Well, that's how really-existing capitalism functions. Socialized losses and golden parachutes for the ruling class, wage theft and austerity programs for the working class. Still, I suppose the "why" is worth pondering.
The sad thing is this article only focuses on the kind of "socialism for rich" that isn't even really socialism: it's purely private arrangements for those who have huge amounts of leverage in a free market. All that considered, I still generally support a free market, but what the article brings up is bad to begin with, but then you see that Republicans tend to also support lots of special treatment from the government - perhaps not always in the form of direct government funding - but in massive tax cuts, regulations in their favor and other special treatment only for select insiders, etc. and then turn around and scream 'free markets!' when it's somebody else's turn. Rank hypocrisy. They criticize the welfare state, but only as long as it's for individuals, they suddenly fall silent when it's for corporations.
The market is free only for those who have earned or inherited FU money. No one else can actually compete in any meaningful way in the free market, they might get lucky now and then but over time that's become nearly impossible similar to winning a lottery ticket, as anyone without money is competing against people with money or their lackeys. And with that same money they can buy preferential treatment when their bad bets blow up... which is paid for by the masses, but controlled by people who they can buy or at least coerce due mostly to wealth.
No when enough wealth is created at the top, the people at the top want to generate yet more wealth as appetite for wealth is never satisfied, so they trickle down some of that wealth mostly as a means to create more wealth for themselves, which pushes the standards of living up. They create schools and educate the masses, to train them as employees that can do more complicated things so that they can sell those things to other people for more profit. Competition between the rich is what pushes everyone up.
This sounds border-line conspiracy-theory-ish, but think about this the next time you hear wealthy or powerful people talking about how to improve education. They might not talk about how education opens your mind, expands your horizons, liberates you from poverty, etc. (some do, and those people are awesome). They may instead talk about educating people to prepare them for specific jobs. That sounds great as a direct impact of education, but that's a hint that they're really looking for publicly-subsidized training of their future employees so they can get away with not providing the training or necessary financial incentives themselves.
There is so much wrong in so few sentences that I literally unable to untangle it. Further discussion seems pretty useless in this case. I hope you will find some good economics books that can get you out of this tangle.
He specifically said "earned or inherited"! It's certainly still possible to acquire FU money (about $1-$5 million depending on your standards of living and your investment risk tolerance) through an ordinary career -- although it's never been easy.
Also, and more respectfully, look at the effect of capital accumulation on wages. When productive capital (hint: not housing stock) increases, wages rise.
The pure fiction that Republicans have anything to do with free market is simply refusing to die. I simply don't understand why people even still have this connection in its head.
Because Republican politicians tend to talk about "The Free Market" whenever they talk about regulations and laws. "We need to let the free market work!" Basically, it's just the brand identity the Republicans have created for themselves.
The Left is always there to point out how false everything they say is, on this point however they stay silent. I seems to benefit both of them, the left have the perfect boggy man (neoliberalism is literally the source of all evil) while the right seems to use is mostly to oppose leftist schemes. The never talk about free markets when they are talking about their own policy.
> The Left is always there to point out how false everything they say is, on this point however they stay silent.
The Left has been pointing out that capitalist markets are coercive rather than free since socialists coined the term "capitalism" for the economic system whose coercive structures they were criticizing, something like 150 years ago.
If you aren't noticing it, you aren't paying much attention to the Left. This often happens when people, for example, mistake the dominant faction of the US Democratic Party (center-right neoliberal capitalists) for "the Left."
Right. In reality a free market can exist under most regulations, particularly ones that are evenly applied. If everyone has to play by the same rules competition should still exist and the players will learn to work within those rules. Regulation != death to free markets.
IMO, it only starts to get really messy when you start mixing public and private funding. Example: A rule about prohibiting certain types of discrimination from health insurance companies vs. a publicly funded option. As you said, various health insurance companies can still compete around the same set of rules, etc. It may affect some of the economics of who can afford to play the game, and how they play, etc. but it's still pretty fair. Compare that with a publicly funded option that by virtue of its ownership does not have to weigh the same risks or set it's prices by the same rules, or even worse: one that wins what is essentially a government-enforced monopoly. Suddenly not so fair for private companies to compete against it.
The people who are against Obamacare but concerned about their Medicare benefits come to mind. Pick one. You can't stand on principle about one aspect of an issue and then change your mind when it suits you financially. "The only good thing about Obamacare is staying on my parents insurance until I'm I'm 26" <- Heard this so much from my classmates at a very conservative university, pissed me off so much.
Why does it piss you off? Why should the not use it? The government takes your taxes and you can't do much about it, so its only fair that you can use the government services as much as they let you.
Lets say person X wants to have a private bus system, would you call him a hypocrite because he rides public buses as well? I can except and live within a system and still prefer a different system.
I didn't say they shouldn't use it - I'm saying pro-Medicare shouldn't be part of their political dialogue if they're opposed to Obamacare on different principles. I've heard a lot of folks who think Medicare should expand argue against Obamacare on the premise that anything but a free market is morally wrong in that case. It's just a case of "this thing that benefits you is morally wrong, but this virtually identical thing that benefits me should grow because it benefits me". By all means use it if you qualify and paid your taxes, but don't be a hypocrite when it comes time to campaign or vote.
It sounds like a nice move to give employees shares in one's company. But what is stopping employees from simply buying shares from their salary? Giving them a high enough salary so that they could buy any shares they want seems like a nicer move than promising them shares in one's own company.
Also, people who get angry about this are often beneficiaries themselves - the article mentions the pension funds who own most shares, but who will also later pay most people's pensions.
Paying people more money is more expensive; giving people ownership is less costly. Employee owned shares encourage employees to work better. It also gives them a louder voice in how things are done.
What if I own a company and don't want my employees to have a voice in how things are done? Why shouldn't that be allowed?
And what if I hire workers to build me a house - should they be entitled to parts of the house after they build it? Or what if they absolute want to put marble into the bathroom, but I don't? Should they be entitled to put marble, because after all they are doing the work?
Meaning what is wrong with making a contract and fulfilling it? You do work x for me, I give you money y in return? Why make things more complicated?
I'm not arguing against that idea (employees receive a paycheck only, not shares). And you appear to be conflating company influence with product influence (was I not talking about company shares?). Shareholders, employees or otherwise, don't force those marble bathrooms; the product designer or customer does.
I hate to get into politics here, but I will say that the one thing that capitalists truly despise is a free market. Competition is terrible for profits. Anybody worth their salt is always always always looking for unfair advantages, cause that's where the money is.
Wouldn't you consider monopolies like Standard Oil to be in line with voluntarism? Because it seems like to me, but their dedication to avoiding fair competition is the stuff of legend.
The free market in the United States is celebrated by the mouth of those who pass the laws, but often gets beaten by the hand.
I don't think my ISP choice is a result of free market capitalism. It seems an awful lot like collusion against the free market, against competition, locking me down to one ISP depending in which region I happen to live.
That's basically what Reich is talking about. The people with money (power) make the rules. The label is still "capitalism", but the reality is otherwise.
The US definitely does not have a free market. I would venture a guess that most of the regulations are actually designed to benefit a select few at the top of some company or investment system.
> The people with money (power) make the rules. The label is still "capitalism"
Which makes sense, since that's exactly what the label "capitalism" was created for.
Lots of people have, however, bought into propaganda that capitalism is something else that was created by capitalists after the criticism in which the system was named.
Perhaps it should be mentioned where power and rules came from in other economic systems.
Blood lines (either real, or "Roman-style" (meaning voluntary adoption)), outright whim or military power (either individual, or organized), or otherwise advancement within a rigid hierarchy.
None of those seem to me even remotely preferable over a system where making money means advancement.
Even Marx viewed capitalism as a step forward from its immediate predecessor, which was itself forward from what had come before. Your post would be perhaps relevant in the context of a challenge to capitalism that favored reverting to some previous system rather than continuing to build on the progress made by capitalism relative to previous systems, but such criticisms are, at best, extremely rare even among criticisms of capitalism.
But this is just the power of "no". Like the robot's dilemma
If you're a car careening down a road. You're going to fast, and an accident is about to happen, but you can, say, either hit a group of male toddlers or a slightly smaller group of female toddlers. How do you choose ?
Your answer is simply "No", and that's just not acceptable. Does that mean anarchism ? You must choose, because the real world needs to exist and the economy must keep working. Without it, we wouldn't be fed, wouldn't be able to move any significant distance, wouldn't be anything.
The problem with the "no" answer is that a this refusal to choose, in the economy, would match in the dilemma with first hitting all the boys, driving back and forth a few times to make sure you've got them all, and then get going on the girls. That's what shutting down the economy would do. One might assume this is not in fact what you intend, so what are you going to do ? What is the superior alternative to capitalism ?
> Those people aren't capitalists in the proper definition of the term
There are two definitions of "capitalist":
(1) A holder of capital,
(2) An adherent to "capitalism", the dominant economic system of the industrialized West in the mid-late 19th Century (which has been diluted by subsequent reforms, but remains a core element of the structure of economy in most of the modern developed world), named "capitalism" by its 19th Century socialist critics for the ways in which it systematically served the interests of capitalists (by the preceding definition.)
The GP post seems to be accurate whether using "capitalist" in sense (1) or sense (2).
Ok. It sounds like we're using the same word to describe two separate ideas. Your definition sounds like what I'd call "crony capitalism", or the rigging of the game (i.e. government policy) in one's favor. I'd bet that I'd consider some of the "subsequent reforms" you've described as fundamental corruptions of the system. For example, political donations as corporate free speech (Citizens United v FEC) doesn't make much sense in a world where shareholders aren't engaged and active participants in company behavior. In other words, corporate governance is broken, something that Reich gets right.
> Your definition sounds like what I'd call "crony capitalism",
"Crony capitalism" is the only kind that has ever existed, and definitely the kind for which the term "capitalism" was coined. The idea of any other kind of "capitalism" is, well, highly implausible. To avoid cronyism, you are going to have to take out the core features that make it capitalism.
> I'd bet that I'd consider some of the "subsequent reforms" you've described as fundamental corruptions of the system.
Thing like establishing labor rights are certainly "corruptions" if you view the 19th Century system initially labelled "capitalism" as pure.
I don't see "corrupting" the purity of capitalism as a problem, though.
> For example, political donations as corporate free speech (Citizens United v FEC) doesn't make much sense in a world where shareholders aren't engaged and active participants in company behavior.
Citizens United is a move back in the direction of a pure 19th Century capitalism, and a reversal of reform efforts aimed at constraining the dominion of the capital-holding class (which is what campaign finance reform efforts that seek to limit the influence of wealth on politics to protect democracy from capitalism are.)
Whether shareholders are personally active or find it most useful to give management free reign is immaterial to this.
> In other words, corporate governance is broken, something that Reich gets right.
What Reich gets wrong is embracing the idea that capitalism is betrayed by the various failures, rather than the source of them. His idea of supporting a "share the gains" capitalism is amusing: "share the gains" is not, and has never been, capitalism (though it's occasionally a lie that capitalists use to justify capitalism, as in "trickle-down" economics.)
Read it and got it at two startups as sorta a bible kinda thing. It's not good. There is no actionable advice in the entire book and just ends up rehashing what he and his friends did and the qualities they happened to have when they made it big. It's basically the classic survivor bias in book form.
I think the overall thrust, which I don't necessarily disagree with, is that there are many ways to enact barriers to enter a even in a perfectly free capitalist market. Think CPU fabrication. You'd need literally billions in tooling and R&D to start manufacturing modern CPUs. That's a formidable barrier to entry. Anybody could in theory but very few can in practice. Which means Intel and a few others make a tidy profit on their market position. And that's economically pretty functional, since the risks of investing billions of dollars over decades are not currently poised to offer significant enough returns to entice investment.
There are a lot of other, less savory, ways to manipulate free markets to stifle competition, however. Your friendly neighborhood cable company, for one example.
The name for this is crony capitalism. Policy that benefits businesses instead of policy that benefits markets. Luigi Zingales's book "A Capitalism for the People" is a good read on the subject.
That is patently ridiculous. The vast majority of firms that you give your dollars too have direct competitors. They may not prefer to have competitors, but neither do you when applying for jobs or bidding on a house, that is pretty basic human nature.
Toyota and GM happily get together to battle against support for alternative forms of mass transit. They have little worry about losing out to light rail for example. No, I'm not interested in a debate about the cost benefit blah blah. I'm using light rail as an example to facilitate the point.
IMO, that's what the previous post is talking about. GM and Toyota largely release the exact same product if you look at it from an engineering data perspective; combustion engine, suspension, cupholders. And the "market" is highly protective and curated towards them (oil industry subsidies helping bring down gas prices, bailouts).
Alternatives, like GM's battery car in the 90s, are mothballed and too expensive for outsiders to really get in on. Plus the key players obviously don't want to get away from fossil fuels, right? So they keep getting favorites.
Nah, there are lots of ways to get that unfair advantage. Network effects are a big one. Facebook is only facebook because everybody is on it. MS Office is only MS Office because everybody has it.
Are they superior products? Meh.
Would you particularly miss them if they were destroyed? Unlikely. Somebody just as good would come along by and by, or one of the other ones would rise to replace them.
Are you gonna pay for them anyways? Bet your ass you will.
An examination of all current and historical implementations of capitalism quickly leads to the conclusion that all capitalism eventually becomes "crony capitalism", and playing the "no true scotsman" game with regards to capitalism does not demonstrate anything meaningful.
That's a bit savage. Did Apple look for unfair advantages or did they design products that people loved and bought in preference to others? Ditto many other industries. Traders (capitalists) should indeed look for monopolies if they don't want a race to the bottom but that monopoly can be based on unique value to the customer if crony capitalism isn't involved although sadly it's all too prevalent. Markets are dynamic. Conditions change. People's needs and desires change. The monopoly of today will eventually dissolve and at best become one of many equivalent options, tomorrow. That's one of the messages of zero to one, Peter Thiel's recent book.
I have some comments and thoughts, sorry for the long read!
> Did Apple look for unfair advantages or did they design products that people loved and bought in preference to others?
They made cool products, but they're the most valuable company in the world, at least in part, thanks to the unfair advantages too. The most blatant of them being the $14.5 billion in unpaid taxes in Ireland. And this is Ireland! Imagine if they paid the taxes proportionally in each of the countries where their operate, or in the US at least.
> Traders (capitalists) should indeed look for monopolies if they don't want a race to the bottom but that monopoly can be based on unique value to the customer if crony capitalism isn't involved although sadly it's all too prevalent.
Never have I heard of an industry that benefited from having a monopoly by a for-profit company more than not. Precisely because they are for-profit. These companies work to increase revenue; as much as they market otherwise, the "value to the customer" is but a means to grow this revenue. If they can grow this revenue without providing as much "value to the customer", or in fact, if they can increase revenue by providing less "value to the customer", they will.
And this is not me vilifying them, it's sadly the way things work. Otherwise, we'd have super cool stuff but companies would go out of business. Take every example of a monopoly though, and since they don't need to provide as much value, they all end up decreasing it.
> Markets are dynamic. Conditions change. People's needs and desires change. The monopoly of today will eventually dissolve and at best become one of many equivalent options, tomorrow.
Except when they don't. I think you're thinking of this only from the tech lens, right after a period of rapid growth and lots of marketing, and he staple child for this claim is probably Microsoft, and how Apple went from the underdog to the beamoth. I have two comments on this;
1. What really broke Microsoft's monopoly? I don't think it was new companies innovating, or people's demands changing. It was a change in the system and ideology. Tech went from being your standard capitalist industry to an interesting beast thanks to the emergence of the Free Software Movement, which shares many ideologies with socialism/marxism.
2. Would Standard Oil or the Bell Telephone Company have "eventually dissolved"? The problem with this system is that it's easier for the rich to get richer; if you have a monopoly and the conditions are changing, easier for you to buy out competition or R&D into the next thing than for any other company. Even now that Standard Oil and the Bell Telephone Company have been artificially split the companies that came out of them are still the biggest ones around; not some new ones, though the times have changed a lot.
> That's one of the messages of zero to one, Peter Thiel's recent book.
Haven't read the book, but Peter Thiel is a businessman after all. I'd take his views more as opinions, since he's not really a full-time economist researcher.
Apple, pretty much singlehandedly, invented an entire category of computing (the smartphone), and reaped the market rewards for it. They were ready, saw the opportunity, had the business chops to make the most of it, and got fabulously rich in the process. An example of the system working does not mean the system always works. There's been a lot of dirt done over the years.
That's not to say I'm anti-capitalist by any means. I think it's a great economic engine and a tool for great good. That we can never turn our backs on, lest it devour us. ;)
Yes, Apple didn't invent the smart phone by a long shot. But they were smart enough to know how to make the smart phone consumer friendly, which is where a lot of tech companies fail. Look at PocketPC which proceeded iPhone, not friendly at all. Even my new Android phone is still pretty clunky UI wise compared to the iPhone it replaced.
It should be noted, the LG Prada predates the original iPhone by about 6 months, with largely the same design (to the degree that LG sued Apple alleging that the design was copied). Apple managed to capture the market, however, whereas LG didn't.
I guess I'd characterize it like Henry Ford inventing the Model T. He was not the first man to make an automobile by any means, but he invented the auto industry. I've used pre iPhone smartphones, and there is a reason they're all dead now and Apple is rich beyond imagination.
You don't have to do it first if everybody before you couldn't close the deal.
Most corporations have more purchasing agreements than sales agreements, so the total risk of corrupt markets is worse on the expense side of the ledger than on the income side of the ledger. Assuming the situation is less than hopeless lets say 10% of markets are corrupt or are corrupt 10% of the time, 10% of the time your revenue will be "lucky" but not the other 90% of the time, while you've got maybe 100 supplier contracts for everything from drinking water to strange electronic components and 10% of 100 means at least 10 suppliers will be destroying your company from the expense side of the ledger 100% of the time.
Its sort of like claiming corporations love the idea of abolishing contract law, forgetting that no matter how much they'd make in revenue, it would never make up for their expense side going crazy.
Another interesting comparison is in an extremely simplistic manner a company would appear to greatly benefit from dumping all their toxic waste out an open window where it blows 10 miles downwind at some city; however the only thing that could be worse than living in that downwind city is working in the same building next to that toxic open window... I was cool with my local nuclear power plant when it was owned an managed by a corporation 10 miles downwind, not melting down would be very enlightened self interest, but not so cool about the plant when it got sold to someone 1000 miles upwind.
Theirs is cutthroat hyper-capitalism—in which wages are shrinking, median household income continues to drop, workers are fired without warning, two-thirds are living paycheck to paycheck and employees are being classified as “independent contractors” without any labor protections at all.
But many businesses are also struggling . By some estimates, this is this harshest environment ever for small business. Employees are being squeezed but so is small business (except web 2.0 and stuff like that), which is another component of capitalism
Quite right in your point. Myself and people close to me know that first-hand. Also, lots of businesses are started by ex-employees who've been squeezed out of their former position.
However the article is careful to distinguish between financial/corporate elites and small business (whose owners are generally not of the former group). It's almost misleading calling both small businesses and large corps "businesses". It's like ignoring the difference between a house cat and a lion in a debate about how one might goose-step on the other.
I live in Mexico, I feel that we bring the US American jobs down here but without the salaries, now there are no customers, most markets does not exist under Mexican salaries.
Of course the salaries don't come with it, that why it was moved in the first place.
However, the reality is that if a country has good enough policies so that more industry starts there it will lead to more growth. If you sustain that for 40 years you can go from the poorest to one of the richest countries.
Yep, the idea of this "new" yogurt capitalism-socialism pretty much relies on the global work force being employees of successful multinational corporations - corporations that still employ a very small percentage of the overall population.
For almost all of history the rich and powerful have had to play by different (more favourable) rules than everyone else. I suppose that the general situation is a better now since people can get into positions of power by means other than their birth and there's democracy, but in some ways much hasn't changed.
It's interesting to me when I think of a world where people that paid higher taxes (absolute values and not a % of income) had more votes during elections.
If you look at history, the rich often used their influence to reduce their tax burden from the state, and this often led to crushing tax burdens on the people who could not represent themselves: peasants and the like. I think Fukuyama gives some great examples of how this led to instability in the political order and finance in pre-revolutionary France [0].
I'm afraid we are seeing something similar now, with some billionaires desperately trying to reduce any and all kinds of taxes they need to pay. Frankly its breathtaking to see how much greed these people have...also, a supreme lack of solidarity with they society they live in (and apparently a lack of knowledge of historical precedents as well).
I should add that the same doesn't hold for all the rich/billionaires. Very much respect the work the Gates foundation is doing, just as an example.
Public policy mitigating risk at the top and increasing it at the bottom isn't "socialism for the rich, capitalism for the poor", it's just capitalism, a system that was named by its (socialist) critics for the way in which its structures inherently favor the interests of the holders of capital.
This is only theoretically good because he's giving the employees stock. Most times, stock options seem like a rip-off that folks can never really cash in on properly.
Maybe I've only encountered this with folks working retail and in places like call centeres, never quite having enough either to buy stocks nor exercise their options after they've left the company. Even $75,0000 (half of the lower stock price amount) can be a life-changing amount for someone making 30k per year.
I understand it is cheaper on the bottom line to offer stocks, but it still can be worthless to the bottom-rung employee.
> Even if Yahoo’s board fires her, her contract stipulates she gets $54.9 million in severance. [...] In other words, Mayer can’t lose. [For the rest of America] wages are shrinking, median household income continues to drop, workers are fired without warning, two-thirds are living paycheck to paycheck and employees are being classified as “independent contractors” without any labor protections at all.
> Before we go to the barricades, you should know about another CEO named Hamdi Ulukaya [...] Last Tuesday Ulukaya announced he’s giving all his 2,000 full-time workers shares of stock worth up to 10 percent of the privately held company’s value when it’s sold or goes public
This is comparing apples to orange socks. The issue at hand is the safety net. If she gets fired, the underperforming CEO gets enough money to continue her lifestyle - perhaps indefinitely. The Chobani employees get a little more upside, but their downside is pretty much the same. E.g. they're still in deep sh*t if the company does badly.
> This is comparing apples and orange socks. The issue at hand is the safety net. If she gets fired, the underperforming CEO gets enough money to continue her lifestyle - perhaps indefinitely.
I guess you're saying the comparison isn't even fair because it is completely different playing fields but it's hard to parse that from the above sentence structure.
Part of why she was able to negotiate that severance was probably also because she was well compensated at Google, and just said no unless they'd make her a good offer.
The first level is its just political sloganeering.
The next level is they're contract jobs and the pay is high enough to be F-you money if they fail and via the magic of survivorship bias we never hear about those that fail, although they and their kids are the trust fund babies that explode inflation while producing nothing of value other than CO2.
The next level of analysis past that is a matter of scale. I can independently afford food and housing and medical care for my kids, maybe not the best but I'd be OK. If my business fails, no biggie, I just won't buy an ocean going sailboat in the 10+ meter range, we're still going to be OK. Someone lower on the socioeconomic totem pole tries to start a business and fails, or gets downsized from his good job, his wife has to leave him to get herself and the kids on the programs or they'll literally starve, that means she'll get the house, its the end of that dudes life, perhaps literally. Certainly its an economic death penalty even if he physically survives or if by some miracle his family survives intact. So the risk is a bit asymmetric because unless you magically have total equality in income, wealth, education, social connections, you're going to have people who will literally die if they lose $5K and others who can shrug off half a mil or more.
> Because the average employee does not take an active enough role in management decisions.
Think on the politics that are closer most people in their day-to-day lives, at the workplace, active engagement with general policy is disencouraged and might be dangerous. Meaning, most people refrain from engagement with "management material." Being trained like this, it naturally extends to governmental politics.
costs go up, wages go down, vacation benefits are almost non-existent, so you have to work more to survive.
when do you educate yourself on these issues sufficiently?
when do you go out and participate?
the problems are not secret. they're well discussed in academic circles, for decades, even longer, since the beginning of "capitalism" itself. this particular "well if the people actually did some thing about it!" is one of the oldest.
what are they supposed to do in a society that largely tells contrarians to stop behaving like they're special and do their job?
"Have an idea! Don't come in here with half a thing and not be able to... after you've walked me to the brink. And say, 'We've gotta do this. It's important though I have no earthly idea how.'" - Toby Zielgler, The West Wing (https://youtu.be/YKSTkLWjuyo)
Robert Riech makes good points but provides zero ideas how to solve them. Relying on the goodness of CEO's hearts isn't going to cut it. That won't help enough people. How do we incentivize the behavior of employee ownership? Right now the incentives are aligned against that, as Reich seems to make clear. He seems to be advocating against more "radical" approaches advocated by Bernie Sanders because there is this glimmer of hope some CEOs will be nicer. It seems like this article makes the point that structural changes are necessary but the author falls short of that conclusion and instead gives glowing praise to a single CEO in hopes it will inspire a few others. It might, but that won't help much.
The answer is easy, just cap CEO pay. Execs can only earn 25X the average salary of employees incl benefits. That multiplier goes up 1x per 1000 employees or whatever is fair there could be a different algorithm but something along those lines. But there's a measurable way to raise the CEO's pay: Hire more employees, and/or raise wages. -- Along these same lines Congress should also be capped at the average American yearly income + benefits = to average American's. -- Why should they get anything better than the rest of us?
When is the denial going to stop?
Capitalism is a system of slavery, and the poor are the slaves not the rich. The ownership shares to stay the owners, and the poor work so the owners stay the owners. Sophisticated slavery, all its ever been.
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[ 3.1 ms ] story [ 239 ms ] threadAll those poor immigrants that came to the US, when the US had 2% of GDP in Federal government spending, did they all stay poor?
There is a discussion about poor people and opportunity, but your statement is just plain false. Its false both empirically and theoretically.
Also, and more respectfully, look at the effect of capital accumulation on wages. When productive capital (hint: not housing stock) increases, wages rise.
The Left has been pointing out that capitalist markets are coercive rather than free since socialists coined the term "capitalism" for the economic system whose coercive structures they were criticizing, something like 150 years ago.
If you aren't noticing it, you aren't paying much attention to the Left. This often happens when people, for example, mistake the dominant faction of the US Democratic Party (center-right neoliberal capitalists) for "the Left."
If only that were true.
Lets say person X wants to have a private bus system, would you call him a hypocrite because he rides public buses as well? I can except and live within a system and still prefer a different system.
Also, people who get angry about this are often beneficiaries themselves - the article mentions the pension funds who own most shares, but who will also later pay most people's pensions.
And what if I hire workers to build me a house - should they be entitled to parts of the house after they build it? Or what if they absolute want to put marble into the bathroom, but I don't? Should they be entitled to put marble, because after all they are doing the work?
Meaning what is wrong with making a contract and fulfilling it? You do work x for me, I give you money y in return? Why make things more complicated?
But VC never fund them, they prefer private owned companies.
Maybe because it is easier to bribe 1 man for 100 grands than 1000 for 10grands
Those people aren't capitalists in the proper definition of the term. Capitalism is voluntarism, which manifests as free markets in practice.
I don't think my ISP choice is a result of free market capitalism. It seems an awful lot like collusion against the free market, against competition, locking me down to one ISP depending in which region I happen to live.
The US definitely does not have a free market. I would venture a guess that most of the regulations are actually designed to benefit a select few at the top of some company or investment system.
Which makes sense, since that's exactly what the label "capitalism" was created for.
Lots of people have, however, bought into propaganda that capitalism is something else that was created by capitalists after the criticism in which the system was named.
Blood lines (either real, or "Roman-style" (meaning voluntary adoption)), outright whim or military power (either individual, or organized), or otherwise advancement within a rigid hierarchy.
None of those seem to me even remotely preferable over a system where making money means advancement.
Unless communism/socialism is not what you mean with "continuing to build".
And consequently, in practice, there are no capitalists and no free markets, by the proper definition of the term.
(As in holders of capital and people following the competitive philosophy.)
If you're a car careening down a road. You're going to fast, and an accident is about to happen, but you can, say, either hit a group of male toddlers or a slightly smaller group of female toddlers. How do you choose ?
Your answer is simply "No", and that's just not acceptable. Does that mean anarchism ? You must choose, because the real world needs to exist and the economy must keep working. Without it, we wouldn't be fed, wouldn't be able to move any significant distance, wouldn't be anything.
The problem with the "no" answer is that a this refusal to choose, in the economy, would match in the dilemma with first hitting all the boys, driving back and forth a few times to make sure you've got them all, and then get going on the girls. That's what shutting down the economy would do. One might assume this is not in fact what you intend, so what are you going to do ? What is the superior alternative to capitalism ?
There are two definitions of "capitalist":
(1) A holder of capital,
(2) An adherent to "capitalism", the dominant economic system of the industrialized West in the mid-late 19th Century (which has been diluted by subsequent reforms, but remains a core element of the structure of economy in most of the modern developed world), named "capitalism" by its 19th Century socialist critics for the ways in which it systematically served the interests of capitalists (by the preceding definition.)
The GP post seems to be accurate whether using "capitalist" in sense (1) or sense (2).
"Crony capitalism" is the only kind that has ever existed, and definitely the kind for which the term "capitalism" was coined. The idea of any other kind of "capitalism" is, well, highly implausible. To avoid cronyism, you are going to have to take out the core features that make it capitalism.
> I'd bet that I'd consider some of the "subsequent reforms" you've described as fundamental corruptions of the system.
Thing like establishing labor rights are certainly "corruptions" if you view the 19th Century system initially labelled "capitalism" as pure.
I don't see "corrupting" the purity of capitalism as a problem, though.
> For example, political donations as corporate free speech (Citizens United v FEC) doesn't make much sense in a world where shareholders aren't engaged and active participants in company behavior.
Citizens United is a move back in the direction of a pure 19th Century capitalism, and a reversal of reform efforts aimed at constraining the dominion of the capital-holding class (which is what campaign finance reform efforts that seek to limit the influence of wealth on politics to protect democracy from capitalism are.)
Whether shareholders are personally active or find it most useful to give management free reign is immaterial to this.
> In other words, corporate governance is broken, something that Reich gets right.
What Reich gets wrong is embracing the idea that capitalism is betrayed by the various failures, rather than the source of them. His idea of supporting a "share the gains" capitalism is amusing: "share the gains" is not, and has never been, capitalism (though it's occasionally a lie that capitalists use to justify capitalism, as in "trickle-down" economics.)
If people with nothing must work for a capital owner not just to survive, but thrive as a human, there's nothing voluntary about it.
http://www.cnbc.com/2017/02/27/peter-thiels-tech-book-became...
Which is a summary of:
http://www.politico.com/story/2017/02/donald-trumps-shadow-p...
There are a lot of other, less savory, ways to manipulate free markets to stifle competition, however. Your friendly neighborhood cable company, for one example.
Typically at least effects of scale and cartel-like contracts with other major players.
IMO, that's what the previous post is talking about. GM and Toyota largely release the exact same product if you look at it from an engineering data perspective; combustion engine, suspension, cupholders. And the "market" is highly protective and curated towards them (oil industry subsidies helping bring down gas prices, bailouts).
Alternatives, like GM's battery car in the 90s, are mothballed and too expensive for outsiders to really get in on. Plus the key players obviously don't want to get away from fossil fuels, right? So they keep getting favorites.
A simple, if specious answer: The Golden rule - she who has the gold, makes the rules.
Are they superior products? Meh.
Would you particularly miss them if they were destroyed? Unlikely. Somebody just as good would come along by and by, or one of the other ones would rise to replace them.
Are you gonna pay for them anyways? Bet your ass you will.
> Did Apple look for unfair advantages or did they design products that people loved and bought in preference to others?
They made cool products, but they're the most valuable company in the world, at least in part, thanks to the unfair advantages too. The most blatant of them being the $14.5 billion in unpaid taxes in Ireland. And this is Ireland! Imagine if they paid the taxes proportionally in each of the countries where their operate, or in the US at least.
> Traders (capitalists) should indeed look for monopolies if they don't want a race to the bottom but that monopoly can be based on unique value to the customer if crony capitalism isn't involved although sadly it's all too prevalent.
Never have I heard of an industry that benefited from having a monopoly by a for-profit company more than not. Precisely because they are for-profit. These companies work to increase revenue; as much as they market otherwise, the "value to the customer" is but a means to grow this revenue. If they can grow this revenue without providing as much "value to the customer", or in fact, if they can increase revenue by providing less "value to the customer", they will.
And this is not me vilifying them, it's sadly the way things work. Otherwise, we'd have super cool stuff but companies would go out of business. Take every example of a monopoly though, and since they don't need to provide as much value, they all end up decreasing it.
> Markets are dynamic. Conditions change. People's needs and desires change. The monopoly of today will eventually dissolve and at best become one of many equivalent options, tomorrow.
Except when they don't. I think you're thinking of this only from the tech lens, right after a period of rapid growth and lots of marketing, and he staple child for this claim is probably Microsoft, and how Apple went from the underdog to the beamoth. I have two comments on this;
1. What really broke Microsoft's monopoly? I don't think it was new companies innovating, or people's demands changing. It was a change in the system and ideology. Tech went from being your standard capitalist industry to an interesting beast thanks to the emergence of the Free Software Movement, which shares many ideologies with socialism/marxism.
2. Would Standard Oil or the Bell Telephone Company have "eventually dissolved"? The problem with this system is that it's easier for the rich to get richer; if you have a monopoly and the conditions are changing, easier for you to buy out competition or R&D into the next thing than for any other company. Even now that Standard Oil and the Bell Telephone Company have been artificially split the companies that came out of them are still the biggest ones around; not some new ones, though the times have changed a lot.
> That's one of the messages of zero to one, Peter Thiel's recent book.
Haven't read the book, but Peter Thiel is a businessman after all. I'd take his views more as opinions, since he's not really a full-time economist researcher.
That's not to say I'm anti-capitalist by any means. I think it's a great economic engine and a tool for great good. That we can never turn our backs on, lest it devour us. ;)
You don't have to do it first if everybody before you couldn't close the deal.
Its sort of like claiming corporations love the idea of abolishing contract law, forgetting that no matter how much they'd make in revenue, it would never make up for their expense side going crazy.
Another interesting comparison is in an extremely simplistic manner a company would appear to greatly benefit from dumping all their toxic waste out an open window where it blows 10 miles downwind at some city; however the only thing that could be worse than living in that downwind city is working in the same building next to that toxic open window... I was cool with my local nuclear power plant when it was owned an managed by a corporation 10 miles downwind, not melting down would be very enlightened self interest, but not so cool about the plant when it got sold to someone 1000 miles upwind.
But many businesses are also struggling . By some estimates, this is this harshest environment ever for small business. Employees are being squeezed but so is small business (except web 2.0 and stuff like that), which is another component of capitalism
However the article is careful to distinguish between financial/corporate elites and small business (whose owners are generally not of the former group). It's almost misleading calling both small businesses and large corps "businesses". It's like ignoring the difference between a house cat and a lion in a debate about how one might goose-step on the other.
However, the reality is that if a country has good enough policies so that more industry starts there it will lead to more growth. If you sustain that for 40 years you can go from the poorest to one of the richest countries.
That's how growth works.
It's interesting to me when I think of a world where people that paid higher taxes (absolute values and not a % of income) had more votes during elections.
I'm afraid we are seeing something similar now, with some billionaires desperately trying to reduce any and all kinds of taxes they need to pay. Frankly its breathtaking to see how much greed these people have...also, a supreme lack of solidarity with they society they live in (and apparently a lack of knowledge of historical precedents as well).
I should add that the same doesn't hold for all the rich/billionaires. Very much respect the work the Gates foundation is doing, just as an example.
[0]: http://www.goodreads.com/book/show/9704856-the-origins-of-po...
That's not happening anymore...because campaign bribes.
...is not a defining feature of the real 19th Century system for which the term "capitalism" was coined as a label by its critics.
Maybe I've only encountered this with folks working retail and in places like call centeres, never quite having enough either to buy stocks nor exercise their options after they've left the company. Even $75,0000 (half of the lower stock price amount) can be a life-changing amount for someone making 30k per year.
I understand it is cheaper on the bottom line to offer stocks, but it still can be worthless to the bottom-rung employee.
Yeah, ever see the people openly weeping at the end of every Undercover Boss?
> Before we go to the barricades, you should know about another CEO named Hamdi Ulukaya [...] Last Tuesday Ulukaya announced he’s giving all his 2,000 full-time workers shares of stock worth up to 10 percent of the privately held company’s value when it’s sold or goes public
This is comparing apples to orange socks. The issue at hand is the safety net. If she gets fired, the underperforming CEO gets enough money to continue her lifestyle - perhaps indefinitely. The Chobani employees get a little more upside, but their downside is pretty much the same. E.g. they're still in deep sh*t if the company does badly.
That's pretty much the opposite of what I'm saying.
> This is comparing apples and orange socks. The issue at hand is the safety net. If she gets fired, the underperforming CEO gets enough money to continue her lifestyle - perhaps indefinitely.
I guess you're saying the comparison isn't even fair because it is completely different playing fields but it's hard to parse that from the above sentence structure.
Chobani does badly -> employees' Chobani stock is also doing badly.
Giving more stock to employees is not a safety net.
The first level is its just political sloganeering.
The next level is they're contract jobs and the pay is high enough to be F-you money if they fail and via the magic of survivorship bias we never hear about those that fail, although they and their kids are the trust fund babies that explode inflation while producing nothing of value other than CO2.
The next level of analysis past that is a matter of scale. I can independently afford food and housing and medical care for my kids, maybe not the best but I'd be OK. If my business fails, no biggie, I just won't buy an ocean going sailboat in the 10+ meter range, we're still going to be OK. Someone lower on the socioeconomic totem pole tries to start a business and fails, or gets downsized from his good job, his wife has to leave him to get herself and the kids on the programs or they'll literally starve, that means she'll get the house, its the end of that dudes life, perhaps literally. Certainly its an economic death penalty even if he physically survives or if by some miracle his family survives intact. So the risk is a bit asymmetric because unless you magically have total equality in income, wealth, education, social connections, you're going to have people who will literally die if they lose $5K and others who can shrug off half a mil or more.
Also this isnt so much about socialism or capitalism but about why the world seems to favor the rich.
> Because the average employee does not take an active enough role in management decisions.
Think on the politics that are closer most people in their day-to-day lives, at the workplace, active engagement with general policy is disencouraged and might be dangerous. Meaning, most people refrain from engagement with "management material." Being trained like this, it naturally extends to governmental politics.
when do you educate yourself on these issues sufficiently?
when do you go out and participate?
the problems are not secret. they're well discussed in academic circles, for decades, even longer, since the beginning of "capitalism" itself. this particular "well if the people actually did some thing about it!" is one of the oldest.
what are they supposed to do in a society that largely tells contrarians to stop behaving like they're special and do their job?
Robert Riech makes good points but provides zero ideas how to solve them. Relying on the goodness of CEO's hearts isn't going to cut it. That won't help enough people. How do we incentivize the behavior of employee ownership? Right now the incentives are aligned against that, as Reich seems to make clear. He seems to be advocating against more "radical" approaches advocated by Bernie Sanders because there is this glimmer of hope some CEOs will be nicer. It seems like this article makes the point that structural changes are necessary but the author falls short of that conclusion and instead gives glowing praise to a single CEO in hopes it will inspire a few others. It might, but that won't help much.
Plus there are other loopholes, some of which are already used, such as banking in Cayman I islands, and being located in a more "friendly" country.