Romney, Capitalism (healthy societies require some suffering)

[RandFan]

This thread is a result of the following video.

When Mitt Romney Came To Town

YouTube Video This video is not hosted by the JREF. The JREF can not be held responsible for the suitability or legality of this material. By clicking the link below you agree to view content from an external website.

I AGREE

First let me say that the piece is obviously biased propaganda. It only highlights the negatives of Bain Capital's investments and involvement with various businesses. While it shows that jobs are lost it doesn't show what if any net positive jobs were gained. Nor does it tell us what companies were saved that would have gone bankrupt without Bain's involvement thus pushing the economy into further trouble. By all means, critique away at the video.

What troubled me about the above video is the ease to which Romney accepts that people must suffer in a capitalist society. He (or Bain), intentionally or not, caused harm to people. And he profited off that harm. Let me hasten to his defense, his job requires that he be detached. He couldn't do his job properly if he allowed his emotions to dictate his decisions. So, FWIW: I could not use this bit of propaganda to decide against Romney even if I took it at face value.

I'm pro capitalism. But here is my problem. Without focusing on Bain Capital, assuming that we take a pro-capitalist position, is such suffering truly requisite? And by that, I don't mean that Bain ought not exist or venture capitalists not be able to buy, sell, close companies or lay off workers. I mean, can't we as a society do more to provide a safety net to those who are laid off? Capitalism can be indifferent but govt does not need be. Since Romney and Bain made so much from their investments, which is cool, why can't they be taxed to insure that any lives uprooted by such cold hearted decisions be mitigated by govt intervention?

Further, would Mondragon type of corporations work better to ensure profitability and protect employees and reduce govt intrusion?

[daredelvis]

Gotta break some eggs to make an omelet, and a company in trouble needs to pay 10s of millions of dollars to management consultants to break those eggs.

Quote:

In, change the logo, fire 30% of the workforce, out... You are now a fully trained management consultant.

Daredelvis

[Bri]

This video was rated as false by nearly every fact-checking site.

http://www.washingtonpost.com/blogs/...s=fact-checker
http://www.politifact.com/truth-o-me...ng-bain-video/
http://factcheck.org/2012/01/facts-s...-king-of-bain/

While Romney was wrong to claim that he created jobs while working at Bain, the criticisms of his work at Bain are also largely unfounded.

-Bri

[RandFan]

Originally Posted by Bri

This video was rated as false by nearly every fact-checking site.

http://www.washingtonpost.com/blogs/...s=fact-checker
http://www.politifact.com/truth-o-me...ng-bain-video/
http://factcheck.org/2012/01/facts-s...-king-of-bain/

While Romney was wrong to claim that he created jobs while working at Bain, the criticisms of his work at Bain are also largely unfounded.

-Bri

Thanks Bri,

As I noted the video is biased propaganda. I'm more interested in Romney's attitude about suffering as a result of capitalism. The video isn't wrong about companies being closed and Romney profiting from their closing.

But, I'm also very interested in the "facts" from your link.

Quote:

Private equity deals, such as leveraged buyouts in which the company borrows lots of debt, can be more rewarding but also more risky. Some of those deals went bad for Bain, which sometimes happens in finance, though the company usually made money anyway. New York magazine, which the film cites as a source, recently ran an excellent profile of Romney in which it explored Romney’s pioneering role in the then-emerging field of private equity. Private equity revolutionized American business, demanding efficiencies (which can mean layoffs) and helping place much more emphasis on increasing shareholder value.

I think this isn't all that far from what the movie is saying. The emploees are devalued and shareholder value is increased.

Let me ask you a question, is a society that is largely or mostly comprised of corporations that devalues employees and puts shareholder value above all else long term societies?

[leftysergeant]

If Mittens thinks this is an unfair attack, all he has to do is show us where he save more jobs than he destroyed. I would, however, put one caveate on that.

Financial sector jobs don't count.

[Bri]

Originally Posted by RandFan

Thanks Bri,

As I noted the video is biased propaganda. I'm more interested in Romney's attitude about suffering as a result of capitalism. The video isn't wrong about companies being closed and Romney profiting from their closing.

Well, the video is a little worse than just biased -- it's factually wrong on almost everything. If there's a point to be made about Romney's attitude towards suffering, this particular video is probably poor evidence to support it.

It's difficult to either blame or give credit to Romney at all as far as job creation/loss is concerned. Romney was just as wrong to give himself credit for jobs created as others are for blaming Romney for jobs lost. Most of the company's records are private, and it's entirely unclear how one would account for the number of jobs lost or gained that Romney would be responsible for. Is Romney responsible for jobs gained/lost after he left the company? Was Romney directly involved with decisions within Bain that would have lead to job gain/loss while he was there? Many of the cases cited in the video are from companies Romney was barely involved with when he was at Bain.

The truth is that companies like Bain don't "dismantle" companies just to make a profit. In fact, dismantling a company wouldn't make a profit for Bain. Bain's goal is generally to purchase a failing company and turn it around and sell at a profit. Sometimes that does involve firing people. However, if those people weren't fired, in many cases the company would have gone bankrupt and everyone would have been laid off.

There are some cases where Bain apparently took very large fees and allowed companies to go bankrupt. There may be valid criticism to be made in those cases. But again, it's unclear whether Romney was directly responsible for those decisions.

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Let me ask you a question, is a society that is largely or mostly comprised of corporations that devalues employees and puts shareholder value above all else long term societies?

I'm not sure I agree with the premise. One could argue that without shareholders, companies wouldn't have employees. Most companies value employees because employees add value to the company. And it can be argued that companies that value employees that don't add value to the company aren't going to be around for long, or at the very least won't grow enough to hire many more employees.

-Bri

[RandFan]

Originally Posted by Bri

Well, the video is a little worse than just biased -- it's factually wrong on almost everything.

Let's accept this. Doesn't respond to my point.

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If there's a point to be made about Romney's attitude towards suffering, this particular video is probably poor evidence to support it.

Perhaps. If his words were taken entirely out of context. I'll accept that. His statements do seem damning but I'll remain open.

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I'm not sure I agree with the premise. One could argue that without shareholders, companies wouldn't have employees.

This has me somewhat confused for a number of reasons. First, not all companies are corporations. But let's not get tangled in a technicality. Even if it is just a business owner someone must own the company, right? Okay, so let's get past that one. Second, many companies including many corporations are owned in part or in total by the employees. You didn't respond to my point about Mondragon type corporations. Wouldn't our society be better off if it cared more about its citizens? Given that many other nations do just as well if not better than us as far as HDI and they provide a much better safety net than we do, why not?

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Most companies value employees because employees add value to the company. And it can be argued that companies that value employees that don't add value to the company aren't going to be around for long, or at the very least won't grow enough to hire many more employees.

I apologize but I don't find this at all helpful. Perhaps the fault is mine and I'm failing to make my point.

There are many schools of thought as to how to value employees and what the results of that valuation would be. If the supply of labor is high and the company knows the sweet spot between paying employees and cost of training for turnover then they can exploit the labor for the least amount possible. They can keep the employees just long enough to achieve the highest rate of return for investment thus boosting shareholder value. Lowering the average value of citizens. So, your premise wouldn't come into play.

But what does that eventually achieve? Well, what do we have now? Lots of citizens without the money to purchase goods. Shrinking middle class. In the end the corporation bites its nose to spite its face.

Henry Ford reasoned that a society with poor citizens wouldn't ultimately help his bottom line. Ford grew up during a time when industrialists looked beyond next quarters bottom line. They had long term vision wishing to earn profits in the short term but investing in the overall company and industry in the long term. Not that these people were bleeding hearts. Hardly. They simply saw things long term.

So, that's my point and my question. How long will a society survive that is primarily interested in maximum profits with no long term vision?

[Brainster]

Originally Posted by RandFan

Let me ask you a question, is a society that is largely or mostly comprised of corporations that devalues employees and puts shareholder value above all else long term societies?

1. What do you mean by devalues employees? Employees should be valued at precisely the replacement cost for someone with equivalent skills and productivity. This is why a company like McDonalds, for example, does not pay many of its workers a high wage; because the workers are very easily replaced. It is also why upper management does earn a high salary. Those folks are very difficult and expensive to replace.

2. Shareholder value is a very useful metric to measure the ability of upper management to maximize profits. Corporations are in business to make money, and those that do not won't be around very long. Maximizing profits involves two key components; increasing revenues and decreasing expenses. If companies are insufficiently diligent about decreasing expenses, they will find themselves less profitable than their competitors. Note that decreasing expenses does not necessarily mean slashing pay; if productivity increases, then salaries can increase and profits will still go up.

3. Societies which have companies which overvalue (i.e., overpay) their workers will not succeed for long. Your example of the Mondragon corporation is interesting, but I note this from the Wikipedia description:

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In general, wages at Mondragon, as compared to similar jobs in local industries, are 30% or less at the management levels and equivalent at the middle management, technical and professional levels. As a result, Mondragon worker-owners at the lower wage levels earn an average of 13% higher wages than workers in similar businesses.

Either the Mondragon is very good at recruiting altruistic management, or they get less-qualified people for those positions. It will be interesting to see how long those types of corporations last; it may be that the value of upper management is indeed exaggerated in the market, and the worker drones are undervalued.

[RandFan]

Originally Posted by Brainster

Employees should be valued at precisely the replacement cost for someone with equivalent skills and productivity.

I disagree but let's accept that this as a dogma for the purpose of this discussion.

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2. Shareholder value is a very useful metric to measure the ability of upper management to maximize profits. Corporations are in business to make money, and those that do not won't be around very long. Maximizing profits involves two key components; increasing revenues and decreasing expenses. If companies are insufficiently diligent about decreasing expenses, they will find themselves less profitable than their competitors. Note that decreasing expenses does not necessarily mean slashing pay; if productivity increases, then salaries can increase and profits will still go up.

Why would or should salaries increase? This does not reconcile with your earlier proposition (see above). Anyway, companies can and do pay their employees more than the competition without earning any additional market share. Simply wanting a loyal work force because you have long term vision isn't such a bad strategy and doesn't mean you will be out of business by next quarter.

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3. Societies which have companies which overvalue (i.e., overpay) their workers will not succeed for long.

Oddly enough there are many societies where citizens are paid more, have less hours and are paid on average more and they have very successful societies with very high rates of well being.

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Either the Mondragon is very good at recruiting altruistic management, or they get less-qualified people for those positions.

Those high priced execs that kept the banks from making idiotic decisions? I'm skeptical that corporations are getting their moneys worth. Yes, upper management does need to be paid more but the labor supply is high and the ability to work in upper management doesn't require particle physics. In 1965 the ratio between CEO pay to employees was 24. Today its 2009 it was 185 after falling from a high of 298 and 273. So, are American businesses measurably that much better today?

In the end, it's the fact that other nations have high rates of well being, pay their workers more, give more vacation and more benefits and provide a strong safety net that leads me to be skeptical of this notion that the American model is the best.

[Bri]

Originally Posted by RandFan

Second, many companies including many corporations are owned in part or in total by the employees. You didn't respond to my point about Mondragon type corporations.

I'm not familiar with Mondragon or how it is run, so I can't really comment.

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Wouldn't our society be better off if it cared more about its citizens? Given that many other nations do just as well if not better than us as far as HDI and they provide a much better safety net than we do, why not?

I'm probably not the best person to argue with since my views probably don't differ that much from yours on a lot of this. I think we'd be better off as a society if we provided a better safety net, yes. More importantly, I think that the inability of people to be able to do better than their parents did is a big problem. But I think that has more to do with taxation and politics than with corporations specifically. Corporations play under the rules that are set by politicians.

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I apologize but I don't find this at all helpful. Perhaps the fault is mine and I'm failing to make my point.

There are many schools of thought as to how to value employees and what the results of that valuation would be. If the supply of labor is high and the company knows the sweet spot between paying employees and cost of training for turnover then they can exploit the labor for the least amount possible. They can keep the employees just long enough to achieve the highest rate of return for investment thus boosting shareholder value. Lowering the average value of citizens. So, your premise wouldn't come into play.

My argument is that in general what's best for the company is ultimately best for the employees and vice versa. I don't think a company that constantly fires its employees is going to succeed. Employees cost money to train, and it takes time for an employee to become productive, and even more time for the employee to gain experience. It doesn't make sense to fire the employees that have the most experience in most cases. And it can be argued that happy employees are more productive.

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But what does that eventually achieve? Well, what do we have now? Lots of citizens without the money to purchase goods. Shrinking middle class. In the end the corporation bites its nose to spite its face.

Well, right now we have a bad economy and low demand for goods. Which of course feeds into itself -- low demand means a company hires fewer employees, which means less money for the middle class, which means less demand. Which is why it takes a long time for the economy to recover.

But it would be silly for a company to hire a lot of new employees when demand is low. The company would lose money, which would mean that later down the road it won't be able to hire as many employees, which doesn't help anyone. It can be argued that a leaner company that can withstand the bad economy is far better than a bloated company going bankrupt and resulting in higher unemployment.

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So, that's my point and my question. How long will a society survive that is primarily interested in maximum profits with no long term vision?

Again, I'm not sure I agree with the premise of the question. I don't know of any company that's interested in short-term profits with no long term vision. Do you have an example?

-Bri

[lomiller]

Originally Posted by RandFan

Thanks Bri,

As I noted the video is biased propaganda. I'm more interested in Romney's attitude about suffering as a result of capitalism. The video isn't wrong about companies being closed and Romney profiting from their closing.

But, I'm also very interested in the "facts" from your link.

I think this isn't all that far from what the movie is saying. The emploees are devalued and shareholder value is increased.

Let me ask you a question, is a society that is largely or mostly comprised of corporations that devalues employees and puts shareholder value above all else long term societies?

I'm no fan of Romney, but his work for Bain is not a valid argument against him

Consider this. Would we be able to enjoy our current standard of living if it took half our population simply to grow food? Farm population at one time was over 50% but now it's around 3% or something ridiculousness low with means nearly half of all workers lost their jobs to increased efficiency.

But look at the overall result. Those people are now employed producing other goods and services that make our standard of living much higher then if we had kept farming the same old inefficient way and allowed those people to keep their farm jobs.

At the end of the day jobs lost to increases in efficiency are not the issue, the issue is if you have the education system, infrastructure and sufficiently dynamic labor market for these people to find work making other higher value goods and services.

[angrysoba]

Originally Posted by Brainster

2. Shareholder value is a very useful metric to measure the ability of upper management to maximize profits. Corporations are in business to make money, and those that do not won't be around very long. Maximizing profits involves two key components; increasing revenues and decreasing expenses. If companies are insufficiently diligent about decreasing expenses, they will find themselves less profitable than their competitors. Note that decreasing expenses does not necessarily mean slashing pay; if productivity increases, then salaries can increase and profits will still go up.

I think one of the biggest criticisms of shareholder value making the bottom line the profits of shareholders is that shareholders have short-term interests and don't have the same kind of commitment to the company that most employees do. This means that they can sell their shares at any time and invest in those companies who will put their interests first. Now given that increasing revenue and decreasing expenses are seen as the main characteristics of "shareholder value" how would most shareholders view R&D if the projects they are working on are not likely to come to fruition for a number of years?

Surely by the rules of shareholder value the important thing is to push out popular products that are cheap to make and spend less money thinking of better products which cost more to produce. The long-term goals of the company are less important because they are less important for shareholders.

General Motors is often cited as an example as they spent less time working on cars to compete with Toyota, Honda, Nissan, etc... and more time trying to enter other industries such as finance which they thought would turn a profit quicker.

In fact, General Electric, supposedly the mould-breaker for shareholder value is a company which also ended up being largely a finanical services company (and where most of its revenue was made) whereas its traditional products were sometimes being rushed out at lower quality to increase revenue.

I wonder if some of the current problems at Toyota come about from its move towards shareholder value... certainly the ethos of the company seems to have changed somewhat.

Quote:

3. Societies which have companies which overvalue (i.e., overpay) their workers will not succeed for long. Your example of the Mondragon corporation is interesting, but I note this from the Wikipedia description:



Either the Mondragon is very good at recruiting altruistic management, or they get less-qualified people for those positions. It will be interesting to see how long those types of corporations last; it may be that the value of upper management is indeed exaggerated in the market, and the worker drones are undervalued.

Well, Mondragon has been around since the fifties. It seems to be pretty successful.

[RandFan]

Originally Posted by Bri

I'm probably not the best person to argue with since my views probably don't differ that much from yours on a lot of this.

Understood.

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I think we'd be better off as a society if we provided a better safety net, yes. More importantly, I think that the inability of people to be able to do better than their parents did is a big problem. But I think that has more to do with taxation and politics than with corporations specifically. Corporations play under the rules that are set by politicians.

Agreed. Though I would suggest that healthy unions might be good for workers.

Quote:

My argument is that in general what's best for the company is ultimately best for the employees and vice versa. I don't think a company that constantly fires its employees is going to succeed. Employees cost money to train, and it takes time for an employee to become productive, and even more time for the employee to gain experience. It doesn't make sense to fire the employees that have the most experience in most cases. And it can be argued that happy employees are more productive.

As a former staunch conservative I can understand the sentiment. IMO, money has a way to turn a company from long term vision to short term.

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Well, right now we have a bad economy and low demand for goods. Which of course feeds into itself -- low demand means a company hires fewer employees, which means less money for the middle class, which means less demand. Which is why it takes a long time for the economy to recover.

But it would be silly for a company to hire a lot of new employees when demand is low. The company would lose money, which would mean that later down the road it won't be able to hire as many employees, which doesn't help anyone. It can be argued that a leaner company that can withstand the bad economy is far better than a bloated company going bankrupt and resulting in higher unemployment.

Again, I'm not sure I agree with the premise of the question. I don't know of any company that's interested in short-term profits with no long term vision. Do you have an example?

Regarding an example, I'd offer the banks for one. The meltdown wasn't unforeseen and predicted by a number of economists who put the fault on putting short term greed over long term stability. But companies go bankrupt all of the time because there are no people to buy their products (see the example of Henry Ford).

But I will agree with your earlier point. It's unfair if not naive to expect corporations to give a damn about the welfare of their employees. Which is why we need GOOD regulation. American corporations are actually some of the most over regulated nations in the world. We need to strengthen unions and it would be good to propagate the fact that other nations do much better than us and they have more vacation and get paid more.

[RandFan]

Originally Posted by lomiller

... his work for Bain is not a valid argument against him

Yeah, I said that.

Quote:

Consider this. Would we be able to enjoy our current standard of living if it took half our population simply to grow food? Farm population at one time was over 50% but now it's around 3% or something ridiculousness low with means nearly half of all workers lost their jobs to increased efficiency.

But look at the overall result. Those people are now employed producing other goods and services that make our standard of living much higher then if we had kept farming the same old inefficient way and allowed those people to keep their farm jobs.

I don't deny any of this but I don't think it is particularly significant to the current situation. I don't think we really needed to lose a decade (at minimum) due to shifting socioeconomic conditions. But I'm curious, is any politician currently arguing that we cannot put Americans to work because the job market has shifted?

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At the end of the day jobs lost to increases in efficiency are not the issue, the issue is if you have the education system, infrastructure and sufficiently dynamic labor market for these people to find work making other higher value goods and services.

The education system? Yes, we have a problem with the education system. But I don't find this particularly compelling. Is this the GOP position? Is there a politician or economist that is saying that the current economic downturn cannot be corrected until the education system is corrected and we develop a sufficiently dynamic labor market?

Don't get me wrong, I'm not saying that you don't have a point. I just seriously doubt that many if any economists have written off a generation or two of economics simply because of our education system. BTW: assuming that our workers were more dynamic, what jobs do you suppose they would be doing that they are not doing now?

[Cain]

Re: Suffering

The Market works in mysterious ways.

[Brainster]

Originally Posted by angrysoba

I think one of the biggest criticisms of shareholder value making the bottom line the profits of shareholders is that shareholders have short-term interests and don't have the same kind of commitment to the company that most employees do. This means that they can sell their shares at any time and invest in those companies who will put their interests first. Now given that increasing revenue and decreasing expenses are seen as the main characteristics of "shareholder value" how would most shareholders view R&D if the projects they are working on are not likely to come to fruition for a number of years?

Surely by the rules of shareholder value the important thing is to push out popular products that are cheap to make and spend less money thinking of better products which cost more to produce. The long-term goals of the company are less important because they are less important for shareholders.

General Motors is often cited as an example as they spent less time working on cars to compete with Toyota, Honda, Nissan, etc... and more time trying to enter other industries such as finance which they thought would turn a profit quicker.

And how did that work out for their shareholders? Hmmm? I suspect that most shareholders are in stock with a longer-term horizon than you are giving them credit for.

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In fact, General Electric, supposedly the mould-breaker for shareholder value is a company which also ended up being largely a finanical services company (and where most of its revenue was made) whereas its traditional products were sometimes being rushed out at lower quality to increase revenue.

I wonder if some of the current problems at Toyota come about from its move towards shareholder value... certainly the ethos of the company seems to have changed somewhat.

But there are plenty of companies that have increased shareholder value by providing quality products, and are often able to get premium prices for their brand. Apple is just the latest example.

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Well, Mondragon has been around since the fifties. It seems to be pretty successful.

In corporate terms, that's since yesterday. Kodak was successful for an entire century; where are they now?

[Brainster]

Originally Posted by RandFan

I disagree but let's accept that this as a dogma for the purpose of this discussion.

Why would or should salaries increase? This does not reconcile with your earlier proposition (see above). Anyway, companies can and do pay their employees more than the competition without earning any additional market share. Simply wanting a loyal work force because you have long term vision isn't such a bad strategy and doesn't mean you will be out of business by next quarter.

If you train your employees so that they are more productive, they become harder to replace, ergo more valuable to the company. And yes, maybe there is some value to creating a loyal work force, so you overpay them a little, or provide other benefits.

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Oddly enough there are many societies where citizens are paid more, have less hours and are paid on average more and they have very successful societies with very high rates of well being.

Not sure if I understand that rating completely. Do you really expect equality of education in this country? I know some people who were lucky to graduate high school and others who have doctorates, and for the most part the difference was innate ability. And without equality of education, you're unlikely to achieve equality of income, or life expectancy.

And when I see the USA ranked below Italy and not far above Greece (both of which are economic basket cases or haven't you heard) I do have to wonder about the validity and stability of the ratings.

[RandFan]

Originally Posted by Brainster

If you train your employees so that they are more productive, they become harder to replace, ergo more valuable to the company. And yes, maybe there is some value to creating a loyal work force, so you overpay them a little, or provide other benefits.

I agree.

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Not sure if I understand that rating completely. Do you really expect equality of education in this country? I know some people who were lucky to graduate high school and others who have doctorates, and for the most part the difference was innate ability. And without equality of education, you're unlikely to achieve equality of income, or life expectancy.

I'm not sure of your premise. Are you saying America is inherently incapable of equality in education?

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And when I see the USA ranked below Italy and not far above Greece (both of which are economic basket cases or haven't you heard) I do have to wonder about the validity and stability of the ratings.

Our GDP and Stock market have been in the basement for 10 years. I'm not sure we are a great yard stick for economic comparisons.

In any event, the ratings are scientific based and published in a peer reviewed journal. Not that HDI is above question and criticism.

[angrysoba]

Originally Posted by Brainster

And how did that work out for their shareholders? Hmmm? I suspect that most shareholders are in stock with a longer-term horizon than you are giving them credit for.

I suspect that in the short-term it worked out well for them and in the long-term badly. Presumably those who sold their shares early and played the game better got rich and those who didn't got suckered. But that was my point.

What's good for the shareholders (in the short-term) isn't what's good for General Motors.

[Bri]

Originally Posted by RandFan

Agreed. Though I would suggest that healthy unions might be good for workers.

I don't have a problem with unions, but I've also seen how the teacher unions in my school district have placed the supposed needs of teachers above the needs of students. For example, the unions have made it so that teachers can only be asked to stay after school two days a week for about 30 minutes. When I was a kid, the teachers were there after school every day for at least an hour and would stay as long as you needed. Anyway, I digress. There are likely solutions to problems like these that wouldn't require dismantling unions.

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As a former staunch conservative I can understand the sentiment. IMO, money has a way to turn a company from long term vision to short term.

I'm definitely not a conservative, but I believe in capitalism as long as the ground rules are set in such a way that minimizes abuses of the system that give one company unfair advantage.

Maybe you can explain what you mean by "money has a way to turn a company from long term vision to short term?" Perhaps provide an example. I've heard of cases where someone will set out to build a company up very quickly and make it very successful but unsustainable in the hopes of selling the company to the highest bidder to make a lot of money. But I don't know how successful that strategy would be, because a company has to be sustainable in the long-term at the time of sale or it won't sell.

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Regarding an example, I'd offer the banks for one. The meltdown wasn't unforeseen and predicted by a number of economists who put the fault on putting short term greed over long term stability.

Well, the problem with banks is that they're too big to fail. Which means that they don't take on the risk for practices such as those involved in the meltdown. The rules need to be written so that banks can't take big risks with other people's money.

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But companies go bankrupt all of the time because there are no people to buy their products (see the example of Henry Ford).

Can you give me an example (even a theoretical one) where a company has no people to buy their product because the company was greedy?

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But I will agree with your earlier point. It's unfair if not naive to expect corporations to give a damn about the welfare of their employees.

Well, I wouldn't say that. I think that corporations should give a damn about their employees because giving a damn makes their employees happier and more productive which in turn makes the corporation more successful. I see no reason a corporation can't do both.

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Which is why we need GOOD regulation. American corporations are actually some of the most over regulated nations in the world.

I agree with your overall sentiment, but actually American corporations aren't over regulated according to most sources I've read. Here's an example:

http://www.politifact.com/florida/st...fficult-world/

Sure, in some cases there's red tape where there doesn't need to be. We should remove bad regulations or in some cases replace them with better regulations. The goal of regulations should be to protect workers, to protect consumers, and to protect corporations (i.e. provide rules of the road that don't give one corporation an unfair advantage over competitors).

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We need to strengthen unions and it would be good to propagate the fact that other nations do much better than us and they have more vacation and get paid more.

I agree that we should strengthen unions, but we also need to regulate unions in some way to avoid certain conflicts of interest such as the one I mentioned above that harm our students.

-Bri

[Pardalis]

At least you guys have stopped obsessing over Santorum.

[RandFan]

Originally Posted by Bri

I don't have a problem with unions, but I've also seen how the teacher unions in my school district have placed the supposed needs of teachers above the needs of students. For example, the unions have made it so that teachers can only be asked to stay after school two days a week for about 30 minutes. When I was a kid, the teachers were there after school every day for at least an hour and would stay as long as you needed. Anyway, I digress. There are likely solutions to problems like these that wouldn't require dismantling unions.

I don't deny problems with unions. I grew up hating them. But it doesn't take much to realize that without unions the corporations get pretty much anything they like.

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I'm definitely not a conservative, but I believe in capitalism as long as the ground rules are set in such a way that minimizes abuses of the system that give one company unfair advantage.

Agreed.

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Maybe you can explain what you mean by "money has a way to turn a company from long term vision to short term?"

I gave you one. Systems can only expand so fast. There is only so much efficiency to them. Our recent crisis was because, in all likelihood, the rate of return was not enough. So, instead of focusing on long term stability they traded that for short term profits.

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Well, the problem with banks is that they're too big to fail.

That's but one problem.

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Can you give me an example (even a theoretical one) where a company has no people to buy their product because the company was greedy?

If I said "no people" then it was an exaggeration. The current situation is a perfect example. Fewer and fewer people have discretionary funds to purchase goods and some people (myself for one) can't even pay for food or shelter for not having a job.

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Well, I wouldn't say that. I think that corporations should give a damn about their employees because giving a damn makes their employees happier and more productive which in turn makes the corporation more successful. I see no reason a corporation can't do both.

I'm fine with that.

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I agree with your overall sentiment, but actually American corporations aren't over regulated according to most sources I've read. Here's an example:

http://www.politifact.com/florida/st...fficult-world/

Sure, in some cases there's red tape where there doesn't need to be. We should remove bad regulations or in some cases replace them with better regulations. The goal of regulations should be to protect workers, to protect consumers, and to protect corporations (i.e. provide rules of the road that don't give one corporation an unfair advantage over competitors).

I agree that we should strengthen unions, but we also need to regulate unions in some way to avoid certain conflicts of interest such as the one I mentioned above that harm our students.

Agreed. Thanks.

[leftysergeant]

Originally Posted by Pardalis

At least you guys have stopped obsessing over Santorum.

Wrong thread. We can discuss that slimeball elsewhere.

[Pardalis]

Originally Posted by leftysergeant

Wrong thread. We can discuss that slimeball elsewhere.

They're all slimeballs according to you, aren't they?

The way you talk about them I'm not sure you consider them human.

[RandFan]

Originally Posted by Pardalis

They're all slimeballs according to you, aren't they?

The way you talk about them I'm not sure you consider them human.

Remind you of the OWS thread?

[Bri]

Originally Posted by RandFan

I gave you one. Systems can only expand so fast. There is only so much efficiency to them. Our recent crisis was because, in all likelihood, the rate of return was not enough. So, instead of focusing on long term stability they traded that for short term profits.

I see what you're saying. I think maybe your observations may be limited to banks rather than corporations in general. Few companies that actually make things or provide services have a conflict between short-term and long-term goals. The current crisis was because of banks that were too big to fail that could gamble with other people's money without assuming the risk. It was also caused by conflicts of interest between the banks and the rating agencies. I think there should have been some regulations to prevent that.

Quote:

If I said "no people" then it was an exaggeration. The current situation is a perfect example. Fewer and fewer people have discretionary funds to purchase goods and some people (myself for one) can't even pay for food or shelter for not having a job.

The ironic thing is that the banks that were responsible for the current situation aren't the ones that are currently hurting from lack of demand. It's the companies that actually make things (the ones that tend to hire regular people) that are hurting, and the result is high unemployment for the middle class. I don't think the greedy banks that caused the financial meltdown caused themselves any long term problems for their bad behavior.

-Bri

[leftysergeant]

[quote=Pardalis;7934886]They're all slimeballs according to you, aren't they?I am hard put to think of a republicon who has not sold his nads to Grover for campaign funding. That this is not considered a crime is a short-coming of the law. I have no reason on earth to show the least respect for any idiot who has signed Grover's anti-tax pledge. They are supposed to work for us, not for some self-important little schmedrick whom nobody elected.

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The way you talk about them I'm not sure you consider them human.

Only taxanomicly, but that is enough to make it illegal to call the Orkin man on them.

So,Mittens the Vulture thinks that some suffering is acceptable to make an ecconomy grow...

Great. Give a generous heaping portion of it to the fools who got us into this depression after taking massive tax cuts under false premises. They were supposed to be creating jobs and prosperity for all of us.

Mostly they shoved it up their noses and pissed it away in the casino on Wall Street. Let them pay for the clean up.

[RandFan]

Originally Posted by Bri

I see what you're saying. I think maybe your observations may be limited to banks rather than corporations in general. Few companies that actually make things or provide services have a conflict between short-term and long-term goals.

We can agree to disagree. A few points however. First, we are talking about business in general and not just corporations. One thing we need to acknowledge is that business is not monolithic. There has always been a continuum between companies with short term vision and those with long term vision. IMO: Given Wallmart and other superstores I really don't think it's a controversial statement to say that the ratio of companies with short term version to long term has shifted to the not so good as of late.

Quote:

The current crisis was because of banks that were too big to fail that could gamble with other people's money without assuming the risk. It was also caused by conflicts of interest between the banks and the rating agencies. I think there should have been some regulations to prevent that.

I agree but here we are going in circles. We've gone over this already. This makes my argument IMO.

Quote:

The ironic thing is that the banks that were responsible for the current situation aren't the ones that are currently hurting from lack of demand. It's the companies that actually make things (the ones that tend to hire regular people) that are hurting, and the result is high unemployment for the middle class. I don't think the greedy banks that caused the financial meltdown caused themselves any long term problems for their bad behavior.

High unemployment is IMO evidence that companies are less likely to accept Ford's proposition.

[WildCat]

Originally Posted by RandFan

Henry Ford reasoned that a society with poor citizens wouldn't ultimately help his bottom line. Ford grew up during a time when industrialists looked beyond next quarters bottom line. They had long term vision wishing to earn profits in the short term but investing in the overall company and industry in the long term. Not that these people were bleeding hearts. Hardly. They simply saw things long term.

I wouldn't use Henry Ford as a shining example of long-term management strategy, by the time he died Ford was a financial mess, bleeding cash, and on the verge of bankruptcy.

[WildCat]

Originally Posted by RandFan

In any event, the ratings are scientific based and published in a peer reviewed journal. Not that HDI is above question and criticism.

It's completely subjective. The measurements may be scientific, but deciding what is to be measured is 100% subjective.

[RandFan]

Originally Posted by WildCat

I wouldn't use Henry Ford as a shining example of long-term management strategy, by the time he died Ford was a financial mess, bleeding cash, and on the verge of bankruptcy.

1. Non sequitur. One can have a long term vision and fail (long term vision is no guarantee of success).
2. Ford, oddly enough, has been one of the most influential corporations in American history.

[RandFan]

Originally Posted by WildCat

It's completely subjective. The measurements may be scientific, but deciding what is to be measured is 100% subjective.

You don't like well being?

Look, you have a point but it's rather silly. It's hardly controversial to state that most people want increased well being and decreased suffering. If YOU think society would be better with increased suffering and decreased well being for the most people then yeah, HDI is worthless. If you think Somalia is subjectively as good as America then yeah, HDI is pointless.

[Brainster]

Originally Posted by RandFan

I agree.

I'm not sure of your premise. Are you saying America is inherently incapable of equality in education?

Americans are inherently incapable of equality in education. My best friend in the whole world barely got a high school diploma; he would have been hopelessly lost in college.

[WildCat]

Originally Posted by RandFan

1. Non sequitur. One can have a long term vision and fail (long term vision is no guarantee of success).
2. Ford, oddly enough, has been one of the most influential corporations in American history.

Ford was failing in the 1940s precisely because they didn't have a long-term vision.

Ever read The Reckoning?

[leftysergeant]

Originally Posted by Brainster

Americans are inherently incapable of equality in education. My best friend in the whole world barely got a high school diploma; he would have been hopelessly lost in college.

That he lacked the ability to advance is no excuse for the opportunity not to be offered.

[WildCat]

Originally Posted by RandFan

You don't like well being?

Look, you have a point but it's rather silly. It's hardly controversial to state that most people want increased well being and decreased suffering. If YOU think society would be better with increased suffering and decreased well being for the most people then yeah, HDI is worthless. If you think Somalia is subjectively as good as America then yeah, HDI is pointless.

None of this refutes my point. You think you can come up with a definition of "well-being" that isn't subjective?

[Chaos]

Originally Posted by Bri

I see what you're saying. I think maybe your observations may be limited to banks rather than corporations in general. Few companies that actually make things or provide services have a conflict between short-term and long-term goals. The current crisis was because of banks that were too big to fail that could gamble with other people's money without assuming the risk. It was also caused by conflicts of interest between the banks and the rating agencies. I think there should have been some regulations to prevent that.

(bolding mine)

Sure they do.

If the management has contracts in which their pay is determined by current performance, they have an incentive to maximize performance during their contract, at the expense of performance after they leave. The same happens if management maximizes short-term "shareholder value" at the expense of a company´s long-term well-being.

As a rule of thumb, if management sees employees as a cost factor rather than as a vital part of the production process, if they look at an older experienced employee and see "high cost" instead of "valuable experience", there´s entirely avoidable trouble ahead for the company.

[Bri]

Originally Posted by RandFan

We can agree to disagree. A few points however. First, we are talking about business in general and not just corporations. One thing we need to acknowledge is that business is not monolithic. There has always been a continuum between companies with short term vision and those with long term vision. IMO: Given Wallmart and other superstores I really don't think it's a controversial statement to say that the ratio of companies with short term version to long term has shifted to the not so good as of late.

I don't personally know of any company (other than maybe banks) that purposely eschew a long-term vision for short-term gain. And it's questionable whether banks suffered long-term from their short-term gains.

Quote:

I agree but here we are going in circles. We've gone over this already. This makes my argument IMO.

As I said, your point may hold some water as far as financial companies are concerned. I don't think it holds for other companies though. And I don't see many financial companies that were harmed in the long-term by their actions.

Quote:

High unemployment is IMO evidence that companies are less likely to accept Ford's proposition.

Except that the unemployment isn't really the result of short-sightedness by the companies that are currently being affected by a lack of demand. It was caused by the short-sightedness of the financial sector, which isn't really suffering from its actions.

-Bri

[Corsair 115]

Originally Posted by Bri

I don't have a problem with unions, but I've also seen how the teacher unions in my school district have placed the supposed needs of teachers above the needs of students.

Well, strictly speaking, the union is just doing what a union is supposed to do: protecting and advancing the interests of its members. The students are not members of the teachers' union.

Originally Posted by Bri

For example, the unions have made it so that teachers can only be asked to stay after school two days a week for about 30 minutes. When I was a kid, the teachers were there after school every day for at least an hour and would stay as long as you needed.

Another way of interpreting it is to say that when you were a kid teachers were putting in a lot of unpaid work hours. Which perhaps is the intent of the new rules: to cut down or otherwise limit unpaid work. Of course, that raises the larger question of what exactly constitutes the work hours a teacher should be paid for, and whether they should be expected or required to provide work outside of those established paid work hours.

[Bri]

Originally Posted by Corsair 115

Well, strictly speaking, the union is just doing what a union is supposed to do: protecting and advancing the interests of its members. The students are not members of the teachers' union.

There shouldn't be a conflict between doing what's best for teachers and what's best for students. In what way does it help teachers to hinder them from doing their jobs to the best of their abilities? It would seem as though unions should be working with school districts to figure out how to enable teachers to best do their jobs and get compensated accordingly, rather than harming students.

If I recall correctly, in one school district the majority of teachers were in favor of pay in proportion to performance but unions wouldn't even allow it to come to a vote. Another school district ended up having to fire all of its teachers and start from scratch in order to get around the unions.

In our school district, we used to be on a "block" schedule, and it was very beneficial to the students. Because of a technicality in the teacher contract having to do with providing teachers a certain amount of out-of-class time each day to work on grading, the block schedule violated the teacher contract. Rather than working it out with the district, the teacher union forced the district to change to a schedule that few teachers or students wanted.

Again, unions aren't all bad, but when they prohibit teachers from doing their jobs to the best of their ability, they're not working in the best interests of the teachers they represent.

Quote:

Another way of interpreting it is to say that when you were a kid teachers were putting in a lot of unpaid work hours. Which perhaps is the intent of the new rules: to cut down or otherwise limit unpaid work. Of course, that raises the larger question of what exactly constitutes the work hours a teacher should be paid for, and whether they should be expected or required to provide work outside of those established paid work hours.

Most teachers are salaried, and most salaried workers work about 8 hours a day. But most salaried workers also don't get the summers off. Anyway...I think that unions should fight for fair wages for teachers for whatever hours they work. But unions shouldn't be fighting for teachers to work fewer hours than is necessary to adequately do their jobs.

-Bri