Marx and Lenin were right!!!

phillyhangin

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The rich pillage when in power.

The 'poor' get lazy and production goes to crap while an elite social class emerges with communism.

Can we get some balance please.
Balance was Adam Smith's original idea for capitalism: Everyone succeeds or fails based upon how they conduct themselves in their transactions. Gain a reputation for pillaging your neighbors, you'll find yourself without customers, employees, suppliers, or, for that matter, friends; gain a reputation for laziness, you'll never be hired. On the flip side, gain a reputation for fair-dealing, and your business will increase because people will want to do business with you; gain a reputation for doing decent work, and you'll be in demand, which translates to higher wages.

Sadly, under corporatism, reputation isn't the "invisible guiding hand" that Smith had hoped. Absentee shareholders don't interact with customers and employees, so they are often divorced from the consequences of the decisions they make; as long as their company makes its quarterly growth targets and pays its dividends, they're happy - regardless of what the company has to do to achieve that. Also, many corporations grow so big that they distort markets around them, so no matter how bad their reputation is - i.e. Walmart - they still make money (largely because they've driven out smaller, more responsive competitors). And then there's the idea of "human resources," a term which implies that people are merely things to be exploited and then discarded when they are used up; needless to say, this attitude doesn't exactly inspire loyalty on the part of those "resources" being exploited - let alone the desire to maximize productivity! :wink:

Unless owners are directly liable for the actions of their businesses, and the success or failure of a business depends on the good reputation of its owners, Smith's invisible hand that was supposed to guide the market to a desirable outcome evaporates, and all that's left is the pursuit of short-term profits at the expense of long-term stability. In other words, pillaging.
 

B_crackoff

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Unless owners are directly liable for the actions of their businesses, and the success or failure of a business depends on the good reputation of its owners, Smith's invisible hand that was supposed to guide the market to a desirable outcome evaporates, and all that's left is the pursuit of short-term profits at the expense of long-term stability. In other words, pillaging.

It doesn't help either that he didn't account for the state intruding upon an individual's ability to trade or be competitive - barriers to entry, red tape, onerous labour laws etc...
 

conntom

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Unless owners are directly liable for the actions of their businesses, and the success or failure of a business depends on the good reputation of its owners, Smith's invisible hand that was supposed to guide the market to a desirable outcome evaporates, and all that's left is the pursuit of short-term profits at the expense of long-term stability. In other words, pillaging.

Fantastic post and I whole heartedly agree.

Now how do we influence the market to avoid the problem you stated. Beyong the problem that has developed in the USA capitalism is still my choice of systems. (capitalism coupled with a limted democracy is my favorite combination.)
 

phillyhangin

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It doesn't help either that he didn't account for the state intruding upon an individual's ability to trade or be competitive - barriers to entry, red tape, onerous labour laws etc...
I think he failed to do so because, at the time he was writing, most if not all corporations were essentially state-sponsored monopolies (and often the local monarchs and nobles were joint stockholders). I think that Smith must've thought that if all businesses were sole proprietors and partnerships (as his model requires), the problem with state interference - i.e. the state limiting access to trade and granting monopolies - would go away. In early America, that was the case, but then individual states began to charter joint-stock companies, and those companies started to grow and engage in anti-competitive behavior (in the absence of laws to prevent that), and pretty soon the age of the Robber Barons was upon us.
 

phillyhangin

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Fantastic post and I whole heartedly agree.

Now how do we influence the market to avoid the problem you stated. Beyong the problem that has developed in the USA capitalism is still my choice of systems. (capitalism coupled with a limted democracy is my favorite combination.)
I agree: Capitalism, despite its current flaws, is the best system we have. Those flaws are not intrinsic to capitalism itself, but are the results of the way capitalism has been implemented (i.e. haphazardly).

Smith's model was predicated on locally owned businesses engaging in local transactions (even import-export operations would hire sales agents to travel to foreign markets and negotiate with foreign suppliers or resellers), so the first thing that would need to happen would be to create market-based incentives that favor sole proprietors and partnerships. This would have the added benefit of making more business owners legally liable for the actions of their business (another key factor in Smith's model). The fact that corporate income in the US is taxed twice - once as business income, and once whenever it's paid out as dividends - is one such strategy, although thanks to tireless lobbying by corporatist business groups, it's a fairly weak one. Holding the owners (shareholders) of corporations responsible for the actions of their companies would be another strategy, albeit one that's very unlikely to get past the corporate-funded Congress.

Another strategy is to create a system of priorities when approving business licenses: sole proprietorships and partnerships would get an expedited approval process, whereas corporations would only get approved if there were no other business applications pending (and only if they could demonstrate that people actually need what they plan to supply).

Filing fees for corporations should be much higher than those for small businesses in order to tilt the market in favor of small businesses.

For tax purposes, there's the possibility of creating an "ideal business plan" whereby each business is rated on certain criteria that favor small, locally owned businesses (such as "more than 50% of the owners live in the same county as the business"). For each criterion that a business meets, it receives a reduction in its business tax rate; businesses that meet all of the criteria pay the minimum tax, and those that meet few or none pay the maximum tax rate.

All businesses should be required to consolidate their books, so that all revenue generated in the US is taxable in the US, and only expenses incurred in the US can be used to offset those revenues. For sole proprietorships and partnerships, this happens automatically since they are local businesses; for multinational corporations, this would require additional accounting work and expense. (It would also make outsourcing a lot less desirable.)

On the positive (as opposed to the punitive) side, the federal government can help create the infrastructure needed for long-distance trade, either through direct investment or incentives. Bear in mind that import/export does not necessarily refer to international trade, it could also be a situation where one state has a surplus of apples but no oranges, while another state has a surplus of oranges but no apples, so an exporter in Appleville buys up all the cheap apples and ships them to an importer in Orangetown (who sells them at a nice markup), while an exporter in Orangetown buys up all the cheap oranges and ships them to an importer in Appleville.

Modern communications allow import/export agents to negotiate with each other directly, eliminating the need for traveling sales agents (it also makes it easier for exporters to find local freight carriers to transport their goods), so maintaining an excellent communications infrastructure is important.

Incentives for exporters to use locally based freight carriers when shipping would also help. You do sacrifice economies of scale when using local carriers as opposed to national carriers, however, local carriers actually create more jobs since there is a lot of duplication of functions (i.e. every carrier needs a dispatch center, every carrier needs an accounting department, etc.); national carriers on the other hand consolidate many of their functions into a single central office, and thus employ fewer people. By encouraging exporters to use local carriers, the government would be encouraging the market to create and maintain more jobs.

Good long-distance roads, such as the tax-supported national interstate highway system, and a well-maintained freight rail system are also necessary for efficient long-distance land-based shipping. Support for the highway system and even a national freight rail system (similar to Amtrak for passengers) could be shifted from general taxes to surcharges attached to the bills of lading. These surcharges would be paid by the export company based on the value of the goods shipped and the distance traveled, and the cost would be passed on to the importer (and ultimately to the final customer); thus, the people who purchase imported goods are the people who finance the system, and the people who don't buy imports, pay nothing.

Those are just some of the ways that the market can be shaped by policy to create stronger local economies. It's really all about setting priorities and then adjusting policy until we get the desired outcome.
 

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Despite the "shit" I got for starting this thread is sure has led to interesting conversation. Story time.... there are two men, same age, same resources, same wealth - they each have 100 potatoes in the month of March or so. One consumes half the potatoes and plants and tends the rest, planning for a fall harvest, the other eats all of the potatoes, plans nothing and spends his time sun bathing and swimming in the local water hole. Fall arrives, the first guy reaps his harvest and has plenty to eat for the winter months and the other shows up at his door demanding half of his potatoes so he can survive the winter. Which of the two is "creating wealth" and which of the two is "destroying wealth?" Remember, both of them started with the same "wealth" in March...... BTW most rich people have created nothing and have only "gamed" the system - Senator Reid comes to mind.... Even Bill Gates had a lot of help as his mother was on the Board of United Way with the CEO of IBM. The father of John Kennedy made most of his money during Prohibition trading illegal alcohol. Joseph P. Kennedy, Sr. - Wikipedia, the free encyclopedia.
 

Industrialsize

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Despite the "shit" I got for starting this thread is sure has led to interesting conversation. Story time.... there are two men, same age, same resources, same wealth - they each have 100 potatoes in the month of March or so. One consumes half the potatoes and plants and tends the rest, planning for a fall harvest, the other eats all of the potatoes, plans nothing and spends his time sun bathing and swimming in the local water hole. Fall arrives, the first guy reaps his harvest and has plenty to eat for the winter months and the other shows up at his door demanding half of his potatoes so he can survive the winter. Which of the two is "creating wealth" and which of the two is "destroying wealth?" Remember, both of them started with the same "wealth" in March...... BTW most rich people have created nothing and have only "gamed" the system - Senator Reid comes to mind.... Even Bill Gates had a lot of help as his mother was on the Board of United Way with the CEO of IBM. The father of John Kennedy made most of his money during Prohibition trading illegal alcohol. Joseph P. Kennedy, Sr. - Wikipedia, the free encyclopedia.
Most people don't have 100 potatoes to start with. What do they do?
 

BF2K

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The example was two people starting with the same "wealth" at one point in history Brazil and the US had the same GDP - what happened, who were things different. Another example is the China and India both had more wealth per capita than the US or any other country at one point in history - what happened, how did things turn out differently?
 

Cuddler

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... at one point in history Brazil and the US had the same GDP - what happened, who were things different. ...

From the beginning, the histories of the two countries are too different to summarize in a short post, but here goes:

Could it be that Brazil was founded by the Portuguese aristocracy, and they never had a French-style revolution to promote equality?

Could it have something to do with Dom Pedro II, the Emperor of Brazil, deciding that his country should have an agricultural-based and not a manufacturing-based economy?

And what does any of this have to do with Marx and Lenin, other than that things might have turned out better in Brazil if their ideas had been implemented a few centuries ago?