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Because capitalism and free enterprise are predicated on fair competition and equal access. In theory, the best and most innovative ideas thrive and lead to ec

by danhak 7y ago

Because capitalism and free enterprise are predicated on fair competition and equal access. In theory, the best and most innovative ideas thrive and lead to economic growth. Extreme inequality undermines this by allowing those who already have significant wealth to put their finger on the scales (lobbying, anticompetitive practices, etc.)

AnthonyMouse 7y ago
The thing that always irks me about this is that we keep talking about the individuals even though that's not the real issue. Sure, Jeff Bezos has a lot of wealth, but really what he has is a lot of shares of Amazon. It's Amazon that really has the money. Even if Bezos is the CEO, he has a duty to the other shareholders to act in their interests. He can't just donate all the company's assets to charity even if he wanted to. The real problem is that corporations are too big. The fact that this makes their founders very rich is more of a side note. Increasing the capital gains rate isn't going to make Apple or Microsoft smaller or give them more competition. It isn't even going to collect more money from the largest shareholders until they sell their shares, which many of them never actually do. This is a competition problem, not a wealth problem. If there were ten times as many companies then there would be ten times as many founders who each had a tenth as much money -- or less, if the added competition directed more of the money to the customers and workers.
- zepto 7y ago
  This isn’t accurate. Amazon doesn’t ‘have the money’ that counts as Bezo’s wealth. It is the value of Amazon to others that produces his wealth. Bezos may not be able to donate Amazon’s assets to charity, but he can donate his assets - in this case his shares of Amazon. He can equally well sell his Amazon shares and buy something else with the proceeds, so the wealth that is attributed to him really his his. Of course there is a point at which Amazon’s value might be impacted if Bezos sold his shares, but he could probably realize well over 50% of his holdings before that became an issue.
  - AnthonyMouse 7y ago
    The problem with your theory is that somebody would have to buy the shares from him. At scale that's zero sum, and the money can't come from people who don't have any. Think about it this way. Alphabet owns Google. When that happened, did it create an additional company out of whole cloth with the value of Google, on top of the value of Alphabet? No. That's double counting. The value only exists once. Moreover, unless Amazon is dissolved, the corporation controls that value (and is required to act in the interests of all the shareholders), regardless of who owns the shares at any given time.
    - pbhjpbhj 7y ago
      >that somebody would have to buy the shares from him // He could decide $N Billion was enough and give the shares away to all employees tomorrow. Or, we could go mediaeval and have a revolution and violently rest control of that wealth from him, and others. I guess the trick with oligarchy is to keep things just the right side of violent revolt, just enough sharing of benefit to give hope to the great unwashed [amongst whom I count myself, in case you think I'm being pejorative].
    - zepto 7y ago
      Your alphabet / google analogy has zero connection to what we are talking. There doesn’t need to be anyone with the cash available to pay the entire price of Amazon. If Jeff Bezos wants to purchase something, he can trade Amazon stock for it. The corporation doesn’t have any control over whether he does that or not. It is exactly equivalent to money.
      - AnthonyMouse 7y ago
        > It is exactly equivalent to money. By this logic Google has an infinite amount of money because it has the ability to issue new shares. It can create a zillion dollars of new shares and sell them in the market and now it has a zillion dollars higher market cap because it has an extra zillion dollars in cash. But it's not actually infinite, for two reasons. First, the money (or whatever you're exchanging the shares for) still has to come from somewhere. There isn't unlimited demand. It's not possible for every billionaire to sell their shares at once because then there would be nobody to sell them to. If they all tried to at once, the share prices would crash into the floor. More importantly, if Bezos sells some shares in Amazon, it doesn't cause Amazon to have less capital. The company is still the same size. All you've changed is who owns it -- and unless the price he sells it for is dramatically lower than its current market value, it has to be some other rich people because nobody else has the money to buy it from him. The only way for a rich person to reduce their holdings in a corporation in order to spend the money is for some other rich person to reduce their spending by the same amount and use the money to buy the shares in their place -- and then the corporation is in control of that person's wealth, in the same amount as the original shareholder's. The things that cause corporate officers to control less wealth are things like corporate spinoffs, taking existing public companies private (which then puts actual control into the hands of the owner), competitors eroding the incumbent's market share, corporate bankruptcies, etc. Two rich guys trading shares for real estate doesn't do that. At the end the corporation still has the same amount of wealth and the two rich guys have the same amount of wealth, you've just changed which one has their wealth in stock vs. land.
- pbhjpbhj 7y ago
  >The real problem is that corporations are too big. // How about if all the workers in Amazon eco-system shared the money equally (according to the retail price index in their locality, perhaps), and reduced the cost of goods to ensure that the per-employee share matched the median societal wage (or something similar)? Still a big fat corp, but not contributing to societal inequality or unfairness (but still a problem for over-use of resources and such); how would that fit with your analysis, would it still be "these corps are too big"?
  - AnthonyMouse 7y ago
    > would it still be "these corps are too big"? Of course, because you'd still have a single entity in control of hundreds of billions of dollars in resources. The CEO still has the same amount of money to lobby the government to relax environmental rules or suppress wages or competition or fix prices or whatever problematic thing Abstract Evil Corp does when they're too powerful. They still have the same huge pile of cash to undercut competitors with until there are none left. The size of the company is problematic independent of where the profits go. It's also somewhat of an implausible hypothetical, because paying significantly above market wages is uncompetitive. If Amazon pays market wages then nobody can undercut them on price because they have better logistics. If they paid significantly above market wages then someone else could pay market wages and undercut them. The only way out of that is to get market wages up and consumer prices down to the level you're talking about -- which is what happens when there are more employers competing for labor and customers.
nbeleski 7y ago
> Because capitalism and free enterprise are predicated on fair competition and equal access. This is so important and seldom mentioned in internet discussions. > Extreme inequality undermines this by allowing those who already have significant wealth to put their finger on the scales (lobbying, anticompetitive practices, etc.) There is a number os scholars who will point that as we currently stand, those things, including the extreme inequality, are consequence of the current system.

by danhak 7y ago

AnthonyMouse 7y ago

The thing that always irks me about this is that we keep talking about the individuals even though that's not the real issue. Sure, Jeff Bezos has a lot of wealth, but really what he has is a lot of shares of Amazon. It's Amazon that really has the money. Even if Bezos is the CEO, he has a duty to the other shareholders to act in their interests. He can't just donate all the company's assets to charity even if he wanted to. The real problem is that corporations are too big. The fact that this makes their founders very rich is more of a side note. Increasing the capital gains rate isn't going to make Apple or Microsoft smaller or give them more competition. It isn't even going to collect more money from the largest shareholders until they sell their shares, which many of them never actually do. This is a competition problem, not a wealth problem. If there were ten times as many companies then there would be ten times as many founders who each had a tenth as much money -- or less, if the added competition directed more of the money to the customers and workers.

zepto 7y ago
This isn’t accurate. Amazon doesn’t ‘have the money’ that counts as Bezo’s wealth. It is the value of Amazon to others that produces his wealth. Bezos may not be able to donate Amazon’s assets to charity, but he can donate his assets - in this case his shares of Amazon. He can equally well sell his Amazon shares and buy something else with the proceeds, so the wealth that is attributed to him really his his. Of course there is a point at which Amazon’s value might be impacted if Bezos sold his shares, but he could probably realize well over 50% of his holdings before that became an issue.
- AnthonyMouse 7y ago
  The problem with your theory is that somebody would have to buy the shares from him. At scale that's zero sum, and the money can't come from people who don't have any. Think about it this way. Alphabet owns Google. When that happened, did it create an additional company out of whole cloth with the value of Google, on top of the value of Alphabet? No. That's double counting. The value only exists once. Moreover, unless Amazon is dissolved, the corporation controls that value (and is required to act in the interests of all the shareholders), regardless of who owns the shares at any given time.
  - pbhjpbhj 7y ago
    >that somebody would have to buy the shares from him // He could decide $N Billion was enough and give the shares away to all employees tomorrow. Or, we could go mediaeval and have a revolution and violently rest control of that wealth from him, and others. I guess the trick with oligarchy is to keep things just the right side of violent revolt, just enough sharing of benefit to give hope to the great unwashed [amongst whom I count myself, in case you think I'm being pejorative].
  - zepto 7y ago
    Your alphabet / google analogy has zero connection to what we are talking. There doesn’t need to be anyone with the cash available to pay the entire price of Amazon. If Jeff Bezos wants to purchase something, he can trade Amazon stock for it. The corporation doesn’t have any control over whether he does that or not. It is exactly equivalent to money.
    - AnthonyMouse 7y ago
      > It is exactly equivalent to money. By this logic Google has an infinite amount of money because it has the ability to issue new shares. It can create a zillion dollars of new shares and sell them in the market and now it has a zillion dollars higher market cap because it has an extra zillion dollars in cash. But it's not actually infinite, for two reasons. First, the money (or whatever you're exchanging the shares for) still has to come from somewhere. There isn't unlimited demand. It's not possible for every billionaire to sell their shares at once because then there would be nobody to sell them to. If they all tried to at once, the share prices would crash into the floor. More importantly, if Bezos sells some shares in Amazon, it doesn't cause Amazon to have less capital. The company is still the same size. All you've changed is who owns it -- and unless the price he sells it for is dramatically lower than its current market value, it has to be some other rich people because nobody else has the money to buy it from him. The only way for a rich person to reduce their holdings in a corporation in order to spend the money is for some other rich person to reduce their spending by the same amount and use the money to buy the shares in their place -- and then the corporation is in control of that person's wealth, in the same amount as the original shareholder's. The things that cause corporate officers to control less wealth are things like corporate spinoffs, taking existing public companies private (which then puts actual control into the hands of the owner), competitors eroding the incumbent's market share, corporate bankruptcies, etc. Two rich guys trading shares for real estate doesn't do that. At the end the corporation still has the same amount of wealth and the two rich guys have the same amount of wealth, you've just changed which one has their wealth in stock vs. land.
pbhjpbhj 7y ago
>The real problem is that corporations are too big. // How about if all the workers in Amazon eco-system shared the money equally (according to the retail price index in their locality, perhaps), and reduced the cost of goods to ensure that the per-employee share matched the median societal wage (or something similar)? Still a big fat corp, but not contributing to societal inequality or unfairness (but still a problem for over-use of resources and such); how would that fit with your analysis, would it still be "these corps are too big"?
- AnthonyMouse 7y ago
  > would it still be "these corps are too big"? Of course, because you'd still have a single entity in control of hundreds of billions of dollars in resources. The CEO still has the same amount of money to lobby the government to relax environmental rules or suppress wages or competition or fix prices or whatever problematic thing Abstract Evil Corp does when they're too powerful. They still have the same huge pile of cash to undercut competitors with until there are none left. The size of the company is problematic independent of where the profits go. It's also somewhat of an implausible hypothetical, because paying significantly above market wages is uncompetitive. If Amazon pays market wages then nobody can undercut them on price because they have better logistics. If they paid significantly above market wages then someone else could pay market wages and undercut them. The only way out of that is to get market wages up and consumer prices down to the level you're talking about -- which is what happens when there are more employers competing for labor and customers.

nbeleski 7y ago

> Because capitalism and free enterprise are predicated on fair competition and equal access. This is so important and seldom mentioned in internet discussions. > Extreme inequality undermines this by allowing those who already have significant wealth to put their finger on the scales (lobbying, anticompetitive practices, etc.) There is a number os scholars who will point that as we currently stand, those things, including the extreme inequality, are consequence of the current system.