people like porn. Why do some TV shows succeed and others fail? Because people choose to watch what they enjoy, so network programming becomes a reflection of society’s taste. Why do our cars look like they do and drive like they do? Because they closely match what we desire in a vehicle. Cars that don’t fit our taste fail in the marketplace and are replaced by those that do.
You seem to think the ‘market’ is some malevolent thing - an artificial force that evil companies use to control us. It isn’t. The market is us. Go have a look at eBay, and browse through the items there, and you’ll have a good sense of the things we value and the things we don’t.
When you use the power of government to control the market, you put barriers up between people. You distort the information that passes through prices about what we want and need. The result is inefficiency. Set price caps or price floors, and you won’t change people’s desires - you’ll just create shortages or gluts of the products they want, and divert resources away from other things.
A valueless sentence. Businesses don’t ‘serve society’. Businesses build things that people want to buy. Society does not ‘serve business’ other than that people buy the things that business offers for sale.
Offered completely without evidence. Basically, you’ve been coming into GD and just offering your opinions about what’s good and bad. Galbraith does the same thing in this paragraph. Assertions made without evidence. It’s up to you to provide some. If you think business controlling markets is so pervasive, you should have no problem coming up with some examples.
Great. Provide it, please. Then we can debate the actual evidence. Otherwise, we’ll just go around in circles.
Really? Could you list them, please? I’m curious which assumptions economists make which never apply to the real world. Since you’ve enumerated a dozen of them, you should have no problem listing, say, half of them.
Another valueless statement. Perhaps the commodities market is used simply because it’s the ‘purest’ form of market, and therefore useful as an example.
And since when are ‘consumers’ the only agents in the market? If your grocer buys his hogs from the exchange, has a market transaction not taken place?
I suspect the only reason you give them more credence is because you aren’t beginning your study of the field carrying a huge amount of bias and political baggage that’s coloring your thinking.
As for ‘the numbers are what you want them to be based on your internal goals’ - you know that these numbers are targets, right? Your goal may be to control 25% of the market, and you may build your business and marketing plan around that. That doesn’t mean you’ll hit your goal. Trust me - I’ve attended far too many meetings where people had to explain why their sales targets missed.
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As I tried to point out in the other thread, costs are determined by intrinsic values - how much labor is required to make the product at the price you want to sell at based on what your sales goal is. That determines what level you can afford to hire.
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‘intrinsic values’? What does that mean in this context? Do we really need to have a debate about what costs are? Costs are whatever you have to pay to other people in order to have them supply you with the materials and labor you need to operate your business. Simple as that.
Wrong again. You can have all the capital available in the world, but if a product costs more to make than it can be sold for, you will lose money. Or not make the product in the first place. In fact, the market is an excellent mechanism for balancing the desires of people against the cost of making the things they desire.
I’m baffled by what you are trying to argue here. People demand products. Companies attempt to find out what people want, then provide them at a profit. The price people are willing to pay depends on how much they want the thing compared to the other things they can spend their money on. If the price is much higher than the cost of production, other competitors will see the profit to be made and enter the market at a lower price. Competition drives the price down to the point where it is barely more profitable to make the product than to put the capital in the bank or invest in some other product. If the product costs more than people are willing to pay, it won’t be produced.
I have no idea what your problem with this arrangement is.
Unless one party has a gun to its head, it isn’t going to buy your product unless it thinks that it will gain more value from having your product than value of the money it spend to buy it. And you in turn won’t sell your product unless you can get more money than it cost you to make it. That’s the very definition of ‘win-win’.
If managers are sucking more profit out of companies than they are worth to the company, why aren’t other companies out-competing them with more efficient managerial models? Anyway, it sounds like you have a problem with business management, not with the market.
By the way, does your fear of managers controlling things also apply to politicians? You realize that politicians have far more concentrated power and the ability to harm people to their own advantage, right? So why do you just assume that government is a better tool than business? You’re all fired up about the horror of Enron - how about Abscam? The Keating Five? Duke Cunningham? The many, many politicians who have had ethics charges leveled at them?
Even if we accepted your premise that business is corrupting and that evil people at the top can twist the market to their own ends, shouldn’t that criticism be twice as strong when it comes to government? After all, they’re the ones with the guns.
Shareholders vote. Isn’t that democratic? Workers vote with their feet - I’ve seen business units get decimated because poor employee practices caused their best people to leave. Unions aggregate even more power to ‘vote’ for employees. I fail to see the lack of democracy in business.
So the market is pushing companies towards behaviours that you think are an improvement. Fancy that…
You know that criminal behaviour or reckless behaviour is not shielded, right? If you can prove that a board member violated a law or acted without due diligence, they can still be held responsible.
Much is made of the arbitrary distinction between the “market” and “government”. Perhaps it might be a good thing, such a clear and unmistakable difference: the market strains its every sinew to produce goods and services for us all (I need to take a moment and wipe away a tear of gratitude for such self-sacrifice and noble endeavor. OK, I’m done…) The government pokes about aimlessly in the machinery of the market, as ignorant as an Amish truck mechanic. And so on.
When was this so? When was it that government was so entirely distinct from business, that the rich and powerful had not the ear of the elected and powerful? These things called “lobbies”…the “oil lobby”, the “Big Pharm” lobby, the “Big Farm” lobby…these are but the fevered imaginings of loony lefties such as myself? Men like Calvin “The Business of America is Business” Coolidge…tireless champion of the common man?
I’m especially charmed by Sam’s analogy, pointing out the fundamental democracy of “the market”, how every dollar is an equal vote. Which is true enough, I suppose, but the guy with a hundred dollars has a hundred votes, and so on and so forth. As well, someone can be born with more such democracy than the next guy, which kinda flies in the face of the very idea, don’t you think?
(Note to AgPag: Perhaps it is well that you study the ways of the Evil Ones. But do not be tempted to stray from the path of the spirit warrior…)
They are very, very different. The market is controlled from the bottom up - it is the aggregate of myriad choices and values which causes prices to change and reflect the state of supply and demand.
The government rules from the top down by fiat. Central control simply cannot manage the vast amount of information that the market processes and adapts to. We’ve gone around on this before - look up some old threads. Or if you want to understand why government is inherently less efficient than the market, you could start reading this very accessible paper: The Use of Knowledge in Society by F.A. Hayek. This paper was part of the body of his work that won him the Nobel Prize in economics, so it’s important reading anyway.
So we have an unholy alliance between business and government. Why is your solution more government? It seems to me that if you don’t want businesses distorting regulations for their benefit and lobbying politicians for special favors, the best solution is to not give the politicians the power in the first place. Get rid of the power to levy transportation tariffs or grant subsidies to milk producers, and you’ll get rid of the milk lobby.
And you don’t think the Kennedys were born with more political power than, say, your family was? Or that an incumbent has a better chance at re-election than a new guy? Or that millionaires don’t have a better shot at political power than someone living in the projects?
The beauty of capitalism is that even if someone else has more ‘votes’ than me, as long as enough people want what I want someone will provide it. It’s not winner-take-all, but rather resources apportioned based on the collective desires of everyone. If the rich and powerful controlled the market, the biggest companies would be BMW and Cartier, not Wal-Mart.
In fact, I could argue that the market is far more democratic in the sense that the masses, through sheer numbers, have great clout. And because the masses are volume consumers, great effort is expended in making the production of their products the most efficient.
But even if there’s only 1000 people like me interested in something, a company can still spring up to provide it. On the other hand, something like 3 million people vote libertarian in every election, yet they never have their point of view respected. Democracy creates the tyranny of the majority. The market creates niches for every desire.
IOW don’t let the facts get in the way of your ignorance about how markets and business really work. Why let trivial things like that get in the way of your rant about business practices and market functionality?
This has got to be one of the great quotes of the year…I haven’t laughed this hard in a LONG time. Thanks 'luci!
My apologies if this point was made earlier, but I’d like to add this: No oligopoly is permanent.
Kodak managed to dominate mass-market photography for a time throughout the US, partially by deliberately minimizing competition:
However, Kodak couldn’t stop Fuji in Japan, and when digital photography came along, the whole market was suddenly wide open again.
In phones, the Baby Bells had a nice, local monopoly thing going until IP telephony began to take off. Now, they’re getting back into the game via fiber optics offerings that are beginning to provide their cable competitors with stiff competition. So in most places we have at least gone from monopoly to duopoly in the provision of land-line phone service, and of course everyone has still more options via cell phones.
About the only place where revolutionary new products haven’t provided more competition is in autos.
Even the Coke vs Pepsi soft-drink oligopoly is looking quaint these days, what with greater sales of all kinds of alternatives, from mere water to those oddball energy drinks popping up all over the place.
Everyone in this thread seems desperate to claim that their opinion of who really controls the market is correct, including some stating that no-one controls the market and one might as well try and control the wind. Which is it guys?
I bolded the quote above to highlight a fairly basic fact (not theory) - the market isn’t controlled. The market (as we know it) it is a composite of lots of different elements, some abstract and some based in physical reality. One - either an individual or a business, corporation, government or whatever - can only influence the market, one cannot control it no matter how hard one tries. To control the market you’d need to own all the money in the world and every business and government - so unless you really do believe in some kind of mega-conspiracy running the world (like, for example, the Illuminati ) talking about controlling the market is really pointless.
What is being discussed (and railed against by Agnostic Pagan) here is individuals or companies/corporations trying to attain control of the market, which wouldn’t be ideal obviously as the logical end point of that would be the “enslaving” of humanity and possession of every piece of wealth and property (apart from the billionnaires who are already a good step towards this, I don’t know who would argue this would be a good thing).
As Sam Stone says, the government on the other hand rules from the top down, although a government like any other system is comprised of people who have their own views and exert their own influences on any intention or directive from the top. If the top says for everyone to jump some bureaucrats will have to decide how high, when, for how long and in what order - that process can sometimes come to eclipse or even derail the original intention (“make America safe and reduce terroism = let’s invade and occupy Iraq” being a great example of that particular process not working too well). So the government does what it can to achieve certain things, and if it’s a democratic government those things are generally what the people said they wanted in the form of casting their vote for a party or candidate. Government, and the apparatus of government, is therefore in a much better place to determine what happens in society and business, so saying that government is fundamentally wrong headed and that “the market should decide” is like saying we should abandon free will and late fate work out everything for us by living according to rolling a dice (hey, that would make a good idea for a book…).
I suppose the point I’m making here is that there’s a lot of discussion about semantics in this thread and not a great deal about the consequences of oligarchy/oligopoly/malpractice in business for society as a whole, and how the market could be influenced for the maximum benefit of all, rather than (as currently seems to happen a lot of the time) for the maximum benefit of the few at the expense of the many.
Evil blood sucking corporate parasite: “Ooh, my downsizing bonus came through. Let’s see, how much did I get… $300 million??? Wow, that’s more than I actually saved the company in lay offs in the first place. I really must start charging more. I wonder if those 30,000 people will every find jobs again… Meh, time for me to go spending!”
Isn’t the real prize an equitable distribution of wealth and the meeting of people’s real needs and wants, rather than what they’re manipulated into wanting and needing by marketers? Like a world where no-one starved, died for lack of basic healthcare or water, could read and write and no-one needed to kill or harm other people, and society prioritised caring for others (especially those that couldn’t care for themselves), rather than saying it’s perfectly right that millions live below the poverty line as long as it means Chester G. Chesterton the Third has enough money to fill another swimming pool full of champagne? (as the Neo-Cons seem to.)
Or shall we just carry on debating the economic equivalent of how many angels can dance on a pinhead?
Economics is not a zero sum game where people become rich by stealing a finite “pie” of wealth from the many. But why don’t you tell us how the market can “be influenced for the maximum benefit of all”.
How do you define an equitable distribution of wealth?
How do you determine peoples “real needs and wants”?
Well, there’s not much we can do about “the world” when it’s full of countries with corrupt, despotic governments. But here in the US our market economy does a pretty good job of doing what you’re asking for.
Again, it’s not a zero sum game where someone has to be poor so someone else can be rich. But we do empower our government to take care of the needy, and it actually does a pretty good job at that. Could do better, of course, but that is not the fault of our market economy.
John Mace - I’m pretty sure I gave an example of what I believe equal distribution of wealth to be, and what real wants and needs are. I also don’t believe I ever suggested anything was the fault of the market either, so I don’t know why you’re intimating that I did.
I’m not clear that you understood what I was trying to say, my point was that it would be better to spend less time arguing over semantics and more time working out how to apply our knowledge to making the world better - I apply this philosophy more widely than just posting on SDMB. Your response suggested that as long as everything is hunky dory in the US then there’s not much to worry about; I don’t agree.
Hell, John, we do it every day. There are literally thousands of progressive ideas on how this might be done. Surely you are aware of them? Why don’t you tell us how you think the market might be so adjusted for equity, so we can nitpick you to death?
You first.
Rather difficult. May we assume a broad category including such things as health care for our children and wholesome foods, and not including such things as nacho cheese flavored dog food? I fear that such will not answer your consuming need for precise definitions.
A judgement call. Progress has been made, to be sure. But even the remotest awareness of American history will show that such advance as has been made has been made by progressives/radicals insisting on change over the ferocious resistance of conservatives, bleating about “socialism!” and struggling to prevent unwarranted intrusions on the “free market”. Pious objections that seem to vanish when it comes to haggling with the Pharm Lobby over pricing, or when credit card companies need a bit of legal fine tuning to prevent debt-laden scalawags from escaping the cold hand of economic justice.
It seems to us on the left that the sanctity of the “free market” is rather more flexible than one might think, given the iron rules of economics intoned herein with pious certainty.
Quite right. That’s our fault. Your enthusiastic cooperation and wise counsel ensures ultimate success.
I honestly didn’t (and still don’t) see where you did that. Can you quote it?
OK. I wasn’t sure how to interpret all that negative rhetoric about rich people swimming in pools of champagne. What specifically did you mean by that?
More easily said than done. What you call “semantics” is precisely what has to be ironed out before we can collectively take action. As an individual you can do whatever you want. But if you want to influence other people, you have to slog thru the semantics. I don’t see why we can’t do both-- individually do as much as we can, and collectively debate what is the best course of action for our government to take. If we all agreed what should be done, then we’d be doing it instead of debating.
As others have already noted, the votes in the marketplace are based on wealth: more dollars = more votes. Which is why there is such a large market for luxury goods at the expense of basic social needs - those that have those needs lack the ‘votes’ necessary to see their aims met.
In most elections I at least have the choice between two candidates - how many candidates are up for ‘election’ in the average board election? And how are those candidates able to appear on the ballot? Joe Blow wants to run? Where does he file? Boards dont stack the deck, they own it and they alone decide who gets to sit in on the deal, unless there is a coup. And how does that process work? The takeover party has to have enough resources to control enough shares to put forth their own slate. They cannot simply present a better business plan and management group to the shareholders otherwise. The barriers to entry are slightly greater for business than democratic government. Guess which model I prefer? (and this is merely about running for office. To realistically have a chance at winning, someone needs far more resources than the filing fee.)
And how many businesses truly act in the best interest of their shareholders? More often they cater to the bankers and Wall Street who provide the far greater share of financing. Many are also beholden to their largest customers who dictate terms rather than negotiate. (Net 30? Nah, we’ll pay you in 90. Take it or leave it. Cash flow problems - thats your problem, not mine.)
The first half of this paragraph is completely false. A bottomless well of tax revenue? Then Africa just needs to tax its way to success then? Government should be able to fund every program they desire? And not all poorly run companies fail. Many stumble along because they make enough money to continue being an ongoing concern. I’ve worked for them (briefly, thank god.)
And the government doesn’t buy goods and services in the same market as the rest of the economy? Market movements have no affect on tax revenues? Voter satisfaction? What was the mantra that got Clinton elected?
Forgive me, I thought I stated it explicitly rather than implied it, but that is what I meant - government cannot manipulate the market to achieve social outcomes, but business can? Business provide new products and create new markets which have a direct influence on social outcomes. Everyday they use the market to achieve their ends, but government should not be allowed to do the same? Bollocks. Whether they are successful at is another issue, but I dont see any evidence that business is so much more efficient than government, but again, at least with government, I have an explicit right to participate, though that is based on the place of birth, (though not originally - I would had have no rights when the US was founded - lacking property and being a half-breed and all that.)
And the US government has an ugly history of using that force on behalf of business more than the average citizen. Also many private companies employ private security forces - usually through license by a state, but not necessarily. And how is market power not force? Physical force is not necessary to achieve most goals. And we dont live in a system of free, democratic exchange - one party usually has far greater information and resources than the other. Outside of the ‘pure’ markets, I have to accept the prices offered. I cannot haggle at the grocery store, gas station, coffee shop, etc. And price shopping is not negotiation, so please dont state I can just go somewhere cheaper. And most businesses can only negotiate on a small part of their expenditures and expenses. And the B2C segment is far larger than the B2B, so those negotiations have a neglible effect on how companies set their prices.
Well, the proper comparison is between modern democracies and modern business. Taking out the United States, I’d say the democracies have hurt their citizens less.
No, I dont believe the market is malevolent - I think that too many of the players are. I dont believe in the two main theories behind the markets - the efficient market hypothesis and the general equilibrium theory. I dont believe in ‘market forces’ and that markets should be left alone to their own ends. I believe that most business have enough control over their interaction with the ‘market’ that the forces have no effect over the short-term, which is all that businesses care about. I believe that the primary constraints on business are not market prices based on scarcity or utility, but by the limits of available capital and the desire of businesses to remain an ongoing concern and to increase their market share, some seeking pure market power and dominance over their sector
The market will always clear? Nothing ever lands up in the landfills? Businesses set price caps and floors everyday. Businesses distort the market as much as, if not more so, than government. Thats the point of this thread. Business dont seek to control the overall market, but many to seek control over their sector. All seek to control how the market affects them. And they succeed. Business is not beholden to market forces. The market is beholden to actions and demands of business. And businesses create far more barriers to entry than government does. Most government regulation is to check those barriers and to create a level playing field, since if left alone, the largest businesses will completely dominate the other players in the market, leading to oligopoly or monopolies.
Society provides the government that establishes the markets and licenses business. Business serves society by providing the best means of providing for our wants and needs decided by society (i.e the myriad of individuals within that society). Thats the theory. In practice, our wants and needs are not decided by society, but by capitalists and their marketing departments not to provide for our desires, but to enrich themselves by only producing those items that will generate the best returns, regardless of the effects it may have on society. When society through government tries to realign the system, business cries foul and laissez-faire.
Offered without evidence… guess we better close all those threads on religion and philosophy. Most debates are about theories, which are glorified opinions. Thats what this is. Do theories need supporting evidence. Yep. If they want to be more than a hypothesis. And you know what, that was my major problem with econ classes - assertions without evidence, like the two issues above. As I stated, they rely on numerous assumptions, like, perfect competition, perfect information, that prices will reach an equilibrium point, that economics should ignore normative issues, that market agents are rational actors, ceterus paribus this and ceterus paribus that, and etc. If all these assumptions are met, then the model might represent reality. But those assumptions never will be met. But rather than try to present a model which will give an accurate representations, which at least Galbraith attempted (and I think did very well), they continue to teach the ‘basic principles’ which often are not. Macro focused on Keynesian theory with a page on Friedman. Micro focuses on the theory of the firm and neo-classical economics, ignoring critics like Galbraith.
I think the evidence is self-evident when looking at the size, scale and operations of modern corporations which exist to enrich their management and not their shareholders. I read the book almost 35 years after it was written, and along with several of his other books, described what I saw on the business pages far more accurately than my econ class did.
And you have never attended one where they did hit their targets? Yet those targets are still the basis for the capital and production budgets, based on price points based on expected return. Straight from one of my accounting texts right after describing the ‘economists’ method of pricing based on price elasticity: “…surveys consistently reveal that most managers approach the pricing problem from a completely different perspective. They prefer to mark up some version of full, not variable, costs and the markup is based on desired profits rather than on factors related to demand.” They then describe cost-plus and target costing which are the most common methods actually used.
And I amazed at how little my marketing class spent discussing market prices, because they followed the same practices.
Thats one reason why I prefer accounting over economics. That profession is more rigorous and has a wonderful thing called GAAP. I took managerial accounting and micro at the same time and thought how much economists need the same thing. Don’t see it happening any time soon. That semester developed alot of the biases I have now. One class taught theory, the other taught practice.
Intrinsic values. The **actual value ** of a company or an asset based on an underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors. This value may or may not be the same as the current market value. Bolding mine.
Except its not the market that pushing these behaviours, but sociologists and behavioural economists and higher educated and empowered workforce (the benefits of a democratic society, not business related) pushing for a flatter hierarchy and more education and more empowerment. The average person is fully capable of being an equal partner and not just a wage-slave, but everyone cannot move into management or the executive suite. You still need production workers. But they dont have to be ‘serfs’ - and for the record, I blame unions as much as the business community for creating the false employer/employee dichotomy.
And elucidator, thanks, I think. Business school is fun - its one of the last bastions of the conservative. But I am starting to see a few more progressives in my classes. (Business Law was a lot of fun. Especially in the aftermath of Kelo v New London)
On preview:
Larry Borgia, everyone knows that cool ranch flavored cat food is what true Americans want. You are a dirty commie, arent ya?
Put another way, so what if people want nacho cheese flavoured dog food? It’s not that OR publicly funded health care. Although in the original context I agree with Elucidator’s point.
IOW don’t let the facts get in the way of your ignorance about how markets and business really work. Why let trivial things like that get in the way of your rant about business practices and market functionality?
Business school is fun - its one of the last bastions of the conservative. But I am starting to see a few more progressives in my classes. (Business Law was a lot of fun. Especially in the aftermath of Kelo v New London)