How to fix the Economy in two easy steps

Discussion in 'Politics' started by AllHazzardi, Feb 28, 2009.

  1. AllHazzardi

    AllHazzardi Member

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    Step 1: All companies with the same product or purpose unify.
    - Have all banks join together and operate a single bank for the country. Have all medical firms join together and operate a single medicine development group for the country. Etc. This reduces the division of money; if there are 100 million people in a country, and one company makes a product, they can sell 100 million of that product at $5 each making $500,000,000 maximum. If a second company makes a product for the exact same purpose that is no better or worse, they have the same investment cost (machinery, energy, resources, etc) as the original company as they still need to be able to produce 100 million of the product, in the event their product is more popular. This reduces the potential income per company to $250,000,000 and also increases costs through competing between each other, so that $250,000,000 is actually further reduced.

    Step 2: Place a federal profit limit of 100% for businesses.
    -If you spend $1m you can take in $2m. If you give 5% interest on money in the bank, you can charge 10% on interest for lent money(loans or credit cards). This keeps a balance between the money available to take from the people and the money being earned by companies. This has a side effect of preventing the risk of a "monopoly" created by the "one company" move of Step 1.

    Bonus effect: Since companies are limited to 100% profit, there is less risk. Steady profit means less failure. Less failure means more tax revenue from companies. As companies are not draining money from the populace, it also means more tax revenue from the people. Bonuses to a CEO or other such executive do not count as money spent going out into the system. However, investment in new technology which improves overall benefit of the country DOES count as money going out as the people have the reduced costs which would result as well.


    I'm as much for free market as everyone else, and if a company can't survive on a 100% profit margin, they really need to be doing something different rather than clinging to the same ideal. The market is still free, as companies can still do whatever they want, but instead of rushing everything forward to make more money faster, you limit profits so that companies make the same money over a longer time and have less chance of failure. Half of any excess profit over the 100% profit limit goes to research and development of new technology which improves overall operation(recycling, energy, agriculture, etc) and the remaining 50% is allowed to be kept by the company since after the half goes to research, they are no longer violating the limitation.




    Regardless of opinions of which system it breaks or which ideal it breaks, it cannot be denied that it would be effective at fixing the economy.
     
  2. Pecker

    Pecker Retired Moderator
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    How about limiting Congress to 1% earmarks? A billion dollar budget or appropriations bill would allow only $10 million in pork.
     
  3. bigman420

    bigman420 Member

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    Have you ever read the "Communist Manifesto"? You're pretty much quoting what Marx said. This is so rediculous, I don't even know where to begin.
     
  4. bigman420

    bigman420 Member

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    Honestly, this might be the single worst post in the history of LPSG.
     
  5. jason_els

    jason_els <img border="0" src="/images/badges/gold_member.gi

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    No, I've read worse posts.

    Joining all the car companies together and placing them under government oversight has been done before. It was called British Leyland. It you want to know what British Leyland was like, ask any Brit over 40.
     
  6. AllHazzardi

    AllHazzardi Member

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    If you don't know where to begin, you don't know enough to say it won't work. But I also don't believe in governmental communism. The reason this works is because competition up to a certain point is good; when that competition still drives advancement in valuable and beneficial ways. However, after that point, the competition actually holds us back. How much money goes to advertising to beat out a competing company that could instead go towards making energy production and resource usage more efficient, which would reduce costs.

    Take for example the banks. If banks give 5% interest, and charge 10% interest, the overall impact is that the bank makes 5%, and the people who have money in the bank make 5%. Now, instead of this, say the people get 5% for giving the bank their money, and the bank charges 20%. What happens is that the SAME PEOPLE who put money in the bank now, instead of gaining a more proportional amount, do not gain anywhere near what they spend. This creates an imbalance of monetary flow, eventually the people who are putting money in the bank do not have the money to put in the bank, and the bank must charge even higher interest. Higher interest with less money in the peoples' hands means increased failure rate on returns of lent money. Increased failure rate means less profit, or no profit. Without profit, operating costs come closer and closer and eventually exceed the company's available supply of money resulting in the failure of that company. So the idea of limiting profit isn't actually limiting profit, but rather making companies be responsible about how much money they take out of the supply. If the supply has more money, it can improve, and support more goods and services. It's like the behavior of cells multiplying; one becomes two, two become four, etc. If you take out more than you are putting in, it forces stagnation; one becomes two, remove one, net is one. However, if one becomes two, two becomes four, remove one, net is three which become six, and so on.

    I don't want to stop companies from doing anything other than digging their own graves by charging too much or not investing enough.
     
  7. faceking

    faceking Well-Known Member

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    Ummm, yes it can be denied for hundreds of reasons... literally.
     
  8. AllHazzardi

    AllHazzardi Member

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    Not government oversight or control. Just a reasonable limitation on expense versus revenue. If you spend more, you can make more. Companies still make their own decisions. Companies are not invested in by the government outside of government grants for business creation. The only limitation is on the ratio, not on the actual value. So if a company wants to increase their revenue, they are required to invest sufficiently back into the system to maintain that system from decay, such that they can make more money in a shorter period.

    The beneficial effect of such a system is that in the process, technologies are improved based on benefit, not on profitability. Profitability should really only control which consumable products are made, not limit what technologies are developed.

    In the end, the only actual limitation created by this system is that companies can no longer accumulate wealth without limit; they must do something to improve the overall status of the society which they operate in.
     
  9. AllHazzardi

    AllHazzardi Member

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    Then be a man and fork them out and I'll explain why those reasons aren't good enough to deny the statement.
     
  10. faceking

    faceking Well-Known Member

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    You get one...

    "Have all banks join together and operate a single bank for the country."

    ...and destroy the capital market system as we know it, if not the global capital market system. you remove pricing, free liquidity, underwriting, risk/reward, it goes on and on.

    don't confuse "banks as a business" (of which they've hit some hard times) vs. "banks contributing to the overall capital market system".

    Here's a bonus second... but it's more of a question.

    How often in modern capitalistic society do you see a proliferation of companies exceeding 100% profit, and even so what percentage of their profits would contribute to that Captain Kangaroo theory? Once in my lifetime and that lasted only a year and half, and was only the result of a bubble. That theory is like expecting bridge tolls alone to cover the cost of painting the Golden Gate Bridge... not sure what that aims to achieve.... as

    a> it's not going to contribute SQUAT to federal revenues, ESPECIALLY over the long haul. last I checked the Fortune 500 doesn't comprise 500 Googles.
    b> given that, you penalize the small companies that need that momentum to catapult them to 2.0
    c> given the existing tax code as it is... companies will certainly find a way to tuck away prosperity off the books and forward them to days like now
     
  11. bigman420

    bigman420 Member

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    The reason I'm not going to sit and actually list any reasons for why this communist/socialist/totalitarianist point-of-view is beyond stupid is because it doesn't even warrant such a response other than saying that it is just stupid.
     
  12. AllHazzardi

    AllHazzardi Member

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    Well, first, joining of banks does not destroy the capital market. In fact, joining of the banks would improve it. You see, banks as a business give out loans, which are used to cover the expenses of operation and interest paid of money kept in the bank. Part of these expenses of operation are advertisement and competition with the other banks. Additionally, in current practice, undercutting when you still have the same expenses either results in cutting back on expenses, such as reducing staff, or increasing profits through other means, such as raising interest rates on credit cards after the contract is already signed. Banks contribute to the overall market system by creating a storage and operation center for the flow of money. Banks are essentially the grease on the gears. Banks provide a service which allows individuals without enough money to take a risk/reward move to slowly accumulate enough money to take a risk/reward move. As a result, risk/reward is not eliminated, but rather transferred from a company system which provides a vital service, to the individual person, or the companies which do not provide vital services. If companies such as banks are less unstable, this means that the flow of money from them to the government is more stable. With a necessary system not draining money from the available source, that source is able to move up and produce more money for the government. That is to say, if people using credit did not have to pay $600 for a $200 item in the long term, they would have that extra $400 to put back towards the companies in the form of consumerism. Or they would have that extra $400 to put into the bank, which the bank could use to make more revenue.

    In modern capitalistic society you do not see a situation of 100% profit because the companies over time have drained sufficient money from the populace that the earning potential of the populace was unable to develop itself. Literally, by not limiting profit, those small moments that do reach those levels or higher actually prevent it from happening again in the near future. So "a" happens because there is no limitation. Given "a" happens because of no limitation, then "b" must happen for the same reason, therefore if there is limitation, then "b" must not happen. New companies are not robbed of momentum because larger companies which have been in operation longer can invest in the programs which give grants to these new companies or the technologies which reduce the costs of these new companies such that they have an easier method of operation. Investment into the system results in more allowance on incoming revenue's actual value by this rule.

    Additionally, under Step 1, there would no longer be any "small company" as individuals which would normally be creating a new company to compete in the market would instead seek employment with the company in the field they wish to compete in. So small companies would not suffer because they would not need to be created. Instead, when creating a new company, you must create a new product that is not already created. If that product is viable, then the new company is successful and a new product is added to the market. If that product is not viable, then the company fails under the weight of the poor choice of creating a product that is not viable.

    To "c" I say that, that's the current tax code. Under the altered system, taxes become a bit simpler; If there is balance in the flow of money, then everyone simply pays the same percentage. The companies investing $50,000,000 make $125,000,000 pay 20% in taxes resulting in $50,000,000 profit. The people earning $200,000 (presumable from employment from one of these companies)pay 20% in taxes resulting in $160,000 profit. The people earning $100 pay 20% in taxes resulting in $80 profit. If the companies make more than their 100% cap, the excess is half invested in new technology such as energy, resource, machinery efficiency, machinery to make products, etc. This comes back in reducing their costs of operation, which essentially increases their ease of making revenues over the long term.

    If you spend $50,000,000,000 to improve energy production resource efficiency by 50%, or to create sufficient renewable energy to handle 50% of the demand of energy, you then reduce the cost of energy needed for operation of making your product or service by a proportional amount. That reduced cost accumulates for the rest of time, far exceeding the $50,000,000,000 original investment. Not only that, but the people living in the country also get the benefit of this reduced cost or improved production efficiency. Note the number is just an example value for explanation purposes.
     
  13. AllHazzardi

    AllHazzardi Member

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    Well there's your problem. This is not a communist, socialist, or totalitarian point of view. Changing our economy does not necessitate changing our government. If we choose to change operation such that it benefits us in the future, it is a good choice. We can still run our country democratically. In fact, the decision to limit profits would be done democratically, by vote of the people desiring the best environment possible for future growth.

    The biggest mistake of the world was when we defined Communism as a dictatorship. Communist economies, that is to say, when resources, productivity, and technology is shared for the purpose of improving quality of life, productivity, and technology, do not need a dictator to run them. This all stems because certain people made the mistake of making Government and Economy synonymous.
     
  14. faceking

    faceking Well-Known Member

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    You got some salient ideas, but the initial folly is that banks core business is consumer and business loans. Maybe in the 19th century.
     
  15. HazelGod

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    As opposed to the OP, here are a few ideas that might actually be sensible:

    1) Revamp the laws governing protection of intellectual property. The durations of our trademark and copyright protections are absurdly overinflated. Mickey Mouse is a perfect case study. That our patent system allows entities to patent abstract ideas is beyond retarded. These rules were thought up to protect the rights of inventors and innovators, and guarantee them opportunity to profit from their labors for a limited time...not in perpetuity. That there are numerous "companies" whose only business model, only source of potential revenue, is to demand royalties on a portfolio of patents that they acquired from others, is absurd.

    2) Legislative term limits, at every level of government. We've had 230+ years of this experiment in democracy, and it's pretty clear what career politicians do for the good of our society. This nonsense needs to end.

    3) Line-item veto, again at every level of government. I've lost count of the number of times I could literally feel my blood pressure spike when I found out that some unbelievably stupid or self-serving rule of law got enacted as part of some "must-pass" omnibus appropriations bill. That bullshit also needs to end.
     
  16. AllHazzardi

    AllHazzardi Member

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    That's the whole point. You see, if the current Economy goes downhill continuously, whatever company is able to will buy out competition to eliminate it. So, at the extreme extension, eventually there will be one corporate bank due to continuous buyouts. All these changes would do is skip the necessary downfall to cause that, and make the choice to do it ahead of time because it is inevitable. The only reasons a single company for each purpose can be bad are either lack of advancement from lack of competition, or monopolization of market. If advancement is made for the sake of advancement rather than profit, that prevents the first reason. If you limit profits, essentially you force a company to either invest in the system they are dependent upon (similar to replanting of trees by lumberjacks) or use reasonable prices for their good or service.

    It would not require a law if corporations would simply agree to do this anyway. With consideration that agreement from the corporations is even less likely than Margaret Thatcher Naked on a Cold Day being sexually arousing, a law is required, at least temporarily.


    PS As a general rule, growth is only necessary until demand is met with your supply. Companies need only make profit until they meet the demand, then profit is no longer necessary so much as balanced expense and revenue. As a combined force, the current companies meet demand, but competition is the leak of money that prevents them from being able to sustain themselves in the long term. Without competition, so long as you make as much as you spend (a 0% profit margin), your company can continue. This is why the limit proposed is 100% profit. If the companies, sans cost of competition, can meet the demand for their product or service, there is no sense in expanding further, or making more money. Until that demand is reached, enough money must be saved up to cover costs of decay of the system. This is why the investment in new technology is important. If instead of making refuges for money to save for a rainy day when your machinery breaks down, you invested in the invention of new machinery. Then it creates a continuous circle of improving efficiency. Why replace old machines when you get usage of the new machines you invested in? Especially when those new machines end up saving you money on providing your good or service to the population.
     
  17. AllHazzardi

    AllHazzardi Member

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    I agree, those are important steps. However, the intention of the two simple steps is not just to fix the problem. If you simply fix the problem, it can happen again. The two simple steps are intended to not only fix the problem in the corporate world's business practices, but preclude the same problems from happening again. The secondary intent is to pave the way for a future situation which gives greater opportunity for success and quality of life. these two steps are intended to improve not just the present, but the future.
     
  18. sexplease

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    there are no ethics in profit.

    We need a resource based economy.

    Investing in education, sciences and renewable energy resources....

    When your children are healthy and educated MY life is better.
     
  19. ToxicNarcotic18

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    "Step 1: All companies with the same product or purpose unify.
    - Have all banks join together and operate a single bank for the country."

    Fixing the economy will take a lot more than 2 steps and simply joining all the troubled facets of society will in turn create a larger problem. That's mainly why we are in the trouble we are now, we already do have a centralized bank its called the Federal Reserve. The Federal Reserve reserve loans the money to the government at a tax, and then the government loans us the money and puts us in debt. A debt that we can only get out of by borrowing more money which in turn puts us in more debt.
    If you think a central bank is a good idea read about the panic of 1907 and J.P Morgan and then the panic that ensued in the 1920's it was all brought about by monopolized companies looking out for their own interests.
    We cannot allow one financial group to have control of the finances of the entire country. No one person can be trusted to have it run smoothly with all that power at their fingertips, and as we know human beings don't always look out for the "gestalt" the bigger picture, greater good.

    Whats happening with the economy is nothing new, it has happened before it will happen again.
    Is it just me or is it very strange that as soon as it seemed that the democrats would take over the white house this whole mess began. And yes the economy wasn't great before but it certainly wasn't this bad. And how much would you like to bet that if after Obamas' term a republican takes office and this whole mess is suddenly and miraculously fixed. Cause we all know that god works in conjunction with republicans.
     
  20. AllHazzardi

    AllHazzardi Member

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    Exactly. That is the intended final result. Money is essentially an illusion designed to guarantee responsible usage of resource. The resource is the only actual limitation. If resource is wasted, the price goes up without tangible gain in quality of life, technology, or efficiency. Take oil for example. We have constantly had the concepts and potential technology to create far more efficient power generation, or technology to create power without consuming as much resource, but we had not been investing in them, so they did not happen. As a result, we continued to "waste"(defining waste as consuming resources without tangible gains in technology, efficiency, or quality of life) the resource, and so the price keeps climbing.

    Not just your life, but everyone's lives. Investment in infrastructure builds economy. The issue is in how you define infrastructure. If you only put transportation in that category, you neglect many other things. Infrastructure, or the support structure, is literally everything which supports you. This includes Agriculture, Education, Transportation, Energy, Recycling, Medicine, and even Entertainment. Investment in these technologies and systems is the key to advancing because if you make that which supports you better, that's just a little bit less you have to do to make sure you survive. We lost sight of that, and our Economy is falling because of it. If we focus on it, eventually survival becomes guaranteed, and then we focus on securing that survival. After that, our resources are free to focus on happiness and the individual desires of the people.
     
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