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| Quote Richie="Richie"Perhaps we should take away that inventive? '" We could, but then we would need accept that Union power was hat kept the greed and avarice of big business in check. Right now, with the rules restricting union action, a removal of the working tax subsidies would simply leave people without enough to live, a race to the bottom as it were.
Quote RichieSo you're not paying it? Please be clear.'" I am paying for the cheapest deal I can get. It is too expensive.
Quote RichieSo part private enterprise and part gov. Just how we expect things to work. Was this supposed to be news?'" Its not news, simply an explanation of why it isn’t, imo, acceptable that a private enterprise can rely on government infrastructure and subsidy, have high charges and high profits. That is not a ‘free market’ in any way, shape or form. What is, is a cartel where the public share the risk of investment, and but the profits go to private enterprise. It is a transference from the public purse to the fat cats pockets. It is a clear example of a market which isn’t working.
Quote RichieYou are being far too absolute. When we say "free market" there are levels of free market and levels of regulation. Those that argue for a "free market" are arguing for a freer market, not the abolition of all rules and regulation. If you believe any is arguing for the absence of all laws and regulation, please show me what led you to that conclusion. Otherwise I'll join in the nonsense and behave like you are arguing for the state to run everything.'" Im not being too absolute. Free market economic theory only holds any kind of water in an entirely free market. Otherwise it isn’t a free market economy, it is a managed economy using free market theory to justify avarice, exploitation and excess. I don’t believe you are arguing for a free market without any rules and regulations, I think you are justifying excess, avarice, greed and exploitation by saying that is a how a free market economy works. It is how a free market economy works, but none of us want one. What we want is a regulated economy. So why not stop excess, avarice, greed and exploitation? Why not have government which manipulates markets to work in the ways we want them? And if a market proves not to work. Why not have a nationalised industry?
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| Quote sally cinnamon="sally cinnamon"There are some great posts on this thread.
In debates about capitalism I usually find myself at odds with the lefties because I am a defender of capitalism and the market system. However, I think supporters of capitalism have to be honest, and not disingenuous about the financial crisis, the root causes, and address it so it doesn't happen again - and not use it as an opportunity to further their own political position which I saw summed up wonderfully on Twitter once as: "the poor have too much and should have less; the rich don't have enough and should have more".
A lot of the voices of the right defend capitalism and criticise government and want the size of the state to be reduced: this is fair enough there is an ideological position here from the likes of Milton Friedman. The Friedman style intellectual argument, that was basically people act more responsibly when they face the consequences of their actions, so the state shouldn't provide a 'safety net' as it will be abused. However the modern day right wing position has moved to one where the state should provide a safety net, not for the poor but to cover the exposure to losses of those that want to get rich by excessive risk taking. They want a one-way bet: they profit from the rewards when risks come off, but the taxpayer absorbs the losses if risks go wrong.
Where the hypocrisy really gets my goat, is the financial services industry and its advocates like to bite the hand that feeds them: they strongly resist any attempt to regulate their practices, and say government should "get out of the way", they allow governments to spend huge sums bailing them out when they collapse, and then they point to government debt and change the argument to "the problem is one of government debt, so governments should reduce their expenditure on welfare and public services"....notably not that they should stop covering losses in the private sector!
The reason they can do this is because especially in the USA, the banking sector has a lot of patronage to give away to those in government or in the academic field of economics. If you are influential in either of those sectors, and hold a position thats friendly to the banking sector, you can expect to be rewarded with a very high paying position in the banking sector as your next career move.
The real cause behind the financial crisis was the creation of financial products that disguised the underlying risk of an asset: eg if you make multiple subprime loans (to families that are never going to be in a position to pay them back) but can package them together in a way that allows you to sell on those loans without the buyer of the loans knowing how high the risk of default was, then you can make money by making a loan to someone that can't pay back, then selling on the loan at a profit, and when the default comes in its the party you sold it on to that loses out. When lenders worked out how to do this it was easy money and they deliberately made loans to people on low or no incomes, in the knowledge they would likely default, but in the knowledge that it would be someone else's problem.
Now of course they like to turn the blame on the poor: "well people shouldn't have taken out the loans then if they can't afford to repay them". Yes thats true, but if you ask me to look after £1000 for you, and when you come to ask for it back I say actually I loaned it to a homeless person at 10% interest but I haven't seen him since, your anger is going to be focused on me not the homeless person....'"
It was just that though if you are asking for honesty. There was also a good deal of poor, traditional lending without fancy products being involved. As to sub-prime, the US and later Blair's government encouraged it - as ever when politicians meddle in the economy it ended it tears.
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| Quote SmokeyTA="SmokeyTA"We could, but then we would need accept that Union power was hat kept the greed and avarice of big business in check. Right now, with the rules restricting union action, a removal of the working tax subsidies would simply leave people without enough to live, a race to the bottom as it were. '"
Plenty of big businesses don't have unions and have (mainly) happy employees. Can unions themselves count as "big business" ? Can't see why not, so what you're wanting to say is that business keep business in check, but sometimes business keeps itself in check anyway.
Another argument about the removal of subsidies is that employers would increase pay to compensate. Which is what you seemed to suggest on your earlier post.
Quote SmokeyTA="SmokeyTA"I am paying for the cheapest deal I can get. It is too expensive. '"
Too expensive for what? It's clearly not too expensive for you to pay, or seek alternatives.
Quote SmokeyTA="SmokeyTA"Its not news, simply an explanation of why it isn’t, imo, acceptable that a private enterprise can rely on government infrastructure and subsidy, have high charges and high profits. That is not a ‘free market’ in any way, shape or form. What is, is a cartel where the public share the risk of investment, and but the profits go to private enterprise. It is a transference from the public purse to the fat cats pockets. It is a clear example of a market which isn’t working. '"
Firstly all private enterprise relies to some extent on gov infrastucture. How would we drive or even walk around for one thing, otherwise.
On subsidies.....I kind of shrug my shoulders here. Where subsidies are given, perhaps we should take them away. In most cases where they are in place they are in such scenarios that no service would be provided otherwise, and if the state tried to do it they perhaps would cost even more.
"Fat cats" is emotive and we should stay away from such terminology if we are to have a sensible discussion.
Quote SmokeyTA="SmokeyTA"Im not being too absolute. Free market economic theory only holds any kind of water in an entirely free market. Otherwise it isn’t a free market economy, it is a managed economy using free market theory to justify avarice, exploitation and excess. I don’t believe you are arguing for a free market without any rules and regulations, I think you are justifying excess, avarice, greed and exploitation by saying that is a how a free market economy works. It is how a free market economy works, but none of us want one. What we want is a regulated economy. So why not stop excess, avarice, greed and exploitation? Why not have government which manipulates markets to work in the ways we want them? And if a market proves not to work. Why not have a nationalised industry?'"
You are being absolute. Please find me any suggestion that is what we should have. Your alternative isn't going so well in North Korea.
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| Quote Richie="Richie"Plenty of big businesses don't have unions and have (mainly) happy employees. Can unions themselves count as "big business" ? Can't see why not, so what you're wanting to say is that business keep business in check, but sometimes business keeps itself in check anyway.
Another argument about the removal of subsidies is that employers would increase pay to compensate. Which is what you seemed to suggest on your earlier post.'" And plenty of those big businesses are those with many employees being subsidised by in work tax credits.
Quote RichieToo expensive for what? It's clearly not too expensive for you to pay, or seek alternatives.'" Too expensive for the level at which I value it. I am forced to pay that amount because there is no realistic alternative.
Quote RichieFirstly all private enterprise relies to some extent on gov infrastucture. How would we drive or even walk around for one thing, otherwise.
On subsidies.....I kind of shrug my shoulders here. Where subsidies are given, perhaps we should take them away. In most cases where they are in place they are in such scenarios that no service would be provided otherwise, and if the state tried to do it they perhaps would cost even more.
"Fat cats" is emotive and we should stay away from such terminology if we are to have a sensible discussion.'" You are doing nothing here but espousing the free market economic theory that the free market will drive costs down yet where it doesn’t saying the only alternative is for the government to subsidise it or lose that service. If the a company cannot provide a service without government subsidy, it shouldn’t provide that service that is the free market. What certainly cannot be acceptable is that a private company receives government subsidy and makes a profit. That is simply giving money collected by tax to rich individuals.
There is no way that government subsidy can be compatible with a free market. Any market which operates with a government subsidy, cannot even begin to argue that it is in anyway, shape, or form a free one
And if all private enterprise relies on government infrastructure, which belongs to all of us, it should remember that it exists to serve all of us, not to exploit so that a few can live in luxury.
Quote RichieYou are being absolute. Please find me any suggestion that is what we should have. Your alternative isn't going so well in North Korea.'" Now who is being too absolute? My alternative isnt North Korea, my alternative is do what we do now, but with the over-riding thought that our markets exist to serve us. Not the other way around. the markets are our servants, not our master. They should do what we want, not us what they want. If you think that is how north korea is run then you need to read a book.
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| Quote Sal Paradise="Sal Paradise"How do you determine what constitutes super-normal profits and how many businesses fall into that category? '"
It's a defined term in economics. Normal profit is when enough profit is made to pay the workers and managers a reasonable wage and for the company to remain in the market. Average Revenue = Average Total Cost.
super-normal profit is when Average Revenue > Average Total Cost and economic theory says this should only ever occur temporarily as it means there will be incentive for others to enter this market as it is clearly very profitable.
It is therefore very easy to tell which and how many businesses are making super-normal profits.
The interesting question is how they are doing this.
That is because Economic theory also assumes the super-normal profit is being made [iwhile still paying the workers and managers a reasonable wage[/i.
So if we end up with firms making super-normal profits while [inot[/i paying the workers and managers a reasonable wage i.e. ending up with Average Revenue > Average Total Cost by exploiting the workforce or relying on in work benefits as a subsidy, then any such firm is making super-normal profits is not doing so because they have cornered the market but are doing so at their workers and the taxpayers expense.
Quote Sal ParadiseBusinesses will pay what they have to pay to attract the calibre of labour they require. To pay more would be foolish and render them uncompetitive unless the whole market followed suit. You wouldn't pay over the asking price for anything would you? There are limited things government can do without negatively impacting the competitiveness of individual businesses especially if we want to encourage exports.'"
The fact John Lewis and Richer Sounds are more successful than many of of their competitors gives lie to what you say above. They value their staff and for example John Lewis are for more successful than M&S who under successive chairmen have abandoned treating their staff as they once did (in a similar way to John Lewis).
Quote Sal ParadiseBusinesses are already paying a 14% tax on employing people - why not simply remove that at lower levels and increase the minimum wage by 14%?'"
I have no idea what the implications of that would be and neither I suspect do you. Nor do I understand why you mentioned it.
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| Quote Dally="Dally" As to sub-prime, the US and later Blair's government encouraged it - as ever when politicians meddle in the economy it ended it tears.'"
I agree in the USA especially in the Clinton era there was government support for extending the American dream downwards to those on lower incomes by making them have access to credit.
But in the UK the problem was the politicians didn't meddle with it. There was no policy of encouraging subprime lending from the Blair government and if you think there was how about find some policy measures and/or government statements in favour of extending credit to those on the lowest incomes....?
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| Quote SmokeyTA="SmokeyTA"And plenty of those big businesses are those with many employees being subsidised by in work tax credits.'"
So?
Quote SmokeyTA="SmokeyTA"Too expensive for the level at which I value it. I am forced to pay that amount because there is no realistic alternative. '"
Clearly not, because you are paying it. You are even using more power to argue with me here.
Quote SmokeyTA="SmokeyTA"You are doing nothing here but espousing the free market economic theory that the free market will drive costs down yet where it doesn’t saying the only alternative is for the government to subsidise it or lose that service. If the a company cannot provide a service without government subsidy, it shouldn’t provide that service that is the free market. What certainly cannot be acceptable is that a private company receives government subsidy and makes a profit. That is simply giving money collected by tax to rich individuals.
There is no way that government subsidy can be compatible with a free market. Any market which operates with a government subsidy, cannot even begin to argue that it is in anyway, shape, or form a free one '"
You're effectively arguing against private hire taxi drivers here. They rely on state infrastructure. Do you propose taxis should be provided by the state?
Quote SmokeyTA="SmokeyTA"And if all private enterprise relies on government infrastructure, which belongs to all of us, it should remember that it exists to serve all of us, not to exploit so that a few can live in luxury. '"
Not happy with hard working taxi drivers then?
Quote SmokeyTA="SmokeyTA"Now who is being too absolute? My alternative isnt North Korea, my alternative is do what we do now, but with the over-riding thought that our markets exist to serve us. Not the other way around. the markets are our servants, not our master. They should do what we want, not us what they want. If you think that is how north korea is run then you need to read a book.'"
You're arguing against a lawless and unregulated free market. Thing is, nobody is arguing for that.
Which particular market do you think you serve?
Which book should I read about North Korea? Was it written by a private enterprise, or a state?
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| Quote SmokeyTA="SmokeyTA"Too expensive for the level at which I value it. I am forced to pay that amount because there is no realistic alternative.'"
If you value it as too expensive for you then that only applies to you, not anybody else. What alternative do you want?
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| Quote DaveO="DaveO"The fact John Lewis and Richer Sounds are more successful than many of of their competitors gives lie to what you say above. They value their staff and for example John Lewis are for more successful than M&S who under successive chairmen have abandoned treating their staff as they once did (in a similar way to John Lewis). '"
They may well value their staff, but saying they're more successful because Mr Richer lets them have a go in his Rolls Royce every now and then is fanciful.
So, just what the staff at these 2 companies get? Salary? Pension? Bonuses? Private Medical Care? Shares? Holidays etc etc
For comparison, The M&S company pension scheme has 3% employee 6% Employer Contributions for new starters, after 2 years this goes up to 6% and 12%. Which isn't bad.
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| Quote BobbyD="BobbyD"They may well value their staff, but saying they're more successful because Mr Richer lets them have a go in his Rolls Royce every now and then is fanciful.
So, just what the staff at these 2 companies get? Salary? Pension? Bonuses? Private Medical Care? Shares? Holidays etc etc
For comparison, The M&S company pension scheme has 3% employee 6% Employer Contributions for new starters, after 2 years this goes up to 6% and 12%. Which isn't bad.'"
The point being that John Lewis and Richer Sounds are highly successful businesses, which is a very nice illustration of how you do not have to shaft your workforce to be successful and highly profitable.
I'm not personally familiar with Richer Sounds, but I am with John Lewis, and a key reason I go there when I need, say, anything for the flat is because the standard of service is so much better than most other places. And that also means a standard of service that includes honesty and not just an intention of flogging you something come what may. Thus they get my return custom – and my recommendation to other people.
In other words, treat people well and value them and give them a stake in the success of the business and you improve the business because you improve the standard of work.
The fortunes of M&S, on the other hand, are declining.
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| Quote BobbyD="BobbyD"If you value it as too expensive for you then that only applies to you, not anybody else. What alternative do you want?'"
That is the same for anything though isn’t it?
Either a market that actually works, which in this instance likely to be impossible, so failing that a nationalised industry able to supply a necessary utility at an affordable price.
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| Quote Richie="Richie"So?'" I;ve already explained that to you.
Quote RichieClearly not, because you are paying it. You are even using more power to argue with me here. '" Under free market economic theory that would be the case. But those companies aren’t operating in a free market. They are operating in a highly regulated, massively subsidised one using what was nationalised infrastructure where there isn’t a realistic alternative. Your premise here is wrong.
Quote RichieYou're effectively arguing against private hire taxi drivers here. They rely on state infrastructure. Do you propose taxis should be provided by the state? '" In what way are taxi drivers subsidised by the state? They do use state infrastructure, they do pay towards that infrastructure, they are also highly regulated and often their prices are set at a reasonable level by the local council. I am perfectly comfortable with that.
Quote RichieNot happy with hard working taxi drivers then?'" To borrow a tactic from yourself? Why differentiate? Why only hard working ones? Why not lazy ones? Whats the difference?
Quote Richie
You're arguing against a lawless and unregulated free market. Thing is, nobody is arguing for that. '"
Nobody is arguing for that, I accept that. You are however justifying excess using that economic theory. You are using the free market theory, where the capital will find the best product, where people will pay a products worth and that is how it finds its value, and that risk takers and wealth creators should be rewarded for the risk they take and the wealth they create and applying to markets which aren’t free markets, where the wealth created is subsidised by the state and the risks taken are mitigated by the state. You cannot apply free market theory and justifications to a managed and subsidised market
Quote RichieWhich particular market do you think you serve?'" myself? Media.
Quote RichieWhich book should I read about North Korea? Was it written by a private enterprise, or a state?'" Any. In fact all. dont limit yourself to one.
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