Recessionomics

[iNow]

Profit is primarily about efficiency and mimized cost (maximizing returns on those costs). If altruism increases the bottom line, a free market will select for it. If altruism hurts the bottom line, a free market will select against it. It's really that simple. Unless it decreases costs or improves efficiency, it's a waste of time and resources. Case closed. Look at real budgets and you'll not find line items for "altruism" factored in anywhere (except for the marketing and advertising expense, but that's more about PR hype than real world Finance).

[ecoli]

Profit is primarily about efficiency and mimized cost (maximizing returns on those costs). If altruism increases the bottom line, a free market will select for it. If altruism hurts the bottom line, a free market will select against it.

 

And what I'm saying is that the latter scenario is not very common, especially not in an environment of transparency, when people are aware of their rights and have a good deal of economic mobility. which, I would argue describes our current situation better than in any time period previously.

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Don't care don't care don't care. My only point is their reasons are ideological and/or personal, not profit-motivated.

Have you asked them this? And, more importantly, have you asked the shareholders this?

Edited January 12, 2009 by ecoli
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[iNow]

And what I'm saying is that the latter scenario is not very common, especially not in an environment of transparency, when people are aware of their rights and have a good deal of economic mobility. which, I would argue describes our current situation better than in any time period previously.

I know that's what you've been saying, but I am responding that your position seems completely untenable, based on wish thinking, and not realistic.

[ecoli]

I know that's what you've been saying, but I am responding that your position seems completely untenable, based on wish thinking, and not realistic.

 

each is entitled to his opinion, of course, but my position is not untenable (i can point you to boatloads of literature on the subject), just based on the principle that free market failures (philosophical failures, not merely temporary recessions) are the result of government interferences that prevent competition in the marketplace. That is to say, that government is more corruptible than markets, yet its free markets that are getting the bad rap.

 

To bring the thread to title relevance, I think we're going to see that loose monetary policy and fiscal stimulus will fail utterly over the next year, but that this will be blamed on government spending not being large enough or interest rates not being low enough... a very helpful thing to the next generation of corruptible politicians.

[npts2020]

ecoli; Explain to me how in a putative democracy, a government is any more corruptable than a corporation? Altruism is only part of capitalism insofar as it increases the bottom line (or certain entrepreneurs buck the tenets of capitalism). It seems to me that most people do business with Google because it is free, more than having anything to do with the philosophy of its founders. While it is true that there are successful companies that have followed business models similar to Google, I would assert with some confidence that these are not the majority of corporations (especially large ones) out there. Most of your problem with government spending it seems to me relates to how to make government accountable for what it spends, a concern of mine as well. My problem with the so-called "free" market is similar, in how to not allow greed to supercede all other considerations. The problem with the market is that there are so few rules that, in general, nobody is accountable to anyone for anything other than making money. I do agree that the current stimulus package is largely a waste and is probably being stolen even as we type.

jackson33; It seems to me that your problem with government spending is similar to ecoli. I completely agree that the bailout is not transparent and will not work (I believe I have stated that in this forum since we first posted about it, before the legislation was passed). The problem of misdirected government spending should not be taken lightly but the reality is that there are some things that government does and into the forseeable future will continue to spend money on. The trick is to get some actual "value" for the money spent, something the American government in particular has been inept at for a long time now (possibly having something to do with where most of it is spent). In order to keep the current diatribe from becoming exponential in size, allow me to leave a proposition and ask a question about it. Proposition: The planet can already support 6.6 billion people. Question: At what standard of living do you wish to support them?

[Mr Skeptic]

It seems to me that most people do business with Google because it is free, more than having anything to do with the philosophy of its founders.

 

A large part of the reason that I switched to Google was their philosophy, and I suspect that the same applies to many others. As a result of their philosophy, their ads are not in-your-face, they don't sell top results to the highest bidder, and their home page is clean and beautiful. Plus, I know that they are unlikely to do anything overtly evil, or lots of more minor evil -- doing so will cost them bigtime, seeing as how they made such a fuss about not being evil. After all, there are dozens of search engines, all free, and I expect Google to behave and keep up the quality if they want my business.

[ecoli]

In order to keep the current diatribe from becoming exponential in size, allow me to leave a proposition and ask a question about it. Proposition: The planet can already support 6.6 billion people. Question: At what standard of living do you wish to support them?

This is exactly what Malthus was afraid of happening... 200 years ago. What he didn't count on happening is that human ingenuity would produce innovations that can better manage resources.

 

After being adjusted for inflation, the price of most natural resources has been on a downward trend (albeit with fluctuations). So while resources may be slowly dwindling, the effective stocks grow, esp. as innovation improves things like recycling, carbon nanotubes, etc.

 

http://www.econlib.org/library/Enc/NaturalResources.html

 

In other words, we may have to move off planet one day, but the free market will ensure innovation when consumers require it so I have no doubt the world can sustain a large population with a relatively high standard of living.

 

Now, is there a place for government (for funding research, etc). Sure, I guess. But when it comes to coming up with radical solutions for innovation, research, distributing, the free market does the job second to none.

 

The 'scary' thing is, I suppose, is that there's nobody 'in charge' making sure that the supply keeps up with demand but, think of it this way, would you have millions of humans interacting to get the right goods to market or would you prefer a corruptible market czar that has to plan at the central level? I'd prefer the risk to be spread out, and taken at the individuals free will.

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ecoli; Explain to me how in a putative democracy, a government is any more corruptable than a corporation?

 

Because the only way corporations can get away with doing bad things is if they coerce or bribe a government official(s) to let them violate free market principles. For every corrupt corporation, there's a corrupt politician suckling at the tit of power at the expense of the liberty of the individual.

Edited January 13, 2009 by ecoli
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[npts2020]

A large part of the reason that I switched to Google was their philosophy, and I suspect that the same applies to many others. As a result of their philosophy, their ads are not in-your-face, they don't sell top results to the highest bidder, and their home page is clean and beautiful. Plus, I know that they are unlikely to do anything overtly evil, or lots of more minor evil -- doing so will cost them bigtime, seeing as how they made such a fuss about not being evil. After all, there are dozens of search engines, all free, and I expect Google to behave and keep up the quality if they want my business.

 

I believe you and that is a big part of the reason I use them as well. I am skeptical as to whether the majority of their users could even articulate that "doing no evil" was part of Google's corporate philosophy, however.

[ecoli]

I believe you and that is a big part of the reason I use them as well. I am skeptical as to whether the majority of their users could even articulate that "doing no evil" was part of Google's corporate philosophy, however.

 

read point 6 and 9:

 

http://www.google.com/corporate/tenthings.html

 

I'd say people probably realize this. But, more importantly, they realize that google is 'altruistic' towards their consumer base and employees.

[Sisyphus]

That's really just offering the best product, though, not being "altruistic."

[npts2020]

This is exactly what Malthus was afraid of happening... 200 years ago. What he didn't count on happening is that human ingenuity would produce innovations that can better manage resources.

 

After being adjusted for inflation, the price of most natural resources has been on a downward trend (albeit with fluctuations). So while resources may be slowly dwindling, the effective stocks grow, esp. as innovation improves things like recycling, carbon nanotubes, etc.

 

http://www.econlib.org/library/Enc/NaturalResources.html

 

In other words, we may have to move off planet one day, but the free market will ensure innovation when consumers require it so I have no doubt the world can sustain a large population with a relatively high standard of living.

 

Now, is there a place for government (for funding research, etc). Sure, I guess. But when it comes to coming up with radical solutions for innovation, research, distributing, the free market does the job second to none.

 

The 'scary' thing is, I suppose, is that there's nobody 'in charge' making sure that the supply keeps up with demand but, think of it this way, would you have millions of humans interacting to get the right goods to market or would you prefer a corruptible market czar that has to plan at the central level? I'd prefer the risk to be spread out, and taken at the individuals free will.

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Because the only way corporations can get away with doing bad things is if they coerce or bribe a government official(s) to let them violate free market principles. For every corrupt corporation, there's a corrupt politician suckling at the tit of power at the expense of the liberty of the individual.

 

If businesses had a "code of ethics" of any sort that they were required to follow in order to do business in America, I might have as much faith as you do in the "free market". Unfortunately, even the few rules (laws) that exist concerning corporate activities only peripherally address any ethical considerations in doing business and most of those are fairly easily ignored or gotten around. Malthus didn't (probably couldn't have) take all of the factors into account but he was basically correct about running up against resource limits at some point. What I see the "free market" doing today is destroying the planet for the rest of us in the name of accumulating wealth for some. If even only a few of the studies I have read about deforestation, coral reef die-offs, fishery depletion, pollution of groundwater sources, global warming, etc. are true, there is a debt being built that will make the current financial market debt look like peanuts. Personally I kind of like the idea of a central czar making sure supply keeps up with demand, if I can see transcripts of his business activivties and vote them out of office if I don't like what he is doing (some would call that democracy), a situation that does not exist with the Treasury Secretary and the current bailout. The part I highlighted seems a pretty fair description of our situation today, so is it democracy, the market, or what that is not working? You kind of skirted the issue of standard of living for 6.6 billion humans but I would be interested in anyones opinion of what specific standard of living that many could realistically expect?

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read point 6 and 9:

 

http://www.google.com/corporate/tenthings.html

 

I'd say people probably realize this. But, more importantly, they realize that google is 'altruistic' towards their consumer base and employees.

 

Thanks for proving my point about Google being atypical of corporate America (somehwere in there they talk about the corporation being like no other in America). Whether the corporation claims or even lives by this and how many of their users actually know or care are completely unrelated.

Edited January 13, 2009 by npts2020
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[ecoli]

If businesses had a "code of ethics" of any sort that they were required to follow in order to do business in America, I might have as much faith as you do in the "free market". Unfortunately, even the few rules (laws) that exist concerning corporate activities only peripherally address any ethical considerations in doing business and most of those are fairly easily ignored or gotten around.

This is a failure of government to enforce existing laws and property rights. Not an inherent flaw in free market system. so, in this case, the problem is democracy... not capitalism.

 

Malthus didn't (probably couldn't have) take all of the factors into account but he was basically correct about running up against resource limits at some point. What I see the "free market" doing today is destroying the planet for the rest of us in the name of accumulating wealth for some.

The data indicates otherwise. Up until this point, the free market has been expanding the amount of resources available to us with making EVERYONE wealthier. No government redistribution policy has ever been as successful at improving the standard of living, rather it usually reduces the standard of living.

 

If even only a few of the studies I have read about deforestation, coral reef die-offs, fishery depletion, pollution of groundwater sources, global warming, etc. are true, there is a debt being built that will make the current financial market debt look like peanuts.

I'm not sure how these two phrases are related but... The pollution you speak of is the government's failure to sufficiently protect property rights. The national debt is to inefficient government spending.

 

Surprise surprise, the problem is again government is essence, and not inherent flaws in the free market.

 

 

Personally I kind of like the idea of a central czar making sure supply keeps up with demand, if I can see transcripts of his business activivties and vote them out of office if I don't like what he is doing (some would call that democracy),

Now why that doesn't surprise me... The problem with this is, of course, since people are profit motivated, the temptation to obscure dealings to promote corruption is too great. Now, unlike corporate corruption, when the politicians are making the laws AND controlling all the money, who do you think is going to profit?

 

Central planning was an exquisite failure.. just ask the 60 million people who were murdered to grease the wheels of the soviet machine: http://www.hawaii.edu/powerkills/USSR.CHAP.1.HTM

 

I'm not saying that socialist planning requires genocide, but it helps demonstrate what insane acts central planners will resort to make sure that 'supply keeps up with demand'...

 

And you thought corporations where corrupt...

 

 

You kind of skirted the issue of standard of living for 6.6 billion humans but I would be interested in anyones opinion of what specific standard of living that many could realistically expect?

A fair question, but impossible to predict.

 

Thanks for proving my point about Google being atypical of corporate America (somehwere in there they talk about the corporation being like no other in America). Whether the corporation claims or even lives by this and how many of their users actually know or care about this are completely unrelated.

Oh give me a break... every company on earth is going to say something like that. The point is that they recognize the profitability of 'doing no evil.' They've set a high standard that other companies will have to adopt, or risk losing business to google. The beauty of the free market at work.

[iNow]

That's really just offering the best product, though, not being "altruistic."

 

This is my POV as well. Google is altruistic they say? Super, that's just icing, but I use it because it works well.

[npts2020]

ecoli; Is the failure to keep corporations from behaving badly more due to lack of law enforcement or lack of laws? I do not agree with your assertion that government based on majority rule is the problem rather than an economic system based solely on greed. If you wish to claim that the two are incompatible, we may find some common ground but I am not sure I entirely agree with even that. Show me some data that points toward everyone being wealthier because of capitalism. Unless you mean that only capitalists are everyone and nobody else counts, you cannot. Additionally, I believe that several tens of millions of Chinese who lived lives on the verge of starving to death before their revolution might disagree about government redistribution of wealth never being successful. How much lower was their per capita standard of living in say 1970 (before the current economic boom) compared to during or right before their revolution? I agree that environmental degradation is caused by failure of government to regulate a "free" market (regulating corporate freedom vis a vis societal and individual rights and freedoms). Yet you and others argue the market is not free enough! Another thing I fail to understand is, why the actions of a single person would be easier to obfuscate and keep secret than the dealings of many. Even the authors of the link you provided don't make the claim that millions of people were killed because of any market considerations (they were killed because they opposed the soviets). To get an idea of the standard of living 6.6 billion people could expect, divide total world gdp (about $45 trillion) by that number of people and you come up with about $6,800 per person if the wealth is distributed evenly. Finally, which corporations have decided to adopt Google's corporate philosophy?