[b said:
Quote[/b] ]How is someone supposed to start up a new company to compete with Chevron?
Well, I suppose some
one isn't, but some entity is. There is no shortage of wealthy people and companies with a lot of usable capital. If a company is too large for any private person to compete with that does not preclude another large company from competing. I can guarantee that if Chevron starts using a 750% markup on a product they have a monopoly over, another company
will expend the capital necessary to get into the industry and charge a 700% markup, thus seducing many Chevron customers with their low prices and still earning a sizable profit. This will, invariably, begin a price war that will drive prices to the lowest level possible while cover operating costs and modest growth.
The only time it is not so simple is when the barriers to entry go beyond financial. An example of this would be laying all new telecom wires or trying to write a new OS (
OS/2 Warp anyone?). However, our current regulations do not focus exclusively on these situations.
[b said:
Quote[/b] ]In many cases, the pay of just the CEO won't result in much of a price increase, so to meaningfully reduce prices to compete, you'd have to shrink the entire pay structure of management. Try recruiting good talent that way. There is a self-imposed entrenched management culture in American business.
That may be so, but I take exception to your comment about recruiting good talent on several levels:
First, the salary for upper management must come from somewhere. In your example it is coming from inflated pricing on the companies products which increases it above the competition's pricing. If this company is still able to survive and, further, force the competition to increase their prices then that indicates that the upper management is providing greater value to the company than that same decrease in product price would. In other words: they are worth it.
In a free market a company will survive and flourish only if they are able to provide the best service to consumers for the best price. If a competitor could pay management less and the decrease in price would be worth more to consumers than the resultant decrease in quality, then I guarantee a competitor would do so. Similarly, if a competitor could maintain product quality by shifting that extra pay to the lower level workers instead of management and use that higher quality to outsell the company, then I again guarantee that they would. Thus managers will receive higher pay because they are worth that higher pay to the company, or they will not receive higher pay at all.
You said this yourself better than I did by saying that an employee's pay should be tied to the value they provide to the company. A free market insures that they are providing that value at all times. You seem to have taken it as an axiom that management is not worth this wage while that hasn't been shown at all.
[b said:
Quote[/b] ]History is rife with vivid examples of what happens when there are no worker protections.
I would like to discuss specific examples if possible. Could you list some examples that you feel existed because of a free market system and were alleviated by regulation?
[b said:
Quote[/b] ]Sure, slave labor would result in lower prices, and therefore a competitive advantage for that company.
But only if the products could be produced at the same quality as higher paid employees. My company could fire me and use my wage to hire twenty unskilled uneducated 'slave labor' workers to build their web applications instead. However, those workers simply would not be able to build the same quality product that I could. You are forgetting that the job market is also working on a free market principle. My pay is as high as it is because if it were not other companies would offer me a huge raise to work for them instead. If a company wants to maintain high quality in a high tech industry it must maintain fair wages.
Now, assume my job was of the nature that my company could replace me with two minimum wage workers and get the same quality. In this case I think we would both agree that there is no problem with this as I was not providing much value to the company; I was more overpaid than the CEOs you referred to above. This provides an incentive for me to continually improve my skills and to work my skillset towards higher tech, and higher value, areas. This is good for the economy.
[b said:
Quote[/b] ]Besides, in today's entrenched corporate culture, the executive level flits around from job to job, so the CEO and his team now aren't necessarily going to be there in two years. So they tend to think in terms of next quarter's results. And the temptation is always there to cut costs - almost always at the low end.
But again we come back to the concept of value. Not every company does this. So if executives are truly thinking and acting only short term then their competitors would produce a competitive product with a lower price to put them out of business. However, short term employment does not imply lack of value. I've done a lot of contract work, sometimes being with a company for as little as three or six months, but I can assure you that the work I did when I was there was of great value to the company and is probably still being used by most.
I would also point out that the big fad in the past decade has been for companies to 'clean house' at the higher end. Almost everywhere I've worked has gone through a series of cuts to decrease unneeded management so they can streamline their workflow and make their prices more competitive. This is the free market at work.
[b said:
Quote[/b] ]People don't think in terms of the good of the community when they just need a trash can. They don't look where it's made, what the conditions are, how the workers are treated. It's just not practical to fully absorb the big picture with every purchase ou make.
I disagree with the last statement. I will not buy any product from Sony, which covers a wide range of products while only needing to have researched and remembered a single company. However, I will agree that most consumers
won't absorb the big picture with every purchase.
But let's talk about that trash can. What labor was required to create that? How much value was the random worker who touched that adding to the company and adding to the community? We already agreed that employees should be paid based on the value they add. If a trashcan can be produced by a minimum wage teenager, who has no training but desperately wants money to buy the new Evanescence CD, why should we be concentrating on taking that job away from them? Why should we inflate the cost of trash cans, in essence taxing the public, to support the worker in that position? What we should instead do is encourage that worker to aspire toward a job that will provide greater value and wealth to the community and their employer. A free market does this by nature.
I understand that not every low-paying job is held by a pimply teenager. However, those positions need to be there for those teenagers to gain experience and training. If experienced adults are stuck there by choice it is not our place to help them get something they did not earn. This is a choice they have made and it is their right to make that choice. While there will be a small percentage of workers who are stuck in that position by circumstance and who cannot get out, they need to be specifically targeted for help which can be done most effectively with a private charity. Government legislation will target the larger subgroup and waste a large portion of available capital on those who do not need, or do not deserve, the help while simultaneously having negative effects on the economy as a whole.
[b said:
Quote[/b] ]stop monopolies (something the Libertarian party simply doesn't have an answer for that satisfies me)
I think the burden of proof is on me on this one. Give me some time to gather some examples and details and compose a proper response. I'll get back to you soon.
[b said:
Quote[/b] ]and to keep the relentless push for efficiency and profit from harming our communities.
Could you specify exactly what harm you are referring to? As I discuss below, I think the free market does just the opposite.
[b said:
Quote[/b] ]If you make a poll and ask people whether they want their community businesses to be replaced by giant chain stores by the highway, they'd say no. But when they need a new snowblower, they can save $50 by going to Wal Mart, so they do it.
If I may, I would like to try a different analogy: If you ask me if I would want to drive around in a new Ferrari instead of my Firehawk, I'll say "yes!" in an instant. But when it comes time to buy a new car, I won't pick up a Ferrari if I have to pay $300,000 for it. A new variable, the cost, was not there in the poll's hypothetical question.
In your example above you are asking them initially if they would prefer smaller shops. However, you're not taking into account any cost involved. That is why those same people that answer "yes" to you will go to Wal-Mart. It's because to many people having Ma-and-Pa shops instead of chain stores is not worth a few hundred, or a few thousand, dollars per year. Again, please don't mistake my objectivism for my opinion: I frequent small businesses as often as I can; I think there is a place for both small and large businesses. But the place of the government is to consider what the populace wants; not what I want.
If you design a poll that asks people (and gets serious responses) if they would want their community businesses to be replaced by giant chain stores by the highway if it meant they could save $250 per month, I think you would see the results match relatively closely to the number of people who shop at Wal-Mart for their new snowblower rather than Ted's Hardware down the street. Once the populace is placed back into a mindset that the proper way to do things is through voting with their buying dollar instead of through legislation, I think you will see that results of the poll match reality almost perfectly.
[b said:
Quote[/b] ]We get together in societies to take advantage of what cooperation and group efforts can accomplish. Why would voluntarily set up the economic rules in ways that crush small buisnesses (and therefore entrepreneurship)? Why would we set up the business rules in ways that hurt towns and cities?
But where is a free market shown to do this? As I mentioned above I think legislation causes more harm than a free market. The idea of most regulation is to 'equalize' the playing field, or treat physical land or government funds like a 'common'. This results in what is called
Tragedy_of_the_commons. When you allow free access to a finite resource you have a psychological phenomena occur where everyone takes as much as they can with the rationalization that everyone else will do the same so they better get what they can now; if everyone else does not, then their over-taxation of the resource will be so miniscule that it will not make a difference. However, with everyone taking as much as they can the common resource is quickly depleted or destroyed. For instance, when you see someone litter in the park or on the highway, do you think they do the same in their own yard?
There is not an exception when politics is involved. Collected taxes become a common that individuals can exploit via pet projects and terribly managed programs that can only exist because of government intervention. While some subsidies can provide a viable service (though whether it should be done is questionable), many fall prey to this same issue, and most government organizations and bureaus become complacent without competition. Privatization is the best way to avoid this problem.
[b said:
Quote[/b] ]Looking back, would you say that the problem with business was that executives didn't get enough pay and the low-paid workers made too much? I wouldn't.
I would say that for me to express an opinion on that, and enforce it through legislation, would be to imply that I am in some sort of preferred, elite reference frame. I am a citizen, no greater and no less than you, and I do not believe I have the right to make such a decision on behalf of the other 300 million citizens in this country. I have the greatest respect for science and logic, and have learned over the past years how much all of it relies on objectivity and the willingness to question even the most basic truths we believe we know. As such, I would say that the evidence contradicts your assertion; as I discussed above those executives are obviously providing greater value than they were receiving pay for, or they would not have seen such a drastic increase.
I also want to point out that having wealthy individuals can help to accomplish things that cannot be done via simple government funding nor middle-class investment. For instance,
Anousheh Ansari's contributions made the X-Prize possible, which was one of the single most important steps to jumpstarting the privatization of space. Several more X-Prize's are in the works, the next one dealing with advances in medical science. These have, and will, provide priceless advances in our knowledge and technology, but no elected official would put government money towards such laudable goals (nor do I feel they would have the right to) and no private company would invest in such a program without polluting it with insistence of return on investment.
Further, wealthy individuals still donate to various charities just as middle class individuals do, though I will wait to say more on this until I have time to research what percentage of their income goes to charity vs. the percentage of middle class income that does.
[b said:
Quote[/b] ]I am the highest paid person here, but instead of making several hundred times what the average person makes, I make roughly double. In part because we pay ourselves modest salaries all things considered, and in part because we pay our people a lot. If we put out a hit piece of software, everyone will benefit. In most similar companies, if there is a hit piece of software, the corporate ownership alone will make a bunch of money. Because we're among the last of the independents that haven't been snapped in a conglomeration spree that's infected all media for a while now, and when you have a corporate parent, the whole reason they bought you is to get the money.
That is very admirable. If I may ask, do you feel that the employees you have are a representative sample of the industry, or do you feel they are great at what they do? If the latter, then do you feel that your competitive pay structure may have something to do with this and given you an edge against your competition?
[b said:
Quote[/b] ]Good stuff again, Nicholas. Perhaps the place to go from here it to talk about specifics. What actual regulations do you see that are hampering business? Filing Environmental Impact Statments? Occupational Safety and Hazard regulations? Pollution standards? Family leave bills? Anti-trust legislation? Should price-fixing be allowed? Child labor? Should there be ANY regulations?
I apologize, but I am getting tight on time and will have to get back to you on some of this. I will say that yes, there should be some regulations, but there needs to be an objectively defined outline that can be used to define what those should be; the Constitution may be a good start for that.
Remember that for every really visible program put into effect, there are a plethora of pork barrel projects going on behind the scenes and pet projects funded with public money. This sort of corruption is fueled by self-righteous elitism and cannot be stamped out no matter what system you have in place. The only way to prevent government corruption from affecting us so greatly is to reduce government's scope and power.
I will quickly note on child labor that I don't know how the laws are written right now, but I don’t think there should need to be any business regulations regarding it as it should fall directly under citizens' rights. We live in a republic, which respects the rights of the individual, and as such those individuals should be protected from unfair exploitation. This is a complicated subject, though, because even the best of intentions can get muddied in the gray area of the real world and often cause more harm than good if not tightly restricted.