eve- My thanks to you for leaving a comment. It’s nice to know when people like something I’ve written.

windspike- It was a nice refresher to review some past discussions that subtly dovetail into this post. I also think that it is deplorable to see multi-million corporate buildings so near to dilapisating infrastructure, especially schools. Businesses like to complain about a shortage of qualified workers, yet take such a limited (if any) role in alleviating that situation. They are they ones who have all the money (and who get our tax bucks too), it’d be nice to see more return to the community. The benefits for business and society are fairly obvious.

Chris- Glad you found me. And yes, it would be nice to see something other than the soon-to-come corporate handouts disguised as help for the victims. I’d much rather just give each affected family a couple hundred thousand to rebuild and restart their lives than trust giant mulit-national corporations to reconstruct an affordable, efficient, safe redevelopment that has more than profit in mind.
Hope to hear from you again.

Martin- Thanks! While this thinking may be in the minority (or even the unspoken majority) it’s still nice to hear some agreement.

John- Understanding that capitalist economics is NOT the end all, be all of life is more important than making a buck, but if you’ve been blinded by the theory of greed over good, then I wouldn’t expect you to agree. Still, you seem to have missed the point that this essay looks at the big picture, not specific instances.

No where do I mention the hurricane in this post. The manipulation I mention is well documented and refers more specifically to the Enron created energy shortage on the west coast a few years back. I’d like to hear your defense of their actions.
Also, your assumption that price increases only reflect scarcity (real or contrived) is a bit naive. Price increases that occur by different producers in a similar industry are nearly always done in a “tit-for-tat” method, meaning that one product goes up and so does the competitors. This is done to increase profit, not necessarily to promote conservation.

Common Sense? Yes indeed!

Jolly- Nice rebuttal to John. I think we do need to get rid of many of the tax give-aways to corporations, but many of the reforms I’v eproposed on this blog would produce savings that could help offset many of the financial problems inherrent in government today. We just need some politicians with the guts to stand up for the people for a change.
Thanks for backing me up.

Jack- Another well thought out response, and I thank you for that.

I readily admit that I am not up to speed on all the laws, regulations, and restrictions already on the books. But what do they matter if they are flagrantly ignored or subverted?

And while we may have legislative safety valves in place to prevent overwhelming worker abuse, the system still favors the corporations because they spash the most cash at the politicians. Out political finance laws need to change to dilute their influence significantly.

I do agree with your supposition regarding the “unforeseen” consequences of capitialism run amok. Though I’m not sure that moral relativity is to blame, if by that you mean a relaxing of historical Judeo-Christian dogma. A person (and by extension, a business) can operate on the principals of profit and charity, productivity and care for worker conditions, but the ethics of the “Greed is Good” culture are rotten to the core.

Business regulation is necessary to a degree, but the bureaucratic red tape that make such regulation expensive can be reduced or eliminated. While most of life does exist inshades rather than absolutes, sometimes the loopholes need to be shut down entirely, especially when a sector of society can’t show the temerity to police themselves.

Thanks for dropping by again Jack.

Your reference…

“But because corporate capitalism uses its own considerable wealth to advance legislation, often times these businesses are not held accountable as an individual would be. They are receiving all of the benefits without bearing any of the responsibility. Furthermore, through their legislative access (allowed them by means of political contributions by a variety of means, both legal and extra-legal) they enjoy access to policymakers and exert influence on policy and laws without having any accountability to the general public, a practice that not-so-subtly bypasses the representative system guaranteed by our Constitution. This is wrong, and to stop this corporate subversion, we need to change our political finance laws as well as our interpretation of the rights of businesses. To what extent should a corporation’s activities be separated from those who actively manage it?”

…is basically addressed by the Sarbanes-Oxley act. Of course, like all acts of Congress it is a cumbersome and unweildy mess, creating bureaucracy and inefficiencies, focusing on nonsense while leaving wide open avenues of abuse. It is a start though.

Also, I think the point you deal with here:

“Does a business exist merely to produce profit or is it more of a cooperative effort between the business leaders and the employees to ensure mutual success? The answer should be, “Yes.” Obviously, in order for a business to be successful, it has to be prosperous at some level. It must earn enough money to pay for all of its materials and employees and utilities. And if the goal of free enterprise is to provide a materially wealthier lifestyle for the entrepreneur, a business must also generate an adequate profit for the owner. But since the success of a business is directly related to the effectiveness and expertise of its employees, business leaders need to find a balance between acceptable profit and outright greed.”

Is essentially guided by forces and dynamics within the business. We have adequate safety valves through legislation (FLSA and others) and the success of the business largely hinges upon all of its factors (like its ability to retain a good labor base etc.)

Here is something that may help in your analysis. (And you touch on it somewhat). With the introduction of the corporate entity we have access to almost unlimited funding for capitalization. This is good, it gives the company great flexibility in operations. There are a host of advantages to the corporation and the consumer because of this capitalization. The problem unforeseen was twofold: 1. Americans have become more shortsighted, and have bought into the qet rich quick thinking, and that translated into problem #2. the accounting perspective changed. Traditionally, companies judged performance by productivity. (This is the reason I always look at a nations GDP as the primary economic indicator, rather than nonsense like the stock market, futures, etc.) For example, a 1970’s GE was unconcerned about profit MARGIN–and was more concerned about gross productivity and the revenues they produced. When companies started trading publicly, the source of company funding was based upon the desirability of its stock. In order to make a stock increase, the MARGIN had to increase. So a company’s CEO and CFO would get together, (and since their bonus was tied to the stock price), they would try to find out how to widen the margin between revenues and expenses. In doing this they would lose the focus on the two primary long-term components (revenues and productivity), because the easiest thing to do was cut expenses. Anyone knows that if you skimp on resources (human to raw materials) you create an inferior product, which in the long run hurts the business.

So essentially the damage has come about through the short sightedness of our corporate structure. This can be linked to personal greed, as you mention, but also can be linked to the promotion of moral relativity and decaying ethics in the nation.

One more factor, and I’ll end this long winded missive.

The cost of government in business is staggering. Not just the obvious taxation, but in forms of regulation. The Cato Institute did a comprehensive study that measured the cost of regulation passed down to American household’s through businesses as a result of government regulation. When divided out evenly to all American households the cost per year was in excess of $20,000.

Ken, will be back–I enjoy your well thought out articles.

-Jack

P.S. Windspike above is a little fundamentalist in thought. Capitalism is just an economic system, but many on the left put horns on it and try to personalize it. I am glad that you point out that if there were no capitalistic transactions, there would be no economy. The less inhibited the transaction process the better the economy, the greater the opportunity for regular folk to advance in free enterprise.

I’ll also bet my last dollar that John wouldn’t like it much if Government had imposed levies on energy to create the precise climate he’s advocating, even though we might have even been able to pay for El Shrubbo’s Great Patriotic War this way AND encouraged conservation.

Between the tax reductions for big oil and the massive profits big oil has raked in, it looks like a pretty good business to be in these days. And I am glad to see that John wants them to have all that money, as well as the money they’ll soon collect from insurance for damages to their facilities. In the meantime, of course, we couldn’t even afford to shore up a frigging levee that happens to straddle one of our major export ports.

This is nonsense:

In a capitalist system, these fluctuations are attributed to supply and demand, but recent shenanigans in this sector (energy) of business have shown us that this isn’t necessarily the case. Manipulation and false scarcity have been used to increase the costs to the consumer for no reason other than greed, and the energy sector isn’t alone in this.

We’ll just forget the fact that a third of the nation’s refining capacity was taken offline by Katrina (there is nothing false about that scarcity, though).

Presumably, you are one of those people who believes that because gas had already been refined at the time of Katrina, it should have been sold at the pre-Katrina rates.

If you do, you are a fool. I’d love to do business with you.

If you buy a stock for $10, and three days later it is selling for $100, I assume you would still sell it to me for $10.

After all, you bought it before the price went up! (of course, I would just turn around and sell for $100 and pocket your profit for you, free of charge).

That is your logic in a nutshell.

The high price of current gasoline:

1. Will encourage people to conserve fuel

2. Will make alternative technologies more attractive

3. Will encourage companies to get their refineries back online and to find domestic sources of oil

These are good things.

Prices are the way that suppliers tell consumers “hey, this stuff is scarce; don’t waste it.”

What is wrong with that?

“Common Sense?” Really?

This post was right on point

-Chris

What we really need is a change in economic focus from capitalism that is set on an unlevel playing field to one that has moral and ethical reasoning attached to it. I call this Capitalism with a Conscience. When big business gets to open large corporate campauses in fancy new buildings four blocks from a middle school that the doors are falling off the hinges in the lavatories, one wonders what happend to Corporate Resonsiblity. Capitalism in it’s purest sense – and certainly not common – is not about helping others, but helping themselves.

I posted about these ideas long ago, in a response to another of your posts if you care to do a refresh on that, i have it here: http://educationalwhisper.blogspot.com/2005/04/common-sense-on-public-education.html

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