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Capitalism is not consumerism or a zero-sum game
Posted by: McQ on Monday, April 09, 2007

Sometimes you come across an article in which the author tries to present as a serious discussion what is, in reality, a caricature developed to push a point. Consider this:
Capitalism's core virtue is that it marries altruism and self-interest. In producing goods and services that answer real consumer needs, it secures a profit for producers. Doing good for others turns out to entail doing well for yourself.
Such was my reaction, after reading that paragraph, to an essay by Benjamin Barber which apparently appeared in the LA Times on the 4th of this month, but didn't show up in the local rag until today. It is entitled "Overselling Capitalism" in the LAT and "Capitalism goes astray, forgets needy" in the AJC. The premise of his essay is found in the cited paragraph above.

Capitalism isn't an entity. Economically, it is a system comprised of private individuals acting, for the most part, independently and reacting to markets. And while it is certainly driven by enlightened self-interest, there isn't an ounce of altruism built into capitalism per se. However, because of the unprecedented wealth the system helps build on a wide basis, it provides the opportunity for capitalists, and others helped by capitalism, to be altruistic if they so choose. What Barber is attempting here is to redefine capitalism to fit his agenda by using a code word, "virtue", to accept a basically collectivist premise that capitalism is an altruistic system which needs redirection.

Now, at this point I obviously have the advantage, having read all of Barber's essay, but this next 'graph should give you and idea of where he's really headed with this if you're still puzzled by my attack on his premise:
Capitalism's success, however, has meant that core wants in the developed world are now mostly met and that too many goods are now chasing too few needs. Yet capitalism requires us to "need" all that it produces in order to survive. So it busies itself manufacturing needs for the wealthy while ignoring the wants of the truly needy. Global inequality means that while the wealthy have too few needs, the needy have too little wealth.
Notice a few things about this paragraph. Working off his "unique" premise about capitalism, he now attaches capitalism's "success" to the delivery of only "core wants". "Needs" need not apply. And what he then describes is "capitalism", the entity, collectively chasing 'too few needs' with too many products, while ignoring real needs.

To make this case, Barber must equate capitalism with consumerism (and hope you don't know the difference) and try to convince the reader that capitalism is a zero-sum game. Only after convincing the reader of these two things can he sell his "we can save capitalism by changing its direction" argument. So in Barber's world, "global inequality" is the fault of zero-sum entity known as capitalism collectively chasing the wants of the rich while the 'truly needy' die from being ignored.

Having now cast his version of capitalism as the villain, we get to the crux of his argument:
Capitalism is stymied, courting long-term disaster. We still work hard, but only so that we can pay and play. In order to turn reluctant consumers with few unsatisfied core needs into permanent shoppers, producers must dumb down consumers, shape their wants, take over their life worlds, encourage impulse buying, cultivate shopoholism and invent new needs.

At the same time, they empower kids as shoppers by legitimizing their unformed tastes and mercurial wants and detaching them from their gatekeeper mothers and fathers and teachers and pastors. The kids include toddlers who recognize brand logos before they can talk and commodity-minded baby Einsteins who learn to shop before they can walk.

Consumerism needs this infantilist ethos because it favors laxity and leisure over discipline and denial, values childish impetuosity and juvenile narcissism over adult order and enlightened self-interest, and prefers consumption-directed play to spontaneous recreation. The ethos feeds a private-market logic ("What I want is what society needs!") and combats the public logic fashioned by democracy ("What society needs is what I want to want!").
I can only characterize this as either extremely sloppy thinking married with pop-psychology and creative rhetoric or extremely disingenuous thinking fashioned to sell a dubious point. Whichever, it leads us to the much awaited attempt to equate capitalism and consumerism. Either Barber doesn't really understand the difference or doesn't care.
Consumerism is a term used to describe the effects of equating personal happiness with purchasing material possessions and consumption. It is often associated with criticisms of consumption starting with Karl Marx and Thorstein Veblen. It can be traced back to the first human civilizations.

In economics, consumerism can also refer to economic policies that place an emphasis on consumption, and, in an abstract sense, the belief that the free choice of consumers should dictate the economic structure of a society.
Emphasis mine. The 1st century was not exactly the century of the Capitalist, was it? If you go further into the Wikipedia cite you'll find:
Although consumerism is commonly associated with capitalism and the Western world, it is multi-cultural and non-geographical, as seen today in Tokyo, Singapore, Hong Kong, Shanghai, Taipei, Tel Aviv and Dubai, for example. Consumerism, as in people purchasing goods or consuming materials in excess of their basic needs, is as old as the first civilizations (see Ancient Egypt, Babylon and Ancient Rome, for example). Since consumerism began, various individuals and groups have consciously sought an alternative lifestyle through simple living.

While consumerism is not a new phenomenon, it has only become widespread over the 20th century and particularly in recent decades, under the influence of neoliberal capitalism.
The point? Consumerism isn't a result of capitalism as much as consumerism has been better enabled by it. But that being said, Barber is advocating a battle to redirect capitalism, as a cure for consumerism. As should be obvious, nothing he can do with capitalism will effect that cure. It's a strawman argument.

Having led those who don't know the difference down the primrose path to this point, he opines:
This is capitalism's all-too-logical way of solving the problem of too many goods chasing too few needs (he means "wants"). It makes consuming ubiquitous and omnipresent, turning shopping into an addiction facilitated by easy credit.
Does it? How is that capitalism, sir? It certainly speaks to consumerism, but capitalism?

At this point, you may ask, well Mr. Smarty-pants, how do you define capitalism.

Glad you asked. I've always been partial to Ayn Rand's definition:
Capitalism is a social system based on the recognition of individual rights, including property rights, in which all property is privately owned.
She further defines the philosophy of the social system thusly:
Corresponding to the four branches of philosophy, the four keystones of capitalism are: metaphysically, the requirments of man's nature and survivial — epistemologically, reason — ethically, individual rights — politically, freedom.
That, in a nutshell, describes capitalism as any libertarian would understand it. Yes, capitalism is also described in utilitarian economic terms, but that is only part of the whole and is why most libertarians resist the homo economicus model of capitalism, which tends to reduce a much more robust system to that of strict economic utility.

And essentially that's what Barber is attempting here as well. These next two paragraphs illustrate well my point:
When we see politics permeate every sector of life, we call it totalitarianism. When religion rules all, we call it theocracy. But when commerce dominates everything, we call it liberty. Can we redirect capitalism to its proper end: the satisfaction of real human needs? Well, why not?

The world teems with elemental wants and is peopled by billions who are needy. They do not need iPods, but they do need potable water, not colas but inexpensive medicines, not MTV but their ABCs. They need mortgages they can afford, not funny-money easy credit.
The highlighted line says it all. Capitalism equals commerce and, he as falsely claims, commerce equals liberty. But, now having put forward his false claim he asks "can we redirect capitalism to its proper end ...?"

Amazing. As far as Barber is concerned, you don't "need" a cola when "it" could be producing inexpensive medicine. You don't need an iPod when "it" could be producing "potable water" instead. And, of course, left out of the entire equation is who will pay for that which 'it' produces and Barber approves?

Note again, according to Barber's formulation, that it is all a zero-sum game - "it" can't produce colas and iPods at the same time it produces inexpensive medicines and potable water, "it" can only do one or the other - or so he'd have you believe.

Of course a capitalistic system can do all of that and more and, in fact, does so routinely.

Barber doesn't go anywhere near appealing to government for capitalism's "redirection" much to his credit. Instead he concludes with a plea:
To serve such needs, however, capitalism must once again learn to defer profits and empower the needy as customers. Entrepreneurs wanted! With micro-credit, villagers can construct hand pumps and water filters from the clay under their feet. Pharmaceutical companies ought to be thinking about how to sell inexpensive retro-virals to Africans with HIV instead of pushing Botox to the "forever young" customers they are trying to manufacture here. And parents can refuse to relinquish their gatekeeping roles and let marketers know they won't allow their kids to be targeted anymore.

To do this, we will require the assistance of democratic institutions and an adult ethos. Public citizens must be restored to their proper place as masters of their private choices. To sustain itself, capitalism will once again have to respond to real needs instead of trying to fabricate synthetic ones — or risk consuming itself.
Interestingly, his poor understanding of capitalism leaves him seemingly clueless in terms of how successful that system has been over the years at empowering "the needy as customers". The "lift all boats" characterization isn't one that works some of the time in a capitalistic system. And its success has nothing to do with "deferred profits". It has to do with a growing economy providing increasingly better economic opportunity to a wider and wider population of people. While it may come as a surprise to Barber, capitalism can simultaneously produce inexpensive retro-virals for Africans with HIV as well as pushing Botox.

It would be nice if he could figure that part out and quit acting like every iPod sold mean a death in Africa or that consumerism and capitalism are synonymous. The problem is there's a good portion of the population who will buy into his portrayal of capitalism and would be only too glad to go a lot further than he recommends to 'redirect' it.
 
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Comments
"has meant that core wants in the developed world are now mostly met and that too many goods are now chasing too few needs..."


I think somebody named Marx said it first. The "crisis of overproduction".
 
Written By: timactual
URL: http://
Capitalism is stymied, courting long-term disaster. We still work hard, but only so that we can pay and play.
Most games are pay to play, which is okay, because TANSTAAFL.

Do you really think this is a mystery to him? Or do you think he’s just pushing an agenda?


Yours, TDP, ml, msl, & pfpp
 
Written By: Tom Perkins
URL: http://
One of the scenes in Atlas Shrugged that always struck me as incredibly powerful comes shortly before Dagny observes the city lit by candles. It is when, faced with economic collapse, the ruling elite ban "wasteful" spending on entertainment, and movie theaters and opera houses fall silent.

Scary that the attitude of the elite has changed not a whit in the last 60 years.
 
Written By: Sean
URL: http://www.myelectionanalysis.com
Scary that the attitude of the elite has changed not a whit in the last 60 years.
Even scarier that Ayn Rand identified it 60 years ago.
 
Written By: triticale
URL: http://triticale.mu.nu
Sorry, McQ, but I’ve already had my lesson on capitalism this week.
I think they’re conflating different aspects with capitalism also.
Slightly off topic but do you run in to confusion between nationalism and patriotism also?
 
Written By: tom scott
URL: http://
Capitalism is not a zero sum game. If you want a zero sum game turn to Marxism and the sum of your economy will be zero. This reminds me of my mother telling me “Eat you spinach, the children in Europe are starving.” to which I would reply, “Send them this spinach” followed by a swat to my rear.

You would think the collapse of the Soviet Union, and the approaching collapse of Socialist Europe would bury this line of thought, but like Dracula, it keeps rising from the grave. We can’t seem to find a way to drive a stake through it’s heart.

The reality is, much of the poverty in the underdeveloped countries arises from their failure to adopt Capitalism. They are saddled with a range of economic systems ranging from Socialism to Kleptrocay, all failures when it comes to the needs of the population.

What Barber is really trying to do is play on the guilt of those who are successful. He is telling us we are successful because we are depriving others the essentials of life. That is patently bovine scatology, but it will play well with the perennially guilty, bleeding hearts. Sob.
 
Written By: James E. Fish
URL: http://faroutfishfiles.blogspot.com/
Damn you, McQ! I’ve been trying to write this post for the past couple of weeks. Now its just a me-too post. Yeah, yeah I know. Early bird. Worm. Some assembly required.

Actually, Barber wrote more than an essay. He wrote a whole book called "Consumed". A review of his marxism masquerading as capitalism spiel can be found here. He’s been interviewed on NPR a few times over the past couple of weeks. Brink Lindsey had a go at the tome as well.

Man, that was gonna be a good post [kicks pebble].
 
Written By: MichaelW
URL: http://asecondhandconjecture.com
What I want to know is when can we stop calling it "capitalism" and start calling it by it’s true name: "economics"?

=P=
 
Written By: peter jackson
URL: www.liberalcapitalist.com
Seriously, I think I’m going to start calling people like Barber what they are: economics deniers.
 
Written By: peter jackson
URL: www.liberalcapitalist.com
You would think the collapse of the Soviet Union, and the approaching collapse of Socialist Europe would bury this line of thought, but like Dracula, it keeps rising from the grave. We can’t seem to find a way to drive a stake through it’s heart.
Suggest you at least wait till "Socialist Europe" does fall over before making this argument. Citing imaginary events as a basis weakens the strength of any conclusion.
 
Written By: unaha-closp
URL: http://warisforwinning.blogspot.com/
McQ is right to one extent: "Capitalism" is just the sum of individual economic decisions. What the societal outcome of those decisions are depends on, among other things, laws and regulations.

Capitalism doesn’t care - because individual decision-makers often do not care, no more no less, if child labor is used, if you slash-and-burn harvest your only natural resources and lead your civilization to dissapear as completely as the Jamestown settlement, or if you sell heroin with warnings that it you may OD and head right to heaven, or without them. Nor does capitalism care - because its individuals don’t care in an organized, accountable, hierarchical, structure - if average hours per week worked shrinks from 100 for the 1800’s farm laborer, to 40 for the average blue-white collar guy in 1950, back to 100 in 2050.

People selling stuff to each other is self-evidently, at this point in history, a good thing. The secondary effects of all of it vary constantly, and can, should be, and are controlled - or disincentivized - in many cases. In other cases, not. That’s what society’s all about, and they all do it.

In a world without the potentiality for the passing of laws and regulations, and possibly lawsuits, public ’noncoercive’ pressure campaigns would be vastly less likely to succeed. Not without how it used to be done in the old days, anyway - find the salesman of the Anheiser Busch spikes, or whatever they are, call him/her a witch, and throw them in the river to see if they float.

In some countries today, that’s still a very effectively used method for keeping out unwelcome commerce.

I also agree with McQ that this guy’s article is lame, though, as it fails even to specify a specific problem, much less suggest a solution.
 
Written By: glasnost
URL: http://
"Nor does capitalism care - because its individuals don’t care in an organized, accountable, hierarchical, structure - if average hours per week worked shrinks from 100 for the 1800’s farm laborer, to 40 for the average blue-white collar guy in 1950, back to 100 in 2050."
Huh?
 
Written By: Aardvark
URL: http://
This reminds me of an article Douglas Rushkoff wrote last year. Is this a new tactic, or am I just beginning to wake to it?

Step one: Don’t attack capitalism/conservatism/democracy, just say that it’s "in trouble" or that it’s "suffered considerable losses" or it’s "gone off the rails."

Step two: Introduce the idea that socialism/liberalism/communism is the NEW capitalism/conservatism/democracy. Or better yet, hobson-jobson (or "Orwellianize") capitalism/etc. to mean socialism/etc.

Step three: Bloodless revolution.

This is a simplistic evaluation, but I’m just beginning to see this technique at work in the world around me.

It seems to me that Barber is defining "capitalism" as "from each according to his or her ability, and to each according to his or her need."
 
Written By: Ronnie Gipper
URL: http://socalconservative.blogspot.com
I put forward that what this hack writes is an "unwanted" bit, and that my lack of need for it means it should go the hell away...

And I’d show this whole thing to my Econ instructor, but his head would probably explode. Hell, he says that Karl Marx is a classical economist...
 
Written By: Scott
URL: http://
"Step one: Don’t attack capitalism/conservatism/democracy, just say that it’s "in trouble" or that it’s "suffered considerable losses" or it’s "gone off the rails."

Yeah, we have to kill it in order to save it. It’s for capitalism’s own good. This hurts me more than it does you.
 
Written By: timactual
URL: http://
I think Barber is partially right. First off, I think Barber means ’free market’ rather than capitalism.

Even you acknowledge that consumerism is as old as human civilization, and I would say most animals show it too. It is a quirk of evolution which is manifest only when there are limited resources, so there is no need to put a cap on how many resources a person "wants" or "needs".

Now, any system we as humans wish to create should attempt to counteract that inherent flaw in our psychology. This doesn’t exclude capitalism.

I think the question that needs to be asked that if we can "simultaneously produce inexpensive retro-virals for Africans with HIV as well as pushing Botox" Then why is there still so much poverty and disease in the world?

I think it’s partially because our free market system certainly has a lot of inefficiencies left.

For example, going back to Swift we get the idea that many small economic decisions are inherently more efficient than a handful of big decisions. This is why communism is so inefficient, and why aristocracies are disastrous. Therefore, if you had x number of people, the way to insure that you had the most efficient set of economic choices by the whole would be to give everyone an equal amount of money. This is certainly far from what we have today.

Another tenant of a good, ideal free market is that individual wealth is a reflection of the usefulness of the economic choices you have made. Our inheritance laws fly in the face of this principal, and I think cause a lot of problems.
 
Written By: Kevin H
URL: http://
Let’s look at the reality: capitalism, you grow we grow; Socialism, the government grows, no one else does; Communism, we grow so we can kill you. I think Capitalism is the ideal compared to the alternatives provided.
Economists [at Cafe Hayek] think the only thing any government can do well is kill, all other services are better provided by the private sector. Communism reflects this ideal the best, give government power at your own peril.
 
Written By: Orlando Armaswalker
URL: http://
glasnost: I read your post but I have no idea what point you were trying to make.
 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
First off, I think Barber means ’free market’ rather than capitalism.
That’s a big part of the problem isn’t it? It isn’t at all clear what he really means. However the danger is that those who would take him literally are those most inclined to see capitalism as a pernicious problem in search of a collective solution.
Even you acknowledge that consumerism is as old as human civilization, and I would say most animals show it too. It is a quirk of evolution which is manifest only when there are limited resources, so there is no need to put a cap on how many resources a person "wants" or "needs".

Now, any system we as humans wish to create should attempt to counteract that inherent flaw in our psychology. This doesn’t exclude capitalism.
Well first you have to agree that consumerism is some pernicious disease which has to be remedied, and I’m not sure everyone would.

Secondly, how does one "counteract" an "inherent flaw" through economic means except by top-down coercion?
I think it’s partially because our free market system certainly has a lot of inefficiencies left.
As compared to what?
For example, going back to Swift we get the idea that many small economic decisions are inherently more efficient than a handful of big decisions. This is why communism is so inefficient, and why aristocracies are disastrous. Therefore, if you had x number of people, the way to insure that you had the most efficient set of economic choices by the whole would be to give everyone an equal amount of money. This is certainly far from what we have today.
And experiments in which that is done find that they end up pretty much the way they were prior to the redistribution not long after everyone is given equal amounts of money.

That is what we have now, and redistribution won’t change it one iota. This isn’t just about "efficiency", it’s about freedom, and what you’re tending toward is not at all about freedom, economic or otherwise.
Another tenant of a good, ideal free market is that individual wealth is a reflection of the usefulness of the economic choices you have made. Our inheritance laws fly in the face of this principal, and I think cause a lot of problems.
That makes absolutely no sense to me. Why would a free market care who you leave your stuff to when you die?
 
Written By: McQ
URL: http://www.qando.net/blog
That’s a big part of the problem isn’t it? It isn’t at all clear what he really means.
I certainly agree it wasn’t the best written piece, but just because he wrote it sloppily, doesn’t mean every idea he hinted at is worthless.
Well first you have to agree that consumerism is some pernicious disease which has to be remedied, and I’m not sure everyone would.
So how is using more than you need not a problem? Especially when there are people in this world without enough. Why don’t you think consumerism is a bad thing?
I think it’s partially because our free market system certainly has a lot of inefficiencies left.
As compared to what?
I’m certainly not saying I think socialism or any other main stream -ism has better answers, but that doesn’t mean we can’t improve the situation we are in.
And experiments in which that is done find that they end up pretty much the way they were prior to the redistribution not long after everyone is given equal amounts of money.
I agree that blanket redistribution is silly, and like putting a makeup on a cancer. You really need to change the rules of the game to create a more even distribution. For example, do you really think the CEO of Tyson is 4000 times as economically worthwhile as the average employee? No, and yet that is what our current market system says he is worth. 100-200x I’d say was reasonable, but it’s obvious that our free market system isn’t distributing wealth efficiently.
That makes absolutely no sense to me. Why would a free market care who you leave your stuff to when you die?
Because if we are to equate wealth with worth, then your wealth should be determined by your own inherent worth, not passed down on family lines. Ask youself, how economically important would Paris Hilton be if she were Paris Schmo? We want to reward ingenunity, efficiency and fulfilling needs, not random chance.
 
Written By: Kevin H
URL: http://
do you really think the CEO of Tyson is 4000 times as economically worthwhile as the average employee?
Yes, if his management of the company increases it’s value 4000 times more than a single employee.
You would think the collapse of the Soviet Union, and the approaching collapse of Socialist Europe would bury this line of thought, but like Dracula, it keeps rising from the grave. We can’t seem to find a way to drive a stake through it’s heart.
Suggest you at least wait till "Socialist Europe" does fall over before making this argument. Citing imaginary events as a basis weakens the strength of any conclusion.

Considering the demographics of the European population and the funding needed to meet it’s social obligations, we will not have to wait long before it’s economic collapse.
 
Written By: James E. Fish
URL: http://faroutfishfiles.blogspot.com/
Yes, if his management of the company increases it’s value 4000 times more than a single employee.
But it doesn’t. That’s the point. Getting him over your average MBA isn’t going to add 4000 jobs each every year, and note you do have to keep that level of growth going to justify the pay year after year. The math just doesn’t add up.
 
Written By: Kevin H
URL: http://
What does Ayn Rand have to do with anything? Why not just use the dictionary definition of capitalism (private or corporate ownership of capital - and possibly free markets) instead of bringing all her metaphysical foolishness into it? "metaphysically, the requirments of man’s nature and survivial"??? Wha...? What do the requirements of man’s nature and survival have to do with either the nature of reality (metaphysics) or capitalism? (And is she really going to ask us to assume the consequent about what man’s nature is here?) "epistemologically, reason" Again wha...? "Reason" is not a meaningful answer to the question "epistomology?". At least indiviual rights has something to say about ethics, but "polically: freedom" is surely about as vacuous as one can get. This isn’t a philosophy, it is a bunch of big words strung meaninglessly together to impress the yokels. Of course, that is what the Ayn Rand warning label means.
 
Written By: Retief
URL: http://
So how is using more than you need not a problem? Especially when there are people in this world without enough.
Because the premise of your question is false. My buying a Twinkie does not cause someone in Africa to starve. People aren’t poor or needy because of other’s consumption. At the root of their poverty is invariably a lack of property rights and/or a means of enforcing them. Zimbabwe (and soon Venezuela) is a perfect example. It went from being the breadbasket of Africa to being a starving nation. It had nothing to do with anyone’s consumption of things they don’t need.
Why don’t you think consumerism is a bad thing?
Because "consumerism" is just another way of saying "someone made a choice that I don’t agree with." Who cares if you don’t agree with it? Unless and until you have the means and wherewithal to force me into adopting your choice, you’re not going get much mileage out of simply telling me you would do something different.
... it’s obvious that our free market system isn’t distributing wealth efficiently.
Our system doesn’t "distribute" wealth. Individuals create it, the government takes some of it away and "re-distributes" it (which, in itself, is a misnomer).

The problem is in your thinking. Capitalism isn’t some machine that can be worked. It is an organic activity that allows for the greatest of possibilities and means of creating wealth. The fuel that feeds it is "self interest". Take away the fuel and you kill the engine.
 
Written By: MichaelW
URL: http://asecondhandconjecture.com
My buying a Twinkie does not cause someone in Africa to starve.
No, but you could give the person in Africa the twinkie, then you wouldn’t be fat and he wouldn’t be hungry. Everyone wins. And then to top it off, because that guy isn’t hungry, he can go out and is more economically productive, making you an ipod in return.
Because "consumerism" is just another way of saying "someone made a choice that I don’t agree with." Who cares if you don’t agree with it?
If it was fashionable to burn $100 bills for fun, then yes, I would care. Basic economic theory says that everyone is helped out, and therefore has a stake in, the efficiency of economic decisions.
Our system doesn’t "distribute" wealth. Individuals create it, the government takes some of it away and "re-distributes" it (which, in itself, is a misnomer).
semantic word games. There is a system in place, that system has outcomes and consequences. We should tailor the system to provide the outcomes and consequences we find most appealing. I think those outcomes should be efficiency and production capacity.
The fuel that feeds it is "self interest". Take away the fuel and you kill the engine.
I’m completely agree. You don’t need to take away self-interest to make the system work better. Take for example, child labor laws. We generally consider those to be a benefit to all of society. They modified the free market system, but didn’t change the basic underlying principal of self interest which you so cherish.

Your problem (and Marx’s, also a bit of Barber’s) is that you are thinking in absolutes, just because you change the bathwater doesn’t mean you kill the baby.
 
Written By: Kevin H
URL: http://
To make my first point clearer, it’s all about the law of diminishing returns. That last twinkie does very little for you, but it can do a lot for someone else. Therefore, the best way to get the most return off of any amount of stuff is to prevent it from concentrating in any one place.
 
Written By: Kevin H
URL: http://
What does Ayn Rand have to do with anything? Why not just use the dictionary definition of capitalism (private or corporate ownership of capital - and possibly free markets) instead of bringing all her metaphysical foolishness into it?
Is it "metaphysical foolishness" or something you just don’t understand?
"metaphysically, the requirments of man’s nature and survivial"??? Wha...? What do the requirements of man’s nature and survival have to do with either the nature of reality (metaphysics) or capitalism?
Ah ... well that answers that question.
 
Written By: McQ
URL: http://www.qando.net/blog
Indeed it does.
 
Written By: Retief
URL: http://
There’s nothing there to understand. You’re better off wrestling meaning out of Althusser. If ya caan.
 
Written By: Retief
URL: http://
I certainly agree it wasn’t the best written piece, but just because he wrote it sloppily, doesn’t mean every idea he hinted at is worthless.
I guess we’ll have to agree to disagree on that. If you can’t properly identify the concept you plan on discussing or it’s traits, then what of worth is there in the piece?
So how is using more than you need not a problem? Especially when there are people in this world without enough. Why don’t you think consumerism is a bad thing?
Because it is a matter of freedom of choice and a function of liberty. While it may not be my choice, it doesn’t involved a violation of my rights or anyone else’s either. And by that last statement I mean doesn’t have anything to do with people in this world without enough. As I said, capitalism isn’t a zero-sum game.

BTW, just out of curiosity, why do you get to decide what is enough or who doesn’t have enough?
I’m certainly not saying I think socialism or any other main stream -ism has better answers, but that doesn’t mean we can’t improve the situation we are in.
And that would entail?
I agree that blanket redistribution is silly, and like putting a makeup on a cancer. You really need to change the rules of the game to create a more even distribution. For example, do you really think the CEO of Tyson is 4000 times as economically worthwhile as the average employee?
If those who own Tyson think so, why is it any of your or my business? All that matters is they think he is worth it or they wouldn’t pay him that amount. It’s a bit like the question about a star athlete. You’ll hear someone say: "$50 million, is anyone worth $50 million"? Well if someone is paying him that amount then the answer is "yes".
No, and yet that is what our current market system says he is worth. 100-200x I’d say was reasonable, but it’s obvious that our free market system isn’t distributing wealth efficiently.
It is distributing the wealth prefectly efficiently, what it isn’t doing is distributing it equally. The problem is that’s not its function nor will it ever be. It rewards those who risk capital, thus the name.
Because if we are to equate wealth with worth, then your wealth should be determined by your own inherent worth, not passed down on family lines.
It’s a matter of property rights which include the right of disposal. It is an integral part of a concept based in property rights called liberty.
Ask youself, how economically important would Paris Hilton be if she were Paris Schmo? We want to reward ingenunity, efficiency and fulfilling needs, not random chance.
You don’t reward such things by taking someone else’s property for heaven sake.

Married? Give your wife gifts? By what right?

Couldn’t someone in Africa better use the money you spent on the gift? How ludicrous do you want to get about this?
 
Written By: McQ
URL: http://www.qando.net/blog
There’s nothing there to understand.


You obviously believe that to be true and if so, there’s nothing I can say which will benefit either of us in a discussion.

Its not my job to defend Rand, and while I don’t mind discussing her, I’m not going to do it with someone who demonstrates no understanding of even her most basic points.

I’m not trying to be dismissive or offensive but I’m simply not going to waste my time discussing something about which you don’t seem to have a clue.
 
Written By: McQ
URL: http://www.qando.net/blog
No, but you could give the person in Africa the twinkie, then you wouldn’t be fat and he wouldn’t be hungry.
Hey! My wife specifically told me that these pants make me look "svelte."
Everyone wins. And then to top it off, because that guy isn’t hungry, he can go out and is more economically productive, making you an ipod in return.

[...]

To make my first point clearer, it’s all about the law of diminishing returns. That last twinkie does very little for you, but it can do a lot for someone else.
Well, you’re conflating some ideas there. The law of diminishing returns simply speaks to how much I value the next Twinkie. It has nothing to do with whether or not my consumption of that Twinkie will make the hungry guy worse off. Indeed, because I value the extra Twinkie so little, I can easily be convinced to give it up for something that the hungry guy has. If he had an iPod, I’d trade him a whole bunch of Twinkies.

The other concept is (if I understand your point correctly) comparative advantage. Even though I have an advantage in making Twinkies and iPods compared to the hungry guy, I’m still better off trading with him for one or the other so that I can concentrate on whichever productive activity I do best.
Therefore, the best way to get the most return off of any amount of stuff is to prevent it from concentrating in any one place.
I’m not sure what you meant here. Are you referring to diversification of investments? If so, I’m not following how that’s relevant.
If it was fashionable to burn $100 bills for fun, then yes, I would care. Basic economic theory says that everyone is helped out, and therefore has a stake in, the efficiency of economic decisions.
Huh? What "basic economic theory" says that? Marx says that (a lot). But economists in general don’t say that "everyone has a stake". It is true that we are all made better off when we each pursue our own self interests, but I’m not sure if that’s what you meant. Either way, this still doesn’t explain why I should give one flying fig about what you or anyone else thinks about my economic decisions.
semantic word games. There is a system in place, that system has outcomes and consequences. We should tailor the system to provide the outcomes and consequences we find most appealing. I think those outcomes should be efficiency and production capacity.
Well, you call it "semantics" and yet your use of the word "distribute" clearly tipped me off to the fact that you think capitalism is a system that can be controlled. Semantics or not, wealth is not distributed and capitalism is not something that can be commanded.
I’m completely agree. You don’t need to take away self-interest to make the system work better. Take for example, child labor laws. We generally consider those to be a benefit to all of society. They modified the free market system, but didn’t change the basic underlying principal of self interest which you so cherish.
You may consider child labor laws a boon, but I sure don’t. They were a boon to unions and organized labor, but they didn’t do much for the families that were forced to survive on less income. It’s fashionable to deride "sweat shops" in South East Asia, and yet those who speak so derisively of them can never explain what the kids working there would do otherwise. What’s the next best alternative to working for pennies a day? Prostitution? Slavery? In fact, child labor laws obstructed self interest in favor of special interest.
Your problem (and Marx’s, also a bit of Barber’s) is that you are thinking in absolutes, just because you change the bathwater doesn’t mean you kill the baby.
I never think in absolutes. (Heh!)

I suppose I could be, but I’m not sure to which absolutes you are referring? Just to be clear, is basing my decision to sleep in a room facing East because that’s where the Sun rises thinking in absolutes? Some things are just laws (e.g. Sun rises in the East) and can’t be avoided.
 
Written By: MichaelW
URL: http://asecondhandconjecture.com
But economists in general don’t say that "everyone has a stake". It is true that we are all made better off when we each pursue our own self interests, but I’m not sure if that’s what you meant.
Do you have a stake in the level at which the government sets interest rates? Do you have a stake in how much your employer pays? Of course you do, economic decisions are not independent. That’s a basis of supply side theory just to name one. And that leads to...
The law of diminishing returns simply speaks to how much I value the next Twinkie. It has nothing to do with whether or not my consumption of that Twinkie will make the hungry guy worse off.
It’s not that you directly hurt the guy by eating the Twinkie, its that there is a type of opportunity cost associated with that choice. Because he has little and you have a lot, the law of diminishing returns says that it will help him more than it helps you. So, the system as a whole has an opportunity cost for ending the day with that Twinkie in your belly rather than his. Now we get back to interdependence. Because your economic decisions aren’t isolated, his higher gain ’lifts all boats’ more than your lesser gain.
tipped me off to the fact that you think capitalism is a system that can be controlled. Semantics or not, wealth is not distributed and capitalism is not something that can be commanded.
The capitalist system is controlled in hundreds of ways, mandated FDIC insurance is a good example (much better than Child Labor laws). Here we have a government regulation that significantly impacts the flow of money in the economy. However, it is a net positive, allowing further economic decisions to be made more rationally.

Maybe I have you pegged wrongly, but it seems to be you think any attempt to modify a free market does some sort of intrinsic harm to the system, and that is the absolute which I think is just wrong.

The big thing I think to get across is that economic decisions are interrelated.
 
Written By: Kevin H
URL: http://
Thanks for the kind response. I just don’t see the point of bringing Rand into this at all. I don’t mean to be offensive, or dismisive of your arguments either, just of Rand.
 
Written By: Retief
URL: http://
sorry if that last sentence came across condecending. I think you know that economies are highly interdependent creatures. I just want you to think about what that means, and what effect that has in eating the Twinkie instead of giving it to maybe not someone in Zimbabwe, but maybe someone in Detroit. Preventing hunger and poverty help make smarter, more efficient workforces and consumers, and that helps everyone.
 
Written By: Kevin H
URL: http://
Do you have a stake in the level at which the government sets interest rates? Do you have a stake in how much your employer pays? Of course you do, economic decisions are not independent. That’s a basis of supply side theory just to name one.
Huh? You lost me. How did you get from individual decision-making to what the government does? And of course I have an interest in what my employer pays me. The questions is, does anyone else? Economic decisions are indeed independent even if economic results have collateral effects. And absolutely none of that is the basis of supply side theory. In fact, SST is based on the idea that you can’t buy anything unless you can sell something. Remove impediments to production (e.g. high taxes, onerous regulations, protectionist rules, tariffs, etc.) and you increase the ability of individuals to produce more. That creates more opportunities for further investment and production.
It’s not that you directly hurt the guy by eating the Twinkie, its that there is a type of opportunity cost associated with that choice. Because he has little and you have a lot, the law of diminishing returns says that it will help him more than it helps you. So, the system as a whole has an opportunity cost for ending the day with that Twinkie in your belly rather than his. Now we get back to interdependence. Because your economic decisions aren’t isolated, his higher gain ’lifts all boats’ more than your lesser gain.
But your premise only makes sense if we live in s zero-sum world and we don’t. IOW, I can have one more Twinkie and the hungry guy can too. In fact, if I purchase one more Twinkie that puts more money in the pockets of the Twinkie manufacturer (among others), which they in turn can do something else with, such as invest in Africa. In short, there is no opportunity cost involved because it’s not a zero-sum game. It’s like the old Doritos commercial — eat as much as you want, we’ll make more.

The problem isn’t consumption, it’s a lack of any incentive to produce. I can give a hungry guy in Africa a Twinkie, but then what? After he eats it he has no more Twinkie and he still doesn’t have a means of procuring one. You know the parable: give a man a fish .... Plus, if just give it to him, what’s his incentive to produce something so that he can buy one for himself? Even if I’m rich enough to buy he and his village all the Twinkies they could ever need, why would I do that? It doesn’t accomplish anything but a delay of the inevitable. Eventually they will starve without a benefactor because they have not the incentive nor the ability to do anything for themselves.

If you really want to be practical about it, I could forego my extra Twinkie, save up for awhile, and then build a Twinkie plant in hungry guy’s village, where I will pay him and his buddies to produce Twinkies. The only problem is, how do I protect my investment? If there are no property laws or a viable courts system, how do I ensure that I’m not just throwing money away? Worse yet, suppose that my Twinkie plant is very successful, and now other businesses are springing up around it. Then, suddenly, someone decides that it’s not MY Twinkie plant, it’s THEIR Twinkie plant. Next think you know, based on that sort of thinking, the guy with the Big Idea is running the Twinkie plant, but he’s giving all the jobs to his brothers and sisters and favorite acolytes. Pretty soon, he’s taking a larger and larger share of the revenues, and dishing out the wealth and power created by the plant to those who will keep him in charge. Before too long, hungry guy is hungry again, and you’re wondering why I’m not giving him a Twinkie.
The capitalist system is controlled in hundreds of ways, mandated FDIC insurance is a good example (much better than Child Labor laws). Here we have a government regulation that significantly impacts the flow of money in the economy. However, it is a net positive, allowing further economic decisions to be made more rationally.
The capitalist system is impacted, for sure, but it simply can’t be controlled. "Control" signifies that you can make it do what you want it to do. However, since the very basis of the capitalist system is individual decision-making, there is no way to "control" that unless you control every individual (e.g. who decides what’s "rational"?). Hence why libertarianism find dirigiste systems anathema.
Maybe I have you pegged wrongly, but it seems to be you think any attempt to modify a free market does some sort of intrinsic harm to the system, and that is the absolute which I think is just wrong.

The big thing I think to get across is that economic decisions are interrelated.
Not that it does harm to the system, per se, as much as it impedes it. No matter what the government does, capitalism goes on. Even if entirely outlawed, people find means to trade for the things they want (e.g. black market) and are really quite creative in how such deals are structured and made.
sorry if that last sentence came across condecending. I think you know that economies are highly interdependent creatures. I just want you to think about what that means, and what effect that has in eating the Twinkie instead of giving it to maybe not someone in Zimbabwe, but maybe someone in Detroit. Preventing hunger and poverty help make smarter, more efficient workforces and consumers, and that helps everyone.
Surely preventing hunger and poverty does all of those things, but forcing me to give someone in Detroit or Zimbabwe or anywhere else a Twinkie isn’t going to solve those problems. Allowing me, and everyone else, to freely make economic decisions without interference offers the greatest opportunity to all. Creating opportunities is what helps everyone, not handing out treats or forcing people to alter their economic decisions.
 
Written By: MichaelW
URL: http://asecondhandconjecture.com
Sorry McQ missed your response until now.
If those who own Tyson think so, why is it any of your or my business?
If a company wanted to use slave labor would it be any of your business? If a company wanted to dump toxic waste into your backyard would it be any of your business? If a company or country wanted to use a near monopoly to manipulate soy markets would it be any of your business. Yes, because all of those things can bite you in the a$$.

I think Tyson, and pretty much all CEO’s have an inflated pay because their pay is based on profit, not efficiency. The two are related, but the relation is distorted. Let’s say you are operating at 10% profit. You increase efficiency 1%. This causes your profit to go to 11%, which is a 10% increase in profits, which is all the market responds to. So a CEO who could be 1% more efficient is rewarded with 10% increase in pay.

So why is this a problem? imagine if we applied this model to everyone. Labor averages about 70% of costs. So lets say an average worker produces 10 widgets in an hour, they cost $3 to make and you get pad $70 an hour. 10 widgets an hour at $3 a pop, plus the hour of labor get you $100 cost for 10 widgets. You want a 10% profit so you charge $11 per widget.

The eq to figure out profit is when n = number of widgets produced in an hour: p = 11n - (3n + 70) = 8n - 70.

So our average worker makes 10 widgets, pulls in 10 units of profit.

Now, we have a better worker, he can produce 11 widgets in an hour. now p = 18. So what do we reward the worker for? If we reward him based on profit, we would pay him 80% more than the average worker, even those he is only 10% more valuable to the company. The result of a profit driven pay scale is a net loss to the company.

Such a profit derived pay scale can only be sustained by a small fraction of the company. You can make a moral argument that it’s unfair to have that bonus always at the top. Or you can say it violates the ’law’ of self-interest because it tricks a company into making a economic decision that is to its own detriment. But I think the bigger point is that it makes the company a poorer company, and that sinks all of our boats a little.
 
Written By: Kevin H
URL: http://
The big thing I think to get across is that economic decisions are interrelated.
The big thing to get across to you, Kevin, is that you haven’t got the slightest clue how—and how much—economic decisions are actually inter-related. If you feel like dog-paddling out of the shallow end, maybe go here and here, only for starters.
We should tailor the system to provide the outcomes and consequences we find most appealing. I think those outcomes should be efficiency and production capacity.
I don’t. So tell ya what: you take what you earn and support whatever you want with it, and (at the same time) take all your plans for using my stuff in support of whatever your goals are this month, and drop them.

And who is this freakin’ "we" you keep prattling about?
 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
If a company wanted to use slave labor would it be any of your business?
So paying a CEO a salary is akin to slavery?

I’m afraid the comparison doesn’t track.
If a company wanted to dump toxic waste into your backyard would it be any of your business? If a company or country wanted to use a near monopoly to manipulate soy markets would it be any of your business. Yes, because all of those things can bite you in the a$$.
None of those things have anything to do with a private corporation’s decision on what to pay its CEO. All are violations of the rights of others. Whose rights are violated by a voluntary agreement between CEO and company?
I think Tyson, and pretty much all CEO’s have an inflated pay because their pay is based on profit, not efficiency.
And I again ask, what business is it of yours what Tyson and the CEO agree upon in terms of pay? How are your or anyone else’s rights violated?
So why is this a problem?
Heh ... it’s not and thus far, and even with your entertaining attempt to declare what is fair in compensation, you’ve not provided anything which answers the basic question - how is it any of your business what a company pays in salary to anyone?
 
Written By: McQ
URL: http://www.qando.net/blog
Economic decisions are indeed independent even if economic results have collateral effects.
That’s all I’m concerned with, the results. I agree that your choice of eating the twinkie has no bearing on the hunger of others, but it does have an effect, more specifically an opportunity cost.
I can have one more Twinkie and the hungry guy can too....eat as much as you want, we’ll make more.
If you buy the twinkie and give it to the hungry guy, the company still gets all of its profits, but now you’ve also made that hungry guy more economically productive, hugely so in fact.

The economics are exactly the same EXCEPT for who gets the twinkie. If you get it, maybe your a little happier, but that twinkie doesn’t make you more ecnomically powerful in the future. However, if you are hungry, getting food allows you to go out and produce more. That’s the key difference

full + food = next to 0

hungry + food = huge new economic benefit. Time spent foreaging or begging for food, can now be spent producing. or maybe he goes and starts a private property revolution in his home country...

impacted vs controlled. Ok sure, I don’t want to control every single economic choice, because that doesn’t work. But I do want systems in place that impact the system positively. I think we always agreed on that, just had different language.

also, I don’t want to force you to give the guy in Zimbabwe a Twinkie. This goes back to:
I agree that blanket [’forced’ is probably a better word] redistribution is silly, and like putting a makeup on a cancer.
We don’t need to be talking about Zimbabwe here, the same goes for our Tyson situation. Giving the CEO $100,000 to buy a really nice Twinkie isn’t going to be as useful as giving a poor employee $100,000 to start his own business. Sure both will have indirect economic effects in the form of wages and services, but allowing that person to start their own business is better.

It is better for precisely the same reason as why free markets beat state planning or monopolies time after time. The spreading of new producers allows the market as a whole to be more dynamic, and more responsive. Instead of one wealthy, economically powerful man we have one slightly less powerful man, and a new man ready to risk and improve the market. Everyone wins, certainly not a zero sum game.
 
Written By: Kevin H
URL: http://
how is it any of your business what a company pays in salary to anyone?
Because it forces upon me an opportunity cost.

Economic effects are interrelated, therefore I share in everyone else’s opportunity costs, whether I want to or not.

It limits my own potential, and yours too.

It certainly is less extreme than slavery, but it is fundamentally no different.
 
Written By: Kevin H
URL: http://
Getting him over your average MBA isn’t going to add 4000 jobs each every year, and note you do have to keep that level of growth going to justify the pay year after year. The math just doesn’t add up.

The CEO’s job is to make profit for the companies stockholders, not hire workers. If he manages the company well and it makes a lot of profit, he deserves the pay. If he doesn’t make profit he should get the boot.
 
Written By: James E. Fish
URL: http://faroutfishfiles.blogspot.com/
Because it forces upon me an opportunity cost.

Economic effects are interrelated, therefore I share in everyone else’s opportunity costs, whether I want to or not.

It limits my own potential, and yours too.
Okay, Kevin, but when somebody gives you a food or a job, that leaves them less ability to feed or hire me or someone else. I’m sure you wouldn’t say that you’re intrinsically more valuable than me or everybody else (and even if you would and lotsa your friends too, that’s kinda looking at things in a very personal, subjective and biased way, wouldn’t ya say?). So that means me or other people pay a lot of opportunity costs so you can continue net-surfing. There’s people in Zimbabwe a lot worse off than you, for instance, that could’ve used at least half the food and school space and clothing etc you’ve consumed, right?

That’s "fundamentally no different than slavery" to use your terms, so what does that leave you as the only honorable course of action, if you’re gonna be consistent about all this? After all, with half of what you’ve consumed you’d still have been way ahead of most of the planet. Lotsa folks live on way, way less than half.

Let’s take this further: you might be a nice guy, but there’s no reason to assume that you’re 1000 times as nice as any other guy you know, so why would it be fair of your girlfriend, for example, to lavish all her affections on just you? I mean, personal, emotion-ridden factors ought to count for squat—we’re talking maximum output and productivity here, and people clearly need companionship as much as money. Look at how many people choose to pay for companionship right now. That’s proof.

Best you forego that useless "wine and dine" night out you two had planned. Start doing your moral duty for the partner-impaired and seek out the lonely folks. Understand that this means that some of the folks you "help" will be among the world’s least agreeable or attractive, but who knows how much time with you and your loved ones will improve their self-esteem and optimism.

And after all, if the lonely folks get some, they’ll be more likely to concentrate better at the factory. Everybody wins.

And you and me both gotta do something about about that chick-magnet at the end of the block. He’s not 1000 times as nice as you and me, and he gets all the action around here. He never pays.

 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
Because it forces upon me an opportunity cost.
It forces no such thing on you unless you’re the owner of Tyson.
It limits my own potential, and yours too.
How? Tyson the only game in town?
It certainly is less extreme than slavery, but it is fundamentally no different.
It is fundamentally completely different for the reasons I stated.
 
Written By: McQ
URL: http://www.qando.net/blog
Does a single success lift all boats?

Then failing to succeed, or succeeding less than possible lifts all boats less than possible, hence an opportunity cost.
 
Written By: Kevin H
URL: http://
And you know how to maximize all successes, do you, Kevin? Better than even the folks directly involved?
 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
I’m sure you wouldn’t say that you’re intrinsically more valuable than me or everybody else
Sure I agree.
There’s people in Zimbabwe a lot worse off than you, for instance, that could’ve used at least half the food and school space and clothing etc you’ve consumed, right?
Certainly. The problem is that unless you change the system, you’ve not really done anything. Simply giving food means you’ve fed one person for one day, but the next day they are hungry. In that, I’m actually in agreement with McQ and James I believe.

To the whole emotional connection vs salary thing. I think your thinking is fairly sound. The problem is that it would be lot harder to create a system that could go against people’s instinct of monogamy than making some economic changes.

If the only way to get equal distribution, or something close to it, is to forgo private property, that is a cost too high and not worth it.

I don’t believe that this opportunity cost is some abstract thing which would be great in an ideal world, I think it’s an actual practical impediment.

I’m not asking to be put in charge of every economic decision, I’m just pointing out a problem. Pretending it doesn’t exist doesn’t make it go away.
 
Written By: Kevin H
URL: http://
To the whole emotional connection vs salary thing. I think your thinking is fairly sound. The problem is that it would be lot harder to create a system that could go against people’s instinct of monogamy than making some economic changes.
You mean otherwise you’d go along with it?!??!

And you’re going after economic changes instead because you think they’re easier?

You’re fun, Kevin.
 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
I’m sure you wouldn’t say that you’re intrinsically more valuable than me or everybody else
Sure I agree.
Uh, Kevin, I put the even if you would and lotsa your friends too, that’s kinda looking at things in a very personal, subjective and biased way, wouldn’t ya say bit in the question you half-quoted on purpose, y’know. Maybe you and your friends would be right if you did. How would I know? And what’s wrong with you and your friends having your own personal reasons and being biased about the things and people you like?

My point is two-fold: one, folks (including you) have a perfect right to support who they want, any way they want, for whatever reasons they want as long as it’s not coercive—and two) that includes companies who want to reward their CEOs all to heck maybe just because they like them. Any investors who think that sucks can pull their investment. My guess is that if they don’t, they’re satisfied enough for whatever reason. It’s not my business anyways unless I involve myself, and then it’s my choice. You write as if companies owe you or society at large whatever you might look on as efficiency or success or bright business methodology. They owe you no such things.

But heck, if you don’t like it, you don’t even have to be an investor to have your impact: just don’t buy their stuff. I mean, right now you buy stuff because you want it or need it, for whatever reasons of your own and I assure you, I won’t ever hassle you for causing unemployment if you boycott someone. Honest.

 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
By the way-I meant I put that italicized part in on purpose, not that you half-quoted it on purpose, Kevin. Sorry because that might’ve confused me depending on how I read what I wrote.
 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
You mean otherwise you’d go along with it?!??!
What can I say, I’m a slave to logic. But seriously. I enjoy interacting with other people and making them happy, and I see the worth in it. My biology doesn’t allow me to take it much farther than that. I’m sure if you examine it you feel pretty much the same way too. That doesn’t mean biology naturally leads to the best of all possible worlds.

And economic policy is certainly much much easier to change than human nature. The former has had major changes hundreds of times throughout history, and small tweaks beyond number. Human nature hasn’t seemed to have changed once in the past 4000 years at least. Hands down it’s easier to change economic policy to conform with human nature than the other way around.

Sorry I didn’t get your question the first time around on comparative worth. Regardless of the beliefs of me or my friends, we can all be wrong, and being wrong can have consequences.

PS so are ppl quiet because I’m starting to make sense, or because they got tired of the back and forth?
 
Written By: Kevin H
URL: http://
An interpretation of what Kevin is saying, with my agreement.

That concentrating capital in large companies is not as dynamically profitable to the general economy as having several smaller companies.
how is it any of your business what a company pays in salary to anyone?
Higher rates of pay are an indicator of business practice nearing a zero sum game. Higher rates of pay come from large consolidations of capital, with capital invested so because it is profitable. The profit is coined by the ability of the large company to corner a market and supply that market with a commoditised good. How they corner this market is partly through the use of regulatory protection (patents, intellectual property, licensing) and state welfare (direct contracts, lobbyists, subsidy). Large & established companies can wield more political influence than small & new.
How? Tyson the only game in town?
Tyson is profitable, if it is the most profitable you’d do best to stay.
My guess is that if they don’t, they’re satisfied enough for whatever reason.
My guess is they don’t as they are making lots of money. In fact I think you’ll find this is the normal reason for carrying an investment.
It’s not my business anyways unless I involve myself, and then it’s my choice.
But if the large conglomerate is making the most money that is where you will rationally choose to invest your money. Yes, technically you are free to act irrationally "for whatever reason", but you would be stupid to do so.
You write as if companies owe you or society at large whatever you might look on as efficiency or success or bright business methodology. They owe you no such things.
Correct, but you have this back to front. As a society we would benefit from a regulatory and welfare regime that favors "efficiency or success or bright business methodology" and we owe no support to large companies with high paid CEOs. We should change the regulations and welfare regimes to favor a stronger economy.
 
Written By: unaha-closp
URL: http://
As a society we would benefit from a regulatory and welfare regime that favors "efficiency or success or bright business methodology" and we owe no support to large companies with high paid CEOs. We should change the regulations and welfare regimes to favor a stronger economy.
But my understanding is that you don’t support a free market, which is exactly what you should have ben describing when you said: "we would benefit from a regulatory and welfare regime that favors "efficiency or success or bright business methodology" and "We should change the regulations and welfare regimes to favor a stronger economy".

The solutions you do suggest (more regulations regarding things like salry/compensation packages and corportate size, as you describe) actually work counter to your stated goals (again, see here for starters).
 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
We’re different people, we agree that high and inflating CEO pay is a cost to society. However looking back at Kevin’s comments some more I realise that I do not agree with his perspective. When he says:
I think Tyson, and pretty much all CEO’s have an inflated pay because their pay is based on profit, not efficiency.

I agree, but when he says:
The two are related, but the relation is distorted...
And drifts into suggesting immorality of paying someone to produce profits based on increases on profit, I disagree.

I believe that CEO pay is based on profits that are (at least in part) unrelated to efficiency.
But my understanding is that you don’t support a free market
I do not support the current market, largely because it is not free. Tyson employs a CEO at very high rates of pay and recieves $billions in subsidy from the state. I see this as a causatory relationship where large commodity producing companies benefit by conforming to regulation rather than from any competitiveness and they do benefit more than small or medium players.
The solutions you do suggest (more regulations regarding things like salry/compensation packages and corportate size, as you describe) actually work counter to your stated goals
I suggest changing the regulatory enviroment to stop favoring large companies that can afford high paid CEOs. This could be further regulation to limit compensation or corporate size to treat the symptoms, but I am unsure this will work. Or it could be the reduction of compliance costs, the shortening of copyright lifetimes, an end to corporate welfare or a simplification of the tax code to treat the causes of big business advantage and I favor this less regulation of business, less protection of big business approach.
 
Written By: unaha-closp
URL: http://warisforwinning.blogspot.com/
The money paid to CEOs belongs to the shareholders. If the shareholders could get away with paying their CEO a nickel, don’t you think they would do it? If they could get away with paying their CEO thirty dollars an hour, don’t you think they would do that? Certainly you don’t think shareholder as a class are so stupid that they want to throw their money away, do you?

The fact of the matter is that the number of people who do what the best CEOs do is very small, and thus they are paid what the market will bear. Lenin also believed that management could be handled by mere clerks, and almost starved his entire nation to death practicing the courage of his convictions. The fact is, like Lenin, you are simply ignorant of what it takes to run a major corporation.

yours/
peter.
 
Written By: peter jackson
URL: www.liberalcapitalist.com
I favour a separation of the State and the economy and for the same reasons I favour a separation of church and State. I don’t care what a CEO gets paid, or why the amount is what it is—that’s between the company and its shareholders. Customers who object, as I said, can boycott if they want.
I do not support the current market, largely because it is not free
I do not support the current market, precisely because, and to the degree that, it is not a free market.

That said, peterjackson makes a valid point: interventionists of any number of stripes have consistently undervalued and misapprehended the value of skilled managers/executives.

 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
Certainly you don’t think shareholder as a class are so stupid that they want to throw their money away, do you?
No, I think that shareholders maximise their profits by investing in companies that gain the most protection and direct assistance from the state that distorts the market into quasi-monopolies for these companies. I think that it is the biggest of companies that benefit most from high compliance costs and high entry cost and complex subsidisation regimes. And it is self evidential that the larger the company the higher the rate of pay of the upper management tends to be.
Lenin also believed that management could be handled by mere clerks, and almost starved his entire nation to death practicing the courage of his convictions. The fact is, like Lenin, you are simply ignorant of what it takes to run a major corporation.
I think you are wrong. If Lenin had hired a highly professional CEO to manage the USSR agri-business and paid them millions it would not have made a jot of diference, because the system was flawed.

Lenin & Stalin forced all farms into a single enterprise using brutish force. I am saying that using regulatory constraint and state subsidy to provide economic pressures that force agri-business into large enterprises is a bad thing, because it tends towards the same result. Anytime you form a monopoly it is a bad thing to do, no matter who you get to run it. This is because no one (irrespective of their payscale) can be right all the time.
Customers who object, as I said, can boycott if they want.
They can if they are willing to waste money.
 
Written By: unaha-closp
URL: http://warisforwinning.blogspot.com/
I think you are wrong. If Lenin had hired a highly professional CEO to manage the USSR agri-business and paid them millions it would not have made a jot of diference, because the system was flawed.
Just a quibble. Had Lenin hired a highly professional CEO, the system would have been almost certainly different. If the system can not be changed, no matter who is hired, the position is more correctly titled "lackey" or "functionary", not "CEO".
I am saying that using regulatory constraint and state subsidy to provide economic pressures that force agri-business into large enterprises is a bad thing
Using regulatory constraint and state subsidy is a mistake, but it’s not wrong because of the result; the result could vary. Who benefits, when and how is dependent on the goals of the retraints and subsidies, and so are the various negative and/or unintended and unforeseen consequences. In other words, regulatory constraint and state subsidy that promoted smaller scale agriculture would also be wrong.
Anytime you form a monopoly it is a bad thing to do, no matter who you get to run it
Coercive monopolies cannot survive without state support (constraints, subsidies as you describe). Non-coercive monopolies of any given scale are not at all necessarily a bad thing.
 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
They can if they are willing to waste money.


That’s not supportable. Boycott (not purchasing something) can have any number of results to the boycotter, including saving money, discovering alternate and possibly better sources for the same commodity, finding other commodities that serve as well or better, finding that one can simply do without, all sorts of possibilities...including giving the boycotter a priceless sense of (possibly or possibly not justified) moral superiority. The various values at play in this boycott scenario (as in any economic scenario) are not all to do with strictly cash profit and loss or object/service oriented productivity.

 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
Just a quibble. Had Lenin hired a highly professional CEO, the system would have been almost certainly different. If the system can not be changed, no matter who is hired, the position is more correctly titled "lackey" or "functionary", not "CEO".
Where is the motivation to change the system? The highly professional CEO would have had difficulty justifying the drop in profitability the state would have experienced if it had stopped the monopoly the state did enjoy. Surely their duty is to their shareholders to maximise the profits by maximising access to the market.
In other words, regulatory constraint and state subsidy that promoted smaller scale agriculture would also be wrong.
Agree with that.
Coercive monopolies cannot survive without state support (constraints, subsidies as you describe). Non-coercive monopolies of any given scale are not at all necessarily a bad thing.

Existance of a monopoly places great power in the hands of the leader of that monopoly. It is not neccessarily a bad thing to have, if they consistently make the right choices it becomes a good thing to have.

Re: to boycott. It is my position that it is not possible to be wealthier by refusing to purchase from/invest in companies with a highly paid CEO, as opposed to making decisions based purely on your return irrespective of CEO pay.
 
Written By: unaha-closp
URL: http://warisforwinning.blogspot.com/
The highly professional CEO would have had difficulty justifying the drop in profitability the state would have experienced if it had stopped the monopoly the state did enjoy
I don’t know. China is developing some fairly professional CEOs and functional companies these days (and, yeah, I know it’s still not near a free market there...still:) and I haven’t seen the drop in state profits yet.
Existence of a monopoly places great power in the hands of the leader of that monopoly
Or a great headache.
It is not neccessarily a bad thing to have, if they consistently make the right choices it becomes a good thing to have.


Or sometimes it’s just neutral. Again, non-coercive monopolies exist at the pleasure of their customers so making "good enough" choices is likely sufficient and not even unreasonable.
It is my position that it is not possible to be wealthier by refusing to purchase from/invest in companies with a highly paid CEO, as opposed to making decisions based purely on your return irrespective of CEO pay
Yeah, but you’re thinking this is all about dollars: object/service value, efficiency, production, investments, capital returns. It’s not. Among the many reasons capitalism (laissez-faire free market) is not consumerism or a zero-sum game is this:

Although most human action can be said to have economic consequences to some degree great or small, it is also true that huge numbers of human decisions are made in support of values (goals/motives) that are only barely connected to monetary or production figures, things like: dislikes, taste, character, nostalgia, serendipity, impulse, sentiment, clan/group identification, honor, distrust, love, fear, superstition, research, pranks, gifts, prestige, charity, ambition, inventiveness, creativity...you get the idea and I was barely scratching the surface, down to someone just feeling better about themselves because they got a new Pink Floyd T-shirt or, for that matter, a Rolls-Royce Phantom Drophead Coupe.

It’s freedom for those dynamics that I work to protect from state/bureaucratic intrusion because it is those human factors that account for human progress, even though I might think some of the decisions/motivations are stupid or merely misguided.

Political freedom, personal moral freedom and economic freedom are corrolaries.

 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
I don’t know. China is developing some fairly professional CEOs and functional companies these days (and, yeah, I know it’s still not near a free market there...still:) and I haven’t seen the drop in state profits yet.
China is getting functional because the Chinese politicians in charge of China as a whole decided to break the some state monopolies for the good of Chinese society. It did not come from the head of the steel industry or the bicycle maker deciding to give up their monopoly, whose interests conflict with those of China as a whole.
It’s freedom for those dynamics that I work to protect from state/bureaucratic intrusion because it is those human factors that account for human progress, even though I might think some of the decisions/motivations are stupid or merely misguided.
Whereas I think the symptom of high CEO pay is derived from existing state/bureaucratic intrusion and wish to reform the state’s approach. As it happens I believe a sure way to reduce CEO pay is to open their companies up to more competition.

To boycott without the reform is pointless waste. As you are making your small economic boycott statement on the one hand, you are also making a larger economic supporting statement through your taxes on the other. Whatever "values" you are using to justify your action are wasted, because to boycott alone is ineffectual.
Political freedom, personal moral freedom and economic freedom are corrolaries.
Working political freedom at the behest of moral values and maximising economic return is therefore to our benefit?
 
Written By: unaha-closp
URL: http://
Whereas I think the symptom of high CEO pay is derived from existing state/bureaucratic intrusion and wish to reform the state’s approach. As it happens I believe a sure way to reduce CEO pay is to open their companies up to more competition.


I think the rate of CEO pay is irrelevant; I simply don’t care if a company wants to pay its CEO huge sums for whatever reason they want. I think were the economy unregulated that CEO pay would vary considerably and that some folks would get astonishingly high pay, but so what?

Mind you, I think you and I are coming from similar places, really. I’m no fan of the State.
 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com
I think the rate of CEO pay is irrelevant; I simply don’t care if a company wants to pay its CEO huge sums for whatever reason they want.
A lot of people do though and it behooves libertarianism to offer a solution to grievances.

When that pay is "earnt" by the CEO (Tyson) of a high maintainance state beneficiary it is a synch to call for business welfare reform. Tyson CEO is paid $50 million per year and Tyson is given $billions in welfare - the "reason" the CEO is paid so well is he is a rain-maker who can shake the taxpayers for every penny they have got.
 
Written By: unaha-closp
URL: http://
OK, but let’s not confuse the issues because there are two issues here:

One is the state provided corporate welfare; that’s just plain wrong and shouldn’t happen; the other is the rate of CEO pay and is properly left up to the company. The confusion comes when coportate welfare allows or subsidizes a CEO rate of pay that would not exist without it.

In other words, remove the corporate welfare subsidies and CEO pay is a non-issue.

 
Written By: Ron Good
URL: http://northernsubverbia.blogspot.com

 
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