The rich are getting richer

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You have to keep in mind that corporations are directly responsible for their employees being able to pay taxes, due to being the ones that create jobs. Without shareholders and CEOs there is no job market, with no workers a lot of production can be done cheaper, more efficiently and with better quality by automatic manufacturing facilities. In the case of the US, the voters have allowed a government that grossly mismanages public funds and has shown itself utterly incompetent when it comes to doing it's job as a regulator.

The goal of a corporation is to make as much profit as possible for its owners IE shareholders and in many cases this includes farming work out overseas in order to stay competitive. Apple would still have great margins if they produced in the US, but they would be unable to compete with Chinese manufacturers who not only benefit from cheaper labor costs but also from huge government subsidies and a highly efficient and competent government.

The top 1 percent of earners account for 20.3% of total income and pay a total of 21.5% of all federal and state taxes. The middle 20% earn 11.6% of total income and pay 10.3% of the taxes, the bottom account for 3.5% of income and pay 2% of total taxes. That looks pretty fair to me. Your average CEO puts in more hours than your average worker http://news.cnet.com/The-great-overpaid ... 78739.html




The financial crisis was the result of a government that insisted on butting in where it should have stayed the hell out and didn't butt in where it should have. In the case of the bank bailouts, it was done in order to save the taxpayers, not the banks. If the banks had collapsed, then the workers would have lost their savings, companies would have been unable to operate due to a lack of funds, in short the entire economic system would have collapsed due to a failure among the government to recognize that programs that give people a chance to buy a house with massive loans that they cannot pay back is not a good idea.

When you add the stupidity that debt is tied to the property rather than the person, meaning that you can walk away from your debt. That Fannie and Freddie, with other culprits on government orders extended loan guarantees to unqualified persons and furthermore that the federal reserve and other government regulators failed at their job, the idea of more government looks dangerous.

If Government wasn't as a rule consisting of the most unqualified people who can get the average stupid moron who shouldn't get to vote to vote for them, I might agree that more government can work, but so long as our brightest minds are in the private sector and shy away from the public sector, there will be a problem. Please also note that state financed education is not always a net positive, given that large amounts of students are inclined to pick lower value degrees such as the many arts degrees offered rather than practical degrees such as engineering and medicine. If the state finances this then the state is financing education that has little net value for the state, thus creating a bunch of highly educated, yet low value citizens.

Why should everything be about profit. That is one of my main objections to Capitalism. Profit is only useful in so much as it improves public welfare. Outsourcing to countries with poor labour laws and environmental regulations may be good for the shareholders, but it isn't much good for anyone else.

Also, the Chinese government is extremely corrupt, so I don't know if it can necessarily be called efficient and competent.

Everything should be about profit, because profit allows a company to expand, offer new products, create new jobs and give the people who invested their money in the company in the first place a chance to get some money back. If your investment results in a cash-flow lesser than bank notes, bonds or other forms of obligations, there is no point investing in companies. If there is no point in investing in companies, then companies cannot get capital through selling equity, which means the only real option for them to fund growth is through bank loans, which A gives the company an excessively poor capital structure and B is significantly more costly than equity.

If profit is only useful if it improves the public welfare, then all companies should be 100% state owned and operated. We all saw how well that worked out in every communist country ever. Outsourcing jobs is good for the country to which the jobs are outsourced. There is no way that China and India would be having the growth they currently have without jobs being created there by foreign companies. Profit is improving the public welfare... in China, India and every other country where jobs are outsourced to.

The problem is that America and quite a few of the Western European countries screwed up in relying too heavily on manufacturing as a source of industry and failed to prepare for the changes once manufacturing could be done at a higher standard for less money elsewhere. The transition from a manufacturing industry to a knowledge based industry was not handled well in the US especially, since the state of the school system ensured that the supply of workers to low skilled jobs would rise, not fall.

The Chinese government has lifted 200 million people out of poverty in the last 30 years, in the US or any Western European country politicians would still be arguing with each other about the morals or some other unimportant aspect rather than having an objective and rational "Where do we want to be and how can we do it in the best way" discussion.

Without profit.

1. No repayment of borrowed capital
2. No replacement or repair of worn machines
3. No way to expand business if the product of the business is successful (i.e. the buying public wants it).
4. No way compensate investors for the risk they are taking by investing in the business.

The only societies that can operate without profit are very primitive societies restricted to barter of goods and services.

ruveyn

Last edited by ruveyn on 04 Apr 2012, 2:42 pm, edited 1 time in total.

Why should ones life goal be to 'market' them self, if anything that is another thing i don't like about society, everyones supposed to be all about profit and disregard everything else. But lets put it this way there are worse problems than people being lazy or not making the best degree choice......pretending the only reason people are struggling just ot make ends meet is because they must be lazy or must have made a bad choice is not going to solve these problems. But that seems to be the attitude of the government as well so such is life I guess.

I think I'm going to have to agree with you.

Sucks that it's usually the people with power and money that admit to problems in the system last.

The arguement of indefinite expansion, huh. Well, the Earth is finite. Even if we can expand into space, there is still only so much that can be done on Earth. The Terrestrial economy can not grow ad infinitum. One day it will assume a steady state, either by people making the decision that that must happen, or by partial or complete societal collapse. As we can not continue to grow forever, that renders much of the argument for the supremacy of profit meaningless. (Let's never mind the environmental damage done in the name of short term profit...)

Our outsourcing to China and India does not dramatically improve public welfare there. In fact, in many cases it causes people to be worse off. Has farming in India was industrialized and as the commons were enclosed, millions found themselves (and continue to find themselves) forced into shanty towns. If capitalists truly cared about the public welfare they would pay the Chinese and Indian workers more (they can certainly afford to), labour market be damned. A few would have been raised to the middle class by our investment, but from what I know many of the middle class are employed in domestic companies.

It is no surprise that the communist regimes failed. For one thing, they tried to micromanage the economy. For another there was no democratic oversight. What I propose is democratic control over the economy. Some things would be state owned. But others would be cooperatives. (There are cooperative grocery stores where I live, and they work very well. There are also cooperative banks, called credit unions, and 1/3 of Canadians use them for their personal banking). Regulation would allow for loose planning, but not micromanagement.

But let's just agree to disagree, ok? Neither of us is going to convince the other.

AstroGeek I do agree with you about mixed economic systems, policy wise what can be done with international trade to have the "right and fair" balance of both the public and the private sectors?

One of the effects of globalisation is income equality, so is it now time for the global mindset to change from neoliberalist policies?
If so then what should replace them.

Yea. The problem is it all comes down to subjective values.

Call me cynical, but I get down on politics in general. I really wish we had a better world but in reality it seems like the politics of economics is mostly a struggle between different interests who all want to have a bigger slice of the pie for themselves and less for everyone else. People just use an ideology as window dressing to get what they want for themselves (or their particular "in-group") at the expense of others.

The arguement of indefinite expansion, huh. Well, the Earth is finite. Even if we can expand into space, there is still only so much that can be done on Earth. The Terrestrial economy can not grow ad infinitum. One day it will assume a steady state, either by people making the decision that that must happen, or by partial or complete societal collapse. As we can not continue to grow forever, that renders much of the argument for the supremacy of profit meaningless. (Let's never mind the environmental damage done in the name of short term profit...)

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The current regime of Chinas has put 300,000,000 people in relatively comfortable circumstances economically. BUT..... One Billion (! !! with a "B" ) people in China lead very impoverished lives. A centrally planned economy is no solution to China's woes. Maybe no system can save China from her oversized population.

And you are quite right. Indefinite exponential growth is a physical impossibility. At some point a maximum level is hit and it either stays there or goes down. The promise of growth without end is bogus on both a logical and physical basis. Some vision of a steady state existence must be formulated. Hopefully it will be a steady state where people are reasonably happy and health. When births and deaths balance and those alive at any given time have enough for their needs, that will be a fine state to live in in the long run. The problem is that very few people grasp the essence of exponential growth. It is beyond them both mathematically and psychologically. Even time is limited. The cosmos as a whole has a finite time limit (far beyond what we short lived humans can easily grasp but finite never the less. All things in heaven and earth will come to an end.

ruveyn

I don't know if I'd say that China has central planning any more. From my knowledge (although I could be wrong), it's level of planning is akin to that found in the Scandinavian mixed economies. The government owns some of the biggest companies, such as the major oil company, and any control that exists on the rest of the economy is achieved via regulation. And, in China's case, an (un)healthy dose of corruption allowing the rich to get concessions and contracts from the government. To be honest, China's system is more akin to Mussolini's corporate state than to Soviet-style communism.

Exactly. That's why I've stopped arguing with ruveyn about most things. There is no getting around the fact that all of our convictions flow from entirely different sets of moral principles. If I'm not mistaken, TM's avatar is a picture of Adam Smith (I think?????), so there is no use in my trying to argue with him about why I view the free market as flawed.

I very astute observation. You might say they have "crony communism". By the way Mussolini was a left wing militant socialist before he became il duci . So was Hitler. Hitler started out as a man of the left. Both discovered that good old fashioned nationalism has more traction than abstract Marxism.

ruveyn

My avatar is Thomas Paine.