Capitalism or Communism? (1 Viewer)

[zstar]

Capitalism is prone to crises which will multiply.

The U.S is already a bankrupt country but most people don't realise it yet. Should America collapse tommorow then countries in Europe, Australia etc would end up just like the former communist countries who relied on the USSR.

 

[withoutaface]

Capitalism is prone to crises which will multiply.

Give me an example worse than one created by central control (let's say the great depression, or great leap forward).

The U.S is already a bankrupt country but most people don't realise it yet. Should America collapse tommorow then countries in Europe, Australia etc would end up just like the former communist countries who relied on the USSR.

Why is the US collapsing tomorrow?

 

[.gemgem.]

I say Capitalism. I'd prefer the government NOT to have control over everything.

 

[cowface]

I'd prefer the government NOT to have control over everything.

I'd prefer corporations.

 

[withoutaface]

I'd prefer corporations.

Who are ultimately far more accountable to the end consumer than any government will ever be.

 

[wheredanton]

Who are ultimately far more accountable to the end consumer than any government will ever be.

Seriously withoutaface. A Proprietary Limited Company is far far less accountable than any government. The Corporations Act encourages this form of company by ensuring that they don't have to report to ASIC. The whole notion of corporate personality encourages people to form companies in order to limit their personal liability and therefore accountability if something goes wrong.

While publically listed companies do have to report to ASIC there are hardly 'accountable'. While consumers vote with their dollars in the market, it assumes perfect market conditions which never exist. Perfect market conditions which have to include people who are well informed to exercise their personal power - never happens.

Corporations accountable to the end consumer? Not really. The corporation only has one real interest and that is to its shareholders. Indirectly, perhaps, consumers can put pressure on the company by putting their dollars somewhere else thus pissing of the shareholders. But the corporate structure is hardly democratic.

If corporations are far more accountable to the end consumer (we are all consumers in some way) do you support the proposition that the government should do away with representative government and incorporate itself list its shares on the stockmarket? It would be one of the biggest initial public offerings in history. Each Australian individual has to buy their way into Australian government Ltd.

 

[withoutaface]

Seriously withoutaface. A Proprietary Limited Company is far far less accountable than any government. The Corporations Act encourages this form of company by ensuring that they don't have to report to ASIC. The whole notion of corporate personality encourages people to form companies in order to limit their personal liability and therefore accountability if something goes wrong.

While publically listed companies do have to report to ASIC there are hardly 'accountable'. While consumers vote with their dollars in the market, it assumes perfect market conditions which never exist. Perfect market conditions which have to include people who are well informed to exercise their personal power - never happens.

I'd posit that people are more informed about their day-to-day purchasing decisions than they are about the average election. What percentage of the electorate would you say are "well informed" as to the state government's function, and how many could coherently explain the policy platforms of the two contesting parties?

Corporations accountable to the end consumer? Not really. The corporation only has one real interest and that is to its shareholders. Indirectly, perhaps, consumers can put pressure on the company by putting their dollars somewhere else thus pissing of the shareholders. But the corporate structure is hardly democratic.

If company a removes an ingredient from their food that makes it less tasty, the shareholders will lose money, and will have to bow to consumer pressure to bring their share prices back up. If company b has toxic chemicals found in their childrens' toys, then they will at the very least suffer severely, if not go bankrupt, because they are slaves to the demands of the consumer.

If corporations are far more accountable to the end consumer (we are all consumers in some way) do you support the proposition that the government should do away with representative government and incorporate itself list its shares on the stockmarket? It would be one of the biggest initial public offerings in history. Each Australian individual has to buy their way into Australian government Ltd.

I'd suggest that the bulk of services currently provided by the government, with the except of police, defence, judicial, etc, be sold off, yes.

 

[wheredanton]

I'd posit that people are more informed about their day-to-day purchasing decisions than they are about the average election. What percentage of the electorate would you say are "well informed" as to the state government's function, and how many could coherently explain the policy platforms of the two contesting parties?

That's true. But I'd bet more people understand government than the ins and outs of corporations law.

If company a removes an ingredient from their food that makes it less tasty, the shareholders will lose money, and will have to bow to consumer pressure to bring their share prices back up.

On the assumption that there is perfect competition in the market and that if one firm increases its price or removes a core ingredient consumers will 'vote' with their dollars by placing their dollar votes somewhere else. There isn't perfect competition, the market is a very good but imperfect when it comes to corporate accountability, as discovered 200 odd years ago in the US. They invented antitrist laws. We have Competition law to ensure 'competition'.

If company b has toxic chemicals found in their childrens' toys, then they will at the very least suffer severely, if not go bankrupt, because they are slaves to the demands of the consumer. I'd suggest that the bulk of services currently provided by the government, with the except of police, defence, judicial, etc, be sold off, yes.

You have scary amount of faith in corporate accountability.

Corporate accountability can often takes years; corporations are designed in a way so as to avoid accountability or at least spread it around; Share price isn't everything; you assume that everyone has the same interests, certain stakeholders (ie shareholders, directors) would have an interest in covering up or minimising the impact of toxic chemicals in childrens toys, other stakeholders (parents) have other interests. What if a family with a large proportion of their earnings invested in poison Toys Limited? Are they going to put their money elsewhere forcing their dividend and share price down?

Is it fair that wealthier people have a greater ability to buy shares in these companies (mr poor ownes 20 shares in poison toy limited, Director of company (mr rich) ownes 40 000 shares (say a majority)). Mr poor has pretty much zero influence in governance of the corporation with his 20 shares. Since he is poor he may have no choice but to purchase produce from a dodgy corporation because of its low price point.

 

[volition]

On the assumption that there is perfect competition in the market and that if one firm increases its price or removes a core ingredient consumers will 'vote' with their dollars by placing their dollar votes somewhere else. There isn't perfect competition, the market is a very good but imperfect when it comes to corporate accountability, as discovered 200 odd years ago in the US. They invented antitrist laws. We have Competition law to ensure 'competition'.

We don't need perfect competition for the market to work, I think it's a rather common myth that we do need 'perfect competition'. I personally think anti trust laws shouldn't exist.

Is it fair that wealthier people have a greater ability to buy shares in these companies (mr poor owns 20 shares in poison toy limited, Director of company (mr rich) ownes 40 000 shares (say a majority)). Mr poor has pretty much zero influence in governance of the corporation with his 20 shares. Since he is poor he may have no choice but to purchase produce from a dodgy corporation because of its low price point.

I don't think you personally need to own shares in a corporation for it to have accountability. The more efficient corporations (as in, it's in their interests to be seen as a good company) will be accountable because otherwise nobody will buy their product/shares (they need equity funding). The ones that aren't efficient go out of business.

Also, the way the corporation acts is also determined by the demands of the consumer, it's not like the only way consumers have a say is by holding shares, they also have a say by choosing to buy/not buy the product.

 

[wheredanton]

I personally think anti trust laws shouldn't exist.

You believe corporations have the right to form cartels, participate in resale price maintenance and exclusive dealing arrangements?

...and yes there is no such thing as perfect competition. Competition in reality is a state of affairs rather than an end product. Antitrust/competition laws exist around the world in order to encourage competition.

 

[Not-That-Bright]

I personally think anti trust laws shouldn't exist.

So how much money do you want to pay for petrol again?

 

[Black Faery]

So how much money do you want to pay for petrol again?

I want to pay $100 a litre, so alternative fuels are economically justifiable. Antitrust laws, while giving short term relief, entrench longer term monopolies and inefficient market structures.

Pain now, and gain later!

 

[Not-That-Bright]

I want to pay $100 a litre, so alternative fuels are economically justifiable. Antitrust laws, while giving short term relief, entrench longer term monopolies and inefficient market structures.

Pain now, and gain later!

I see a few problems here:

- Poorer people cannot afford to take huge hits or pay more for their transport.
- Remote communities will be particularly at risk.
- You assume they'd rise their prices to a point where they'll be replaced, I'd say they'd be smart enough to merely raise prices to the point where they make maximum profit without being replaced.

 

[banco55]

The trick would be to raise the tax on fuel and cut other taxes an equivalent amount. Although you'd probably have to give big tax breaks to the agrarian socialists out in the bush.

 

[withoutaface]

That's true. But I'd bet more people understand government than the ins and outs of corporations law.

They don't need to. They just need to know what company makes the products best/closest to their needs. There's a concept in engineering that I believe is applicable here, known as "black boxes". The average car owner doesn't need to know how a car works, just that it doesn't break down and goes as fast as they need it to go. Under the bonnet is a black box. The mechanic doesn't need to know how the electronics of a car work, just that they do. If there's a problem that's not mechanical in nature, then the onboard computer, which is a black box, can be sent back to the manufacturer for repair or replacement.
If company A makes cheaper biscuits of the same quality as company B, it doesn't matter to me that this is because company A has an efficient management structure, just that they make cheaper biscuits.

On the assumption that there is perfect competition in the market and that if one firm increases its price or removes a core ingredient consumers will 'vote' with their dollars by placing their dollar votes somewhere else. There isn't perfect competition, the market is a very good but imperfect when it comes to corporate accountability, as discovered 200 odd years ago in the US. They invented antitrist laws. We have Competition law to ensure 'competition'.

Monopolies that don't come about from government intervention are exceedingly rare, and if too much profiteering is occurring there's nothing stopping a large corporation from another sector entering to make it competitive (e.g. when Virgin Blue came into the Australian market of its own accord, preventing a Qantas monopoly following the demise of Ansett).

You have scary amount of faith in corporate accountability.

Or very little faith in government.

Corporate accountability can often takes years; corporations are designed in a way so as to avoid accountability or at least spread it around; Share price isn't everything; you assume that everyone has the same interests, certain stakeholders (ie shareholders, directors) would have an interest in covering up or minimising the impact of toxic chemicals in childrens toys, other stakeholders (parents) have other interests. What if a family with a large proportion of their earnings invested in poison Toys Limited? Are they going to put their money elsewhere forcing their dividend and share price down?

Strawman. Consumers take their money out of toxic toys inc because dead babies, while hilarious, tend to smell. Shareholders see this lack of consumer confidence and remove their money from the company, causing the share price to spiral down.
Secondly it's a lot cheaper to introduce proper quality control measures than to silence word of mouth or bribe the coroner to lie about the cause of death.

Is it fair that wealthier people have a greater ability to buy shares in these companies (mr poor ownes 20 shares in poison toy limited, Director of company (mr rich) ownes 40 000 shares (say a majority)). Mr poor has pretty much zero influence in governance of the corporation with his 20 shares. Since he is poor he may have no choice but to purchase produce from a dodgy corporation because of its low price point.

If this dodgy corporation didn't exist he wouldn't be able to purchase produce from anywhere.

 

[cowface]

I personally think anti trust laws shouldn't exist.

Won't people loose faith in the market system?

 

[withoutaface]

Won't people loose faith in the market system?

Market monopolies rarely happen. People bring up stuff like Microsoft, but if you look at it, anyone can get a free ubuntu cd sent to them, buy a mac, or download bsd, so consumer choice isn't restricted.

 

[sunjet]

It's all theory.

 

[Black Faery]

I see a few problems here:

- Poorer people cannot afford to take huge hits or pay more for their transport.
- Remote communities will be particularly at risk.
- You assume they'd rise their prices to a point where they'll be replaced, I'd say they'd be smart enough to merely raise prices to the point where they make maximum profit without being replaced.

- short term pain, they pay more on average by enforcing a petrol market through subsidies etc
- yes
- then that is an optimal price point.

All i'm saying (in a particularly radical libertarian way) is that subsidising things isn't a very good long term situation, and has probably set back green energy uptake by decades.

 

[Black Faery]

It's all theory.

Do you actually know what theory means? It is something that can be applied in practice. Like, I don't know, the theory of gravity?