"Businesspeople Don't Know How to Run National Economies"

[9-10ths_Penguin]

Now, here comes the obligatory partisan jibe....having been a community organizer is not nearly enuf.

But the "community organizer" isn't really the one running the economy. He's the one who - along with others - sets the overall vision, but it's the high-level civil servants (e.g. in the US, the Secretary of the Treasury and the Chairman of the Federal Reserve) who are the ones "running the economy" in the sense that they're overseeing the day-to-day governmental decisions that do affect the economy.

The President's role is more to select and appoint the people who do the economic "heavy lifting", and then motivate them to do their job well in light of the overall vision. It seems to me that "community organizing" is decent preparation for that role.

 

[sandandfoam]

Stephenw, how can you be so cynical? You don't even live in Michigan.

lol

No. I live in Ireland - a country which has been destroyed by free market capitalism and is free falling back into the misery of being broke.
Business types have robbed several generations of a present and of a future. I'm not a fan.

 

[Revoltingest]

But the "community organizer" isn't really the one running the economy. He's the one who - along with others - sets the overall vision, but it's the high-level civil servants (e.g. in the US, the Secretary of the Treasury and the Chairman of the Federal Reserve) who are the ones "running the economy" in the sense that they're overseeing the day-to-day governmental decisions that do affect the economy.

The President's role is more to select and appoint the people who do the economic "heavy lifting", and then motivate them to do their job well in light of the overall vision. It seems to me that "community organizing" is decent preparation for that role.

Obama's appointments look particularly lame. Regarding economics, Tim Geithner is unacceptable. He either couldn't do his own taxes or he cheated on them, yet he now runs the IRS. I also distrust his origins in & ties to Wall St, given that Wall St gets the lion's share of bail-out money with few strings attached, unlike GM. I argue that to appoint an expert to run something, it helps to be familiar with running that same something. Tis no guarantee of success (eg, Jimmy Carter & Dubya), but more qualifications are generally better than fewer.
A president's running of the economy is certainly an indirect thing, eg, by appointments, by the bully pulpit & by executive
order. But they do have an effect, albeit a hard to measure one which often exists with a several year phase lag.

 

[Revoltingest]

lol
No. I live in Ireland - a country which has been destroyed by free market capitalism and is free falling back into the misery of being broke.
Business types have robbed several generations of a present and of a future. I'm not a fan.

Clearly, you need better quality capitalism....as do we.

"Ireland...the Michigan of the North Atlantic".....or should it be....
"Michigan....the Ireland of the rust belt".

 

[sandandfoam]

Clearly, you need better quality capitalism....as do we.

"Ireland...the Michigan of the North Atlantic".....or should it be....
"Michigan....the Ireland of the rust belt".

One reason why I think that capitalism is inherently flawed is that unregulated it tends to monopoly.
I think that the idea of regulated capitalism is oxymoronic.

I think we need something completely new because this boom/bust we're stuck with is a disaster.

 

[Revoltingest]

One reason why I think that capitalism is inherently flawed is that unregulated it tends to monopoly.
I think that the idea of regulated capitalism is oxymoronic.

I think we need something completely new because this boom/bust we're stuck with is a disaster.

There is some tendency for monopolies to form in some industries, but the inefficiency of a top heavy bureaucracy prevents
it where barriers to entry are low. This keeps markets freer. Monopoly prevention is a useful function for government.
(Many of the worst monopolies I've had to deal with were actually creatures of government, eg, schools, utilities,
building departments, the IRS.) I use remodeling contractors a lot....or at least, I used to. Can anyone imagine
hiring someone other than a small business to install a brick patio or remodel a bathroom? I'd rue the day when I
had to have a government agency perform all my maintenance or home improvements.

The Institute For Justice is one sort-of-libertarian organization which fights government sanctioned cartels.

 

[sandandfoam]

There is some tendency for monopolies to form in some industries, but the inefficiency of a top heavy bureaucracy
prevents it where barriers to entry are low. This keeps markets freer, & is a useful function for government.
(Many of the worst monopolies I've had to deal with were actually creatures of government, eg, schools, utilities,
building departments, the IRS.) I use remodeling contractors a lot....or at least, I used to. Can anyone imagine
hiring anyone other than a small business to install a brick patio or remodel a bathroom? I'd rue the day when I
had to have a government agency perform all my maintenance or home improvements.

I think there is something in what you say. But unfortunately for you I think it is in favour of my argument!!

I think business and government are of the same order when businesses are big. The difference is that one is supposed to be run for the common good and the other for profit. I think that business has contaminated the government through conflation of profit with the common good. I think this has reached and passed the point where big business is a threat to the common good.

Small enterprise is a different matter. It makes no sense to have huge organisations focused on the like of home improvements.

I think government should be big on the common good things like health/education and law.
I think enterprise should be big in the sense that there be a big number of small players. Small businesses/enterprise can spring up and fade away as needs be. They are good for society.

Capitalism is by nature big. It is a threat to society. I would rather have a society with 1,000,000 well off people than 1000 millionaires.

Capitalism is about the 1000 millionaires.

 

[Revoltingest]

I think there is something in what you say. But unfortunately for you I think it is in favour of my argument!!

I think business and government are of the same order when businesses are big. The difference is that one is supposed to be run for the common good and the other for profit. I think that business has contaminated the government through conflation of profit with the common good. I think this has reached and passed the point where big business is a threat to the common good.

Small enterprise is a different matter. It makes no sense to have huge organisations focused on the like of home improvements.

I think government should be big on the common good things like health/education and law.
I think enterprise should be big in the sense that there be a big number of small players. Small businesses/enterprise can spring up and fade away as needs be. They are good for society.
Capitalism is by nature big. It is a threat to society. I would rather have a society with 1,000,000 well off people than 1000 millionaires.
Capitalism is about the 1000 millionaires.

Far & away, most of us capitalists ain't millionaires....although I hope to be again some day.
Regarding government, what it's supposed to be (about serving us) & what it actually is in practice
(about self-serving politicians) are at odds with each other. They're tricky things to reconcile.

 

[doppelganger]

Well . . . duh . . . Krugman.

Businessmen know how to make money for themselves and sometimes incidentally for others as well. If they don't bear any responsibility for it, they can be expected to do so even at the expense of others . . . lying, cheating and stealing if necessary. But then, politicians do those things too . . .

 

[9-10ths_Penguin]

A business exists to benefit its officers and stockholders, by extracting as much wealth from other sources with as little expense as possible. Any collateral social benefits are incidental. Any collateral damage -- as long as it doesn't cost the company anything, is irrelevant.
A social conscience is often economically detrimental to a company. Many are social parasites or predators. Maximum profit with minimal outlay is best achieved by sociopathic administrators.

I don't think that's really the case.

Maybe you could argue this for a company that deals in straight commodity transactions and nothing else; if a company is trying to sell tonnes of coal or pork bellies, then sure - nothing's relevant to that transaction besides how much they get for the end product vs. how much they paid to produce it.

Except... I don't think that there's really any company like that. Every business trades off goodwill or its reputation in some way. For instance, that company selling coal by the tonne has to get that coal somehow, and when they apply for a government permit for a new mining operation, their cause will not be helped by a public perception that they're environment-rapers who don't have any concern beyond their own self interest.

Even the company that does do nothing but trade back and forth in commodities is still involved in transactions where reputation matters... in hiring staff, for instance.

As an example of what I'm talking about: I've had some business dealings with large aggregate and concrete companies. At first glance, one would assume that their business is about nothing but money. After all, nobody buys a gravel pit out of passion for turning large rocks into small rocks, and nobody who's in the business of buying aggregate cares where it came from as long as it was obtained legally and it meets the relevant product standards. The motivation for an aggregate business is entirely financial.

Still, the companies have to be super-sensitive to all sorts of non-financial concerns. They know that how they run their business now can come back to bite them when they apply to the government for an expansion or a new quarry. They know that if they don't deal with, say, truck noise complaints now, it'll create a financial penalty for them down the road. If they don't properly rehabilitate their retired quarries, then they won't be able to get new ones and the business will cease to function.

Yes, in the case of an aggregate business, none of this is entirely altruistic; in the end, it is about financial and business interests. Still, I think that something like that would be excellent training for government. When a person learns to think in terms of the "big picture" for business reasons, they're still learning to think in terms of the "big picture"... which can directly translate to ability in government.

 

[Alceste]

I don't think that's really the case.

Maybe you could argue this for a company that deals in straight commodity transactions and nothing else; if a company is trying to sell tonnes of coal or pork bellies, then sure - nothing's relevant to that transaction besides how much they get for the end product vs. how much they paid to produce it.

Except... I don't think that there's really any company like that. Every business trades off goodwill or its reputation in some way. For instance, that company selling coal by the tonne has to get that coal somehow, and when they apply for a government permit for a new mining operation, their cause will not be helped by a public perception that they're environment-rapers who don't have any concern beyond their own self interest.

Even the company that does do nothing but trade back and forth in commodities is still involved in transactions where reputation matters... in hiring staff, for instance.

As an example of what I'm talking about: I've had some business dealings with large aggregate and concrete companies. At first glance, one would assume that their business is about nothing but money. After all, nobody buys a gravel pit out of passion for turning large rocks into small rocks, and nobody who's in the business of buying aggregate cares where it came from as long as it was obtained legally and it meets the relevant product standards. The motivation for an aggregate business is entirely financial.

Still, the companies have to be super-sensitive to all sorts of non-financial concerns. They know that how they run their business now can come back to bite them when they apply to the government for an expansion or a new quarry. They know that if they don't deal with, say, truck noise complaints now, it'll create a financial penalty for them down the road. If they don't properly rehabilitate their retired quarries, then they won't be able to get new ones and the business will cease to function.

Yes, in the case of an aggregate business, none of this is entirely altruistic; in the end, it is about financial and business interests. Still, I think that something like that would be excellent training for government. When a person learns to think in terms of the "big picture" for business reasons, they're still learning to think in terms of the "big picture"... which can directly translate to ability in government.

Sensitivity to public perception =/= sensitivity to public good. If the two were synonymous, the PR industry and the lobbying industry would not exist.

The trouble with "social responsibility" that is primarily motivated by the potential impact of poor behavior on future profits is that simply lying is by far the cheapest way to establish your ethical credentials.

 

[9-10ths_Penguin]

Sensitivity to public perception =/= sensitivity to public good. If the two were synonymous, the PR industry and the lobbying industry would not exist.

And if it was all about public perception and not public good, the environmental consulting industry wouldn't exist.

The trouble with "social responsibility" that is primarily motivated by the potential impact of poor behavior on future profits is that simply lying is by far the cheapest way to establish your ethical credentials.

Maybe in some cases in the short term. I don't think it's generally in a company's best interest over the long term to lie. The prospect that your lie will be uncovered is always a horrendous risk to that corporate reputation that the corporate leadership spent good money for.

 

[Alceste]

And if it was all about public perception and not public good, the environmental consulting industry wouldn't exist.


Maybe in some cases in the short term. I don't think it's generally in a company's best interest over the long term to lie. The prospect that your lie will be uncovered is always a horrendous risk to that corporate reputation that the corporate leadership spent good money for.

I think if we compare the size and profitability of the PR industry to the size and profitability of the environmental consulting industry, we might gain some insight into whether or not capitalists favour lying over actual social responsibility.

Of course to you and I lying seems like madness considering the risks. To an oil company wishing to develop Alberta's tar sands lying about the environmental impact is the ONLY way to cash in and maintain the appearance of corporate responsibility.

 

[9-10ths_Penguin]

I think if we compare the size and profitability of the PR industry to the size and profitability of the environmental consulting industry, we might gain some insight into whether or not capitalists favour lying over actual social responsibility.

You'd be surprised. I've spent quite a bit of my professional life doing stuff within the environmental assessment framework - it keeps a rather large number of people employed.

Of course to you and I lying seems like madness considering the risks. To an oil company wishing to develop Alberta's tar sands lying about the environmental impact is the ONLY way to cash in and maintain the appearance of corporate responsibility.

But in that particular case, the same could be said of the Alberta government. And the Federal government. And the taxpayers who realize in their heart of hearts that more environmental constraints on the oilsands would mean less in royalties to the government, which means that the taxpayers would have to shoulder more of the burden of paying for government services.

It's not like the oil companies are pulling the wool over the eyes of an otherwise vigilant citizenry. It's more like they simply have to give a plausible "sheen" to things so the people can feel okay with not digging deeper. There are a lot of people in the mix who are looking the other way.

 

[Kilgore Trout]

Depending on how your define your ideal theoretical environment, all sorts of different models could explain how national economies work. Unfortunately, the world is never an ideal theoretical environment. I fear this fact doesn't generally appeal to type of people who call themselves economists.

 

[Alceste]

You'd be surprised. I've spent quite a bit of my professional life doing stuff within the environmental assessment framework - it keeps a rather large number of people employed.

That's not a comparison. Also, would you agree that environmental assessments are generally required by regulation rather than voluntary? Social responsibility means more than ticking a box on a form, and ethical behavior involves more than following the letter of the law.

But in that particular case, the same could be said of the Alberta government. And the Federal government. And the taxpayers who realize in their heart of hearts that more environmental constraints on the oilsands would mean less in royalties to the government, which means that the taxpayers would have to shoulder more of the burden of paying for government services.

It's not like the oil companies are pulling the wool over the eyes of an otherwise vigilant citizenry. It's more like they simply have to give a plausible "sheen" to things so the people can feel okay with not digging deeper. There are a lot of people in the mix who are looking the other way.

I disagree. The oil industry spends billions on advertising in Alberta to convince the public the process is clean and safe. The government has been complicit by maintaining the appearance of governmental "oversight" while relying entirely on reports from the oil industry to determine the levels of environmental toxicity being generated. The people have indeed been hoodwinked, and with clear intent to hoodwink. Even now, after independent studies have conclusively demonstrated the oil sands are contaminating the Athabasca and its tributaries with unsafe levels of carcinogens, the industry is spending billions to promote the narrative that the contamination is naturally occurring.

Anyway, before we get too far OT, this is only one single example of what is in fact a common corporate strategy. Everybody from cigarette manufacturers to GM food patent holders realizes that lying is far more cost-effective and profitable than social responsibility.

 

[9-10ths_Penguin]

That's not a comparison. Also, would you agree that environmental assessments are generally required by regulation rather than voluntary?

Oh, definitely. But even when the message is "learn about your impact on the surrounding community or you won't be allowed to build your big revenue-generator" or "learn about your impact on the surrounding community or you'll get a massive fine", "learn about your impact on the surrounding community" is still a part of it.

Living within a regulatory framework is a good way to learn about that framework. It can even be a good way to come up with ideas for how to make it better.

Social responsibility means more than ticking a box on a form, and ethical behavior involves more than following the letter of the law.

Sure, but by the same token, dealing directly with the effects of law and policy can give quite an education on what effects those laws and policies have.

I disagree. The oil industry spends billions on advertising in Alberta to convince the public the process is clean and safe.

Hmm. Maybe I have a different point of view as a non-Albertan - I assume that we're subject to different ad campaigns. However, when I've seen the oil company ads that air out here, my first reaction was that they came across as rather obvious greenwashing. They didn't strike me as anything that would fool someone who didn't want to be fooled.

The government has been complicit by maintaining the appearance of governmental "oversight" while relying entirely on reports from the oil industry to determine the levels of environmental toxicity being generated.

And that gets back to what I hinted at before: the politicians don't want to be the ones to bring the hammer down on the oil companies, because that means they'll be seen as the ones who raised taxes for everyone.

Anyway, before we get too far OT, this is only one single example of what is in fact a common corporate strategy. Everybody from cigarette manufacturers to GM food patent holders realizes that lying is far more cost-effective and profitable than social responsibility.

This quarter, maybe. This year, possibly. In the long term, definitely not.

Anyhow (and bringing it back to topic myself), this is all more about attitude and approach than knowledge and skills, right?

 

[Random]

Everybody from cigarette manufacturers to GM food patent holders realizes that lying is far more cost-effective and profitable than social responsibility.

^^^^^^^^^^^^

 

[atanu]

A business exists to benefit its officers and stockholders, by extracting as much wealth from other sources with as little expense as possible. Any collateral social benefits are incidental. Any collateral damage -- as long as it doesn't cost the company anything, is irrelevant.
A social conscience is often economically detrimental to a company. Many are social parasites or predators. Maximum profit with minimal outlay is best achieved by sociopathic administrators.

A government or co-op, on the other hand, exists to maximise the quality of life for all the citizens/members. Profit is, at best, a secondary concern. Governments exist for their citizens, ideally, anyway.
The ideal, sociopathic CEO of a corporation would not, in my opinion, make an ideal co-ordinator of a self-help co-operative/government.

I mostly agree with this. I think motivation is key aspect. A businessman and a mass leader have different sets of motivations. There can be bad and good of both types, but, a leader's motivation to have influence over people by good (or evil means) is a necessary motivation.

A wise man may not have very much of that motivation and a businessman will have motivation of profit maximisation -- often at the expense of greater good. So, I think that leadership qualities are different from businessman qualities -- though there may be an overlap.

 

[Alceste]

Oh, definitely. But even when the message is "learn about your impact on the surrounding community or you won't be allowed to build your big revenue-generator" or "learn about your impact on the surrounding community or you'll get a massive fine", "learn about your impact on the surrounding community" is still a part of it.

Living within a regulatory framework is a good way to learn about that framework. It can even be a good way to come up with ideas for how to make it better.


Sure, but by the same token, dealing directly with the effects of law and policy can give quite an education on what effects those laws and policies have.


Hmm. Maybe I have a different point of view as a non-Albertan - I assume that we're subject to different ad campaigns. However, when I've seen the oil company ads that air out here, my first reaction was that they came across as rather obvious greenwashing. They didn't strike me as anything that would fool someone who didn't want to be fooled.


And that gets back to what I hinted at before: the politicians don't want to be the ones to bring the hammer down on the oil companies, because that means they'll be seen as the ones who raised taxes for everyone.


This quarter, maybe. This year, possibly. In the long term, definitely not.

Anyhow (and bringing it back to topic myself), this is all more about attitude and approach than knowledge and skills, right?

I think we are talking about a basic philosophy and ethical framework developed by and for the plutocracy in which we live, which primarily benefits the very wealthy at the expense of everyone else.

It is now taken as a given in all Western democracies that corporate profit is the primary - if not the only - factor in consideration of which an economic policy should be constructed. To create these policies, our governments have become a revolving door recruiting agency for CEOs of the world's most profitable companies.

The philosophy of this entire class of hopeless wankers is that it is better and cheaper to hire specialists to paint a pretty (and false) picture for the public than to allow the public to reach an informed opinion on any issue involving conflict between corporate profit and the public good.