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Originally posted by mybigunit
The fact is in 1980 the average fortune 500 exec made 60x their average employee and now they make almost 600x their average employee. How did we allow this to be?
The Wealth of Nations
Nations is often mischaracterized and politicized.
Left-wing writers have characterized it as advocating the status quo, yet the work clearly discusses what Smith sees as the inefficiency, and inappropriateness of tariffs, apprenticeships, immigration control and cartels - arrangements favourable to special interest groups.
Right-wing politicians have often used a sleight of hand - erroneously equating "pro-business" with advocacy of free markets, thus using/abusing the Wealth of Nations to support their own protectionist objectives.
Originally posted by Merriman Weir
Because you haven't really got any mechanism in place to prevent it but rather you have mechanisms to encourage it.
Because Americans, specifically, are sold the idea of the 'American Dream': that you could be one of the Fortune 500 executives if you just work hard enough. So you allow it to happen because one day, fingers crossed, you could be the guy earning 600 x more rather than 600 x less. That's not "executive greed" though, that's average guy on the street greed allowing it to happen.
However, I can't blame the average guy in the street for this because America been told for decades that anything other than the 'American Dream' is unAmerican, so don't even toy with the idea of changing it, just get a 3rd or 4th job and pray you never get a serious illness.
[edit on 26-10-2008 by Merriman Weir]
Originally posted by mybigunit
I dont agree that if you work hard enough that you will be a fortune 500 exec. I think it is a combination of work, luck, and connections.
But the one equation that isnt being considered in lets say the Austrian School theories is greed. Greed ruins the theory. Greed is why the trickle down theory on paper sounds great but in reality does not work.
Originally posted by mythatsabigprobe
I think you're seeing the flaw in the capitalist model. There are only so many individuals that can rise to the top of a pyramid. It always ends with a disproportionate amount of wealth at the top and the gap between rich and poor gets larger and larger, hence less opportunities to practice capitalism. In effect, it kills itself. It also always ends in revolt.
****No one should earn more than 50* their worst paid employee****
I also feel that regulation is counter productive in a growing economy.
But I ask a question when does drive turn to greed.
I feel to sustain a productive economy there has to be a strong working class and it seems over the past 30 years we have seen the middle class shrink and shrink.
Well, I think if there is any greed by executives in how they run the corporation they are usually reprimanded by the stockholders.
I feel there are two reasons for this. A. Executive Greed. The executives start focusing on how they can make us much money as they can in a short amount of time with as little work as possible.
Well, the stock market exists because investors who initially received a prospectus from some business owner needed to have a secondary market to sell the ownership claim to others. Think of it this way, say some guy came to you who ran a pretty good software company or a discount department store he told you of his plan to expand and showed you his product. You feeling confident give him your money or you invest in his company. This is what underwriters do. Then you wait...and see what this guy does with his software company or the discount department store owner do with the new capital you have provided. They then sometimes price these instruments or stocks through initial public offering. Sometimes the public or people in the Stock Market reward those companies that issue the stock with equaling the price or more so for the money they gave to the software or discount department stores. Here the underwriters make a little money between the difference of the money they issued to Microsoft or Walmart and the INITIAL PUBLIC OFFERING...sometime more...depending on what the market says. Mind you this doesn't mean that ALWAYS underwriters get their money back....sometimes they lose. Sometimes nobody wants to buy these stocks, hence they are left holding the bag, between the money they gave to microsoft and walmart and the money they thought they were going to make.
The stock market. The stock market has robbed the working class because instead of companies putting this money back into their companies via raises for employees and technology it is being given to the investors.
Employers cut pay because they have wrongly over-estimated demand. This is because of false market signals given to them by the FED. When the Fed artificially lowers the rate of interest, entrepreneur's ROI is decreased (return on investment) in other words the entrepreneur who normally would have not invested in buying or producing a certain activity, mistakenly takes it thinking that it will be a profitable venture. He therefore hires and uses capital and equipment because he think he will receive a decent return. When the interest rates are manipulated back up by the FED, this venture no longer profitable since the older rate of return and the new interest rate is no longer yielding the return that he was expecting.
Employers cut pay and other expenses to show a "strong bottom line"
So if there is to be no regulation how do you stop the greed and the real socialism of the country and that is the siphoning of wealth from the production of the working class via forms like taxation and the stock market and then greed from the execs from paying less to employees so they can get paid more.
Yes, we are all inter linked. Some more so than other though, unfortunately. Like those that seek political and economic favors from our representatives. It is a shame that our representatives do not see the long run picture on how they harm us all.
The reason why I bring this up is because I feel there is a bigger picture of why we are where we are in both the economy and in society in general. I feel it is all linked.
Yep, that's what the politicians working with those that hate capitalism are trying to do. Capitalism contrary to what most people think is a difficult system to live in if you are a producer. Think of it...having to please people constantly who have change and preferences that alter as often as the wind blows. It is much easier to stifle these pesky desires by limiting people's choices through the use of government coercion, it keeps those at the top ON top. Again this has nothing to do with capitalism. Both of the parties, Democrats and Republicans practice this system. When Republicans are in office it is the Oil industry, the banking industry, the Energy industry that get the political favors....then when you have the Democrats, you have the Bio-fuel industry, Banking Industry (as well), Medical Industry, trade unions, the list is endless. People in both parties want to maintain a MERCANTILISM or CORPORATISIST system where they prop-up their pet industry, and they DESPISE capitalism.
We now live in a society of its about me me me and not in a society where take what I can when I can and F*** everyone else.
You sound like an Austrian. We hate ALL forms of subsidies, preferences, tariff, and limits to people's choices which otherwise would only enrich those few at the top. We despise, WTO, IMF, World Bank, Nafta, because they do not help anyone, they have to do with managing trade, they also support or subsidize regimes that bankrupt and starve their own people. These are not free market tools used to help everyone, they are designed to help a few at the expense of the many. No you don't sound like a socialist, you want to rightly blame those that have caused this mess. And you are right to blame the government as the culprit of this entire fiasco, I also can guarantee that since they are the culprits, that they will only succeed to make things worse. These institutions that they created that I mentioned above were created by people who did not believe in Markets to price things properly in the first place, they believed that they are elevated above markets that they are smarter, people like Keynes, Friedman, Bernanke, Greenspan, Bush, Republicans, Democrats, all proclaim to be smarter than the MARKET, they think they know better, but ultimately will lead us all into the abyss with their stupid policies of interventionism.
Am I a socialist? Im not advocating wealth redistribution from rich to poor but I also do like seeing the redistribution from poor to rich off the backs off hard working people. Sigh someone help me out please. Help me to label myself.
Mises and the Challenge of Calculation
That new man would be devoid of any selfish, or indeed any self-determined, goals; his only wish would be to work as hard and as eagerly as possible to achieve the goals and obey the orders of the socialist State. Throughout the history of socialism, socialist ultras, such as the early Lenin and Bukharin under "War Communism," and later Mao Tse-tung and Che Guevara, have sought to replace material by so-called "moral" incentives.
This notion was properly and wittily ridiculed by Alexander Gray as "the idea that the world may find its driving force in a Birthday Honours List (giving to the King, if necessary, 165 birthdays a year)."[2] At any rate, the socialists soon found that voluntary methods could hardly yield them the New Socialist Man. But even the most determined and bloodthirsty methods could not avail to create this robotic New Socialist Man. And it is a testament to the spirit of freedom that cannot be extinguished in the human breast that the socialists continued to fail dismally, despite decades of systemic terror. But the uniqueness and the crucial importance of Mises's challenge to socialism is that it was totally unrelated to the well-known incentive problem. Mises in effect said: All right, suppose that the socialists have been able to create a mighty army of citizens all eager to do the bidding of their masters, the socialist planners. What exactly would those planners tell this army to do? How would they know what products to order their eager slaves to produce, at what stage of production, how much of the product at each stage, what techniques or raw materials to use in that production and how much of each, and where specifically to locate all this production? How would they know their costs, or what process of production is or is not efficient?
Mises demonstrated that, in any economy more complex than the Crusoe or primitive family level, the socialist planning board would simply not know what to do, or how to answer any of these vital questions. Developing the momentous concept of calculation, Mises pointed out that the planning board could not answer these questions because socialism would lack the indispensable tool that private entrepreneurs use to appraise and calculate: the existence of a market in the means of production, a market that brings about money prices based on genuine profit-seeking exchanges by private owners of these means of production. Since the very essence of socialism is collective ownership of the means of production, the planning board would not be able to plan, or to make any sort of rational economic decisions. Its decisions would necessarily be completely arbitrary and chaotic, and therefore the existence of a socialist planned economy is literally "impossible" (to use a term long ridiculed by Mises's critics).
Originally posted by Gateway
Well, I think if there is any greed by executives in how they run the corporation they are usually reprimanded by the stockholders.