[Merged]All businesses convert to non-profit and salary caps

[The_Animus]

I personally hate the way businesses in general are run. Almost all businesses are set up for the purpose of huge financial gain in the hands of a few people. This results in numerous issues such as choosing more profit for the company at the expense of the environment. This means that we sell poor quality products or refuse to upgrade to better technology (cars and gas). This means that prices for all products and services are higher than they need to be, which in turn means that people have to work more hours than needed to pay for the things they need. I'm sure there is more, but you get the point.

I believe this conflicts are interferes with progress for all humanity.

As such I would like to propose the idea that all businesses convert to non-profit businesses/organizations and that all jobs have a maximum yearly salary cap. If businesses are non profit they have no need to charge more than needed for their products. With the salary cap there would be no way for them to use bad or unethical business practice to make extra money for themselves and as such there would no longer be any incentive to continue those practices.

This thread is mostly just to discuss the benefits and possible downfalls of this idea. For the purposes of this discussion let's assume that it was made a law that all businesses must be non-profit, and that there is a maximum salary cap of say $200,000 a year or something like that. Let's also assume that all businesses follow this and that there is no way for them to get around these restrictions to give themselves more money.

[Wolfman]

Interesting thread; but this is really just a modified form of the Communist ideal. In theory, it sounds great -- everyone equal, and other such arguments.

The problem is that, in the real world, it simply doesn't work very well. People are, essentially, selfish. Let me illustrate:

Assume a group of employees who work in a company such as the one you've described. The salary cap means that no matter how hard they work, or how much better than their colleagues they are, they still get paid the same money. Now, you may get the rare idealist who works his hardest only for personal satisfaction. But for the majority, this serves only as incentive for mediocrity and negligence.

Consider, one of them works really hard, does his best, puts in a lot of overtime, makes real sacrifices in order to get the best results. He sees other people on his team slacking off...they don't do a bad job, they just don't work hard, either; they do the minimum amount of work necessary to get their salary. Month after month after month, this guy sees the same thing...he busts his butt and makes significant personal sacrifices, but at the end of the month, the others who did much less work than him still get paid exactly the same amount of money.

I'm not talking in theory here, either. I'm in China, which for some 50 years ran its businesses essentially the way that you have proposed. Companies were all state-owned, and were effectively non-profit (in fact, quite a few were downright unprofitable, and survived only through gov't subsidies). Employees all got paid the same salaries across the board; you could get a slightly higher pay with a promotion, but it wasn't that significant.

The result? Incredible incompetence and inefficiency.

Now, when the Chinese gov't turned around and privatized these companies -- so that they now operated on a more 'capitalistic' model -- not only did those companies become more profitable, but the people in those companies worked harder, and had greater commitment to their work. Because they knew that now, if they worked hard, they'd actually be rewarded for it.

In some idealized utopia, ideas such as yours might work; a utopia where everyone worked purely for the joy of working, where nobody cared about personal benefit, or being better than others.

But that's not the world we live in. Experiments similar to yours have been tried many, many times; and I am not aware of any of them that have proven to be even moderately successful.

[The Atheist]

I personally hate the way businesses in general are run.

What Wolfman said.

But there's another issue as well - without the potential returns, people wouldn't run businesses and the global economy would be reduced to barter and probably 3/4 of the population would die of starvation.

The bad news for your theory is that capitalism has produced the most reasonable system. Very few people starve to death - except by lifestyle choice - in OECD countries, because the capitalist system provides sufficient income so that governments can establish safety nets to support those who can't support themselves.

I agree that your premise sounds great on the surface, but it certainly doesn't take human emotion into account.

[TriangleMan]

Other issues with the OP theory:

1) risk/reward relationship is thrown out the window. Why would someone risk their money starting up a business when, at best, they can only have a set salary regardless of how well the business does, yet can still lose all their money if the business fails.

2) no incentive to grow a business, set up new franchises etc. because there is little financial benefit to do so

3) government tax base will be significantly decreased (will these non-profit businesses even be taxable?) thereby reducing government social and infrastucture spending.

[The_Animus]

I think there has been a misunderstanding. I am not proposing that everyone gets paid the same. Quite the opposite. People would still get paid in a wide range of salaries, but there would be no one who makes such a grossly unnecessary amount of money. By all means pay harder working people and more difficult positions more money. No one needs to make a million dollars a year. They can live more than comfortable on that $200,000. Obviously a CEO or a Doctor would be paid more than a cook or cashier. And if there is an instance where there are two Doctors and one is much better than another then they would be paid differently.

If someone doesn't do their job well then I'm sure there is someone else who can and would appreciate making more money.

But there's another issue as well - without the potential returns, people wouldn't run businesses and the global economy would be reduced to barter and probably 3/4 of the population would die of starvation.

The bad news for your theory is that capitalism has produced the most reasonable system. Very few people starve to death - except by lifestyle choice - in OECD countries, because the capitalist system provides sufficient income so that governments can establish safety nets to support those who can't support themselves.

I don't think that is how it would work. There would still be benefits to run a business. If you run the business you would make more money than if you were simply an employee at another business. There is still a benefit to having a business, you still make a higher than average salary. You just don't get to make $2 million.

I don't know what OECD means. However there would still be taxes to pay for things that are otherwise unpaid for. And if businesses were more geared towards trying to benefit all of humanity there wouldn't be any world starvation. We currently waste ridiculous amounts of food with our current system. Even by just eliminating the meat industry you could provide more food to people. The animals we raise to eat eat more plant life than people do.

[quixotecoyote]

The one thing I found interesting was the concept of salary caps (or investment profit cap) as applied to corporate America. If there could be some way of enforcing that it might be interesting.

I think about the instances where it is the most profitable action for a company to heaily pollute or screw their employees for salary or benefits. Usually the people who are making these decisions are already obscenely rich, have more money than they know what to do with, and are playing their networth like a high score chart. Either they are or the investors behind them are. Capping expected returns might remove an incentive to behave unethically for greater profit.

Lots of problems in implementation making it practically unworkable, but the idea's worth kicking around.

[TriangleMan]

. There would still be benefits to run a business. If you run the business you would make more money than if you were simply an employee at another business. There is still a benefit to having a business, you still make a higher than average salary. You just don't get to make $2 million.
No, running a business does not generally mean that you make more then on salary because most businesses either fail or barely scrape by, leaving the person who started the business in debt. Only successful businesses reward the risk-taker and under your scenario that reward is now limited. Is someone going to put five million dollars into a start-up tech/manufacturing business when at best he could make $200,000 a year? No, not at the risk of losing the money.

I don't know what OECD means.
www.oecd.org

[Wolfman]

Ditto on what TriangleMan said.

Consider if I want to start a company making cars. I have to build large factory facilities, invest money in research and development, etc. The cost is going to be in the tens of millions of dollars at the very least.

Under your proposal, you are basically telling me that the worst I can expect is that my business goes under, and I lose everything; the best I can expect is that I get one million dollars a year maximum, meaning that I won't even recover my initial investment for 20 or 30 years...much less make a profit.

[The Atheist]

I can give a classic example - me. Along with headhunting, I own the major stake in a solar energy company.

No way, no how, would I ever take the risks associated with the investment if I didn't see a healthy return at the end of it all.

Also, there's a fallacy in the idea of paying a salary to the company owner - during the first year, most company owners make nothing, then spend the next few years recouping their investment. Who's gonna pay my salary?

[The_Animus]

What if we change it so that you can choose the option of either a max salary cap of something like $250,000 or a certain % of the profits. That way you can still benefit from higher expenses, higher profit business.

Also you have to understand that all that initial cost in setting up the factory or store or whatever is still there in the net worth of the business. So it's not as if you are really losing 4 million dollars and only getting $200,000 a year.

You could also change it so that if the business does go under you are able to sell everything off to try to recoup your losses.

There is also the possibility of government subsidies.

It's also possible that this would encourage multiple investors in business.

I do understand there are issues. So let's see if we can't come up with some way to fix this up.

[The_Animus]

I have another idea.

Let's say instead that the person who starts the business does not have a salary cap or % of profits each year cap. Instead they are allowed to only make double the amount of money invested to start the company up. So if you invested $1,000,000 in a company you could make $2,000,000. You might be able to change the ratio a little depending on certain investment brackets that could be set up.

After you make that much from the company you can't make any more aside from the previously mentioned salary cap.

This would encourage business growth because of the greed for more money that it can bring, while still putting a limit on the amount of overall money that can be made from each particular business by one person.

[The Atheist]

Wow! You really have got a bee in your bonnet about this, haven't you?

Aside from the simply wrong assumptions about what makes people tick, you have to realise that you'd have no support whatsoever for your plan. Businesspeople are probably the sector wanting least government involvement and here you are threatening to drown them in further red tape as companies have all these new profitability rules to follow. Who will police it? Every company in the world would become a corrupt entity concentrating on the best way to avoid draconian capital laws.

What you're proposing would make Prohibition seem like a Sunday School picnic.

[tkingdoll]

Meh, I take all the risk, so I want all the reward.

Also, I work anything up to 20 hours a day, seven days a week. There is no limit to the amount of money I want my business to make in order for that sacrifice to have been worth it.

Someone has to start the businesses that the 'capped salary' people work for. Those who take that risk, reap the rewards. If the business goes bust, they could lose everything, including the right to start another company.

I can guarantee that if I had a maximum income I could earn from my business, I wouldn't have started it. I'd guess that's also true for probably 99% of the business owners I know, too.

[TriangleMan]

Who will police it? Every company in the world would become a corrupt entity concentrating on the best way to avoid draconian capital laws.
well he did say in the OP to assume that everyone complied and there was no way to get around the caps so we may as well continue with those assumptions (otherwise the taxation issues alone kill the idea)

[H3LL]

Is it just me?

I thought that the OP had so many strawmen that this thread was in danger of becoming a fire hazard.

.

[TriangleMan]

Also you have to understand that all that initial cost in setting up the factory or store or whatever is still there in the net worth of the business. So it's not as if you are really losing 4 million dollars and only getting $200,000 a year.

Your assumption is incorrect. Most types of businesses, if they go under, get little return on the initial investment. $5m in a manufacturing business that goes under would be lucky to get $1m back, and that would be only if they didn't have bank debts (which would be collateralized by the assets of the business) and they could find someone to buy the assets, not necessarily an easy thing to do.

Other types of businesses would be even worse off. IT or R&D has very few hard assets, a mining or oil company would have little that anyone would want (an oil well with no oil: cost to set up = millions, value = 0)

[tkingdoll]

Perhaps The Animus doesn't realise what it takes to run a successful business?

i.e. blood, sweat, tears, graft, and bigger iron balls than has ever been demonstrated in a forum thread.

[Ivor the Engineer]

The_Animus, I too think that capitalism is a deeply flawed ideology, giving immense amounts of power to the greediest people in society. E.g., It costs $1 billion to become president of the US now.

All the people who champion the system implicitly condone millions of people living in poverty or staving to death, while they enjoy the comforts of their energy guzzling cars and mansions and watch said staving people on the news on their 64" LCD TV.

People have become so brainwashed by capitalist propaganda pushed during the cold war they cannot imagine a different way to organize the economy, such that extremes are curtailed while still providing a gradient to motivate people to work hard. In fact, I think the idea terrifies them.

[Wolfman]

Ivor,

I personally am a champion of a system that has a reasonable combination of capitalism and socialism -- such as that you find in countries like Canada and Sweden (two countries that have the highest standards of living in the world).

You think there is a better way? Then please do more than spout vague theory. Look at a country like Canada, and the poverty levels there, and compare that to any other system, and the poverty levels within that system.

Its easy to claim a superior idea (or the inferiority of another idea) if you don't actually have to provide practical demonstrations of the idea you are championing. So put your money where your mouth is.

[tkingdoll]

So put your money where your mouth is.

Or even better, donate it all to people living in poverty...;)

[Ivor the Engineer]

Ivor,

I personally am a champion of a system that has a reasonable combination of capitalism and socialism -- such as that you find in countries like Canada and Sweden (two countries that have the highest standards of living in the world).

You think there is a better way? Then please do more than spout vague theory. Look at a country like Canada, and the poverty levels there, and compare that to any other system, and the poverty levels within that system.

Its easy to claim a superior idea (or the inferiority of another idea) if you don't actually have to provide practical demonstrations of the idea you are championing. So put your money where your mouth is.

I wasn't championing any particular ideology. I was pointing out that those who tend to benefit the most from a system tend to quickly dismiss any idea for change that would curtail their idleness, greed or power as unfair or unworkable.

As for what can be done to curb the excesses of individuals, the only way that I can see it being made to work is with a internationally agreed 100% income tax for those whose earnings are over a certain threshold.

Please feel free to spend 2 seconds considering how to make this idea work and any advantages it might have over the present system, and 2 hours picking fault with it.

[Ivor the Engineer]

Or even better, donate it all to people living in poverty...;)

Nah, they'd just use it to buy AK-47's.

[tkingdoll]

Nah, they'd just use it to buy AK-47's.

In this country? I doubt that (although knives are a popular choice, I hear).

There's a massive difference between redistribution of wealth in your one country, and worldwide, of course. And cultural, environmental differences et al make for a conflict of priorities. There is no workable worldwide solution. Not even sure there's a national one.

However, the individual can make a difference to the individual. Personal responsibility is king, at least in the west.

Example: I grew up in extreme poverty, by UK standards. As a result, I had almost no formal education. That's not much better than second world standards, really. But the opportunities that were available to me were great, and I have worked my little rear end off to make an extremely nice (if busy) life for myself. I bought my first property with cash when I was 25, and started my own business 18 months ago. I work harder than anyone I know. I plan to retire at 50, as rich as possible. Yay me, frankly.

The opportunities I had and made the most of are available to anyone in this country who is prepared to work hard. To be fair, it helps if you are intellectually gifted, but short of eugenics, there is no way to address that particular imbalance.

In return for the opportunities I've had, I work with a local charity which helps families in poverty, and a local homeless shelter.

But FSM help anyone who tries to cap the amount of money I can earn. If I can be a multi-millionaire, I will be. The poverty I grew up in certainly wasn't capped. Unlimited opportunities should bring unlimited reward.

[Rob Lister]

No one needs to make a million dollars a year. They can live more than comfortable on that $200,000.

Before you get too far down the idealist road, what is it that people that make 1M+ a year do with that money?

[Wolfman]

I wasn't championing any particular ideology. I was pointing out that those who tend to benefit the most from a system tend to quickly dismiss any idea for change that would curtail their idleness, greed or power as unfair or unworkable.
Ah, I get it...you get to state that capitalism is the "wrong" idea, but have no obligation to provide us with any superior alternative!

Its rather easy to "win" an argument when you don't give us any actual position to debate. Does a capitalistic system have problems? Yes. But the fact remains, every single country in the world with the highest standard of living and lowest level of poverty is based on a capitalistic system (although the most successful of those seem to have a balance between capitalism and socialism).

But hey...let's ignore that and rely on vague claims with no substantiation or alternative possibilities.
As for what can be done to curb the excesses of individuals, the only way that I can see it being made to work is with a internationally agreed 100% income tax for those whose earnings are over a certain threshold.

Please feel free to spend 2 seconds considering how to make this idea work and any advantages it might have over the present system, and 2 hours picking fault with it.
"how to make this idea work"? Ummmm...what idea?!? You've given us nothing to consider, except your basic claim that "capitalism is wrong". Where have you suggested a viable alternative idea for me to consider?

I spent two seconds "considering" your idea because you haven't given me any idea to consider.

I present to you concrete examples -- countries like Canada and Sweden -- that enjoy high standards of living, low rates of poverty, etc. No country based on Communism, Fascism, or any other system of government has produced a comparable standard of living for its citizens, nor has been as successful in decreasing rates of poverty.

If you want to disagree, that's fine; but you'll have to do better than vague claims based on no evidence whatsoever, or without proposing another system that would work better.

[Ivor the Engineer]

Ah, I get it...you get to state that capitalism is the "wrong" idea, but have no obligation to provide us with any superior alternative!

Its rather easy to "win" an argument when you don't give us any actual position to debate. Does a capitalistic system have problems? Yes. But the fact remains, every single country in the world with the highest standard of living and lowest level of poverty is based on a capitalistic system (although the most successful of those seem to have a balance between capitalism and socialism).

But hey...let's ignore that and rely on vague claims with no substantiation or alternative possibilities.

"how to make this idea work"? Ummmm...what idea?!? You've given us nothing to consider, except your basic claim that "capitalism is wrong". Where have you suggested a viable alternative idea for me to consider?

I spent two seconds "considering" your idea because you haven't given me any idea to consider.

I present to you concrete examples -- countries like Canada and Sweden -- that enjoy high standards of living, low rates of poverty, etc. No country based on Communism, Fascism, or any other system of government has produced a comparable standard of living for its citizens, nor has been as successful in decreasing rates of poverty.

If you want to disagree, that's fine; but you'll have to do better than vague claims based on no evidence whatsoever, or without proposing another system that would work better.

I'm not out to "win" a debate with you. I was putting forward an idea for discussion, which you appear to have missed so I'll state it again:

As for what can be done to curb the excesses of individuals, the only way that I can see it being made to work is with a internationally agreed 100% income tax for those whose earnings are over a certain threshold.

So, what problems do you see with this idea and how may they be overcome (if at all)?

[roger]

Warren Buffett has about 1/4 million direct employees, and a lot more indirectly through his extensive stock holdings in various companies. Call it half a million people.

Cap his returns, and you put 1/2 million people out of work.

[Ivor the Engineer]

Warren Buffett has about 1/4 million direct employees, and a lot more indirectly through his extensive stock holdings in various companies. Call it half a million people.

Cap his returns, and you put 1/2 million people out of work.

His annual salary is about $100,000. I wouldn't call that excessive.

[roger]

His income is rather higher.

ETA: since I don't want to do this blow by blow, allow me to expand...


First, if you only cap salary, there will be no change. Compensation will change from salary, which is already quite low for the average S&P 500 CEO, to alternative forms of income, such as options, etc. Warren's salary is 100K, but his income made him one of the richest men in the world.

Second, if businesses were non-profit, those 1/2 million people would be out of work. Why? Well, Buffett started out by investing in stocks. He would not have done that with non-profits.Then, he started investing money for friends. This is where he made his millions, and he would not have done that. Then, he divested his fund, and bought Berkshire Hathaway. Again, he would not have done that if BH was a non-profit. Then, he turned the company into a cash cow. Wouldn't have happened. he took this cash flow and bought: Geico (another cash cow), Dairy Queen, Washington Post, Coca Cola, Bank of America, Wells Fargo, etc., etc., etc.

In all, he directly employees around 1/4 million people through BH.

In other words, no millionare or billionare takes their money and stuffs it in a sock and buries it. If they did, the OP would have a point. The money is reinvested, even if it just sits in a checking account bearin 0% interest. The bank invests it in businesses (and they wouldn't if there was no profit in it, why would they). Smart people, like Buffet, invest it either in bonds, stocks, or entire companies. None of this would happen if the money wasn't earned in the first place. Buffett did not transfer wealth from your pocket to his, though he gets tenth of a cent or so everytime you buy a coke. No, he created wealth, he created jobs, he provided home building materials, sofas, couches, tables, newpapers, soda, bricks, business jets, etc., to the world, all created by people working at jobs. He provides insurance to people who get wiped out by hurricanes. Why would he do any of this if there wasn't the potential for profit? he wouldn't? Why would any bank lend anybody money if there was no potential for profit (remember, the OP states that all businesses should be not for profit)? They wouldn't.

The economy would die, there would be no new job creation, there would be massive unemployment, etc.

Anyone who wants to replace the capitalistic system needs to provide an alternative form of wealth creation. I haven't seen it yet.

[Ivor the Engineer]

In this country? I doubt that (although knives are a popular choice, I hear).

There's a massive difference between redistribution of wealth in your one country, and worldwide, of course. And cultural, environmental differences et al make for a conflict of priorities. There is no workable worldwide solution. Not even sure there's a national one.

However, the individual can make a difference to the individual. Personal responsibility is king, at least in the west.

Example: I grew up in extreme poverty, by UK standards. As a result, I had almost no formal education. That's not much better than second world standards, really. But the opportunities that were available to me were great, and I have worked my little rear end off to make an extremely nice (if busy) life for myself. I bought my first property with cash when I was 25, and started my own business 18 months ago. I work harder than anyone I know. I plan to retire at 50, as rich as possible. Yay me, frankly.

The opportunities I had and made the most of are available to anyone in this country who is prepared to work hard. To be fair, it helps if you are intellectually gifted, but short of eugenics, there is no way to address that particular imbalance.

In return for the opportunities I've had, I work with a local charity which helps families in poverty, and a local homeless shelter.

But FSM help anyone who tries to cap the amount of money I can earn. If I can be a multi-millionaire, I will be. The poverty I grew up in certainly wasn't capped. Unlimited opportunities should bring unlimited reward.

Why do you think the injustice you faced as a child (poverty) is a valid justification for the injustice you wish to attain (excessive wealth)?

Why do you want to retire at 50?

Funny how often successful people claim it was their hard work and unsuccessful people claim it was their bad luck that got them where they are. It must be true:rolleyes:

[Wolfman]

I'm not out to "win" a debate with you. I was putting forward an idea for discussion, which you appear to have missed so I'll state it again:

As for what can be done to curb the excesses of individuals, the only way that I can see it being made to work is with a internationally agreed 100% income tax for those whose earnings are over a certain threshold.

So, what problems do you see with this idea and how may they be overcome (if at all)?
So, essentially, you argue in favor of a world-wide government that has the right to impose laws, taxes, etc. on every nation and government. Because that is the only way that such a thing works.

I also have yet to see you to respond to my question as to how it is that if, as you claim, capitalism is so bad, why is it that the countries with the highest standards of living for all their citizens, and the lowest rates of poverty, are consistently those with capitalist-based economies?

What problems do I see with your proposal? Oh, where to begin:

1) It would require a world-wide, global government with the power to force such laws on countries that did not agree (and among the countries that would not agree would be U.S., China, etc...pretty darned formidable opposition). I'm most definitely opposed to such an idea.

2) It would be an entirely counter-intuitive system. Let me see...if I don't work hard, and strive only for mediocrity, I can keep most of my money. But if I show initiative, work really hard, and build a really successful business that not only benefits me, but that provides employment to hundreds/thousands of other people, you punish me by taking every cent of the money I've made.

3) Far from benefiting a nation's economy, it would cripple it. If forced to pay 100% income tax, the owners of such companies would quickly go bankrupt, and the companies would shut down. The employees in those companies would then lose their jobs, and the economy would fall apart.

Again -- if you want to argue for your point, please demonstrate A) how such a system could possibly be implemented, and B) how such a system could possibly benefit anyone?

[Wolfman]

Funny how often successful people claim it was their hard work and unsuccessful people claim it was their bad luck that got them where they are. It must be true:rolleyes:
Talk about a meaningless argument.

And your theory is...what, exactly? I grew up in a village of 900 people in Canada, in a family with a father who was a pastor, and didn't even have enough money to buy new clothes for us. I had to work part-time jobs to put myself through university. I came to China 14 years ago, busted my butt in difficult and unrewarding jobs until I got experience. Then I started building my own businesses, again through hard work.

There are many others I went to university with who had far better situations than me, but who never accomplished anywhere near as much as me.

So...exactly what should I attribute my success to, if not hard work?

Honestly, this is sounding to me more and more like the arguments of someone who has never risen above mediocrity in their own life, and seeks to blame it on the "oppression" of others with more success. It can't be his own fault, so it must be the fault of others who actually have accomplished something.

The solution? Forget about all the work they've put into what they've done; forget the significant risks they've taken. The only way to treat everyone fairly is to take the money from the people who are "successful", and give it to those who aren't.

I'm very, very sure that your life would be much more comfortable, and much easier, if such a system were implemented. Then there'd be no need for you to do much at all...let others do the work, make the profits, then take it from them and use it for yourself.

Truly a utopia...for those who revel in inadequacy and who feel they "deserve" reward for nothing more than existing.

[Wolfman]

For the record; I don't think that a purely capitalistic system is a good thing. What I argue for -- as should be made plain above -- is a combination of socialist and capitalist systems,

In this way, those who work hard and demonstrate exceptional capability have no limit to the rewards they can accomplish; but there is still gov't control to prevent abuse, stop monopolies, and 'redistribute' a certain percentage of those profits to the rest of the population.

I think Canada is a great example of this. The richest people in Canada are nowhere near as rich as the richest people in the U.S.; but the poorest people in Canada are nowhere near as poor as the poorest people in the U.S. The division between "rich" and "poor" is significantly smaller. Furthermore, taxes are higher, and are used to pay for things such as universal health care.

Yes, as others will point out, this system has its problems...but it is still overall better than most other systems in the world, and is one of the reasons why Canada is consistently in the top 3 countries with the highest standard of living in the world (way ahead of the U.S., despite the U.S. having far more wealth).

The problem is, the moment you remove the incentive for success (or, even worse as in Ivor's suggestion, penalize people for success), then a country is effectively doomed. Why would people take risks to introduce new technologies if they know that being successful in their efforts means that they have to pay 100% income taxes, for example? All the people who had the best ideas, all the people who were willing to work the hardest for success, would leave your country and go to another country where they would actually be rewarded for their efforts.

I do think that businesses and corporations have a 'social responsibility', and I'm fully in favor of the government taxing such entities and using that money for the betterment of society -- things like health care, education, etc. But I also believe that there has to be a balance...those corporations still need to have the opportunity to make profits, and to grow.

Please note -- in a country that encourages the capitalistic development of companies, that country will have a far larger corporate tax base than a country that penalizes capitalism. China's a great example. When capitalism was not allowed, the state had to pay money to the companies in order to keep them working; now that China is changing to a more capitalistic system, the state is getting money from those businesses. So instead of having to use a significant part of its money to prop up failing businesses, the gov't can use that money to improve education, health care, etc. (which is exactly what they're doing).

There's a quotation from Churchhill that goes (if I remember properly), "Democracy is the worst form of government, except for all the others that have been tried". Essentially, he was saying that democracy has its weaknesses and problems, but still works better than any of the other systems out there.

I'd argue the same thing here. There have been experiments with many different kinds of economies, many different styles of government.

And what do we see today?

Make a list of the five countries in the world with the highest standards of living for all citizens? You'll find that all of them are democratic, and all of them have capitalism.

Make a list of the five countries in the world that have the highest focus on human rights and individual freedom? You'll find that all of them are democratic, and all of them have capitalism.

I'd argue there's a good reason for that.

If you're going to argue against this, you've got to do more than propose vague theories that have no basis in reality.

[Ivor the Engineer]

Talk about a meaningless argument.

And your theory is...what, exactly? I grew up in a village of 900 people in Canada, in a family with a father who was a pastor, and didn't even have enough money to buy new clothes for us. I had to work part-time jobs to put myself through university. I came to China 14 years ago, busted my butt in difficult and unrewarding jobs until I got experience. Then I started building my own businesses, again through hard work.

There are many others I went to university with who had far better situations than me, but who never accomplished anywhere near as much as me.

So...exactly what should I attribute my success to, if not hard work?

Honestly, this is sounding to me more and more like the arguments of someone who has never risen above mediocrity in their own life, and seeks to blame it on the "oppression" of others with more success. It can't be his own fault, so it must be the fault of others who actually have accomplished something.

The solution? Forget about all the work they've put into what they've done; forget the significant risks they've taken. The only way to treat everyone fairly is to take the money from the people who are "successful", and give it to those who aren't.

I'm very, very sure that your life would be much more comfortable, and much easier, if such a system were implemented. Then there'd be no need for you to do much at all...let others do the work, make the profits, then take it from them and use it for yourself.

Truly a utopia...for those who revel in inadequacy and who feel they "deserve" reward for nothing more than existing.

I'll tackle your little rant first because I have stuff to do. I'll work on your problems with my idea later.

I think a more realistic reason people are either successful or not is through a combination of both the amount of effort they put in and luck. I.e. Those that are successful have often worked hard and had some good luck, while those who are unsuccessful have often not worked particularly hard and had some bad luck.

Now, as for your "let others do the work" crap, that is exactly what the CEO's of most (all?) companies do. The CEO of the company I work for has approximately 60,000 "others doing the work" for him. So, what fraction of the companies success is down to his work and what fraction is down to the other 60,000 do you think? Apparently you believe that the 60,000 (including me) are just mediocre bottom feeders who are frustrated that we can't all be like the boss (or you).

And don't worry, I will not be requiring any of your profits. I already earn (or as you seem to think, am given) more than enough to cover my mediocre existence.

[Wolfman]

I'll tackle your little rant first because I have stuff to do. I'll work on your problems with my idea later.

I think a more realistic reason people are either successful or not is through a combination of both the amount of effort they put in and luck. I.e. Those that are successful have often worked hard and had some good luck, while those who are unsuccessful have often not worked particularly hard and had some bad luck.

Now, as for your "let others do the work" crap, that is exactly what the CEO's of most (all?) companies do. The CEO of the company I work for has approximately 60,000 "others doing the work" for him. So, what fraction of the companies success is down to his work and what fraction is down to the other 60,000 do you think? Apparently you believe that the 60,000 (including me) are just mediocre bottom feeders who are frustrated that we can't all be like the boss (or you).

And don't worry, I will not be requiring any of your profits. I already earn (or as you seem to think, am given) more than enough to cover my mediocre existence.
And for all of that, you have yet to respond once to the oft-repeated question of why it is that the countries with the highest standards of living, greatest levels of freedom and equality, etc....all happen to have capitalistic economies?

Nor have you answered the question of how one could possibly institute a solution such as yours (100% income tax above certain income level) without an autocratic world-wide government.

I am CEO and President of my company. I have quite a few other people working on me (and within a few years, I hope that this number will be in the hundreds or thousands). In starting up this company, I have taken significant risk, investing every cent that I have...if it fails, I'm completely bankrupt. Not one single other person in my company is taking that risk. If the company fails, at worst they lose their job...but they don't lose their life savings as a result.

But, according to you, if I'm somehow successful in building up this company, and reach a certain income level, I should be subject to a 100% income tax that punishes me for that success.

And no, I don't think that my employees are "bottom feeders"; I used to be in exactly the same situation. I do my best to provide incentive for them -- if they do a superior job, they get better pay, higher position, etc. If some of them, like me, take the experience that they've gotten and go on to start their own businesses, then I say more power to them.

If others choose not to do that, or do not have the opportunity, I don't look down on them.

What I do look down on is people who take a simplistic worldview in which the successful should be punished for their success, and who think that I somehow "owe them" something because I make more money than them.

And in regards to your CEO, I'll readily grant that there are some people making tons of money who arguably "don't deserve it"; for example, heirs who live off their parents' hard work (think Paris Hilton) without contributing anything of value themselves. Or someone who gets a high-paying position just because of his connections, instead of because of his actual ability and experience.

However, by far the majority of top business people that I know -- particularly those who have built their own companies -- are people who've worked incredibly hard, and who've taken huge personal risks, to get to where they are today.

You have not answered one single question that I've raised; I assume that it is because you are unable to supply a reasonable answer. So, just in case you've forgotten them in the 10 or 15 seconds its taken you to get this far, here they are again:

1) If capitalism is so bad, why is it that the countries with the highest standards of living, and the greatest freedoms, are all based on capitalistic economies (with some degree of socialism to moderate it)?

2) How on earth could your suggestion (100% income tax above a certain level of income for all countries) ever be implemented without an autocratic world-wide government? You are arguing in favor of an international dictatorship? Because that's the only way such a proposal could even have a hope of happening.

3) Why is it that, under your system, a person who never tries very hard, never takes any risks, and who actually throws away opportunities to improve himself, would still deserve all or most of his income; but someone who took busted their butt for decades, took significant risks, and built up a very successful company, should be punished by having 100% of his income seized by the government?

If you can't answer these three simple questions -- please don't bother with any further responses.

[quixotecoyote]

But Wolfman, isn't that only true of 'first generation' businesses? If you start up a company with your own resources then I've got nothing but respect for you. But I've never personally known anyone that's done that. The few well-off people I know schmoozed up various corporate ladders. Those corporate ladders were not built by the people currently in charge, but were bought and sold may times after the original entrepreneur washed his/her hands of it. Think Cerberus Group buying Chrysler. I've little respect for those kinds of profits.

[Wolfman]

It would be true that the risks for subsequent leaders within the organization would be significantly less...the company is already there, already successful.

But as far as the necessary ability or commitment to keep that company functioning, or to build it larger...there are still only a relatively small number of people who can actually do that. For those who think that the CEO position in a large multinational could be filled by anyone, that he's just a figurehead or doesn't require any special skills or knowledge, I'd just point out how radical a difference changing a company's CEO can have on that business. Yeah, there are tons of people under the CEO doing the 'grunt work', and yeah the company could not function without them; but if they have an incompetent or lazy CEO, the company will fall apart, and they'll have no job whatsoever.

The higher the responsibility, and the higher the position, the higher the pay should be -- in my opinion.

I agree 100% with laws and regulations to protect the rights of workers within that organization, which is part of the reason that I support a combination of socialism and capitalism.

But my question remains -- if capitalism is so bad, if this system is so evil and oppressive, why is it that the countries with the highest standards of living and highest levels of equality are all based on capitalist systems?

I'll gladly accept an argument that another system is superior, if you could provide any actual proof of that...but every other system that has been tried has failed to produce results as positive or beneficial as this one.

Yes, capitalism can be abused; I think that capitalism in the U.S., particularly as practiced/encouraged under the Republican gov't, is dangerous and wrong. There is too little gov't oversight, and the gap between the rich and the poor is absolutely inexcusable, especially for the richest nation on the planet. Rather than government controlling big business, too often it is big business controlling the government.

And that form of capitalism would be one that I personally have significant problems with.

But that doesn't automatically render all capitalism as "bad". With appropriate regulations and safeguards, a capitalist system can provide maximum motivation for its population (there is no limit to what you can achieve, based on your own ability and efforts), while also serving as an economic base that makes the country as a whole richer and stronger.

Plain fact; no government is going to collect a lot of taxes if all the businesses only have small profits. The higher the profits, the higher the tax revenue. The higher the tax revenue, the more money the gov't has to address other social concerns (like education, health, etc.).

But there's a limit on those taxes...charge too much (as in Ivor's argument), and the companies (or their owners) reach a plateau beyond which further growth or development is impossible. This benefits nobody. No new jobs are created. No funds are available for development of new technology (and if new technology is developed, they won't produce it, because all their profits will be taken away from them anyway).

[roger]

What strikes me about these arguments about these is how they seem to miss how tooth-and-nail big business is. Name me a big business that isn't locked in a survivial of the fittest fight (I do this in the next paragraph, btw). To put some perspective on this, look at how many of the biggest companies from 100 years ago still exist today. I forget the numbers, but Kenneth Fisher wrote about this back in the 50s and 60s - the upshot, almost every company eventually dies. The few that do survive have changed radically multiple times, each with a particularly strong and effective CEO at the helm. Any time there is a nice profit margin, other companies come in to try to get a piece of the action. This inevitibily leads to a lower profit margin, and hence lower prices to the consumer.

As an aside, we can point to a few businesses for which this doesn't really apply, such as Coke. People will buy coke even when a generic brand is half the price. Go to a tiny village in China with no running water and you will find Coke. give somebody 10 billion dollars to take over Coke's market share and they can't do it. But there are only a very tiny handful of companies that have that kind of competitive advantage.

So, we have a scenerio where companies are competing fiercely to reduce prices to the consumer, and we are being offered an alternative scenerio where companies are no long profit driven, where people are not rewarded in any way for reducing prices further, and where we have no way to motivate a CEO to take a company through a difficult period where it's death is imminent. Doesn't make sense to me.

ETA: I'd like to see an estimate of how many start up companies would be in Southern California with no profit potential, no VC, no reason to try to invent iPods, blackberries, microprocessors, Oscilloscopes, CNC machines, artificial hearts, etc., etc., etc.

[tkingdoll]

But Wolfman, isn't that only true of 'first generation' businesses? If you start up a company with your own resources then I've got nothing but respect for you.

There are at least two in this thread.

And I don't have the stats, but I'd be willing to bet that the majority of companies are of that type.

[jimlintott]

There are at least two in this thread.

And I don't have the stats, but I'd be willing to bet that the majority of companies are of that type.

I bought an existing company and that certainly doesn't come risk free (but you knew that).

It's not the rich that are the problem. They spend more money on goods than the poor. They pay substantially more taxes than most people. They have jobs (generally).

I've always maintained that if you could evenly distribute the wealth among the world's population it will be a very short time before the ambitious have all the lazy people's wealth. Capitalism works fairly well because it accepts human nature for what it is. A system that is supposedly philosophically fair often has to make the assumption that all people are equally ambitious.

[Ivor the Engineer]

<snip>
1) If capitalism is so bad, why is it that the countries with the highest standards of living, and the greatest freedoms, are all based on capitalistic economies (with some degree of socialism to moderate it)?

The critical factor in your question is the "with some degree of socialism to moderate it." Pure capitalism = natural selection. I am not proposing to divorce the world's economies from it, just moderate them by limiting the extremes.

The insidious aspect to capitalism is the way it gives the few (i.e. the rich) enormous power to exploit the world's resources for their benefit, often at a cost to the many. Most (all?) of the other economic systems in the past have had the similar or worse flaws.

2) How on earth could your suggestion (100% income tax above a certain level of income for all countries) ever be implemented without an autocratic world-wide government? You are arguing in favor of an international dictatorship? Because that's the only way such a proposal could even have a hope of happening.

Self regulation and international audits. Countries that cheat have sanctions brought against them. E.g., increased import duty or restriction of supply of resources.

3) Why is it that, under your system, a person who never tries very hard, never takes any risks, and who actually throws away opportunities to improve himself, would still deserve all or most of his income; but someone who took busted their butt for decades, took significant risks, and built up a very successful company, should be punished by having 100% of his income seized by the government?

Firstly, I must address why you think taking risk should mean you deserve a reward. If I go into a casino, play roulette and put my life savings on No. 2, most people would say I'm an idiot. Certainly no one would say I deserved my winnings if the ball happened to land in No. 2. I don't know about you, but I'd prefer a economic environment where extreme risk takers are not in control of the destiny of thousands of peoples' livelihoods.

Secondly, you (and Teek) seem to think you are working exceptionally hard for the huge rewards you desire. IIRC, the most dangerous job in the world is crab fishing in Alaska. The men who do that job risk their lives. I don't believe they become (or expect or think they deserve to become) multi-millionaires.

A little more down-to-earth could be the stress and workload of junior doctors. Do you think you work as hard as them? Do you think the mistakes you could make could have as serious consequences as those they could make? Teek, what if the doctor looking at the lump in your breast had made an error?

I think you over-estimate the risk you are taking for the rewards you think that risk deserves.

Thirdly, who said anything about 100% of income being seized by the government? The CEO could choose to re-invest the money in the company. All a salary cap would stop is individuals getting rich.

In addition I would get rid of the stock market and the public ownership of companies.

-----------------------

A simpler idea would be to make a law that only allowed the CEO of a company to have an income that was, for example, 10 times that of the lowest paid employee.

[tkingdoll]

A little more down-to-earth could be the stress and workload of junior doctors. Do you think you work as hard as them? Do you think the mistakes you could make could have as serious consequences as those they could make? Teek, what if the doctor looking at the lump in your breast had made an error?



What an utterly, utterly inane and stupid thing to say. You, sir, do not have my respect. What kind of argument do you think you are formulating here?

What kind of person uses someone's cancer scare as a strawman in a debate about money? The lowest kind, I'd say.

But to answer your staggeringly ridiculous point, junior doctors are training to become extremely highly paid individuals. Most UK GPs, for example, earn over £100,000 per year. The surgeon, Mr Paterson, who removed my lump, works both NHS and private and earns considerably more than a GP.

But, without people like me, no-one would know the private sector exists. I wouldn't have been able to get my lump diagnosed and removed so quickly, because I would simply not have known that there is such a thing as BUPA.

And yes, my workload in hours is comparable with a junior doctor. I have worked 48 hours straight. To save a life? No. Is that the only profession worth pursuing? It seems you think so.

Get off your high horse, you look ridiculous.

[Marquis de Carabas]

I think you over-estimate the risk you are taking for the rewards you think that risk deserves.
Here's the beautiful bit: Wolfman, teek, and others don't have to estimate. They know what their hard work is worth: whatever they can sell it for. Why should they settle for less than they can get?

[nails3jesus0]

Secondly, you (and Teek) seem to think you are working exceptionally hard for the huge rewards you desire. IIRC, the most dangerous job in the world is crab fishing in Alaska. The men who do that job risk their lives. I don't believe they become (or expect or think they deserve to become) multi-millionaires.

ooooh someones been watching discovery channel :p

A little more down-to-earth could be the stress and workload of junior doctors. Do you think you work as hard as them? Do you think the mistakes you could make could have as serious consequences as those they could make? Teek, what if the doctor looking at the lump in your breast had made an error?

wow that was a cheap shot.

[Zygar]

Here's the beautiful bit: Wolfman, teek, and others don't have to estimate. They know what their hard work is worth: whatever they can sell it for. Why should they settle for less than they can get?

Precisely. How much you make isn't about straight risk. It is a complex combination of economic factors. People risk their lives and get nothing in return (look at firemen, especially the volunteer forces).

The thing is, you risk what you do with a certain goal in mind. In the case of brosdki and teek I think I can safely say they are doing it in an entrepreneurial spirit. That cannot necessarily be said for any of Ivor's counterexamples.

Of course capitalism results in an imbalanced system, but no one has ever come up with a better balanced system that I am aware of. Certainly not in this thread.

[dudalb]

In addition I would get rid of the stock market and the public ownership of companies.

Worst idea ever.
Sounds to like Ivor is advocating a pure Socialist system with a happy face painted on it in the form of "non Profit companies" instead of Government agencies.
And I get the feeling that Ivor and Animus really think that the profit motive is basically evil,but don't want to say so in so many words.

[Ivor the Engineer]

What an utterly, utterly inane and stupid thing to say. You, sir, do not have my respect. What kind of argument do you think you are formulating here?

What kind of person uses someone's cancer scare as a strawman in a debate about money? The lowest kind, I'd say.

In what way was I "using" your cancer scare? I'd have "used" my own father's cancer scare, but his wasn't just a scare, you didn't know him and the doctor did made a mistake. However, feel free to use this as an example; I won't get offended or upset.

Anyhow, I was making the point that there are people in regular jobs who make decisions every day which have much greater risks and consequences than any CEO of a company has to deal with when (s)he makes a decision.

Another (hopefully less emotive) example would be Firemen. They risk their own lives for the benefit of others. How much would you need to be paid to run into a burning building to rescue a stranger? What motivates them?

But to answer your staggeringly ridiculous point, junior doctors are training to become extremely highly paid individuals. Most UK GPs, for example, earn over £100,000 per year. The surgeon, Mr Paterson, who removed my lump, works both NHS and private and earns considerably more than a GP.

That's a long way from the millions (billions?) you think an individual should personally be able to have. Makes you wonder why he keeps on going. Perhaps there's something other than money that drives him?

BTW, the fact your surgeon was doing private work means the people who pay his NHS salary have to wait longer while he does his moonlighting for BUPA.

I'm going to ask my boss if I can have a day or two off a week to go do some contracting for the competition.

But, without people like me, no-one would know the private sector exists. I wouldn't have been able to get my lump diagnosed and removed so quickly, because I would simply not have known that there is such a thing as BUPA.

And yes, my workload in hours is comparable with a junior doctor. I have worked 48 hours straight. To save a life? No. Is that the only profession worth pursuing? It seems you think so.

Let's just say that if meteor is detected heading for earth, I don't think there will be many people from the world of advertising being invited into the bunker.

You might be needed to come up with a catchy advertisement giving directions to it, though.

Get off your high horse, you look ridiculous.

I wasn't aware I was on my high horse.

[tkingdoll]

In what way was I "using" your cancer scare? I'd have "used" my own father's cancer scare, but his wasn't just a scare, you didn't know him and the doctor did made a mistake. However, feel free to use this as an example; I won't get offended or upset.

Anyhow, I was making the point that there are people in regular jobs who make decisions every day which have much greater risks and consequences than any CEO of a company has to deal with when (s)he makes a decision.

Another (hopefully less emotive) example would be Firemen. They risk their own lives for the benefit of others. How much would you need to be paid to run into a burning building to rescue a stranger? What motivates them?



That's a long way from the millions (billions?) you think an individual should personally be able to have. Makes you wonder why he keeps on going. Perhaps there's something other than money that drives him?

BTW, the fact your surgeon was doing private work means the people who pay his NHS salary have to wait longer while he does his moonlighting for BUPA.

I'm going to ask my boss if I can have a day or two off a week to go do some contracting for the competition.



Let's just say that if meteor is detected heading for earth, I don't think there will be many people from the world of advertising being invited into the bunker.

You might be needed to come up with a catchy advertisement giving directions to it, though.



I wasn't aware I was on my high horse.

All I have to do here is quote your entire post, in all its smug and condescending (and inaccurate) glory, with the last sentence intact. I don't need to respond to any of it. You've done all the work for me. Well done.

[Ivor the Engineer]

Worst idea ever.
Sounds to like Ivor is advocating a pure Socialist system with a happy face painted on it in the form of "non Profit companies" instead of Government agencies.

No, I'm not.

And I get the feeling that Ivor and Animus really think that the profit motive is basically evil,but don't want to say so in so many words.

No, I don't.

[PopeTom]

Secondly, you (and Teek) seem to think you are working exceptionally hard for the huge rewards you desire. IIRC, the most dangerous job in the world is crab fishing in Alaska. The men who do that job risk their lives. I don't believe they become (or expect or think they deserve to become) multi-millionaires.



according to here (http://www.cvtips.com/alaska_commercial_fishing_job_opportunities.html)
an Alaskan crab fisherman can earn $15,000 per month for the risk that they take. Though this of course can vary depending on a bit of luck and length of the fishing season.

Currently US minimum wage earns a person $11,700 per year. Is making more money in one month then a minimum wage job would earn someone in a year worth the risk? I don't know not for me, but for plenty of people it clearly is.

How would any of the business owners reading this thread feel if they could gross $15,000 a month for their hard work?

[Ivor the Engineer]

ooooh someones been watching discovery channel :p

I don't have Sky. Can you guess why?

wow that was a cheap shot.

So some people seem to think:confused:

[Ohmer]

I work in higher education. We are private and non-profit. This simply does not have the effects that the OP suggests. Our salaries are lower than equivalent jobs in for-profit companies and tuition is increasing faster than inflation. We make due with limited recourses just like for-profit companies. Sometimes we have make decisions that are not the best for the environment or our employees in order to accomplish our goals.

I think you are assuming that if you take the profit out of business that all the time and energy spent making that money will magically be transformed into making the world a better place. There is no reason to think that will happen.

[fuelair]

I personally hate the way businesses in general are run. Almost all businesses are set up for the purpose of huge financial gain in the hands of a few people. This results in numerous issues such as choosing more profit for the company at the expense of the environment. This means that we sell poor quality products or refuse to upgrade to better technology (cars and gas). This means that prices for all products and services are higher than they need to be, which in turn means that people have to work more hours than needed to pay for the things they need. I'm sure there is more, but you get the point.

I believe this conflicts are interferes with progress for all humanity.

As such I would like to propose the idea that all businesses convert to non-profit businesses/organizations and that all jobs have a maximum yearly salary cap. If businesses are non profit they have no need to charge more than needed for their products. With the salary cap there would be no way for them to use bad or unethical business practice to make extra money for themselves and as such there would no longer be any incentive to continue those practices.

This thread is mostly just to discuss the benefits and possible downfalls of this idea. For the purposes of this discussion let's assume that it was made a law that all businesses must be non-profit, and that there is a maximum salary cap of say $200,000 a year or something like that. Let's also assume that all businesses follow this and that there is no way for them to get around these restrictions to give themselves more money.
Your problem is that the reason for businesses to exist is to make money for ther owner(s). There is no point in having a business otherwise ("wow! I think I'll spend years of my life working my butt off to make a company that makes and sells stuff so I can have no profit and have all aspects controlled by someone else!! That's the life for me, buddy boy!!!).

[The Atheist]

All the people who champion the system implicitly condone millions of people living in poverty or staving to death, while they enjoy the comforts of their energy guzzling cars and mansions and watch said staving people on the news on their 64" LCD TV.

What an offensive little strawman you've created here.

Wouldn't the simple expedient of checking who the world's greatest altruists are have saved you an awful lot of embarrassment?

Warren Buffet and Bill Gates are giving away BILLIONS of dollars to charities.

I find it hard to believe that you could get as far as leaving school and still hold the opinion you display above. Seriously, it's the sort of rubbish I'd expect from Revolutionary91. You may as well blame it all on the Jooos.

[TriangleMan]

And I get the feeling that Ivor and Animus really think that the profit motive is basically evil,but don't want to say so in so many words.
I'm willing to give Animus the benefit of the doubt. The OP was essentially wanting to discuss ways to rectify unequal wealth distribution. While Animus's initial idea of salary caps is not tenable it could have led to a worthwhile discussion about how the inequality occurs and ways that might mitigate it to a degree. Sadly, Ivor "I'd get rid of the stock market" Engineer has taken the thread in an unproductive direction.

[The Atheist]

I'm willing to give Animus the benefit of the doubt. The OP was essentially wanting to discuss ways to rectify unequal wealth distribution. While Animus's initial idea of salary caps is not tenable it could have led to a worthwhile discussion about how the inequality occurs and ways that might mitigate it to a degree. Sadly, Ivor "I'd get rid of the stock market" Engineer has taken the thread in an unproductive direction.

Agree. I think Animus' question was more naivety than anything else and worth explaining the realities.

[Wolfman]

Agree. I think Animus' question was more naivety than anything else and worth explaining the realities.
Ditto...I think that some more investigation on Animus' part would find that my proposed model of a combination of capitalism and socialism would address most of his concerns.

In regards to Ivor, he lives in a world so far removed from reality that discussion is pointless; I'm bowing out.

[The Atheist]

Ditto...I think that some more investigation on Animus' part would find that my proposed model of a combination of capitalism and socialism would address most of his concerns.

Yeah, there's no harm in testing the water with those thoughts every now and then. Let's face it, if it were possible, it might well be the Utopia which ought to be self-evident for humankind by now. I think that was Animus' point which we've perhaps overlooked:

If humans would operate in the way he suggests, keeping productivity at current levels, then yes, there would be enough money to go around the entire planet, rather than the 50-60% we have now. As a Utopian ideal, it sounds great, but it just can never happen. Humans don't work like that.

Your local example - China - is going to be a fascinating example of how a weird hybrid of totalitarianism and capitalism can co-exist. Personally, I can't see it avoiding the type of corruption rife in Russia, but time will tell.

Those inscrutable Orientals...

[Hokulele]

Those inscrutable Orientals...


Bite me.

(Meant in the most pleasant manner possible of course. :) Wouldn't want to initiate the modding in Business!)

[TriangleMan]

Ditto...I think that some more investigation on Animus' part would find that my proposed model of a combination of capitalism and socialism would address most of his concerns.
Perhaps to an extent within a country, but I'm not sure how it would assist inequalities in wealth on an international trade basis.

One issue is that under democracy the decision makers are more geared towards economic solutions that assist their citizens, even if that policy would be detrimental to others or potentially even harmful in the long-term. Such policies are a small part of what creates unfair subsidizing, tariffs and other protectionist measures, and developing nations willingness to look the other way on issues of regulations and worker abuse just to be able to attract companies to set up factories there. But as a policymaker you come to a tough decision: would you rather a factory pay 1000 citizens $1 a day, or do you demand they get $2 a day and risk that they get nothing because the company decided to set up in a country where they can pay workers $1.

Attempts by nations to rectify some of these issues is a long and arduous process. Agricultural subsidies by the West is what I consider the prime example. Issues like these will not change overnight.

[Wolfman]

Your local example - China - is going to be a fascinating example of how a weird hybrid of totalitarianism and capitalism can co-exist. Personally, I can't see it avoiding the type of corruption rife in Russia, but time will tell.

Those inscrutable Orientals...
Very true...it is fascinating to watch the process, moreso to be a part of it.

Under the 'old' system, all companies were state-owned and operated. The primary purpose of any company was to "support the state" and to "support society"; actually generating financial profits was not a priority at all.

In regards to "supporting the state", virtually every industry was a monopoly. There was no competition, thus no need to try to improve quality. And prices were set by the government, based on what it could afford, rather than on actual market value.

"Support society" meant that workers in these companies benefited from incredibly stability -- they were not only guaranteed a job for life, but the company also provided their housing, clothing, food, etc. Of course, in return, you sacrificed any real freedom. The government chose where you lived, what you studied, where you worked, etc.

In many cases, factories produced a product that was not in demand at that time (they might work for three months each year, at which point they would have filled the year's quota, then have nine months with nothing to do). So they'd go to work, then sit around all day playing cards, watching TV, or sleeping.

Promotion to senior management was almost never based on actual experience or ability (since everything was a monopoly, quality made no difference and incompetent managers were the norm); instead, it was based on politics. If you were a member in good standing with the Communist Party, and had the right political connections, you'd get a promotion. Otherwise, you were out of luck.

40 years of this economic model resulted in Chinese banks (also all owned by the government) holding absolutely massive debts, paid out to continue supporting factories and companies that were completely unprofitable. This not only made for a weak economy, but also meant that far less money was available for things like health care, education, etc.

Approximately ten years ago, the Chinese gov't started an aggressive program of privatizing all their state-owned companies. They got rid of monopolies, and opened the market up to competition, and stopped providing financial support for companies that were managed incompetently.

The resultant change in China's economy was incredible, as anyone observing China's economic growth over the past decade will be readily aware.

Of course, this meant that individual citizens no longer had guaranteed job security. Non-state-owned companies generally do not provide housing, food, and clothing for their employees; nor do they guarantee life-long employment. For the older generation of Chinese, who grew up used to that level of stability (and who have little hope of competing in this new more capitalistic model) generally object to and complain about this.

But the younger generation? They love it. For the first time, they get to choose what they study, where they live, where they work, etc. And they know that if they work hard and do a good job, they'll be rewarded for their efforts with promotions and higher pay.

The under-25 generation of Chinese, who have essentially grown up entirely outside the context of the old state-run businesses, have also become extremely entrepreneurial. For a culture that traditionally has a reputation of being conservative and risk-adverse, this new generation is a complete reversal of the stereotype. Everybody and their brother is setting up their own small business; only a few are really successful, but most manage to at least make a living at it.

Within the context of this discussion, let me point out that while the government still exercises a certain minimal degree of control (and within certain industries, such as health care industry, still retains a strong grip), for the most part it is a very strongly capitalistic system. And the Chinese are proving to be among the most capitalistic people in the world.

Of course, in China, it is never called "capitalism". It is called "Socialism with Chinese characteristics".

[The Atheist]

Agricultural subsidies by the West is what I consider the prime example. Issues like these will not change overnight.

Now there's a subject which just sickens me - farming subsidies.

Which country has the lest-protected farmers by way of subsidy and import tariff?

New Zealand.

Which country is [arguably] the most-successful (on weighted basis) exporter and producer of agricultural commodities?

New Zealand.

If only the EU and USA would realise that subsidising farmers allows inefficiency to be rewarded, the planet would be a much better place.

[The Atheist]

But the younger generation? They love it. For the first time, they get to choose what they study, where they live, where they work, etc. And they know that if they work hard and do a good job, they'll be rewarded for their efforts with promotions and higher pay.

Good synopsis.

This will be the interesting part - as this generation gets older, their thoughts are likely to turn towards change. It'll be interesting to watch how the changes occur, or if they are allowed to.

[Wolfman]

Perhaps to an extent within a country, but I'm not sure how it would assist inequalities in wealth on an international trade basis.
Actually, the way I see it, capitalism in many ways promotes economic development in less-developed countries. Consider the current move to outsourcing labor and manufacturing to other countries. Capitalism encourages such a move, which in turn results in more jobs and greater economic development in those other countries. It is protectionism or regionalism, the idea that "those jobs belong to us", that hurts other countries more.

There is certainly potential for abuse, such as when people are used virtually as slave labor. But in China, for example, a company can set up a factory that pays very fair wages, and provides a safe working environment, and still save significantly over setting up the same factory in the U.S.

I don't believe that we are ever going to reach a point where multinational companies are going to invest in other countries out of a sense of altruism; the bottom line is always about making a profit.

Providing a positive incentive for investment that benefits developing nations -- providing jobs, income, new technology, skills training, etc. -- is, in my opinion, a very good thing; and capitalism very strongly supports such actions (albeit for selfish reasons), since such investment not only benefits the local people, it also benefits the company's profit margin.

But you need to have safeguards and restrictions, also, to ensure the this investment actually does benefit the local people, and does not simply exploit them.

Question -- can you propose any way that is more likely to induce rich, powerful countries to invest significantly in undeveloped countries than the capitalistic incentive of increasing their profits? Sure, it'd be nice to rely on altruism, but this is the real world...and in the real world, a capitalistic system that has the proper controls and balances in place to minimize abuse, will be the one that provides the most long-term benefits.

I do not contest at all that capitalism has hurt many developing nations, by exploiting local labor and resources in a way that hurts them, and benefits only the foreign companies. And, if left with no government oversight or regulation, I'm sure that such behavior would continue to be common.

But I can also point to many, many examples where capitalistic investment in developing nations has benefited the local people phenomenally. And where, without the incentive for increased profits, those companies would never have bothered to do anything at all.

[Ivor the Engineer]

What an offensive little strawman you've created here.

Well I guess that depends on what you believe money is. I would say it is a symbol for access to and use of the world's FINITE resources.

Wouldn't the simple expedient of checking who the world's greatest altruists are have saved you an awful lot of embarrassment?

No. What embarrassment?

Warren Buffet and Bill Gates are giving away BILLIONS of dollars to charities.

Oh, isn't that generous of them. After they're finished salving their consciences they'll probably only have a billion or two left. I bet their kids are annoyed they'll only be inheriting a few million each.

Has it ever crossed your mind that people don't want charity, or that it is nowhere near an optimal way to utilize resources and it is unlikely to solve any of the world's problems?

What about the idea that the $37 billion Buffet is giving away might have been better spent over the period of time he was amassing his personal fortune?

Or that people may exist who, after their basic needs and comforts are met, are not motivated by more money?

As for the stock market, read this:

http://www.slate.com/id/2154152/fr/rss/

[Wolfman]

Or that people may exist who, after their basic needs and comforts are met, are not motivated by more money?
Dude, you are so close, and yet so far away.

Personally, I'm not motivated by more money; not directly, anyway. I am motivated by challenge, by doing new things, by the opportunity for success, by the opportunity to help others, etc.

Starting a new company enables me to do all those things.

You know what my number one motivation for "making more money" is? Besides my business, I am also founder of a non-profit organization that works with one of the most remote Chinese minority groups, the Mosuo (you can read about them in my post here (http://forums.randi.org/showthread.php?t=72651)). The more money I make in my business, the more money I'm able to channel towards the projects that they are doing -- projects that improve education, health care, economic development, etc.

And I'm not doing this to "salve my conscience". My greatest priority and passion is in working with the Mosuo; running my business, and making more profits, is a means to bring about that goal.

Of course, not all -- or even most -- businessmen would think the same way, but the thing is that you do not have the right to tell them what their goals should be, any more than they have the right to tell you what your goals should be.

And in regard to Bill Gates and Warren Buffet, I fully agree that their donations do not represent a huge "sacrifice" on their parts, they still have tons of money. But I don't see why only a person who lives in poverty is "noble".

Here's a fact for you to chew on. The billions of dollars that Gates and Buffet have donated go to things like education, and AIDS research (in fact Gates by himself has donated more money to AIDS research than all other donations in the world put together). Millions of people will benefit, directly or indirectly, from the work that is made possible by those donations.

So let me ask you.

Make a list of all the people whose lives will be made quantifiably "better" by you; and make a list of all the people whose lives will be made quantifiably "better" because of the donations from Bill Gates (people who will have access to better education, or better treatment for AIDS for example).

If we're measuring the worth of a life according to how many lives are improved or made better because of that person, then you, my friend, barely even register. And Gates and Buffet have managed not only to bring benefit and assistance to millions of other people, they've also managed to have comfortable lives for themselves.

You can be proud of mediocrity if you want. You can feel free to condemn those who have had the terrible audacity to be successful, and then use that success to help others. That's your opinion, and you have every right to that opinion.

But I will tell you -- for the AIDS victims who are desperate for a cure, or the inner-city kids that are desperate to get a better education -- they value the contributions of someone like Bill Gates or Warren Buffet far, far more than the abstract meanderings of someone like yourself who, in all likelihood, despite all his high-sounding principles, is never going to do anything to help or benefit even a tiny minority of those people.
Has it ever crossed your mind that people don't want charityI don't know -- has it crossed your mind that people dying from AIDS, or crying for a better education, just might appreciate an actual effort to help them, rather than someone shouting vague philosophies and principles on a street corner?

[The Atheist]

In regards to Ivor, he lives in a world so far removed from reality that discussion is pointless; I'm bowing out.

...many words...

Busted!

[TriangleMan]

Question -- can you propose any way that is more likely to induce rich, powerful countries to invest significantly in undeveloped countries than the capitalistic incentive of increasing their profits? Sure, it'd be nice to rely on altruism, but this is the real world...and in the real world, a capitalistic system that has the proper controls and balances in place to minimize abuse, will be the one that provides the most long-term benefits.
The portion that is in italics is the important point. Such control systems are simply lacking or ineffective in a lot of the world and if that could be addressed it could go part of the way in alleviating wealth inequalities between countries. But as Western history has shown the battle to put those controls in place is a long and challenging one. With the ease from which goods can now be moved around the world such systems would also need to be introduced, piecemeal if need be, on a global scale in order to reduce regulatory arbitrage by multi-nationals. Without it exploitation will continue to be a common feature of developing world business practices.

[Ivor the Engineer]

Dude, you are so close, and yet so far away.

Personally, I'm not motivated by more money; not directly, anyway. I am motivated by challenge, by doing new things, by the opportunity for success, by the opportunity to help others, etc.

Starting a new company enables me to do all those things.

You know what my number one motivation for "making more money" is? Besides my business, I am also founder of a non-profit organization that works with one of the most remote Chinese minority groups, the Mosuo (you can read about them in my post here (http://forums.randi.org/showthread.php?t=72651)). The more money I make in my business, the more money I'm able to channel towards the projects that they are doing -- projects that improve education, health care, economic development, etc.

And I'm not doing this to "salve my conscience". My greatest priority and passion is in working with the Mosuo; running my business, and making more profits, is a means to bring about that goal.

So, how would limiting your personal fortune stop you from doing any of these things?

Of course, not all -- or even most -- businessmen would think the same way, but the thing is that you do not have the right to tell them what their goals should be, any more than they have the right to tell you what your goals should be.

But we do try to teach children to share their sweets, don’t we?

And in regard to Bill Gates and Warren Buffet, I fully agree that their donations do not represent a huge "sacrifice" on their parts, they still have tons of money. But I don't see why only a person who lives in poverty is "noble".

Did I say anything about living in poverty? Or even all people should have exactly the same standard of living? I have already acknowledged that there needs to be a gradient to motivate people to work. All I have suggested is:

i) Claiming huge financial rewards are justified by the risks taken is often untrue, and that many people take significantly higher risks with their own or others' lives for comparatively tiny reward.

ii) Limiting individuals' personal wealth will not stop competition. In fact, if owners were forced to invest profits in their businesses or other projects, rather than amassing huge personal fortunes (which they may then decide to start giving away), far more people would benefit from capitalism.

iii) The stock market does not do what it claims it does particularly well.

Here's a fact for you to chew on. The billions of dollars that Gates and Buffet have donated go to things like education, and AIDS research (in fact Gates by himself has donated more money to AIDS research than all other donations in the world put together). Millions of people will benefit, directly or indirectly, from the work that is made possible by those donations.

So let me ask you.

Make a list of all the people whose lives will be made quantifiably "better" by you; and make a list of all the people whose lives will be made quantifiably "better" because of the donations from Bill Gates (people who will have access to better education, or better treatment for AIDS for example).

If we're measuring the worth of a life according to how many lives are improved or made better because of that person, then you, my friend, barely even register. And Gates and Buffet have managed not only to bring benefit and assistance to millions of other people, they've also managed to have comfortable lives for themselves.

Hang on, why do Gates or Buffet get the credit if their money helps find a cure for HIV or malaria? What about the scientists, doctors, NGO’s etc. who do the work? Do I get the credit for the work of charities I donate a fraction of my salary to?

The capitalist principles that have allowed Gates and Buffet to amass their huge personal fortunes have been one of the driving forces for the African HIV pandemic. Africans have had their resources plundered by companies in the west for decades.

You can be proud of mediocrity if you want. You can feel free to condemn those who have had the terrible audacity to be successful, and then use that success to help others. That's your opinion, and you have every right to that opinion.

I’m not “condemning” them; I’m saying that giving away money and having billions left over is not considered to be a huge sacrifice by most people.

But I will tell you -- for the AIDS victims who are desperate for a cure, or the inner-city kids that are desperate to get a better education -- they value the contributions of someone like Bill Gates or Warren Buffet far, far more than the abstract meanderings of someone like yourself who, in all likelihood, despite all his high-sounding principles, is never going to do anything to help or benefit even a tiny minority of those people.

Why do you think I’m not going to do anything to help other people?

I don't know -- has it crossed your mind that people dying from AIDS, or crying for a better education, just might appreciate an actual effort to help them, rather than someone shouting vague philosophies and principles on a street corner?

They might also appreciate a fairer world where, for example, goods are not dumped on them to keep the price artificially high in the west, which in turn makes their only sources of income worthless.

E.g,

http://www.maketradefair.com/en/index.php?file=23062003172617.htm

[Wolfman]

Busted!
LOL

Yeah, I know. :blush:

[The_Animus]

Enough.

Man do I love thread hijacking. If you want to argue about the benefits of capitalism over other current business systems make your own thread. If you want to sit and argue with each other with the occasional ad hominem please do so elsewhere. Or better yet stop wasting your precious time on these forums since you have your 20 hour work day business to attend to.

The purpose for this thread was to admit that capitalism is not a perfect system. While it does have its merits it is still flawed in many ways. Though no other better working system is being used by another country that does not mean we cannot make the attempt to formulate a new outline of business conduct which would address the flaws in capitalism, while still keeping some of the strong points of it.

Because this thread has gotten so far off track I would like to ask the admin to delete it. I am going to repost my relevant posts in a new thread with the hopes that we can have a friendly constructive discussion on the original matter of the OP and my subsequent posts.

Thanks.

[quixotecoyote]

Good luck with that

[The_Animus]

*Note* This is a reposting of a previous thread I made. The thread was hijacked and was brought off topic from the original intend of the thread.

The purpose for this thread is to admit that capitalism is not a perfect system. While it does have its merits it is still flawed in many ways. Though no other better working system is being used by another country, that does not mean we cannot make the attempt to formulate a new outline of business conduct which would address the flaws in capitalism, while still keeping some of the strong points of it.

I am reposting this in a new thread with the hopes that we can have a friendly constructive discussion on the this matter. If you think there is a problem please state it but also see if you can't figure out a way to fix this issue.

Thank you for your cooperation.

I personally hate the way businesses in general are run. Almost all businesses are set up for the purpose of huge financial gain in the hands of a few people. This results in numerous issues such as choosing more profit for the company at the expense of the environment. This means that we sell poor quality products or refuse to upgrade to better technology (cars and gas). This means that prices for all products and services are higher than they need to be, which in turn means that people have to work more hours than needed to pay for the things they need. I'm sure there is more, but you get the point.

I believe this conflicts and interferes with progress for all humanity.

As such I would like to propose the idea that all businesses convert to non-profit businesses/organizations and that all jobs have a maximum yearly salary cap. If businesses are non profit they have no need to charge more than needed for their products. With the salary cap there would be no way for them to use bad or unethical business practice to make extra money for themselves and as such there would no longer be any incentive to continue those practices.

This thread is mostly just to discuss the benefits and possible downfalls of this idea. For the purposes of this discussion let's assume that it was made a law that all businesses must be non-profit, and that there is a maximum salary cap of say $200,000 a year or something like that. Let's also assume that all businesses follow this and that there is no way for them to get around these restrictions to give themselves more money.

------------------------

I am not proposing that everyone gets paid the same. Quite the opposite. People would still get paid in a wide range of salaries, but there would be no one who makes such a grossly unnecessary amount of money. By all means pay harder working people and more difficult positions more money. No one needs to make a million dollars a year. They can live more than comfortable on that $200,000. Obviously a CEO or a Doctor would be paid more than a cook or cashier. And if there is an instance where there are two Doctors and one is much better than another then they would be paid differently.

If someone doesn't do their job well then I'm sure there is someone else who can and would appreciate making more money.

But there's another issue as well - without the potential returns, people wouldn't run businesses and the global economy would be reduced to barter and probably 3/4 of the population would die of starvation.

The bad news for your theory is that capitalism has produced the most reasonable system. Very few people starve to death - except by lifestyle choice - in OECD countries, because the capitalist system provides sufficient income so that governments can establish safety nets to support those who can't support themselves.



I don't think that is how it would work. There would still be benefits to run a business. If you run the business you would make more money than if you were simply an employee at another business. There is still a benefit to having a business, you still make a higher than average salary. You just don't get to make $2 million.

I don't know what OECD means. However there would still be taxes to pay for things that are otherwise unpaid for. And if businesses were more geared towards trying to benefit all of humanity there wouldn't be any world starvation. We currently waste ridiculous amounts of food with our current system. Even by just eliminating the meat industry you could provide more food to people. The animals we raise to eat eat more plant life than people do.

------------------------------

No, running a business does not generally mean that you make more then on salary because most businesses either fail or barely scrape by, leaving the person who started the business in debt. Only successful businesses reward the risk-taker and under your scenario that reward is now limited. Is someone going to put five million dollars into a start-up tech/manufacturing business when at best he could make $200,000 a year? No, not at the risk of losing the money.

Yes. I agree. That is a valid point.

What if we change it so that you can choose the option of either a max salary cap of something like $250,000 or a certain % of the profits. That way you can still benefit from higher expenses, higher profit business.

Also you have to understand that all that initial cost in setting up the factory or store or whatever is still there in the net worth of the business. So it's not as if you are really losing 4 million dollars and only getting $200,000 a year.

You could also change it so that if the business does go under you are able to sell everything off to try to recoup your losses.

There is also the possibility of government subsidies.

It's also possible that this would encourage multiple investors in business.

Or... I have another idea.

Let's say instead that the person who starts the business does not have a salary cap or % of profits each year cap. Instead they are allowed to only make double the amount of money invested to start the company up. So if you invested $1,000,000 in a company you could make $2,000,000. You might be able to change the ratio a little depending on certain investment brackets that could be set up.

After you make that much from the company you can't make any more aside from the previously mentioned salary cap.

This would encourage business growth because there is still considerable profit to be made, while still putting a limit on the amount of overall money that can be made from each particular business by one person.

I do understand there are issues. So let's see if we can't come up with some way to fix this up.

[Miss Anthrope]

I've merged the restarted and clarified thread with the original. Thread drift happens in the course of discussion, and I see no attempts to hijack or deliberately derail the thread. Other moderators and admins have reviewed it as well.

[The_Animus]

Some people continue to say that its not enough money. That's its not worth the risk. I do not understand. If you put in $1 million to start up the company you are able to make $2 million dollars before the salary or % of profits cap comes into play. So not only are you able to make a million extra above what you started with as fast as you are able to do so according to your profits, but after that you are able to continue making a significant sum of money each year from the business.

Why do you need to make more money than that? Do you need 4 summer homes in addition to the one you have? Do you need your own personal plane or maybe a collection of fast cars?

With capitalism there is just as much risk involved. You can still go bankrupt. Just like with this system. They are the same. With capitalism its worth the risk for the potential benefits. The same is true with this system. You can make large amounts of money that would otherwise be impossible. The only difference is that with this system you aren't making profits far far above and beyond what is even remotely necessary, at the expense of others (higher product costs, lower employee pay, environmental issues, etc). Again why isn't making an extra million enough? Why do you need ten?

Maybe its not that. Maybe you are looking at this from the perspective of smaller businesses. Well in that instance I agree it may not be worth the risk for double the profit. For example if you put in $25,000 for your business, making $50,000 isn't that great a bargain for the risk. But as I mentioned earlier there would be investment brackets. As such businesses with a lower start up cost would be able to make more than 2x the initial investment. Maybe 4x or 5x, these numbers can always be adjusted so as to be worth the risk involved. While businesses with a large start up cost would be more limited due to the higher potential revenue. As such a start up investment of $5 mil would only be able to make the CEO $10 mil before the caps come into play.

[roger]

Why do you need to make more money than that? Do you need 4 summer homes in addition to the one you have? Do you need your own personal plane or maybe a collection of fast cars?Because I want to make a $10M dollar business, for example. Or I want to built an oil tanker. Or make some jets. Or buy a single CNC machine. Or drill an oil well. Or do research in solar panels. Or gamble and hire 50 biochemists to try to invent a cancer beating drug. Or I want to build and give away a dam in area that floods and causes maleria every year in Africa. Or I want to buy a mountain that is being threatened of being leveled by a coal mining company and make it a nature preserve. Or I want to give money to UNICEF. Or I want to produce a documentary exposing pork barrel projects in congress. Or I want to start a publishing company to print books on how people have excessive salaries. Or....

yes, sometimes buy a fourth home, which uses the labor of a bunch of people, i.e. provides jobs.

ETA: at one time my father built vacation homes for people. You better believe that we didn't complain that people had money to buy these homes. Cause you know, it fed, clothed us, and sent us to school.

[fuelair]

By the by, the mods/admins were quite right - and here's the reason (by me)you made a suggestion - as is your right - but you do not want to have arguments against it, you just want to hear it agreed with (maybe a minor difference or two). But, that is almost never how a discussion or a forum goes if there is any possibility for disagreement - and I think you see there is a lot of disagreement.

My suggestion - given that there has been a long time that commerce has been present here on Earth - is to hunt (research) around and see if there has ever been a reasonably successful society with any functionally developed economy and with scarcities of any hard to get,but necessary, materials that operated in this manner (because the liklihood that you have stumbled into one that would work that everybody missed over a few thousand years is not particularly likely).

[Ohmer]

As such I would like to propose the idea that all businesses convert to non-profit businesses/organizations and that all jobs have a maximum yearly salary cap. If businesses are non profit they have no need to charge more than needed for their products.

Is $31,840 per year "more than needed" for a liberal arts education? That is what our non-profit school charges. These charges are rising faster than inflation, despite that fact everyone here has a fixed salary that is generally lower than equivalent jobs in for-profit companies.

With the salary cap there would be no way for them to use bad or unethical business practice to make extra money for themselves and as such there would no longer be any incentive to continue those practices.

Our previous president loaned $12 million of the college's money to a failing company and then bought stock in that company. The company went bankrupt and we lost all $12 million. Drawing a fixed salary does not stop one from being stupid or unethical.

Your basic premise is flawed. Taking the profit out of a business will not turn it into a benevolent, environment loving organization that will deliver cheap products and develop new technology. You seem to think that if profit is limited that the money will still be generated and redistributed in way that is more to your liking. There is no reason to think this will happen.

[The_Animus]

but you do not want to have arguments against it, you just want to hear it agreed with (maybe a minor difference or two).

Quite wrong. I don't doubt there will be arguments against it. However...

If you think there is a problem please state it but also see if you can't figure out a way to fix this issue.

So it is not that there won't be conflict or problems with this system. I am simply trying to avoid posts of the manner "This idea won't work because of this, therefor I shall not attempt to think of any solution to this issue but instead continue to complain that this won't work over and over again rather than try to provide constructive solutions."

Because I want to make a $10M dollar business, for example. Or I want to built an oil tanker. Or make some jets. Or buy a single CNC machine. Or drill an oil well. Or do research in solar panels...

For what purpose are you making these things? To ultimately make more money? Or is it for the benefit of everyone? If so then couldn't you also have multiple investors in higher investment businesses? And there is nothing to stop you from making $10 million. It just requires either multiple companies or a higher initial investment company. There are also business loans.

Our previous president loaned $12 million of the college's money

Our president shoudn't have been president. And the idea of use college money to fund a business is terrible in the first place. And you cannot use flaws in the current system to say this one doesn't work. That's the point of making and working out a new system, to avoid the problems of the current one.

Taking the profit out of a business will not turn it into a benevolent, environment loving organization that will deliver cheap products and develop new technology. You seem to think that if profit is limited that the money will still be generated and redistributed in way that is more to your liking. There is no reason to think this will happen.

I'm taking immense profit from individuals. If it's not in the hands of a few then it can be spent on more important things. The way things are now if a company is making tons of profit the CEO can make virtually as much of that profit as they want. If there is a cap then no matter how much profit the company makes the CEO/board members or whoever is limited in how much of those profits they can have for themselves. As a result they can either give the excess profit away to some sort of charitable organization or to help pay for roads, or pay their lower salary employees more money, or lower the price of their products, or use it to improve the quality of their products. Or they can do any combination thereof. In any case they are forced to use the excess money to something which benefits large numbers of people instead of themselves.

I am not saying I have all the answers or that this is perfect and flawless. Not at all. This is simply an idea, and I encourage people to help find issues with it and to then work to solve those issues.

[Wolfman]

Animus,

One problem with your proposed salary cap is that it fails entirely to account for different values of the company, or the investment made in that company.

Let me take your argument about investing one million dollars to start a company. If I'm allowed to get a maximum of $2 million in personal profits each year, that means that after five years, I've made $10 million, a 1000% return on my initial investment. That is, arguably, a reasonable return on investment.

However, what if I have to invest $10 million to start a company? Under your system, which still only allows a maximum of $2 million in personal profits each year, that means that after five years, I've just barely broken even. I haven't made one cent in profit. A 0% return on investment over five years...nobody is going to consider that reasonable.

And if I have to invest $50 million to start the company, under your system, I will have to wait 25 years just to recover my initial investment!!!!

Sorry, but I just do not see how such a system could possibly work. You would at the very least have to have the salary cap indexed according to the amount of the initial investment, so that the owner would be able to get at least a 500% ROI over five years (if the company does well). Thus, the salary cap for someone who invested $50 million to start a company would be $50 million/year. Any ROI less than this would make the risk of starting the company too high, compared to the potential benefit.

And as soon as you start acknowledging that this person is allowed to make far more money, its going to be very difficult making the argument that other people are only allowed to make $ 2 million/year.

Another note, and one that is extremely important:

Any country that implemented such a system would find its economy effectively destroyed within a year. Why? Because every major company in that country would leave and set up their operations in another country that did not have such salary caps. Factories would be shut down, industries would disappear overnight. The only way such a plan would have even a chance of working would be if every country in the world adopted it. Which is a practical impossibility.

My arguments are based not on how I'd like things to be; if my arguments were based on how I'd like things to be, I'd say something like, "Wouldn't it be nice if all humans would suddenly stop being selfish, and would run companies for the betterment of society, rather than for their own benefit and profit?". Yes, that'd be wonderful; but its not a practical reality.

I believe that any discussions such as this must focus on practical realities of what can actually be done, given the current situation in our world.

There are already existing, practical models of capitalism being modified somewhat by a socialist framework; these still put no limit on what profits you can make, but take a higher percentage of those profits and channel them back into society (ie. education, health care, etc.), and put stronger limits to prevent potential abuse (no monopolies, worker's rights, etc.).

This model provides a balance between encouraging companies to invest in that country, and preventing abuses by those same companies, while also channeling profits back into society.

In your model, there is no "balance". It is essentially an all-or-nothing proposition.