"Sorry, It's Not a 'Law of Capitalism' That You Pay Your Employees as Little as Possible. It's..."

[Hissyspit]

"a choice."

http://www.businessinsider.com/companies-need-to-pay-people-more-2013-8

Sorry, It's Not A 'Law Of Capitalism' That You Pay Your Employees As Little As Possible

Henry Blodget

AUG. 7, 2013, 10:51 AM 107,347 219

- snip -

But, unfortunately, over the past three decades, what began as a healthy and necessary effort to make our companies more efficient has evolved into a warped consensus that the only value that companies create is financial (cash) and that the only thing managers and owners should ever worry about is making more of it.

This view is an insult to anyone who has ever dreamed of having a job that is about more than money. And it is a short-sighted and destructive view of capitalism, an economic system that sustains not just this country but most countries in the world.

This view has become deeply entrenched, though.

- snip -

This view, unfortunately, is not just selfish and demeaning. It's also economically stupid. Those "costs" you are minimizing (employees) are also current and prospective customers for your company and other companies. And the less money they have, the fewer products and services they are going to buy.

Obviously, the folks who own and run America's big corporations want to do as well as they can for themselves. But the key point is this:

It is not a law that they pay their employees as little as possible.

It is a choice.

- snip -

It is a choice that reveals that, regardless of what they say about how much they value their employees, regardless of what euphemism they use to describe their employees ("associate," "partner," "representative," "team-member&quot , they, in fact, don't give a damn about their employees.

These senior managers and owners, after all, are earning record profits while choosing to pay their employees so little in many cases that the employees have to live in poverty.

- snip -

CHART ONE: Corporate profits and profit margins are at an all-time high. American companies are making more money and more per dollar of sales than they ever have before. Full stop. This means that the companies have oceans of cash to invest. But they're not investing it. Because they're too risk averse, profit-obsessed, and short-term greedy.



- snip -

CHART TWO: Wages as a percent of the economy are at an all-time low. Why are corporate profits so high? One reason is that companies are paying employees less than they ever have as a share of GDP. And that, in turn, is another reason the economy is so weak. Those "wages" represent spending power for American consumers. American consumer spending is revenue for other companies. So the profit maximization obsession of American corporations is actually starving the rest of the economy of revenue growth.

- snip -

CHART FOUR: The share of our national income that American corporations are sharing with the people who do the work ("labor&quot is at an all-time low. The rest of our national income, naturally, is going to owners and senior managers ("capital&quot , who have it better today than they have ever had it before.




MORE AT LINK

[Raine]

1. Good article on point. nt

[Brigid]

2. Another subtle thing about this that isn't talked about . . .

Is the way starvation wages erode the American work ethic, still one of our greatest assets even after three decades of work being devalued and workers treated as disposable. But where the young are concerned, the jig is up. They know that employers don't care, and that any job they are likely to get will be low-wage and not last long. They have no incentive to care about their jobs beyond a (skimpy) paycheck. That paycheck doesn't cover the bills and offers no stability for the future anyway. They went to college and have nothing to show for it but a job at Starbucks (maybe) and a pile of student loan debt. Those STEM jobs they worked so hard to get qualified for? They went to H1B visa holders from India who will work for next to nothing. They've been the victim of a monstrous lie. Work hard, and you'll be rewarded? Yeah, right -- tell me another one. And we older ones are on the same boat; many of us just don't want to admit it yet.

[Quantess]

4. It should be apparent to most workers of all ages, by now.

There are a few lucky people who have held on to their good jobs and do not have anyone in their inner circle who has suffered from the lousy job market. Most people have been affected or are close to at least one person who has been financially devastated.

Even middle aged people who have always had good careers, wise with money, etc, had their 401Ks drained.

[liberal N proud]

14. So true

I watched my brother who put 30+ years in the airlines lose his job, his house and his savings. He was too young to draw a pension at the time and they didn't do 401K's.

He now lives in a trailer living paycheck to paycheck.

[Nay]

40. My brother is in the same boat. He worked for many years as a civilian ship radio operator, and

has tons of different skills -- electrician, engine repair of any kind, etc. -- and at age 59, he cannot find a job to save his life. Not even a part-time security job.

[Eleanors38]

58. I'm 65, but started drawing SS at 63 so I wouldn't

burn through my "savings" trying to eke out a bigger SS payment. My last temporary job was over 7 yrs ago. And I'm lucky by most standards since my dilapidated house is paid for & my 20 yr old van still runs.

[Nay]

69. My bro will apply for SS next year; he's got that long to wait for age 62. He has worked all

over the world, and as a result, he has bought and sold a few houses but does not have one now. Before the bottom dropped out, he was trying to decide where in the world he wanted to buy a place to retire to. Now, he'll be lucky if he can rent someplace in a ghetto somewhere.

He has never been one to go into debt so he doesn't have that hanging over his head, but he has never been able to make himself save money and LEAVE IT ALONE. There was always something he wanted. Sure, he paid cash, but in the end, he now has nothing. Absolutely nothing. It didn't help that he got married 5 yrs ago to someone who is pretty worthless, frankly. But he's always been willing to work and now has gotten caught up in this godawful economy. I send $$ when he needs it, but I'm not rich, either.

[Eleanors38]

78. It's a crappy situation. The ONLY things which saved

my behind as well as it has been are:
1) No debts
2) I save
3) I rarely spend beyond necessities

But I am an exception, and most people shouldn't be "punished" for not following my "style."

[jollyreaper2112]

35. no this can't be right

I was told the failure of communism is that nobody is rewarded for working hard so nobody does. You're trying to tell me we're in the same trap. This can't be right. We're America. We're better than everyone else.

[Brigid]

71. Oh, it's a trap all right.

It's a mousetrap of a different design, but the little mousie (us) is just as dead.

[HiPointDem]

3. no, it's a law. the article is kind of silly, i think. competition of various kinds makes it a law

(or rather, a necessity) rather than a choice, as the writer claims. he's basically saying, paying workers too little hurts the economy, so this is stupid & just a product of some bad people's 'greed'.

but it's not true. it's not just a product of some bad people's greed. it's inherent in the operations of capitalism.

[fasttense]

9. Exactly right Hi Point

this article IS kind of silly. It's like saying it's not a law that a corporation makes as high a profit as it can. It's not a law that corporations charge their customers as much money as the market or government allows.

No, it's NOT a law but it IS built into the economic system called capitalism.

A lot of awful things are built into capitalism, like the advantage of monopolies, the necessity to lie cheat and defraud if your competitors are doing it, the need to coerce your customers to buy your crap.

Want a smooth running economic system? Want an economic system that does NOT crash every few years? Get rid of capitalism.

[TBF]

15. "Get rid of capitalism" -

that is the answer.

It may not be a "law" that people are paid low and profit is king - but when those are the things that are rewarded that is the behavior you are going to get. Every.single.time.

We need to change the system and reward other behaviors if we want any sort of change.

[branford]

22. Respectfully, replace it with what exactly?

The efficiency and comfort of communism or state socialism? I'd rather not wait on long lines for the state toilet paper.

Capitalism has, by far, lifted more people out of poverty that any other economic model. Capitalism is the reason that the United States has the world's largest economy and it maintains our very high standard of living. It's why so many millions want to immigrate here.

There is a reason we see it as a driving force in developing economies like China, India and Brazil. Even countries with strong social democracies like those in Scandinavia, rely on capitalist enterprise to pay for their cradle to grave benefits. It is also why countries like Venezuela, which is increasingly following a state socialist model, and despite great natural wealth due to its vast oil reserves, has significant commodity shortages and lacks the internal skills and resources, as well as foreign investment, necessary to maintain and maximize its own energy industry.

Market factors, like competition and supply and demand, determine wages in a capitalist system. Any yes, profit is the prime motivating factor. This profit drive is why the United States, even with the re-industrialization of Europe and Japan post-WWII and more recent competition from industrializing developing countries, is still a leading technological and entrepreneurial innovator. Contrary to what many might believe, the United States is one of the largest manufacturers in the world, second only to China.

HOWEVER, no system is perfect (or pure), most definitely including capitalism in America. Rather than eliminating capitalism, we should seek to eliminate the factors that DISTORT the market - do not bail out companies and individuals who made bad investments and foolish risks, enforce the numerous antitrust and fraud laws available today, tax long-term capital gains as income, eliminate preferences for certain industries and companies in tax codes and regulatory schemes, etc. Also note that unions, safety and environmental regulations, minimum-wage laws, etc. are NOT inconsistent with our capitalism system.

Now, let the flaming begin . . . ! (Yes, yes, I know . . . I'm a fascist, corporate shill, soulless oppressor, etc. Such accusations are patently ludicrous and will not change stark economic realities.)

Also please cite to actual examples of the implementation of your preferred economic model for the U.S.A. The perfect, abstract economic theories you read about or discussed in your comparative economic theory seminar in college, are effectively useless. Flawed and selfish human beings run and live in economic systems, warts and all. Convincing implementation of theory should drive actual policy.

[Moostache]

24. You are not accounting for what made capitalism work in the first place...

In post-war America from 1945 through 1970, wages and work/productivity tracked a roughly even path and the system was tightly regulated through government laws, agencies and enforcement. We also had a progressive tax code that maintained some semblance of fairness without allowing for a de facto aristocracy to accumulate inheritance wealth and pseudo-royalty land and titles.

In the period from 1980 to the present, government regulation and enforcement have been gutted, the tax code has been dumped onto the back of the former middle class and the system of capitalism has broke free of its containment and become a destructive force of wealth accumulation in a rigged game.

Replace it?
Not necessary...

Re-cage the beast by returning power to the people with publicly financed elections, term-limited politicians who are barred from lobbying after their "service" is over (CHOOSE - a career IN government or a career LOBBYING government but NOT both), eliminate the very concept of "externalities" by forcing corporations to account for things like pollution and waste disposal and road / infrastructure maintenance and upkeep. This can either be done directly through taxes or indirectly through fines and citations for the violations of already existing laws or by passing and enforcing new laws.

The "problem" is not so much capitalism itself, but the virulent, wealth concentrating bastardization it has become. You can still incentivize work and effort in an inherently lazy and selfish species like homo sapiens without seizing everything...

[branford]

25. I fully agree with much, although not all, of your comment.

My point was certainly NOT that the capitalist system in American could not be substantially improved, a point I made in my original comment and with which you appear to completely agree, but rather it was the best economic model for our country (and most others).

I admit to being somewhat frustrated with reading innumerable comments from well-meaning posters who believe that if we just eliminated capitalism, that most of our societal ills would disappear, all the sick would receive medical care, there would be no more poverty and homelessness, crime would vanish, wars would end, and unicorns would roam free. I have never seen such a utopia, nor any conceivable or viable road map to achieve such a platonic vision.

[pscot]

46. Excess breeds excess

If the system pushes people to the wall, they will react. If the system eliminates all possibility of reform, the reaction, when it comes, may be violent. They know this, hence the national security apparatus. They're afraid of the public.

[branford]

49. After the revolution, you will still need a job and probably want an iad. n/t

I do not believe the system is anywhere near as bad as you suggest. Evolve and improve the system so that many more may reap its benefits.

Also, the "national security apparatus" is a creature of politics, not economic. One certainly does not need capitalism for a surveillance state.

[HangOnKids]

72. What is an iad?

BTW n/t means you are not going to post anything else in the body of the message. It appears you might be a tad confused.

[branford]

79. I, too, do not have an ipad, but I believe you understood my point.

As to the "n/t," I originally did not intent to include any additional text, then changed my mind and forgot to edit. I should not compose messages and talk on the phone at the same time. Lesson learned.

[HangOnKids]

81. I thought an iad might be an acronym for something

As to the n/t thing, I just didn't want people to miss your post because they believe the header is all there is.

[branford]

86. All good.

[Kingofalldems]

125. Oh no, not this again!

[AmyStrange]

102. well, at least you weren't texting and driving...

-

causes wrecks, ya know. Ha ha, just kiddin' wicha branford,

d

-

[branford]

104. Don't have a car, so not a problem :)

I walk or take the subway over here in The Big Apple!

Now, let's not talk about how I walk around like a zombie with my noise-cancelling earphones . . . I've had far too many near misses with bike couriers for my liking. My days are probably numbered . . .

[AmyStrange]

105. So have I...

-

I really am big time surprised there isn't either an epidemic of deaths caused by buds or at least some kind of national campaign warning about the dangers of walking and listening too loud,

d

-

[branford]

106. Here in NYC, I think people just expect you to be preoccupied when walking on the street.

It keeps the casualty rate relatively low.

I also think Mayor Bloomberg was trying to pass a law concerning pedestrians and headphones. It got lost in the great Big Gulp chronicles that are still ongoing.

[AmyStrange]

108. I've been to NYC

-

one college field trip I walked around and into Central Park and the Metropolitan Museum of Art and had a quick shot and beer in a side street Tavern. During the day, you people (and I mean that in a good way) walk in herds waiting at each corner like one big wild animal knowing exactly when the "WALK" sign will flash and actually start crossing the street a couple seconds before.

IT WAS AMAZING!!!

I've also driven through Manhattan at night (3 or 4 am) and you people drive the same way as you walk. I got lost and decided to follow this one car that looked like it knew where it was going (driving faster than everyone else) and got right behind it and ended up at the Lincoln Tunnel and I think into Queens.

I'm originally from RI, and I love NYC, especially New Yorkers. There ain't nobody like you guys IN THE WORLD!!!

Sorry, I'll shut up now

d

[branford]

109. There's nothing greater than the City!

However, I take exception to one of your remarks . . .

I am a NATIVE New Yorker, I feel no need to wait for the sign to change before crossing the street. Damn tourists.

[AmyStrange]

110. HA HA HA...

-

ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha ha HA!!

from one of those "DAMN TOURIST"

-

[socialist_n_TN]

94. Politics is a creature of economic. As is society...

nm

[socialist_n_TN]

93. How the hell do you (or anybody else) KNOW that capitalism is the....

"...best economic model for our country {and most others}"? There has NEVER BEEN A SOCIALIST SYSTEM THAT WAS ALLOWED TO DEVELOP ON IT'S OWN TERMS! Never. Every time it was tried, it was attacked from it's inception, viciously, overtly and covertly, by the MICs of the capitalist system. Until a socialist system has a shot, nobody KNOWS what the best system would be.

[branford]

101. Ah, the old canard, "Socialism, next time we'll get it right."

Last edited Thu Aug 8, 2013, 06:20 PM - Edit history (1)

I assume that you would only want a fully socialist economic system under the auspices of a democracy. Therefore, it must survive the slings and arrows of those who oppose it, just like any first-world capitalist system, from Sweden and Norway to the United States and Britain. Socialist economics imposed with the consent of the governed would be anathema to liberal values.

As you admit, full-scale socialism has in fact been tried, and the results have been disastrous. You can make all the excuses you want, but history has not judged these experiments too kindly. Most importantly, nothing is stopping you and your ideological fellows from convincing our country or any other nation to abandon capitalism and give socialism a try.

However, even very peaceful, rich, productive, democratic, left-wing social democracies with no MIC to speak of, like those in Scandinavia, who already have some truly socialist institutions, are moving towards increasing levels of capitalism due to the ever rising costs of their comprehensive social benefit system (and accompanying negative birth rates). If countries like Sweden and Norway cannot be convinced of the value of a more comprehensive socialist system, who will?

[socialist_n_TN]

130. So you're obviously OK with the capitalist military.......

and spy agencies undermining socialist and socialist leaning countries every chance they get. You don't get to use that "best system" shit until there's a TRUE competition for the hearts and minds of people WITHOUT interference.

The truth is pretty fucking obvious. Capitalism can't allow a socialist system to exist. Capitalism can't even allow something like Medicare for All to exist BECAUSE THEY CANNOT COMPETE WITH A WELL RUN SOCIALIST STYLE OF PROGRAM.

[Enthusiast]

139. Now that was one great fucking post. You win!

"Capitalism can't even allow something like Mediare for All to exist BECAUSE THEY CANNOT COMPETE WITH A WELL RUN SOCIALIST STYLE OF PROGRAM."

Your post goes beyond the usual retort. It gets to a fundamental truth of the matter. Our system, our military and intelligence apparatus, has undermined anything and everything that has even a whiff of socialism.

"You don't get to use that "best system" shit until there's a TRUE competition for the hearts and minds of people WITHOUT interference."

[branford]

145. Capitalism is the economic system in all first-world (and most other) countries, not just the USA.

Let's look to Sweden and Norway, for example.

They are most definitely capitalist and have social protections well in excess of that offered by Medicare and Social Security. And as I stated before, these countries are very peaceful, rich, productive, entirely democratic, left-wing social democracies with no MIC to speak of, who already possess some truly socialist institutions. They are also some of the least corrupt governments in the world. Nevertheless, even they are moving towards increasing levels of capitalism structure due to the ever rising costs of their laudable comprehensive social benefit system (and due the accompanying negative birth rates inherent in such a system and plaguing much of Europe).

These countries also have multiple political parties devoted to your ideology. These parties will often even win some elections and serve in coalition governments. Absolutely nothing is stopping the people from voting for more politicians that would immediately implement many, if not all, your ideas. Yet, at best, these state socialist and similarly minded politicians usually are nothing more than political oddities and agitators.

Now, who exactly, and by what conceivable manner, is preventing these countries and others from establishing the ever increasing levels of socialism that you desire?

Apparently, unless they are staring down the barrel of a gun, no country or significant number of people are willing to try (again) any system with such demonstrably poor results and abominable history. Just ask most citizens of eastern Europe.

[Enthusiast]

146. I do not know of a single human being that is

an advocate for Eastern European or Soviet style socialism. What is your point?

"Now, who exactly, and by what conceivable manner, is preventing these countries and others from establishing the ever increasing levels of socialism that you desire?"

That I desire? I want to preserve social security and medicare. I would like to expand medicare to include everyone. I want to rein in the excesses of MIC. I want the banks to be reasonably regulated. I don't believe in privatizing the profits and socializing the losses. That's about the extent of my socialist leanings.

[branford]

148. Then we have very many areas of agreement.

It was my impression that you advocated a more "state socialist" model for the United States. I apologize if I was mistaken as to your personal beliefs.

I believe that enforcing many of the laws already on the books and instituting reforms similar to those in more progressive capitalist nations would best serve us all.

[fasttense]

26. Has capitalism lifted people or has the opening up of markets lifted people?

One of the problems when discussing capitalism is that it usually does NOT stand by itself. It can't. It would destroy any society that decided to do only a capitalist society. Most of the time things like markets, industrial and technological improvements, slavery, feudalism, traditional privately owned businesses influence economies that call themselves capitalist. But people like to ascribe all of these influences to capitalism when they are merely a part of a functioning economy.

You say capitalism has lifted people but how do you know it wasn't market influences or technological improvements that lifted people?

There have been many economic models that have been successful. Feudalism and slavery are 2 models that have been very successful. Yet very few people ascribe the success of the Revolutionary war to slavery even though it was a successful and large part of the economy back then. Look how successful feudalism was and yet freedoms we enjoy today implemented back in the days of rulers and serfs are not ascribed to that economic model. Yet we ascribe so many successes to capitalism that frequently people mistake capitalism for democracy.

You suggest that we continue to attempt to control capitalism by regulating it much like FDR did during the last great depression. But look at what happened to those regulations put into place to prevent another great depression. They were removed and we got another great depression or great recession. Controls on capitalism only work as long as the rich capitalist allow them to. If they see a chance to make huge gobs of money by repealing regulations well then they use all the money we allow them to repeal the regulation. As long as you allow a handful of greedy men to make decisions about capital that we the people allow them to accumulate then they will continually undermine all regulations by using that very wealth and power you have permitted them.

There really has never been a real socialist country. The Soviet Union merely took away the wealth and power from the capitalist and put it into the hands of government officials. They thought they could always vote out the officials but you see even in the US voting does not always represent the will of the people. So instead of capitalist CEOs and boards, the old USSR had politicians and the Politburo.

Here are just a few examples of socialist corporate entities and business that are very successful:

http://www.alvaradostreetbakery.com/

http://biofueloasis.com/about-us/

http://broadwaybicycleschool.com/about/

http://www.mondragon-corporation.com/ENG.aspx
A corporation and federation of cooperatives in the Basque region that employs more than 80,000 with the policy of one worker, one vote.

And I agree no system is perfect, but we can do a whole lot better than what we have now.

[branford]

29. I admit that no economic system is "pure"

You raise a fair question concerning whether market influences or technological improvements lifted people or capitalism. A real chicken or the egg came first dilemma. I would generally say neither, rather that the opening of markets, technological advancements and capitalism have been complementary. China and India are currently the perfect examples. Access to foreign markets, rapid industrialization and competition has served them well as it similarly did with America in the pre and post-WWII periods, and Britain in the 19th century . Most significantly, profits to be derived capitalism (particularly as they related to the military) have primarily driven technological achievement in the modern era.

You correctly observe that there has never been a successful "true" socialist country (or even a predominately socialist one) in the modern times. I believe that this is no accident. Human beings are tribal and naturally seek to accumulate and preserve resources. This "greed," in varying degrees, is a survival trait that has catapulted us to the top of the evolutionary ladder (and caused quite a few wars in the process). Attempts at true socialism rarely overcome man's base nature and end-up looking like the USSR, and more recently Venezuela, particularly when forced to compete against other aggressive capitalist societies.

The communal business entities you cite are admirable and do not conflict with the capitalist ethos. They are freely entered into business arrangements, compete in the capitalist marketplace, and their niche socialist allure helps attract their target customers.

However, do you believe these relatively small bicycle shops and bakeries could really serve as an economic model for a country as vast and diverse as the United States and achieve anywhere near the same level of comfort, security and prosperity?

[fasttense]

38. Capitalism compliments new markets and technologies or simply exploits them?

Wouldn't feudalism have opened them and exploited them too? Slavery would have been able to use those advances as well - remember the cotton gin.

Capitalism merely allowed the rich capitalist to gain the majority of the wealth from the new markets or technology.

You use some of the most horrendously poor societies as your "models" for capitalism.

1st India - 32.7% of the total Indian people fall below the international poverty line of US $1.25 per day (PPP) while 68.7% live on less than US $2 per day. India has been a capitalist country for centuries, the East India Tea company was one of the 1st to use India's cheep products to undermine prices in the US. Why are they so poor? Why are they just now getting the 'rewards" of capitalism. Seems to me capitalism doesn't provide the rewards until desperate and starving people can provide a cheap labor pool.

Then there is Communist China - Are you really using a country that calls itself communist as an example of the success of capitalism? Aside from that contradiction, China certainly isn't a democratic nation. Capitalism - much like feudalism works best when democracy is crushed out of existence. So it's no surprise capitalism thrives in Communist China. But what you call serve them well means a decline in the poverty rate from 85% in 1981 to 13.1% in 2008 (poverty being defined as the number of people living on < $1.25/day). Of course when dealing with a totalitarian country, you don't know if those numbers are true or if those numbers merely represent in increase for just the uber rich.


Yes, mankind is greedy. Mankind is also ignorant, lazy, and hateful. So lets set up economic systems based on those faults as well. Why would you pick the worst qualities in a species and use it as your bases for an economic system? Why not pick the best qualities and use that? Why is greed and avarice so sacred to capitalist anyway? I'm so sick of the greed worshiping capitalist praying to their god of money. Do you NOT believe humankind is able to be motivated by other considerations besides money and greed? Really?

Oh by the way, you need to really check out those links. They are not all small businesses. From wikipedia, if you like that source better: http://en.wikipedia.org/wiki/Mondragon_Corporation

Mondragon at the end of 2012, employed 83,321 people in 256 companies in four areas of activity: Finance, Industry, Retail and Knowledge.

I don't call that small.

[Starry Messenger]

53. Great work.

[branford]

56. India and China are developing countries.

Focus on the capitalist social democracies in Europe if your objections involve current relative poverty levels.

And yes, Moondragon is larger. Nevertheless, it is a rare anomaly, very small in comparison to most large corporate capitalist enterprises that many members here find objectionable, and it exists entirely within a capitalist economic model.

I tend to look at economics like this: Capitalism is a terrible, flawed system, it's just better than anything else yet devised

[HiPointDem]

100. no, they're countries that were deliberately & forcefully *undeveloped* by british (& later US)

capital & later 'developed' by the same capital.

Just a process of moving capital around the world & changing the regulatory & policing structures. No great mystery.

[fasttense]

147. So why is it taking so long for India to develop????

They have been a capitalist society for centuries. If capitalism is just so wonderful at helping people, than why is India still developing??? They were around long before the US. In fact the East India Tea Company was used to rig prices in US markets when the US was a mere colony to Great Britain. Why the slow development if capitalism is such a wonderful economic system?

I see you decided that using a country that calls itself communist is NOT a good example of a successful capitalist economy.

When most of mankind lived under feudalism, capitalist were a rare anomaly. Capitalist corporations were very small in comparison to the vast wealth of royalty and religious institutions. But eventual feudalism disappeared (except inside the structure of capitalist corporations).

No there are many alternatives to capitalism that are a whole lot better than what we have now.

[Enthusiast]

140. PLUS ONE!

Excellent post!

[HiPointDem]

91. "China and India are currently the perfect examples." That's an ironic comment, given the history.

Last edited Thu Aug 8, 2013, 05:08 PM - Edit history (1)

India was one of the richest & most civilized countries in the world when the British colonized it, with a more advanced textile industry than the Brits had. By force of arms the British destroyed the Indian industry (and others) & turned India into a giant 'farm' for production of cotton & other basic commodities the British could use in *their* industries & trade. The british deindustrialized India & impoverished it.

A similar process took place in China, with the added gift of turning 10% of its population into drug addicts.

British capitalist colonization & theft was the direct cause of the poverty you now say capitalism is relieving in india and china.

but it's not really the case. all that's happening is the center of capitalist investment is moving. the 'new middle classes' you see developing in china & india are the corollary of the 'declining middle classes' you see in the US & Europe. The centers of capitalist development are becoming peripheries and the peripheries are becoming centers.

It's the same process you saw when the auto industry left detroit, only on a global scale.

Furthermore, in a global sense, capital is taking an ever-larger share of total value created, and labor a smaller share. which means, even though some 'average' global standard of living may be increasing, most of the value created is taken by a small fraction of the global population, which means an increasing percentage of the global population becomes, effectively poorer/more powerless. it's like mine & bill gates' 'average' income is in the millions, but my power compared to bill gates' is that of an ant to an elephant.



oh, and those chinese workers you say are 'becoming middle class'? they may be becoming middle class in that they have a better house, can buy more consumer goods, etc. but in the big picture, chinese workers as a whole are taking home a lower percentage of the value they are creating, and capitalists are taking home a bigger share. dramatically so.





So even though there may be a rise in some aspects of living standards globally (e.g. a higher fraction of the population has access to consumer goods, or electricity, etc) that does not mean there is any reduction in global poverty, if poverty is defined as access to hard assets (land, capital, productive tools) or distance from average wealth/income (i.e. if wealth/income is right-skewed so that the 1% has most of it).

Result = more poverty, not less.

[blackspade]

27. Democracy in the workplace

Mondragon in Spain is a prime example.

[branford]

32. Moondragon thrives in a capitalist system.

A capitalist system does not prohibit or prevent workers from being shareholders or even completely owning the enterprise. They still need to pay competitive wages, build better products or provide better services, and otherwise do better than their competitors in the marketplace. As owners, the workers are free to accept a lower profit. However, if their earnings do not consistently exceed their liabilities, such an endeavor will fail. I also do not believe that any state significantly supports Moondragon or any other "socialist corporation."

If "worker cooperatives" were the most competitive or efficient economic model, we would seem them far more often in the marketplace. However, investment and the incentives relating to the large accumulation of wealth drives the most significant projects and maintain economies of scale that keep prices low and maintain our standard of living. For example, one might hate Walmart as a soulless beast that destroys small enterprise, but their scale both provides inexpensive goods that increase the standard of living for many poor individuals, and forces their competitors to act likewise.

[fasttense]

43. Actually capitalism does prohibit just that.

That's what capitalism means. That individual capitalists gather up all or most of the capital for themselves by controlling the means of production. The means of production are NOT controlled by the workers. That is the basic description of capitalism. Once the workers control the means of production and by association the capital, you no longer have capitalism.

By the way, Mondragon makes great profits for it's workers/owners by NOT using capitalism. True it is functioning in a predominately capitalistic economic system but it would do much better in a different system.

You know, we don't see slavery anymore as a major economic system but it certainly was successful. Feudalism, a very successful and rich economic system, wiped out all ideas of capitalism until, well capitalism overran it.

So just because you don't see it as often, does not mean it is not a perfectly viable economic system.

[blackspade]

44. Using Walmart as a prop for your opinions on capitalism

undercuts rather than underscores them.
Walmart exploits workers at all levels from production to retail and even exploits the tax payers anywhere they are located.
It is a posterchild for capitalism at its worst.

Corporations like Mondragon by contrast does not exploit its employees, because they are the company's shareholders and board of directors. While it exists in a capitalist system, it is not dependent on it. Worker directed companies can exist at multiple scales and do successfully, not that it is reported in our corporate controlled media. Worker directed enterprises by nature are more competitive in salaries and can produce better products. The problem is, as you point out, that the way our capitalist controlled government is set up, the government subsidies and tax incentives are set up in such a way as to exclude "socialist corporations," as you call them. Yet they still thrive and will hopefully one day bury the capitalist corporate state.

[HiPointDem]

95. Capitalism *does* prevent it. For example, the Green Bay Packers were a successful community-

owned sports franchise.

The rest of the owners got together & made a law/rule so that it could never happen again.

[Enthusiast]

141. That is an excellent point.

I think it would be great if I could own a little part of my Cleveland Browns. I guess the owners didn't like the competition.

[PowerToThePeople]

33. Typical RW argument

In fact, your post looks like a copy-paste of some quote I saw quoted from another RW board.

Also please cite to actual examples of the implementation of your preferred economic model for the U.S.A. The perfect, abstract economic theories you read about or discussed in your comparative economic theory seminar in college, are effectively useless. Flawed and selfish human beings run and live in economic systems, warts and all. Convincing implementation of theory should drive actual policy.

There can be a better way to do it. The system and how it functions may not exist yet. That does not mean we can not build one.

Before cars - "show me a horseless carriage"
Before rockets - "show me a way to get a man to the moon"
Before polio vaccine - "show me a way to stop polio"
on and on. We can do great things if we choose to.

They are meeting now and putting a lot of effort into TPP. This is a capitalist central meeting trying to maximize corporate profits. Why not put as much effort into devising an economic system that is good for the people and ecosystem on this planet? Why? Because TPtB don't fucking give a shit. They don't care if you starve, they do not care if you die, they do not care if the worlds Oceans rise 5 feet. All they care about is more money and power. They need to be gotten rid of if we are to move forward as a race.

[branford]

36. Right wing? Really?

If you think that those who believe strongly in the values of capitalism, and demand evidence to contrary claims, cannot be proud Democrats and most decidedly liberal, you need to get out more. There is a reason why Obama and the Democratic Party scoffs with utter disdain at the slightest notion that Obama is even the least bit socialist.

You need to speak with George Soros, Warren Buffett, Bill Gates and most of Hollywood!

In a world with scarce resources, I very much would like to see this completely new economic theory that will propel us to egalitarian economic bliss yet still accounts for human nature and does not just rehash state socialist rhetoric.

Edit: Although I've only been posting on the forum a short time, a quick search of my posts will quickly disabuse you, or anyone else, of the preposterous allegation that I am some right-wing troll. If the forum posts you apparently read on conservatives boards demand empirical evidence in support of arguments, good for them.

[PowerToThePeople]

48. liberal.

the term liberal is used a lot.

It is used to describe someone in support of

Women's rights
LGBT rights
Minority Rights
Fair Judicial system
Animal Rights
and many more.

I claim that as long as a person stands in support of Capitalism or any unfair economic system, they can not be a true liberal. They are a LINO. They are willing to allow personal choice and direction, but only within the confined cage of tyranny that is Capitalism. There is no true freedom in that system, only the illusion of freedom.

[fasttense]

54. Well put Power. n/t

[fasttense]

51. If you are serious about what you wrote:

I very much would like to see this completely new economic theory that will propel us to egalitarian economic bliss yet still accounts for human nature and does not just rehash state socialist rhetoric.

Check out this site. http://rdwolff.com/ Take a few of the free on-line course and see if it does not open your mind to new and great possibilities.

Oh by the way. There is no perfect. There are flaws in most economic systems and the bad parts of human nature will always have to be fought off but it does NOT mean we must all bow down to our worst demons.

[TBF]

131. The labels don't matter -

especially at a time when we have a "liberal" president with policies of privatization that rival Ronald Reagan's dreams.

Capitalism has been very successful for the 1% of the world that has richly benefited from scratching it's way to the top of the heap. For others, not so successful.

[HiPointDem]

87. capitalism has not lifted people out of poverty. it has lifted the general standard of living &

raised human productivity, but that's not the same thing. in fact, capitalism has actually sent an increasing percentage of the human population *into* poverty.

[CreekDog]

114. how about the type of social safety net system like they have in Northern Europe and Scandinavia

capitalist with an active government which is devoted to taking care of their people and increasing the average citizen's quality of life.

[branford]

120. I would encourage such proposals.

Reform and improve our capitalism structure. Enforce the laws already on the books. However, do not throw away the baby with the bathwater, capitalism has far too many comparative advantages.

As I stated earlier, if government performed its proper and expected role, everyone would greatly benefit.

I do not want to argue how best to divide the economic pie; I want a bigger, tastier pie! (preferable apple pie, yum.)

[Enthusiast]

138. So we should rid capitalism of unions, safety and environmental regulations and minimum-wage laws?

What are you?

[branford]

143. Respectfully, did you even read my full, original post, no less any of the follow-ups?

I explicitly stated the exact opposite of what you allege on multiple occasions.

You may disagree with me, and that's certainly fine. You should, however, at least have the courtesy of addressing the actual arguments as so many others have done, both calmly academically and, at times, with great emotion.

Unions, regulations and similar laws are perfectly compatible with capitalism in practice. If government simply performed their proper role, even more people would reap the benefits of the system.

My argument is definitely not that capitalism is perfect or cannot be properly regulated, it's simply that the alternatives that have often been suggested are far worse.

[leftstreet]

60. +1

[Hydra]

124. Nailed it

And I don't know why that scares people so much about removing capitalism- It may be a sacred cow, but it's not the best system every created(unless you're in the 1%).

[cheapdate]

20. Yes, it's a "law" of capitalism, so to speak.

It works in support of the main "law" of capitalism -- which is to maximize profit. Greedy capitalists are laughing at this article.

[Hippo_Tron]

112. Markets are almost never perfectly competitive

The competition argument says that if Wal-Mart started paying their employees $9 instead of $8 an hour, a new business would spring up that pays their employees $8 an hour, and would put Wal-Mart out of business because it can produce lower costs. But the reality is that the barriers for entry are far too high for a new Wal-Mart to spring up just because they raise the minimum wage a dollar.

[HiPointDem]

113. Competitors already exist, so barriers to entry are immaterial. If walmart raises wages,

competitors can theoretically undercut them unless they make it up elsewhere.

that's why big capital actually loves the minimum wage law. they can get rid of small competitors using it, & otherwise control general wage levels.

[Hippo_Tron]

116. Who will put Wal-Mart out of business if their wages go up $1 per hour?

[HiPointDem]

119. maybe no one. but competitors are multiple, and all can steal market share. which reduces

walmart's profits.

walmart has multiple competitors in retail, grocery, pharmacy and other speciality lines.

here's just one:

http://business.time.com/2013/04/01/will-dollar-stores-rule-the-retail-world/

[Hippo_Tron]

121. Any loss of profit would be minimal

If Wal-Mart raised their wages $1 an hour they'd presumably make up for it by raising the prices of some items a few cents. The vast majority of their customers would not notice the difference. The vast majority of the remainder would determine that they are still saving money overall by not having to use gas driving to multiple different stores.

A few obsessive bargain hunters who spend a large amount of time comparison shopping would ditch Wal-Mart for another store. But the vast majority of human beings are not robots, and we don't react to extremely small price changes. We make the rational choice to spend our time doing more productive things than trying to save a few pennies.

[HiPointDem]

122. maybe. maybe not. walmart apparently feels differently. do you think it's sheer bloody-mindedness

that makes them feel so?

[Hippo_Tron]

123. Yes, I do...

I think that the law of capitalism is that you pay your employees as little as you can and still sleep at night. For some people, that's a lot higher than others.

If your business has fallen on hard times and you need to pay low wages to survive, at least in the interim, it's one thing. If you have an extremely profitable business and a sizable percentage of your employees are living off of government assistance or if you won't raise the price of your pizza a whole 14 cents to provide your employees with healthcare, it's another thing.

The Mitt Romneys of the world who run the vast majority of the corporations we're talking about aren't reasonable compassionate human beings. They have a Ferangi-like obsession with acquiring more and more profit. Even if the Democrats obtained supermajorities in congress for the next two decades, the Koch Brothers' great great great great grandchildren would still never have to work a day in their lives. Obsessively trying to defeat every regulation or tax increase that could possibly cost them a nickel, isn't required for their enterprise to prosper. They do it because they get satisfaction from it.

Plenty of businesses can and do profit just fine without paying their employees as little as they possibly can.

[HiPointDem]

126. motto of capitalism = grow or die. if you're not making at least that 3% growth, you're dying.

[Hippo_Tron]

128. What does growing have to do with paying your employees as little as legally possible?

Because if one is a prerequisite for the other, somebody better tell Costco that they have to stop growing.

[HiPointDem]

136. there's growth & there's growth. costco is a pygmy compared to walmart & a kind of niche

player in a way. its 'average' customer makes about $74K & its percentage of profit is consistently about half of walmart's (just under 2% v. just under 4%)



not to mention that, while costco starts its new hires about $1.50-$2 higher than walmart (in my state, washington), the same can't be said of the labor in its international supply chain -- which costco, like walmart, is continually engaged in wringing lower prices out of.

it's a smart strategy that *complements* the existence of walmart; walmart wouldn't be getting a lot of costco's customers anyway, purely on branding criteria (walmart is perceived as too low-rent to shop at by the demographic costco targets). so costco offers essentially the same thing, with somewhat higher quality goods and higher-quality staff.

costco offers higher wages/benefits than walmart as part of its business strategy (targeted at a higher demographic). that works until it grows enough to exhaust that market niche.

and then, all bets are off.

[Demo_Chris]

117. Well said....

It seems that often the loudest critics of capitalism do not even understand what it is that they are critical of -- and I include this author in this. Capitalism is nothing more than a social economic system in which the property rights of the individual take precedence over any claim, and in which men and women can exchange goods and services using their own best judgment as a guide. It is the obligation of the individual to secure for himself the deal that is in his or her own best interest.

If, as this author claims, businesses are making an error in paying too little, or perhaps workers an error in not demanding more, the failure is not with the system that ALLOWED them the freedom to make this error.

[HiPointDem]

118. The author isn't a critic of capitalism, he's an Oppenheimer/Merrill Lynch shill who got busted

for fraud.

Which explains why his account is so ultimately misleading.

[DontTreadOnMe]

5. Large scale labor strikes are the only solution.

The only fear the corporation have is have continuous days of "no sales".

Do Americans want it enough, or are they just going to continue to be slapped in the face with lower wages.

[Brigid]

7. Perhaps coming soon to a workplace near you. n/t

[DontTreadOnMe]

8. People on minimum wage have nothing really to lose

And the amount of people service MANY large chains of stores.

If a National Week of Boycott could be established... it could hurt many retail and food chains real bad, especially if you did it during the Xmas "shopping" season.

1 week out of 52 total loss can hurt a bottom line big time.

[Throckmorton]

19. Except their lives,

which is what the 1% wants. Fear to take any real action, because the right wing goons can't wait to use all that firepower they are amassing. The 1% will unleash it when necessary.

[Eleanors38]

66. Well, there was plenty of firepower during the massive

expansion of the union movement during the early decades of the last century. Didn't stop unions, did it? There are limitations to armed goons: Us.

[Throckmorton]

135. They have learned that lesson,

this time they will come for our children first.
All we can do is suffer and die.

[ceonupe]

30. Tell me how that works

I know every time my local Walmart has a job fair or opening there are literally hundreds if not thousands of people trying to get a job.(we are a town of around 400k with 6 walmarts and 5 are super centers)

I could see Walmart just firing everyone who strikes and replacing them all pretty fast. Their system will work with new employees.

Also most people making low wages can't take a week off of work or they will be homeless in less than 30 days do to eviction. U gotta come up with a fund to pay these workers while they are on strike.


Also note:
The Walmart distribution center intown pays much better than most factory jobs we have left outside of Goodyear tire plant

[DontTreadOnMe]

31. Here is "how" it works...

you need to explain to EVERYONE on minimum wage that you are being ripped off and that your future will remain the same unless to stick together. If you are happy living minimum wage for the rest of your life, then just ignore the strike and end up with nothing in your life.

[ceonupe]

41. What about those unemployed

Who aren't even making min wage and the state cut unemployment and other assistance.

They will apply for those jobs. Because they have to eat. So those min wage employees that just striked are now unemployed effectively because they can't get their jobs back until the replacements quit/get fired.

[DontTreadOnMe]

42. so if they are unemployed NOW, they can stay unemployed for another week

if you can't stick together on a strike, they we all lose.

[oldhippie]

45. That right there ...

... is the problem.

[DontTreadOnMe]

47. you are unrealistic. How do you strike if everyone does not strike.

You can make money and service doing other things than take a minimum wage job at one of these corporations that are killing the labor market.

If you put Wal-Mart out of business, it would open up MILLIONS of jobs that they took away!

[ceonupe]

55. In NC

The amount and time on UE was drastically cut to avoids businesses having to pay more UE tax.

If u don't have a job and have not had one for 2+ years a $9-10.50 an hour job at Walmart is better than nothing especially if u have no other way to survive.

Like I said hundred if not over a thousand people apply every time they open a store/ have job fair.

[Eleanors38]

68. All those questions were asked on the eve of the union movement.

[ceonupe]

70. These workers aren't unionized

They have no find to pay them anything on strike. They most likely live paycheck or paycheck advance to payceck advance. They prob always run 5 days or more behind on most bills. Let's say a strike lasts 1.5 weeks and it takes them 1 month to get back to pre strike hours. The get booted from apartment, car remotely disabled/towed by repo company, it will happen very fast if you don't watch out. Who helps these people.

Non unionized with no backup funds on strike - no social saftey net = homelessness and even worse poverty

[Eleanors38]

75. I'm open to suggestions.

[Kingofalldems]

37. So we should just do what the republicans say, I guess.

Thanks alot.

[ceonupe]

50. No we get

Serious about creating industry in the USA that offers good wages and an oprotunity for upward mobility.

Right now there is no path from cashier to middle class for many workers. The factories are gone, we don't make anything anymore here, the things we do make here we bring in forgien labor to do it for us on both the high and low end.

To change this we have to reshape how we see the value of each other. We also may have to look at technology and its disruptive nature as it relates to labor. I know this is controversial but we must look at this. Many banks and even credit unions are now wear housing tellers in central call centers and using terminals in the branches. They are able to reduce the number of tellers dramatically and provide faster service but they also displace the most economically fragile workers. Same thing at stores with self checkout systems and order systems. What happens to these workers?

[HangOnKids]

74. "do to eviction"

Oh dear.

[ceonupe]

92. ok so i cant spell

do you have another point.

are you willing to put up some of your money in to a fund to help offset the $$$ cost of a strike on these workers?

the point is clear by 10 days late most apartments already have the paper work ready to befiled to evict and the whole process can happen in 30 days or less.

[Egnever]

6. Thnx

About as easily explained as it gets.

[The2ndWheel]

10. People want more for less all the time

Why wouldn't that be the case with labor? If corporate profits are so high with wages being so low, why would wages go up? Apparently we're not needed for profits to be high. If you're not needed, either to produce something or buy something, who's going to pay you to show up?

[DrDan]

11. "short sighted" - exactly, but that has been the CEO trend since the 80's

quarterly results are the focus.

and how better to improve short-term results but to slash costs by downsizing, outsourcing and, hence, reducing salaries

long-term planning has no place in today's corporate strategy

[B Calm]

12. Tell this to all the anti union co workers!

[pipoman]

13. Books like "Think and Grow Rich"

About early 20th century philosophy regarding labor..there was at least a leaning toward worker value..an example was Fords insistence that workers be able to afford their product..

[tclambert]

16. Ford was right. But B-school graduates think he was silly.

After all, Ford never went to business school, never got his MBA, never slept through a macroeconomics class. He was just the richest man in the world in his day.

[Brigid]

23. Ford basically thought to himself,

"Why would I have my workers building a car they couldn't afford to buy for themselves, when they are the very type of worker the car is intended for to begin with?" Thus the higher wages. Before him, cars had been little more than toys for the rich, much like private jets today. His car was to be for everyone.

[pipoman]

137. sam walton was

Probably a huge rethug, but his attitude toward labor and suppliers labor died with him...

[ZRT2209]

64. And in "How to be Rich" J. Paul Getty says

"Unions are the bulwark against economic and political totalitarianism."

[xchrom]

17. du rec.

[Ilsa]

18. Besides "a choice," I like to call it "Greed"

or Avarice. Yes, pointing out the shortsightedness of low wages might be the only way to get them to see the light.

[Civilization2]

21. short-term gain is the only thing corporate controlers see,..

Like over fishing till the ecosystem fails to provide fish, oil extraction till depletion, toxic dumping till environmental failure,. The corporate system is nearly blind to all consequences except profits for themselves.

[blackspade]

28. Like the world economic systems before it, Capitalism is

Stumbling and will eventually fall like feudalism and slavery before it.

Like these earlier systems, capitalism is based on the exploitation of workers production and the resources of those that don't have economic or military power.
Capitalism is like a virus, and it has nearly burnt the world up.

[branford]

34. Tell that to the formerly destitute rural Chinese who now have electricity and medical care.

Work to improve the benefits that capitalism has already bestowed in our country.

[blackspade]

52. You mean the ones that now work in sweat shops

and living in squalor in corporate and government high rise slums?
The ones that are daily exposed to harsh working conditions for slave wages.
The ones daily exposed to chemicals that cause cancer and other health issues?
The ones that make all of this worthless shit that Walmart sells around the world for staggering profits that they never see?

It's called exploitation. Being given crumbs in return does not make it less so.

As for this country, we now have the worst income disparity in generations and is getting worse, not better. Corporations control the levers of power for their own benefit because money is now speech. Capitalism exploits workers for the benefit of the capitalist classes. The gains workers have made over the last century are not due to capitalism, but in spite of it. Unions, protests, and left wing agitators made these things happen.

[branford]

57. Quite frankly, yes, I do mean those workers.

While I certainly do not approve of those conditions, from a entirely clinical perspective, this is exactly the historic pattern societies go through from rural, agricultural squalor to first-world comfort. In fact, Chinese workers are beginning to demand higher wages and improved working conditions. Many even want to start their own (capitalist!) businesses. This will ultimately be good both for these workers and those in America who might be better able to now compete with Chinese manufacturing.

Cultures do not go from tilling their small farms by hand to living in the city, owning cars and playing with ipads, overnight.

[blackspade]

62. You have a profound misunderstanding of capitalism.

[HangOnKids]

76. The cheerleaders for the 1% often suffer from that malady. n/t

[blackspade]

77. Indeed.

[leftstreet]

65. Coal did that, not Capitalism

And access to that energy has been through a more socialist distribution system

Although that's changing rapidly as Capitalism takes over

[Coyotl]

39. It is a law of capitalism that paying people as little as possible can cause business failure

because you do not compete for valuable employees.

[limpyhobbler]

59. Low wages are not just about money. It's also about power and control.

In many cases it is a choice. But if we're waiting to capitalists to make the right choice, we might be waiting forever.

They can make money either way: by treating people right, or treating people like garbage. They tend to go for the latter.

Because it's not just about money. It's also about power and control. When you keep your employees temporary and underpaid, always scared they can be fired, with no job security, you keep them divided and competing with each other, then it's hard for them to get uppity and start making bigger demands.

A capitalist is afraid that if you give 'em an inch, they will demand a yard. And then it really will start cutting into profits, and the capitalist will have to push back.


Instead of asking how can we get more money from a company, we could start asking ask how do we get power and control at a workplace. How to we get the power to make decisions about what to do with the profits and products.

Because exploiting other people via crap wages shouldn't be a choice a CEO or board of directors is allowed to make.

[treestar]

61. It is a law of capitalism

You pay as little as you can get away with, as little as the market will bear, and sell for as much as the market will bear.

This is why government needs to be involved to reign in the excesses that will occur.

[branford]

67. I completely agree.

The mitigation of the excesses and foibles of capitalism is precisely the role of government. The solution, however, is not the elimination of capitalism.

[moondust]

73. At least a law of corporate/stock market capitalism.

Not the same as small business capitalism of, by, and for mutually supportive communities where most of the profits remain in those communities.

Corporate/stock market capitalism is a predatory form that probably should have been outlawed a century or two ago.

[treestar]

80. If people could not incorporate

They'd have huge partnerships. I don't see how the world is going to turn back to small town days.

[moondust]

84. Growing one's business is the idea.

As long as growth is the result of delivering better goods or services and not the result of profitability tricks like we see today with mergers to eliminate competition (big banks), offshoring, automation, financialization schemes, etc.--often to please Wall Street and boost the stock price so the CEO with thousands of shares can become a billionaire.

Incorporation is probably not so much the problem as stock markets providing big incentives for predatory behavior.

[ZRT2209]

63. suddenly businesses feel entitled to slave labor

[Egalitarian Thug]

82. It is a law in America, just not a law of capitalism.

Dodge Bros. v. Ford

It's one of those weird things in life that Henry Ford, truly one of the most despicable men ever to breathe, was also one of the best models of smart capitalism America has ever produced. He proved through practice that the best answer is that everyone does well by doing well. It was the Dodge brothers and the wrong-headed court that created this myth and the law.

[HiPointDem]

96. this is mythology. they never tell you how ford subsequently *lowered* wages.

ford raised his wages above prevailing standards to attract talent, not because he was a great guy. when conditions changed (recession/depression) he lowered them.

[Egalitarian Thug]

103. No, he was not a great guy, he wasn't even a human being by any civilized standard,

but you're wrong about this being a myth (I gave you a link to the case). This 1919 case is the origin of the premise that a publicly traded company's first and only duty is to maximize profits for the shareholders.

He paid more because he understood that if he paid his workers enough to buy the products they were making he would make even more money for himself. He lowered wages under a court order after the Dodge Bros. sued him as stockholders in FoMoCo for paying more than he absolutely had to, arguing that the "excess wages" meant they were denied dividends that they were due. In reality, they wanted and the court gave them, start up money to compete against him, but the facts remain.

Henry Ford embodied the worst of humanity, sadist, racist, fascist, misogynist, greedy, authoritarian, you name it, if it makes the world worse he did it or supported it, but he was not stupid. He understood, just like every sane economist today, that your spending is my income and my spending is your income and when that cycle get too far out of balance it creates a negative feedback loop and the whole thing stops.

[HiPointDem]

111. I read your link. The suit wasn't about wage levels. The suit was about ford not paying a

dividend in a year of record profits because he wanted to expand his plant capacity.

Raff and Summers (1987) conduct a case study on Henry Ford’s introduction of the five dollar day in 1914. Their conclusion is that the Ford experience supports efficiency wage interpretations. Ford’s decision to increase wages so dramatically (doubling for most workers) is most plausibly portrayed as the consequence of efficiency wage considerations, with the structure being consistent, evidence of substantial queues for Ford jobs, and significant increases in productivity and profits at Ford. Concerns such as high turnover and poor worker morale appear to have played a significant role in the five-dollar decision. Ford’s new wage put him in the position of rationing jobs, and increased wages did yield substantial productivity benefits and profits. There is also evidence that other firms emulated Ford’s policy to some extent, with wages in the automobile industry 40% higher than in the rest of manufacturing...

http://en.wikipedia.org/wiki/Efficiency_wage

ford was also an early adopter of outsourcing -- again, under competitive & economic pressure: "During this period (depression) Ford's use of outside suppliers increased considerably...it appears that these companies paid less than Ford....Murray Body...employed 500 women on a Ford contract and paid them on a piecework basis as little as $3 a day..."

Another thing usually elided is that Ford's $5 a day wasn't -- it was standard pay + a bonus, which you could only get by letting Ford spies come to your home & check to make sure you were following it's rules, e.g. no liquor in the home, etc.

http://books.google.com/books?id=Rl6ApEbSsDAC&pg=PA168&dq=henry+ford+cut+wages+depression&hl=en&sa=X&ei=0R4EUr2GFonhiALwnoGAAQ&ved=0CGUQ6AEwBg#v=onepage&q=henry%20ford%20cut%20wages%20depression&f=false


The decision had nothing to do with workers being able to buy his cars. Ford increased wages to reduce labor turnover and get better workers generally. It was an expansionary time & Ford's goal was to expand & improve production so as to make it more efficient generally & also produce economies of scale. That's why he needed a skilled & stable workforce, so that process wouldn't be hijacked by labor -- not so that his particular workers would be able to buy the cars they were producing. That would be a pretty small market, if only his highly paid workers were able to buy his cars.

The reason for high wages was to produce efficiencies that lowered the cost of production, PERIOD, allowing Ford to produce cheaper cars -- for EVERYONE, not just for his own workers. To expand the market for his cars generally.

Higher labor inputs at the beginning = greater profits down the line, on volume with lower margins.

Same reason microsoft etc paid wages higher than average when it and the computer industry was expanding, & same reason they're lowering wages today.

Just as Ford began to lower wages in the 20s due to competitive & profit pressures:

January 1, 1914: Ford introduces the five-dollar-a-day wage, twice what his workers earned before and twice what they could earn at any other auto company...

1927: Ford's River Rouge plant is the greatest industrial complex in history, but Ford must lower wages and speed up his assembly line in order to maintain low prices. Competition from other manufacturers leads Ford to shut down the line. The massive layoffs are a harbinger of the great economic debacle to come...

http://faculty.weber.edu/kmackay/a_job_at_ford.htm

[branford]

115. In addition to his other "fine" qualities, Ford was also a rabid anti-semite!

[Kingofalldems]

127. So what does that have to do with high wages?

[Egalitarian Thug]

133. Indeed. I figured that was included under racist. He was a big supporter of Hitler. n/t

[stranger81]

83. Still trying to pick myself up off the floor after seeing Henry Blodget's byline on this . . .

When did this guy do a 180? Just, wow.

He's absolutely correct, of course.

[HiPointDem]

99. omg, written by an oppenheimer/merril lynch analyst. that would explain why this article is so

stupid & misleading.

convicted of securities fraud too.

[Wounded Bear]

85. The problem with unfettered capitalism is that it respects no laws...

[liberal_at_heart]

88. Companies didn't act this way 60 years ago. Hell companies didn't act this way 40 years ago.

[leftstreet]

89. Organized labor, and the political Left, had power then

Now, not so much

[liberal_at_heart]

90. that is sadly true.

[HiPointDem]

97. they did -- just not so much in the US.

[Sen. Walter Sobchak]

98. I always struggle with conceptualizing the type of business Republican policies are targeted at

Because unless your workforce is made up of unskilled transient day laborers who can pickup an assigned task in a couple minutes, they just don't seem relevant.

[libodem]

107. I recommend this

For the title alone!!!

[NorthCarolina]

129. Unfortunately, to the capitalists in power it's the holy grail.

That, and maybe the Social Security Trust Fund.

[Kablooie]

132. It's not a law of capitalism but it IS a law of cannibalism.

Might be a law of cabalism also.

[Rex]

134. YEP!

That is why they keep pretending it is needed for a healthy economy. Maybe needed to keep Wall Street afloat.

[B Calm]

142. Back in the 1980s the workers where I worked accepted to take a 5% wage cut

to keep the doors open to the plant. The company then gave all salary people a nice raise and posted how our wage cut will make them more competitive in the market place.

[Eddie Haskell]

144. Capitalism has one law ... maximize profits!