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What happened?

godwarrior

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Here are some definitions to make you think:Definition of CAPITALISM
: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

Definition of OLIGARCHY
: a government in which a small group exercises control especially for corrupt and selfish purposes


Well, if your business fails you get bailed out. Why compete when you can work together to cut all your employee benefits and report record profits. All you need to do in America to succeed is buy yourself a senator, and why not they are clearly for sale in our United Oligarchy of America!
 

X Factor

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Unfortunately that's what happens when the government starts to over regulate and involve itself in business. It feels it has "skin in the game".
 

Fisher

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What happened was that powers that be recognized the growing Marxist/socialist tendencies spreading amongst the workers in the late 1800's probably would not have a happy ending for them. They decided to do what the rich always have done--bought them out, co-oped their movement, and held them at bay with crumbs and have been doing so ever since.
 

lizzie

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Unfortunately that's what happens when the government starts to over regulate and involve itself in business. It feels it has "skin in the game".

It does, but it's your skin, and my skin, that they are putting in the game. :(
 

YoungConserv

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What has happened is we have allowed our politicians too much power. Money follows power and this has allowed buisness to buy power in the form of political favors. This takes shape in crony capitalism which is best shown in bail outs and government grants but goes so much deeper. Crony capitatalism uses regulations that are sold as for the public good to create barriers to entry that give companies defacto monopolies, this especially evident in the insurance and energy industry's.
 

ashurbanipal

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YoungConserv said:
What has happened is we have allowed our politicians too much power. Money follows power and this has allowed buisness to buy power in the form of political favors. This takes shape in crony capitalism which is best shown in bail outs and government grants but goes so much deeper. Crony capitatalism uses regulations that are sold as for the public good to create barriers to entry that give companies defacto monopolies, this especially evident in the insurance and energy industry's.

I suspect this is not correct. It seems fairly difficult to square this analysis with the facts of history during the so-called "gilded age." Business was relatively unregulated in the U.S. during that time, and abuses were both rampant and harmful. The average citizen was screwed royally, and government kept its hands off.
 

YoungConserv

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I suspect this is not correct. It seems fairly difficult to square this analysis with the facts of history during the so-called "gilded age." Business was relatively unregulated in the U.S. during that time, and abuses were both rampant and harmful. The average citizen was screwed royally, and government kept its hands off.

That's debatable as there was massive political corruption during that time. And even if that was true a lot of that was do to a uniformed populace I have a hard time beliving those abuses could happen again with the Internet. Also there's no reason we both can't be right there's enough blame to go around.
 

ashurbanipal

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YoungConserv said:
That's debatable as there was massive political corruption during that time. And even if that was true a lot of that was do to a uniformed populace I have a hard time beliving those abuses could happen again with the Internet. Also there's no reason we both can't be right there's enough blame to go around.

I tend to agree a little more with this, though most of the corruption was just to keep government out of the business of business. Regulations came about, historically, because businesses were doing so much harm that it just wasn't sustainable. But I think it's surely not impossible to neutralize the harm that powerful organizations (whether business or government) inflict on common people.
 

YoungConserv

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I tend to agree a little more with this, though most of the corruption was just to keep government out of the business of business. Regulations came about, historically, because businesses were doing so much harm that it just wasn't sustainable. But I think it's surely not impossible to neutralize the harm that powerful organizations (whether business or government) inflict on common people.
That may have been the case back then but now these regulations prevent new companies from entering new markets.
 

ashurbanipal

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YoungConserv said:
That may have been the case back then but now these regulations prevent new companies from entering new markets.

What do you think we ought to do about this situation?
 

YoungConserv

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What do you think we ought to do about this situation?

I think you de regulate and allow competition but turn the regulatory agencies into a observers that hit them when they try and abuse the people.
 

imagep

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Unfortunately that's what happens when the government starts to over regulate and involve itself in business. It feels it has "skin in the game".

It's my belief that under-regulation and mal-regulation was 90% of the cause of the economic meltdown, not over-regulation. The economic meltdown created the need for the bailouts. If we had proper regulations, then we wouldn't have needed the bailouts, and the bailouts wouldn't have occured.

As far as the GM bailout, they had incompetent leadership (mostly the CEO) and continued to reward this incompetence with huge pay raises and bonuses. That was a failure of the private sector to self regulate. Lot's of people were screaming fowl when Obama asked the CEO to resign, and it is a darn shame that the private sector allowed such incompetence in one of our largest and most important companies (the entire sector actually), but there was a national economic necessity for the guberment to step in and correct the private sector failure. The CEO should have been fired by the board a decade earlier, but crony capitalism (where the board kept rewarding their buddy for failure, instead of watching out for their shareholders) got in the way of making good business decisions.
 

ashurbanipal

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YoungConserv said:
I think you de regulate and allow competition but turn the regulatory agencies into a observers that hit them when they try and abuse the people.

This is something to which I could provisionally agree, though I think we have to be very careful about what amounts to abuse. Tell you what...here's a true story about how I used to do business before I woke up and decided to get back into academia:

Whenever a competitor would come into one of my markets (I was the VP of purchasing for a specialty grocery chain. We didn't compete with places like Homeland, Reasors, Safeway, or etc since those places tended not to carry specialty items, so our competitors were invariably smaller operations), I would call up my suppliers and tell them they could forget business from me if they supplied the competition. Since I purchased in fairly high volume from more or less all the suppliers in the industry, this was a no-brainer for them. So these competitors would usually spend half a mil or so on buildout before they realized they weren't going to be able to get any inventory. I put maybe ten or so people out of business that way before they ever got started.

How would you handle that? There's no law that says one person can't influence another to not enter into an agreement. I was just exercising my right to do so and keep my suppliers from entering a contract with my would-be competitors. And believe me when I say, I got away (figuratively speaking) with murder. When I started at the company, the average wage was $10 an hour for store employees. By the time I was done, 13 years later, it was $7.85. I had various ways of driving down wages. My shareholders were very happy (to be fair, this wasn't all me by a long shot, but I helped). I was able to offer less to my employees because I was good at limiting their other options. I gouged my customers with insane markups (I had margins--margins, not markups--that were nearly 300% on some items).

The point of this story is that business doesn't want competition either. It's in the interest of established businesses to keep competition out of the market, to pay labor as low a wage as possible, and to charge people as high as possible. Short-term gains have become the name of the game, and this has very deleterious consequences. How are you going to handle these?
 
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YoungConserv

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This is something to which I could provisionally agree, though I think we have to be very careful about what amounts to abuse. Tell you what...here's a true story about how I used to do business before I woke up and decided to get back into academia:

Whenever a competitor would come into one of my markets (I was the VP of purchasing for a specialty grocery chain. We didn't compete with places like Homeland, Reasors, Safeway, or etc since those places tended not to carry specialty items, so our competitors were invariably smaller operations), I would call up my suppliers and tell them they could forget business from me if they supplied the competition. Since I purchased in fairly high volume from more or less all the suppliers in the industry, this was a no-brainer for them. So these competitors would usually spend half a mil or so on buildout before they realized they weren't going to be able to get any inventory. I put maybe ten or so people out of business that way before they ever got started.

How would you handle that? There's no law that says one person can't influence another to not enter into an agreement. I was just exercising my right to do so and keep my suppliers from entering a contract with my would-be competitors. And believe me when I say, I got away (figuratively speaking) with murder. When I started at the company, the average wage was $10 an hour for store employees. By the time I was done, 13 years later, it was $7.85. I had various ways of driving down wages. My shareholders were very happy (to be fair, this wasn't all me by a long shot, but I helped). I was able to offer less to my employees because I was good at limiting their other options. I gouged my customers with insane markups (I had margins--margins, not markups--that were nearly 300% on some items).

The point of this story is that business doesn't want competition either. It's in the interest of established businesses to keep competition out of the market, to pay labor as low a wage as possible, and to charge people as high as possible. Short-term gains have become the name of the game, and this has very deleterious consequences. How are you going to handle these?
That's competition it's sleazy but not illegal the only way to adress this is transparency and giving the people more information so they can make choice on things other than price.
 

ashurbanipal

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YoungConserv said:
That's competition it's sleazy but not illegal the only way to adress this is transparency and giving the people more information so they can make choice on things other than price.

Well, wouldn't that be a kind of regulation, though? For my customers to know whether I'd done stuff like that or not, I'd have to be required to publish it somehow. How would you keep me from simply lying? It seems there'd have to be a regulatory agency somewhere who had the power to audit for such things.

Anyway, you can see where this is going. I agree that mindless regulation is bad. But I suspect we need to think through some basic issues more carefully now that we've got some data to hand. For one thing, I think that all too often we create a kind of idol of competition without understanding how we got to that shrine in the first place. The original point made by the founder of capitalism as a system, Adam Smith, was that competition was good because, if handled correctly, it was the fastest and best way to ensure prosperity for the most people. But prosperity is the goal, and competition merely the means. The problem is that unbridled competition does not lead to prosperity, which is something that Smith himself foresaw. And when it doesn't, it's not wise to think of competition as good in itself. I suspect a fair few people commit just that error (I myself did so for a long time. I actually thought that the stuff I was doing was good. I was basically Gordon Gecko but I did business in the Midwest rather than on Wall Street). Competition can be a powerful engine, but it has to be run appropriately or it wrecks the ship just as surely as do purely cooperative models of economics.
 

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Term limits and campaign finance reform.

If you are against these, then the problem will only grow worse. So grow a pair and start demandin'.
 

beerftw

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Here are some definitions to make you think:Definition of CAPITALISM
: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

Definition of OLIGARCHY
: a government in which a small group exercises control especially for corrupt and selfish purposes


Well, if your business fails you get bailed out. Why compete when you can work together to cut all your employee benefits and report record profits. All you need to do in America to succeed is buy yourself a senator, and why not they are clearly for sale in our United Oligarchy of America!

what your describing isnt capitalism,but rather protectionism,practiced under mercantilism going back centuries,its the same policies that not only created robber barons but protected them.under a free market capitalism,regulations only exist to ensure consumer protection and free trade and competition,under protectionism,certain players are protected under the belief that the economy cant thrive without competition,therefore leading to an uncompetitive market,also protectionism can simply be the result of govt corruption,rather than any economic belief.

protectionism is anti capitalist,under its extreme forms leads to corporate monopoly capitalism(also opposite of free market)which further leads to fascism,in which political agenda and corporate infuence intertwine perfectly into the ultimate oppressive economy.state capitalism is very similiar to fascism,but at the same time its not,best examples of state capitalism are the former soviet union,cuba,etc.
 
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