10 ms·

Goldman Sachs May Be Forced to Fundamentally Question How Capitalism Is Working

98 points by uptown 11y ago

jdimov10 11y ago
This is the result of blue ocean strategy in play (whether consciously applied or by accident). When it's easier for me to create a new market and reap huge profits, than to struggle into fighting with Big Co for a share of their huge profits... guess which way I'd rather go. At the end, both I and Big Co win. We are already living in a new time period - a new age in world history, fundamentally different from all other ages experienced by humans so far. We have entered the age of ubiquitous abundance. All economic, political, moral and philosophical frameworks revolving around the concept of scarcity are fast becoming obsolete.
- craigyk 11y ago
  I don't see it. Unless you mean debt subsidized growth involving inserting "internet" or "mobile" into existing things and calling them "blue oceans". I think what Goldman Sachs is trying to say is that capitalism ( in any flavor: laissez faire or mixed economy ) might favor evolution to a small number of large entrenched winners rather than eternal competition and churn.
  - jdimov10 11y ago
    Neither the GS analysis, nor cursory observation of daily reality can possibly lead to any such conclusion. Wealth is increasing, globally, at an accelerating pace. The number of players creating and sharing such wealth is also increasing at an accelerating pace. These trends are not showing any signs of slowing down, much less of reversing (and might in fact be non-reversible). As a consequence, global well-being (by any reasonable measure) is also increasing at an accelerating pace. Note that this DOES NOT contradict the fact that various "inequality gaps" are also increasing at an accelerating pace. This is natural.
    - dota_fanatic 11y ago
      > As a consequence, global well-being (by any reasonable measure) is also increasing at an accelerating pace. Meanwhile, in reality: - corruption / inability to problem-solve in most governments in any reasonable amount of time is more and more evident as transparency / software insecurity increases, and there's no obvious way to fix this - business advantages through technology, information asymmetry, lack of competition, and very cheap labor accelerates, businesses which have a singular goal in mind with little care for negative externalities - species diversity plummets - climate change remains negatively positive (zika incoming everyone, I'm sure we'll figure it out in time, just don't have any babies in the meantime) - wage slavery becomes more and more real for more and more people, in the US particularly through people taking on debt for what used to be a non-risky endeavor (higher education) but which actually turned out to be foolish once they were ready to work Remember, the only thing that matters is that you get yours; that's the name of the game and it's only so long until the consequences of this utterly delusional approach of infinite growth in a closed system will find its way to the homes of the rich and powerful, too. Who in their right mind, excluding miraculously well-executed altruistic AI proliferation appearing, is looking to the future and saying, "we're doing it everyone! things are getting better and better!". Do you have any idea what 3 billion+ people living in poverty looks like? Because that is now, and it's fucking shameful how little we care about our communities, our planet, in this race to greater and greater "wealth".
      - soared 11y ago
        You're defining global well-being from a very American viewpoint. Poverty, war, actual slavery, child labor, hunger, disease, etc are dying out on a global scale.
- deleted 11y ago
  [deleted]
- vezzy-fnord 11y ago
  Scarcity is not a property of physical abundance, but of use. To say that scarcity is over would effectively mean all wants have been satisfied and the economy has reached its final state of rest, and this is ludicrous. You can have a bundle of inert goods, but as soon as they are employed to fulfill plans, they become different goods where spatial, territorial and property constraints enter into motion. Also people have been saying this for a long time and it has yet to bear out. Galbraith was railing on about the affluent society, how corporations are somehow artificially inventing wants through advertising and the necessity of an activist state. Developed countries have had their states get larger and more activist to no avail.
- jjaredsimpson 11y ago
  Certain physical goods will always be scarce and there is a limit to energy utilization. I agree that subsistence work for survival is on the way out but I'm unconvinced humans will stop competing for status and resources because of abundance.
  - jdimov10 11y ago
    If advances in technology teach us anything at all, it is that there can be no scarcity of physical goods. There is nothing that can not be made in abundance, at marginal cost. The scarcity of energy is even more difficult to defend. There can not possibly be any such thing, it is a truly ridiculous perception. The ONLY remaining value, then, is in individualism. In bringing forth a unique perspective. Competing for status is indeed a natural human tendency, that isn't going anywhere any time soon.. But it can no longer equate to competing for resources.
    - Silfen 11y ago
      I'm not sure how to unpack this. If there isn't energy scarcity, why does petroleum cost money? Scarcity isn't just a question of production, but also one of consumption. With some goods (e.g. food), we could reach a point where the entire population of the world cannot consume more. With others (energy is a salient example), there seems to be no upper limit on consumption. There will always be a finite amount, and people want to use it differently. This is exactly the problem markets are purported to solve.
    - jjaredsimpson 11y ago
      Land is a scarce resource. Downtown properties in urban cities, beachfront properties, lake front properties. Access to a hot new chef's 5 star restaurant on a Friday night. Energy consumption can not increase without bound. Every human on the planet can not have a 10GW datacenter to simulate their own perfect Matrix where they are King of all creation. The thermodynamics of waste heat certainly puts limits on potential energy utilization for 15 billion humans. Your inability to conceive of limitations that are certainly present, is not an indication that those limitations do not exist.
esaym 11y ago
Never quite followed the plethora of "Capitalism isn't working" articles. And the alternative is?? There always seems to be some political agenda involved.
- xndjcjdjf 11y ago
  It's a Goldman Sachs analyst pointing out anomalies in global capital flow. Where are seeing an agenda?
- saiya-jin 11y ago
  there is no alternative, not a better one at least, not now. look at other possibilities - ie central planning is a major fail over longer time (I lived in one of those systems, no thank you). IMHO what fails in all other systems is to take into account human nature, and not some ideal working guy that never actually lived. people are lazy, care more about themselves rather than company good, some are plain evil etc. very few work on themselves unless they see the carrot at the end of the stick (bonus?). in capitalism it's cash, which can get you quite far in life, so most are chasing it (even you probably are - if your employer stopped paying you today, would you come in tomorrow?). this chase can easily ruin your life, makes people do regretful decisions but overall, it pushes mankind far beyond (and much faster) that it would achieve without this perpetual force. I'll claim one thing, feel free to disagree - capitalism ain't often the best system for a single person, but (if all internal mechanisms work) it's probably best for the advancement of mankind. and these days, we need to advance to not destroy ourselves (for that, we already have capability)
  - convivialdingo 11y ago
    I'd agree with this. (I also briefly lived in a socialist paradise myself.) I'm not a fan of capitalism, but everything else has historically been worse. The only pre-capitalist system that may have worked well was distributism, but that was under an aristocratic rule. I think the modern fair market issues we have in all 1st world nations isn't a feature of capitalism - it's the failure to reign in plutocratic tendencies. Democratic nations have a tendency to ignore oligarchs as they initially grow industry and produce lots of growth. Long term though, they tend to become parasites on the budget and political vampires.
spectrum1234 11y ago
The reason for this is barriers to entry to be a big corporation are getting bigger. (This is the only fundamental truth that the author fails to mention!) However, the barriers to entry to be an entrepreneur are far far lower. Corporations still compete with each other on innovation but now more than ever this is through buying small and medium sized companies said entrepreneurs have created :) So, this is neither good nor bad, just a shift in where the competitive opportunities are. Hint, it's getting easier for the little guys to compete.
- voynich61 11y ago
  Rate of entrepreneurship in the US has declined, and is overwhelmingly class, race, and sex based. It's borderline sociopathic to assert that it's getting easier for the little guys to compete.
  - jdimov10 11y ago
    I don't know about that, but it is flat-out psychopatic to claim that the rate of entrepreneurship in the US has declined when it has been increasing faster than ever in the past few years[1]. [1] http://stats.oecd.org/Index.aspx?DataSetCode=TIMELY_BDS_ISIC4 http://stats.oecd.org/Index.aspx?DataSetCode=TIMELY_BDS_ISIC...
    - guscost 11y ago
      > sociopathic ... psychopathic I don't think either of you understand what those words mean.
      - voynich61 11y ago
        Asserting that one's company hit a triple when it was born on third base is self-serving and manipulative.
        AnimalMuppet 11y ago
        You seem to be asserting that this is what most "entrepreneurship" is. Can you justify/document that assertion, or should we just take it as merely one person's opinion?
Sealy 11y ago
Just reading that headline makes me think to myself. Why ask Goldman Sachs? They are clearly ahead of the capitalism game so of course they are gonna say it works well!?!? Asking the richest capitalists in the world if capitalism works is a silly question if you ask me...
- AnimalMuppet 11y ago
  Yes, but having them say we may have to question whether it works is big news.
  - Sealy 11y ago
    True, I think I was influenced by the sensationalist headline.
financedfuture 11y ago
>We are always wary of guiding for mean reversion. But, if we are wrong and high margins manage to endure for the next few years (particularly when global demand growth is below trend), there are broader questions to be asked about the efficacy of capitalism. This isn't a criticism of capitalism. This is an acknowledgment our current "capitalist" financial system isn't able to produce "capitalism" itself.
- Analemma_ 11y ago
  > This isn't a criticism of capitalism. > This is an acknowledgment our current "capitalist" financial system isn't able to produce "capitalism" itself. That's a No True Scotsman argument intended to shield capitalism from any criticism. "The system isn't working? Then it must not be real capitalism."
  - financedfuture 11y ago
    No. That's about recognizing there would be no mean reversion, a great indicative of the existence of crony monopolies and, therefore, lack of capitalism.
    - nitrogen 11y ago
      How can capitalism result in anything other than crony monopolies?
      - jazzyk 11y ago
        The government _not_ hand-picking winners and losers (bailouts, lobbyists, etc.) would be a good start.
        Umn44 11y ago
        The problem is this is a fantasy historically ,the government works for the rich (capitalists) its a capitalist government. Copyright law is a case in point. https://en.wikipedia.org/wiki/Copyright_Term_Extension_Act#/media/File:Copyright_term.svg https://en.wikipedia.org/wiki/Copyright_Term_Extension_Act#/...
nopotatoes 11y ago
Does anyone know the brand or model of that beautiful keyboard with the orange and green keys in the photo just above the title?
- osullivj 11y ago
  Bloomberg keyboard with specialised func keys for std cmds.
  - mortenjorck 11y ago
    The newer ones look amazing: https://qzprod.files.wordpress.com/2013/05/bloomberg_keyboard.png?w=640&h=197 https://qzprod.files.wordpress.com/2013/05/bloomberg_keyboar... They have that certain beauty of something carefully designed for a specific domain.
Fando 11y ago
No one has a clue about what's going on in this article. Nothing substantial it seems.
goodcanadian 11y ago
What I see in their chart is profit margins are generally in the 6-8% range with dips down to ~2% after economic recessions. It would seem to me that profit margins may be slightly higher than the historical average, but only slightly (though I would need a chart with a much longer x-axis to say anything with confidence). As for the free market (I believe "capitalism" is the wrong word to use) squeezing the margins to zero, that works great in theory. However, the real world is made up of real people with imperfect information, so maintaining a slightly above zero profit margin doesn't surprise me, even when averaged across the entire economy.
- nikdaheratik 11y ago
  Yes, but you're missing some context. Specifically the theory that, historically, business profits have always been limited to a set percentage of overall GDP. Everytime it tries to expand beyond a certain point, the market seems to correct either through increased competition driving that number down or labor pushing back to get workers a greater share, or government taxation/regulation (in a few rare cases) pushing this back down. It may seem like a historically high range of a few percentage points is no big deal, but it would be very surprising for that amount to stay constant over time and (when you account for compounding effects), it actually would be a big deal if it did stay at that level.
  - goodcanadian 11y ago
    I don't think I'm missing anything. What I was saying was that, from their chart at least, the current level appears to be completely normal or perhaps only slightly high. I'm willing to admit that their chart could be misleading, but they failed to clearly make their point and really didn't convince me that anything unusual is going on.
phrogdriver 11y ago
>We are always wary of guiding for mean reversion. But, if we are wrong and high margins manage to endure for the next few years (particularly when global demand growth is below trend), there are broader questions to be asked about the efficacy of capitalism. I find this title to be misleading. The above quote can be paraphrased as, "We think profit margins will revert to the mean. If they don't, we will be really surprised that capitalism isn't working as we think it should."
Mikeb85 11y ago
What we think of as 'capitalism', in many ways is more akin to mercantilism or oligarchy. Corruption is basically codified as 'lobbying', and governments enact all sorts of stupid laws to the benefit of large, incumbent corporations, preventing the free market from actually functioning. And of course, these unnatural barriers to competition allow inefficiencies, concentration of wealth, and so on. The 'free market' is somewhat of a myth. The west has never truly had 'free markets', in the past monopolies have been bought, wealthy merchants, nobility and corporations have patronized governments and monarchs, and tariffs and subsidies have been ever-present. The current arguments for free markets have to do with price discovery, personal freedom and 'fairness', however we need to realize that these sacred cows are myths, and that if we want to build a better society, it may be time to rethink exactly how we distribute resources.
hodder 11y ago
Here is a much more thought out analysis from a generally excellent econ blog: http://www.philosophicaleconomics.com/2015/05/profit-margins-in-a-winner-take-all-economy/ http://www.philosophicaleconomics.com/2015/05/profit-margins...
roymurdock 11y ago
Rethink capitalism - aka rebalance capitalism and socialism, two sides of the same coin. The government plays a regulatory, distributive role in society, allowing profits to accrue to capitalists but setting taxes and running social programs at the proper level to ensure that society as a whole functions smoothly, and that there are opportunities for everyone to improve their situation. Most of the economic world is in agreement that financial deregulation was a huge contributing factor in the crash of 2007-08. The repeal of Glass-Steagall allowed banks to take on too much risk with too little supervision. This would have been fine if the banks had been the only ones punished when their bets went bad - but they had also been allowed to accrue so much power (through consolidation/M&A) that it was impossible to let them face the consequences of their own bad decisions and fail. So they had to be underwritten with public money in the form of QE. A functional society requires healthy levels of both capitalism and socialism to survive. But the most important thing in my opinion, is that those who intentionally commit fraud or do not act in the fiduciary interest of their stakeholders are adequately punished. This last part is of course the rub - how can you tell if the leaders of business and finance were intentionally setting up their dependents for a crash? What is the adequate punishment?
- dnautics 11y ago
  > The government plays a regulatory, distributive role in society "We shall see the entire people transformed into petitioners. Landed property, agriculture, industry, commerce, shipping, industrial companies, all will bestir themselves to claim favors from the State... Everyone will have good reasons to prove that legal fraternity should be interpreted in this sense: "Let me have the benefits, and let others pay the costs." Everyone's effort will be directed toward snatching a scrap of fraternal privilege from the legislature. The suffering classes, although having the greatest claim, will not always have the greatest success." Perhaps Bastiat was overoptimistic. The suffering classes will almost never have the greatest success; as over time the path to becoming wealthy becomes more and more dependent on the ability to extract benefits that the government doles out with increasingly byzantine rules and "arbitrary (i.e. cronyist)" process (think SBIRs). Goldman Sachs is the least worthy company to have to "rethink capitalism" - it itself is such a cronyist organization that in many circles it's nicknamed "government sachs". If Goldman Sachs is only now saying, "there are broader questions to be asked about the efficacy of capitalism" - that's stunningly oblivious about its own actions. If anything Goldman Sachs should be asking itself about the efficacy of government in doing anything but redistributing wealth upwards.

98 points by uptown 11y ago

This is the result of blue ocean strategy in play (whether consciously applied or by accident). When it's easier for me to create a new market and reap huge profits, than to struggle into fighting with Big Co for a share of their huge profits... guess which way I'd rather go. At the end, both I and Big Co win. We are already living in a new time period - a new age in world history, fundamentally different from all other ages experienced by humans so far. We have entered the age of ubiquitous abundance. All economic, political, moral and philosophical frameworks revolving around the concept of scarcity are fast becoming obsolete.

craigyk 11y ago
I don't see it. Unless you mean debt subsidized growth involving inserting "internet" or "mobile" into existing things and calling them "blue oceans". I think what Goldman Sachs is trying to say is that capitalism ( in any flavor: laissez faire or mixed economy ) might favor evolution to a small number of large entrenched winners rather than eternal competition and churn.
- jdimov10 11y ago
  Neither the GS analysis, nor cursory observation of daily reality can possibly lead to any such conclusion. Wealth is increasing, globally, at an accelerating pace. The number of players creating and sharing such wealth is also increasing at an accelerating pace. These trends are not showing any signs of slowing down, much less of reversing (and might in fact be non-reversible). As a consequence, global well-being (by any reasonable measure) is also increasing at an accelerating pace. Note that this DOES NOT contradict the fact that various "inequality gaps" are also increasing at an accelerating pace. This is natural.
  - dota_fanatic 11y ago
    > As a consequence, global well-being (by any reasonable measure) is also increasing at an accelerating pace. Meanwhile, in reality: - corruption / inability to problem-solve in most governments in any reasonable amount of time is more and more evident as transparency / software insecurity increases, and there's no obvious way to fix this - business advantages through technology, information asymmetry, lack of competition, and very cheap labor accelerates, businesses which have a singular goal in mind with little care for negative externalities - species diversity plummets - climate change remains negatively positive (zika incoming everyone, I'm sure we'll figure it out in time, just don't have any babies in the meantime) - wage slavery becomes more and more real for more and more people, in the US particularly through people taking on debt for what used to be a non-risky endeavor (higher education) but which actually turned out to be foolish once they were ready to work Remember, the only thing that matters is that you get yours; that's the name of the game and it's only so long until the consequences of this utterly delusional approach of infinite growth in a closed system will find its way to the homes of the rich and powerful, too. Who in their right mind, excluding miraculously well-executed altruistic AI proliferation appearing, is looking to the future and saying, "we're doing it everyone! things are getting better and better!". Do you have any idea what 3 billion+ people living in poverty looks like? Because that is now, and it's fucking shameful how little we care about our communities, our planet, in this race to greater and greater "wealth".
    - soared 11y ago
      You're defining global well-being from a very American viewpoint. Poverty, war, actual slavery, child labor, hunger, disease, etc are dying out on a global scale.
deleted 11y ago
[deleted]
vezzy-fnord 11y ago
Scarcity is not a property of physical abundance, but of use. To say that scarcity is over would effectively mean all wants have been satisfied and the economy has reached its final state of rest, and this is ludicrous. You can have a bundle of inert goods, but as soon as they are employed to fulfill plans, they become different goods where spatial, territorial and property constraints enter into motion. Also people have been saying this for a long time and it has yet to bear out. Galbraith was railing on about the affluent society, how corporations are somehow artificially inventing wants through advertising and the necessity of an activist state. Developed countries have had their states get larger and more activist to no avail.
jjaredsimpson 11y ago
Certain physical goods will always be scarce and there is a limit to energy utilization. I agree that subsistence work for survival is on the way out but I'm unconvinced humans will stop competing for status and resources because of abundance.
- jdimov10 11y ago
  If advances in technology teach us anything at all, it is that there can be no scarcity of physical goods. There is nothing that can not be made in abundance, at marginal cost. The scarcity of energy is even more difficult to defend. There can not possibly be any such thing, it is a truly ridiculous perception. The ONLY remaining value, then, is in individualism. In bringing forth a unique perspective. Competing for status is indeed a natural human tendency, that isn't going anywhere any time soon.. But it can no longer equate to competing for resources.
  - Silfen 11y ago
    I'm not sure how to unpack this. If there isn't energy scarcity, why does petroleum cost money? Scarcity isn't just a question of production, but also one of consumption. With some goods (e.g. food), we could reach a point where the entire population of the world cannot consume more. With others (energy is a salient example), there seems to be no upper limit on consumption. There will always be a finite amount, and people want to use it differently. This is exactly the problem markets are purported to solve.
  - jjaredsimpson 11y ago
    Land is a scarce resource. Downtown properties in urban cities, beachfront properties, lake front properties. Access to a hot new chef's 5 star restaurant on a Friday night. Energy consumption can not increase without bound. Every human on the planet can not have a 10GW datacenter to simulate their own perfect Matrix where they are King of all creation. The thermodynamics of waste heat certainly puts limits on potential energy utilization for 15 billion humans. Your inability to conceive of limitations that are certainly present, is not an indication that those limitations do not exist.

esaym 11y ago

Never quite followed the plethora of "Capitalism isn't working" articles. And the alternative is?? There always seems to be some political agenda involved.

xndjcjdjf 11y ago
It's a Goldman Sachs analyst pointing out anomalies in global capital flow. Where are seeing an agenda?
saiya-jin 11y ago
there is no alternative, not a better one at least, not now. look at other possibilities - ie central planning is a major fail over longer time (I lived in one of those systems, no thank you). IMHO what fails in all other systems is to take into account human nature, and not some ideal working guy that never actually lived. people are lazy, care more about themselves rather than company good, some are plain evil etc. very few work on themselves unless they see the carrot at the end of the stick (bonus?). in capitalism it's cash, which can get you quite far in life, so most are chasing it (even you probably are - if your employer stopped paying you today, would you come in tomorrow?). this chase can easily ruin your life, makes people do regretful decisions but overall, it pushes mankind far beyond (and much faster) that it would achieve without this perpetual force. I'll claim one thing, feel free to disagree - capitalism ain't often the best system for a single person, but (if all internal mechanisms work) it's probably best for the advancement of mankind. and these days, we need to advance to not destroy ourselves (for that, we already have capability)
- convivialdingo 11y ago
  I'd agree with this. (I also briefly lived in a socialist paradise myself.) I'm not a fan of capitalism, but everything else has historically been worse. The only pre-capitalist system that may have worked well was distributism, but that was under an aristocratic rule. I think the modern fair market issues we have in all 1st world nations isn't a feature of capitalism - it's the failure to reign in plutocratic tendencies. Democratic nations have a tendency to ignore oligarchs as they initially grow industry and produce lots of growth. Long term though, they tend to become parasites on the budget and political vampires.

spectrum1234 11y ago

The reason for this is barriers to entry to be a big corporation are getting bigger. (This is the only fundamental truth that the author fails to mention!) However, the barriers to entry to be an entrepreneur are far far lower. Corporations still compete with each other on innovation but now more than ever this is through buying small and medium sized companies said entrepreneurs have created :) So, this is neither good nor bad, just a shift in where the competitive opportunities are. Hint, it's getting easier for the little guys to compete.

voynich61 11y ago
Rate of entrepreneurship in the US has declined, and is overwhelmingly class, race, and sex based. It's borderline sociopathic to assert that it's getting easier for the little guys to compete.
- jdimov10 11y ago
  I don't know about that, but it is flat-out psychopatic to claim that the rate of entrepreneurship in the US has declined when it has been increasing faster than ever in the past few years[1]. [1] http://stats.oecd.org/Index.aspx?DataSetCode=TIMELY_BDS_ISIC4 http://stats.oecd.org/Index.aspx?DataSetCode=TIMELY_BDS_ISIC...
  - guscost 11y ago
    > sociopathic ... psychopathic I don't think either of you understand what those words mean.
    - voynich61 11y ago
      Asserting that one's company hit a triple when it was born on third base is self-serving and manipulative.
      - AnimalMuppet 11y ago
        You seem to be asserting that this is what most "entrepreneurship" is. Can you justify/document that assertion, or should we just take it as merely one person's opinion?

Sealy 11y ago

Just reading that headline makes me think to myself. Why ask Goldman Sachs? They are clearly ahead of the capitalism game so of course they are gonna say it works well!?!? Asking the richest capitalists in the world if capitalism works is a silly question if you ask me...

AnimalMuppet 11y ago
Yes, but having them say we may have to question whether it works is big news.
- Sealy 11y ago
  True, I think I was influenced by the sensationalist headline.

financedfuture 11y ago

>We are always wary of guiding for mean reversion. But, if we are wrong and high margins manage to endure for the next few years (particularly when global demand growth is below trend), there are broader questions to be asked about the efficacy of capitalism. This isn't a criticism of capitalism. This is an acknowledgment our current "capitalist" financial system isn't able to produce "capitalism" itself.

Analemma_ 11y ago
> This isn't a criticism of capitalism. > This is an acknowledgment our current "capitalist" financial system isn't able to produce "capitalism" itself. That's a No True Scotsman argument intended to shield capitalism from any criticism. "The system isn't working? Then it must not be real capitalism."
- financedfuture 11y ago
  No. That's about recognizing there would be no mean reversion, a great indicative of the existence of crony monopolies and, therefore, lack of capitalism.
  - nitrogen 11y ago
    How can capitalism result in anything other than crony monopolies?
    - jazzyk 11y ago
      The government _not_ hand-picking winners and losers (bailouts, lobbyists, etc.) would be a good start.
      - Umn44 11y ago
        The problem is this is a fantasy historically ,the government works for the rich (capitalists) its a capitalist government. Copyright law is a case in point. https://en.wikipedia.org/wiki/Copyright_Term_Extension_Act#/media/File:Copyright_term.svg https://en.wikipedia.org/wiki/Copyright_Term_Extension_Act#/...

nopotatoes 11y ago

Does anyone know the brand or model of that beautiful keyboard with the orange and green keys in the photo just above the title?

osullivj 11y ago
Bloomberg keyboard with specialised func keys for std cmds.
- mortenjorck 11y ago
  The newer ones look amazing: https://qzprod.files.wordpress.com/2013/05/bloomberg_keyboard.png?w=640&h=197 https://qzprod.files.wordpress.com/2013/05/bloomberg_keyboar... They have that certain beauty of something carefully designed for a specific domain.

Fando 11y ago

No one has a clue about what's going on in this article. Nothing substantial it seems.

goodcanadian 11y ago

What I see in their chart is profit margins are generally in the 6-8% range with dips down to ~2% after economic recessions. It would seem to me that profit margins may be slightly higher than the historical average, but only slightly (though I would need a chart with a much longer x-axis to say anything with confidence). As for the free market (I believe "capitalism" is the wrong word to use) squeezing the margins to zero, that works great in theory. However, the real world is made up of real people with imperfect information, so maintaining a slightly above zero profit margin doesn't surprise me, even when averaged across the entire economy.

nikdaheratik 11y ago
Yes, but you're missing some context. Specifically the theory that, historically, business profits have always been limited to a set percentage of overall GDP. Everytime it tries to expand beyond a certain point, the market seems to correct either through increased competition driving that number down or labor pushing back to get workers a greater share, or government taxation/regulation (in a few rare cases) pushing this back down. It may seem like a historically high range of a few percentage points is no big deal, but it would be very surprising for that amount to stay constant over time and (when you account for compounding effects), it actually would be a big deal if it did stay at that level.
- goodcanadian 11y ago
  I don't think I'm missing anything. What I was saying was that, from their chart at least, the current level appears to be completely normal or perhaps only slightly high. I'm willing to admit that their chart could be misleading, but they failed to clearly make their point and really didn't convince me that anything unusual is going on.

phrogdriver 11y ago

>We are always wary of guiding for mean reversion. But, if we are wrong and high margins manage to endure for the next few years (particularly when global demand growth is below trend), there are broader questions to be asked about the efficacy of capitalism. I find this title to be misleading. The above quote can be paraphrased as, "We think profit margins will revert to the mean. If they don't, we will be really surprised that capitalism isn't working as we think it should."

Mikeb85 11y ago

What we think of as 'capitalism', in many ways is more akin to mercantilism or oligarchy. Corruption is basically codified as 'lobbying', and governments enact all sorts of stupid laws to the benefit of large, incumbent corporations, preventing the free market from actually functioning. And of course, these unnatural barriers to competition allow inefficiencies, concentration of wealth, and so on. The 'free market' is somewhat of a myth. The west has never truly had 'free markets', in the past monopolies have been bought, wealthy merchants, nobility and corporations have patronized governments and monarchs, and tariffs and subsidies have been ever-present. The current arguments for free markets have to do with price discovery, personal freedom and 'fairness', however we need to realize that these sacred cows are myths, and that if we want to build a better society, it may be time to rethink exactly how we distribute resources.

hodder 11y ago

Here is a much more thought out analysis from a generally excellent econ blog: http://www.philosophicaleconomics.com/2015/05/profit-margins-in-a-winner-take-all-economy/ http://www.philosophicaleconomics.com/2015/05/profit-margins...

roymurdock 11y ago

Rethink capitalism - aka rebalance capitalism and socialism, two sides of the same coin. The government plays a regulatory, distributive role in society, allowing profits to accrue to capitalists but setting taxes and running social programs at the proper level to ensure that society as a whole functions smoothly, and that there are opportunities for everyone to improve their situation. Most of the economic world is in agreement that financial deregulation was a huge contributing factor in the crash of 2007-08. The repeal of Glass-Steagall allowed banks to take on too much risk with too little supervision. This would have been fine if the banks had been the only ones punished when their bets went bad - but they had also been allowed to accrue so much power (through consolidation/M&A) that it was impossible to let them face the consequences of their own bad decisions and fail. So they had to be underwritten with public money in the form of QE. A functional society requires healthy levels of both capitalism and socialism to survive. But the most important thing in my opinion, is that those who intentionally commit fraud or do not act in the fiduciary interest of their stakeholders are adequately punished. This last part is of course the rub - how can you tell if the leaders of business and finance were intentionally setting up their dependents for a crash? What is the adequate punishment?

dnautics 11y ago
> The government plays a regulatory, distributive role in society "We shall see the entire people transformed into petitioners. Landed property, agriculture, industry, commerce, shipping, industrial companies, all will bestir themselves to claim favors from the State... Everyone will have good reasons to prove that legal fraternity should be interpreted in this sense: "Let me have the benefits, and let others pay the costs." Everyone's effort will be directed toward snatching a scrap of fraternal privilege from the legislature. The suffering classes, although having the greatest claim, will not always have the greatest success." Perhaps Bastiat was overoptimistic. The suffering classes will almost never have the greatest success; as over time the path to becoming wealthy becomes more and more dependent on the ability to extract benefits that the government doles out with increasingly byzantine rules and "arbitrary (i.e. cronyist)" process (think SBIRs). Goldman Sachs is the least worthy company to have to "rethink capitalism" - it itself is such a cronyist organization that in many circles it's nicknamed "government sachs". If Goldman Sachs is only now saying, "there are broader questions to be asked about the efficacy of capitalism" - that's stunningly oblivious about its own actions. If anything Goldman Sachs should be asking itself about the efficacy of government in doing anything but redistributing wealth upwards.