5 ms·

We All Work at Enron Now

35 points by sinzone 16y ago

muhfuhkuh 16y ago
Here's what I don't understand about Pure Capitalism (and the Pure Capitalists who espouse it): The end goal of it is, in almost all non-theory cases throughout the history of civilization, suffering in either quality or quantity delivered to the customer or suffering of the well-being of the non-owner personnel. Whether it is by imperfect competition due to myriad reasons (information asymmetry, {mono|duo|oligo}poly, "regulatory capture" or blatant corruption of governments) or industry verticalization or horizontalization, the end result is always one or a cabal of big ass companies runs everything, exploits its workers in one or more industries, and the smaller competition gets squeezed out to the point where the barriers to entry are impossible except through regulation (and, often times, regulation is the reason it makes it hard to compete). How many more times can we say "Capitalism would be perfect, if it weren't for humans" before we conclude that we need something different? And, why do we continue to pursue it in practice if we know it doesn't work in almost any situation? In fact the only industry that is known to have "perfect competition", the one taught about ad nauseum in econ classes, is fishermen in Southern US. And, even then, governments and even the Ku Klux Klan were called in when hard-working Vietnamese immigrants came in and fished harder and longer. There's no win when Free Will is involved. Pure capitalism doesn't work (or else we'd have done that already), communism doesn't work. Something in between, but what?
- noarchy 16y ago
  Can we say that what many modern nations have right now is, in fact, that "something in between"? Is it possible that what we have now is the natural progression towards a general equilibrium between the role of the state, and the role of capital? Clearly people disagree over the finer points of how it should work, but what about the overall picture?
- stretchwithme 16y ago
  And how do you define pure capitalism? What is government allowed to do in your definition?
  - ScotterC 16y ago
    Well that's at the root of the question. What is the government's role? What should it be? To keep citizens safe? To allow commerce?
    - stretchwithme 16y ago
      I was asking what definition of pure capitalism is being referred to, not what the proper role of government is.
  - muhfuhkuh 16y ago
    Well, in the purest sense of Capitalism, the government's sole role is to enforce private property rights for property owners. That's it. It does not have to, for example, determine equality or "justice", unless and only unless, justice is meted only in the context of property right enforcement. Notions of constitutionality, "natural" or "human" rights, "general welfare" -- hell even "common defense" -- are simply theft by government gunpoint. That's the leanest, strictest, "aspie"-est role of government that I've seen. We don't need anything: An army, navy, NIH, IRS, Student Aid, welfare, SS, Medicare. We need nothing but the government to ensure that what I make I can keep and what I do with it is my business. Everything else, and I mean all of it, as cute and as cuddly and toothless and gross and poor and pathetic, can fall where it may. In this situation, "ask not what your country can do for you, ask what you can do for your country" is tantamount to treason, if and only if we lived in a pure capitalistic society. Any disputes to the above are the very first that I've heard of and is not pure capitalism.
    - stretchwithme 16y ago
      And in this perfect capitalist system, would the government collect a fee to defray the costs of enforcing property rights?
- T_S_ 16y ago
  The price system is the best thing about capitalism, and it is a great thing, but only when it includes taxes to account for externalities. The concentration of capital is merely a historical accident or a symptom of parasitism, depending on your brand of goggles. When you see people standing up for capitalism, ask yourself: Are they promoting the correct operation of the price system, or just helping out some friend of theirs?
  - nika 16y ago
    What school of economics is this perspective from? I'm not aware of it. Isn't a tax on "Externalities" simply using some politically correct claim as an excuse to take money? EG: if the government puts a tax on production for "pollution", what reason is there to believe the money isn't just being taken to profit the politicians? Its not like they spend the money on abating pollution. Finally, I think there really is no such thing as an "Externality". If you build a plant next door that is polluting, you're going to owe me money. This is an internality, it is part of your operating cost. I will sue you, and in any fair system, the damage you do to my persons or property is something I can recoup. If you're afraid that the ability to sue for such damages is impaired, then get rid of the EPA and other government regulations that provide cover for this pollution. Lawsuits are a form of market pricing of the cost of doing wrong. And generally, most businesses will try not to do wrong because it is a lot easier to just do things right the first time than face the liability of injuring people or property. of course, removing limitations on liability is important for this. IF that's what you meant by a "Tax on externalities" then great.
    - ecounysis 16y ago
      This is from the school of economics commonly taught at any university that can get past the free market love fest that so many business economics courses focus on. I believe the technical term for externalities and such is "market imperfection".
      - T_S_ 16y ago
        Externalities are one form. They are the source of imperfections in markets for scarce resources. Informational asymmetries are another source of imperfection. I don't think taxes and subsidies can help remedy them. Regulation that promotes information sharing is the only remedy I know.
- nika 16y ago
  The US is far from a pure capitalist society. Between 1800-1900, despite a civil war and the massive economic damage involved in such things, we went from being a backwards third world country to being a world power in a nearly pure-capitalist society. We were well on our way to eliminating poverty. Starting in 1900 socialism in many forms started to take over the country, resulting in the great depression, the new deal, etc. But still, between 1900-2000 despite inflation eroding the purchasing power of the dollar by %90+, the standard of living for the lowest %20 of americans increased drastically. We went from nobody having any electric utilities in 1900 (of those in poverty, maybe lights and phone service) to it being fairly common for the lower %20 to have computers and internet and TVs and electric dishwashers, etc. Too long of a time horizon? Look at india from 1980-2000. India is a socialist country and did not embrace pure capitalism, but had reforms that greatly reduced buracracy making starting small businesses much easier. The per-capita income of India doubled in that time period. That is over a billion people. Many of them are still poor, but their relations who are now living in first world standards can send money back home and the quality of life of the poor was improved dramatically-- just by lessening the burdends of socialism slightly. Seriously, if you study economics, and you look at history, you'll find that where a country has a relatively free economy, the standard of living of the poorest %20 improves. Where a country has a relatively unfree economy, ranging from British socialism to German socialism to the USSR and North Korea, the poor have much lower standards of living. If socialism is very dominant, it is true that there is "less poverty", but this is simply because everyone but the government is made to be poor. The only economic equality historically comes from everyone being poor. -- Finally, I think that, given that the purpose of this site is to foster a startup spirit, you really should question whether a startup is for you if you reject capitalism. I don't see how you can make good business deals, treat your employees right, or be a success if you thin the very nature of what you're doing is bad or evil. Capitalism works because in a consentual exchange, both parties profit. When we trade, we are trading something we value relatively less for something we value relatively more. The apple farmer has so many apples, he'd rather have money, while the cobbler has no apples and wants to buy some. When you give government control over the economy you naturally create centralized planning and inefficiencies that lead to shortages. Either they price things too high or too low, because they aren't aware of the market signals. Compulsion of force eliminates choice which eliminates the method by which consumers give feedback to economic entities. This is why there was scarcity in the USSR while there was abundance in the USA despite the USSR having more resources overall. Of course, it is also in governments interest to indoctrinate people with the idea that they need government, which is why governments take over schools and then proceed to teach children that socialism is necessary to for "equity" while ignoring that it has failed everywhere (even the USA.) Study economics. It isn't that difficult of a subject. The obfuscation and handwaving is all about trying to make keynsianism seem viable. Economics in one lesson, by henry hazlit is free online from various sites and gives very succinct arguments for why various programs do or don't work, and how the world works economically. We're in a depression in the US caused by a distortion of the market from government. Under clinton it was decreed that loaning money only to people who could repay it was racist, and under Bush it was decreed that the rate of interest should be below the rate of inflation. This caused the housing bubble and the consequent bust. It is no wonder that the perpetrators of this crime -- years after it turned out that there was no racial bias in the loaning results-- blamed the wall street banks and "bailed them out", often forcing solvent banks like wells fargo to take "Bailouts" even though they didn't need them...and to try to push thru congress the power to arbitrarily force mergers of banks at the federal reserve level. Capitalism works. Freedom works. Let people be and they will make better choices for themselves. Try to impose your whims on them and you will make their lives worse. You need to embrace this if you want to run a business.
- stretchwithme 16y ago
  I think what a lot of people don't realize is that most of the things that government does for us right now can and would be handled through property rights and voluntary contracts if government were limited to a minimal role. For example, a group of property owners could agree to a contract that controls whats on sale at stores in their collection of properties, decide what channels are available on its cable tv system, ban smoking of tobacco and even combine their bargaining power to get better deals on credit cards, lawn mowing, etc. I think we'd certainly see such systems evolve if government restricted itself to just enforcing property rights and contracts. There is nothing about this that conflicts with property rights, as long as people can enter and leave these contracts and the terms cannot be changed arbitrarily. A lot of these things are impossible for government to do without stepping on the rights and preferences of large portions of the population. It tries and fails at many of them. It actually regulates very badly compared to standards that For example, we still don't have smoke free communities. I doubt it will ever be mandated. But its been possible in private property forever. And smoke free communities can coexist with communities that allow smoking (except for whoever's downwind). These neighborhoods would attract people who value the overall quality of life who may even disagree with some parts of the contract, but are willing to tolerate the rules to get the safety and health benefits or just to live with people like themselves. And there'd be others who'd prefer not to be involved with any such arrangements.
  - davidw 16y ago
    What if, right next to your libertopian neighborhood, I buy up someone's house and decide to turn it into a dynamite factory and spent-plutonium deposit operated by chain smokers? That's an 'externality'. Regulations are a pretty good way of dealing with them, even if imperfect. I believe it's good for there to be a more or less continuous debate on the nature and scope of those regulations - too many stifle business and personal liberty, too few can cause problems as well.
  - varjag 16y ago
    > I think we'd certainly see such systems evolve if government restricted itself to just enforcing property rights and contracts. They will indeed evolve. As the time goes, more and more local regulation would be added, and you will need people doing full time tracking and enforcement of it. Eventually, enough neighborhoods will notice how much similar regulation they have, and agree to outsource that part to be managed by an independent body focused on the issue. They will fund this body by paying a share of their budget, as obviously people doing this work need to live off something. At this point of course, you get a government.
zeteo 16y ago
This article is rather crappy. Quick summary: 1. Ten years ago, some people committed egregious accounting fraud. 2. Let's imagine what would happen if everyone committed accounting fraud. (Where we re-define accounting fraud in a very liberal manner.) 3. Sprinkle in lots of non-sequitur. Oh look, this is an explanation for the current state of the economy and Everything Else! 4. Therefore, the environment is going down the drain and we're all screwed, unless all principles of accounting are re-based upon environmental economics. Come on Umair, you can do better than that!
- Vivtek 16y ago
  Also: 5. Fortunately, the Internet has Changed Everything and, like in $CONTEMPORARY_REFERENCE, all bad things will be swept away. The End!
drstrangevibes 16y ago
I think you'll find that economies have been doing this for centuries and theyve been crashing because of it too. http://ancienthistory.about.com/od/fallromeeconomic/a/econoffall.htm http://ancienthistory.about.com/od/fallromeeconomic/a/econof...

35 points by sinzone 16y ago

Here's what I don't understand about Pure Capitalism (and the Pure Capitalists who espouse it): The end goal of it is, in almost all non-theory cases throughout the history of civilization, suffering in either quality or quantity delivered to the customer or suffering of the well-being of the non-owner personnel. Whether it is by imperfect competition due to myriad reasons (information asymmetry, {mono|duo|oligo}poly, "regulatory capture" or blatant corruption of governments) or industry verticalization or horizontalization, the end result is always one or a cabal of big ass companies runs everything, exploits its workers in one or more industries, and the smaller competition gets squeezed out to the point where the barriers to entry are impossible except through regulation (and, often times, regulation is the reason it makes it hard to compete). How many more times can we say "Capitalism would be perfect, if it weren't for humans" before we conclude that we need something different? And, why do we continue to pursue it in practice if we know it doesn't work in almost any situation? In fact the only industry that is known to have "perfect competition", the one taught about ad nauseum in econ classes, is fishermen in Southern US. And, even then, governments and even the Ku Klux Klan were called in when hard-working Vietnamese immigrants came in and fished harder and longer. There's no win when Free Will is involved. Pure capitalism doesn't work (or else we'd have done that already), communism doesn't work. Something in between, but what?

noarchy 16y ago
Can we say that what many modern nations have right now is, in fact, that "something in between"? Is it possible that what we have now is the natural progression towards a general equilibrium between the role of the state, and the role of capital? Clearly people disagree over the finer points of how it should work, but what about the overall picture?
stretchwithme 16y ago
And how do you define pure capitalism? What is government allowed to do in your definition?
- ScotterC 16y ago
  Well that's at the root of the question. What is the government's role? What should it be? To keep citizens safe? To allow commerce?
  - stretchwithme 16y ago
    I was asking what definition of pure capitalism is being referred to, not what the proper role of government is.
- muhfuhkuh 16y ago
  Well, in the purest sense of Capitalism, the government's sole role is to enforce private property rights for property owners. That's it. It does not have to, for example, determine equality or "justice", unless and only unless, justice is meted only in the context of property right enforcement. Notions of constitutionality, "natural" or "human" rights, "general welfare" -- hell even "common defense" -- are simply theft by government gunpoint. That's the leanest, strictest, "aspie"-est role of government that I've seen. We don't need anything: An army, navy, NIH, IRS, Student Aid, welfare, SS, Medicare. We need nothing but the government to ensure that what I make I can keep and what I do with it is my business. Everything else, and I mean all of it, as cute and as cuddly and toothless and gross and poor and pathetic, can fall where it may. In this situation, "ask not what your country can do for you, ask what you can do for your country" is tantamount to treason, if and only if we lived in a pure capitalistic society. Any disputes to the above are the very first that I've heard of and is not pure capitalism.
  - stretchwithme 16y ago
    And in this perfect capitalist system, would the government collect a fee to defray the costs of enforcing property rights?
T_S_ 16y ago
The price system is the best thing about capitalism, and it is a great thing, but only when it includes taxes to account for externalities. The concentration of capital is merely a historical accident or a symptom of parasitism, depending on your brand of goggles. When you see people standing up for capitalism, ask yourself: Are they promoting the correct operation of the price system, or just helping out some friend of theirs?
- nika 16y ago
  What school of economics is this perspective from? I'm not aware of it. Isn't a tax on "Externalities" simply using some politically correct claim as an excuse to take money? EG: if the government puts a tax on production for "pollution", what reason is there to believe the money isn't just being taken to profit the politicians? Its not like they spend the money on abating pollution. Finally, I think there really is no such thing as an "Externality". If you build a plant next door that is polluting, you're going to owe me money. This is an internality, it is part of your operating cost. I will sue you, and in any fair system, the damage you do to my persons or property is something I can recoup. If you're afraid that the ability to sue for such damages is impaired, then get rid of the EPA and other government regulations that provide cover for this pollution. Lawsuits are a form of market pricing of the cost of doing wrong. And generally, most businesses will try not to do wrong because it is a lot easier to just do things right the first time than face the liability of injuring people or property. of course, removing limitations on liability is important for this. IF that's what you meant by a "Tax on externalities" then great.
  - ecounysis 16y ago
    This is from the school of economics commonly taught at any university that can get past the free market love fest that so many business economics courses focus on. I believe the technical term for externalities and such is "market imperfection".
    - T_S_ 16y ago
      Externalities are one form. They are the source of imperfections in markets for scarce resources. Informational asymmetries are another source of imperfection. I don't think taxes and subsidies can help remedy them. Regulation that promotes information sharing is the only remedy I know.
nika 16y ago
The US is far from a pure capitalist society. Between 1800-1900, despite a civil war and the massive economic damage involved in such things, we went from being a backwards third world country to being a world power in a nearly pure-capitalist society. We were well on our way to eliminating poverty. Starting in 1900 socialism in many forms started to take over the country, resulting in the great depression, the new deal, etc. But still, between 1900-2000 despite inflation eroding the purchasing power of the dollar by %90+, the standard of living for the lowest %20 of americans increased drastically. We went from nobody having any electric utilities in 1900 (of those in poverty, maybe lights and phone service) to it being fairly common for the lower %20 to have computers and internet and TVs and electric dishwashers, etc. Too long of a time horizon? Look at india from 1980-2000. India is a socialist country and did not embrace pure capitalism, but had reforms that greatly reduced buracracy making starting small businesses much easier. The per-capita income of India doubled in that time period. That is over a billion people. Many of them are still poor, but their relations who are now living in first world standards can send money back home and the quality of life of the poor was improved dramatically-- just by lessening the burdends of socialism slightly. Seriously, if you study economics, and you look at history, you'll find that where a country has a relatively free economy, the standard of living of the poorest %20 improves. Where a country has a relatively unfree economy, ranging from British socialism to German socialism to the USSR and North Korea, the poor have much lower standards of living. If socialism is very dominant, it is true that there is "less poverty", but this is simply because everyone but the government is made to be poor. The only economic equality historically comes from everyone being poor. -- Finally, I think that, given that the purpose of this site is to foster a startup spirit, you really should question whether a startup is for you if you reject capitalism. I don't see how you can make good business deals, treat your employees right, or be a success if you thin the very nature of what you're doing is bad or evil. Capitalism works because in a consentual exchange, both parties profit. When we trade, we are trading something we value relatively less for something we value relatively more. The apple farmer has so many apples, he'd rather have money, while the cobbler has no apples and wants to buy some. When you give government control over the economy you naturally create centralized planning and inefficiencies that lead to shortages. Either they price things too high or too low, because they aren't aware of the market signals. Compulsion of force eliminates choice which eliminates the method by which consumers give feedback to economic entities. This is why there was scarcity in the USSR while there was abundance in the USA despite the USSR having more resources overall. Of course, it is also in governments interest to indoctrinate people with the idea that they need government, which is why governments take over schools and then proceed to teach children that socialism is necessary to for "equity" while ignoring that it has failed everywhere (even the USA.) Study economics. It isn't that difficult of a subject. The obfuscation and handwaving is all about trying to make keynsianism seem viable. Economics in one lesson, by henry hazlit is free online from various sites and gives very succinct arguments for why various programs do or don't work, and how the world works economically. We're in a depression in the US caused by a distortion of the market from government. Under clinton it was decreed that loaning money only to people who could repay it was racist, and under Bush it was decreed that the rate of interest should be below the rate of inflation. This caused the housing bubble and the consequent bust. It is no wonder that the perpetrators of this crime -- years after it turned out that there was no racial bias in the loaning results-- blamed the wall street banks and "bailed them out", often forcing solvent banks like wells fargo to take "Bailouts" even though they didn't need them...and to try to push thru congress the power to arbitrarily force mergers of banks at the federal reserve level. Capitalism works. Freedom works. Let people be and they will make better choices for themselves. Try to impose your whims on them and you will make their lives worse. You need to embrace this if you want to run a business.
stretchwithme 16y ago
I think what a lot of people don't realize is that most of the things that government does for us right now can and would be handled through property rights and voluntary contracts if government were limited to a minimal role. For example, a group of property owners could agree to a contract that controls whats on sale at stores in their collection of properties, decide what channels are available on its cable tv system, ban smoking of tobacco and even combine their bargaining power to get better deals on credit cards, lawn mowing, etc. I think we'd certainly see such systems evolve if government restricted itself to just enforcing property rights and contracts. There is nothing about this that conflicts with property rights, as long as people can enter and leave these contracts and the terms cannot be changed arbitrarily. A lot of these things are impossible for government to do without stepping on the rights and preferences of large portions of the population. It tries and fails at many of them. It actually regulates very badly compared to standards that For example, we still don't have smoke free communities. I doubt it will ever be mandated. But its been possible in private property forever. And smoke free communities can coexist with communities that allow smoking (except for whoever's downwind). These neighborhoods would attract people who value the overall quality of life who may even disagree with some parts of the contract, but are willing to tolerate the rules to get the safety and health benefits or just to live with people like themselves. And there'd be others who'd prefer not to be involved with any such arrangements.
- davidw 16y ago
  What if, right next to your libertopian neighborhood, I buy up someone's house and decide to turn it into a dynamite factory and spent-plutonium deposit operated by chain smokers? That's an 'externality'. Regulations are a pretty good way of dealing with them, even if imperfect. I believe it's good for there to be a more or less continuous debate on the nature and scope of those regulations - too many stifle business and personal liberty, too few can cause problems as well.
- varjag 16y ago
  > I think we'd certainly see such systems evolve if government restricted itself to just enforcing property rights and contracts. They will indeed evolve. As the time goes, more and more local regulation would be added, and you will need people doing full time tracking and enforcement of it. Eventually, enough neighborhoods will notice how much similar regulation they have, and agree to outsource that part to be managed by an independent body focused on the issue. They will fund this body by paying a share of their budget, as obviously people doing this work need to live off something. At this point of course, you get a government.

zeteo 16y ago

This article is rather crappy. Quick summary: 1. Ten years ago, some people committed egregious accounting fraud. 2. Let's imagine what would happen if everyone committed accounting fraud. (Where we re-define accounting fraud in a very liberal manner.) 3. Sprinkle in lots of non-sequitur. Oh look, this is an explanation for the current state of the economy and Everything Else! 4. Therefore, the environment is going down the drain and we're all screwed, unless all principles of accounting are re-based upon environmental economics. Come on Umair, you can do better than that!

Vivtek 16y ago
Also: 5. Fortunately, the Internet has Changed Everything and, like in $CONTEMPORARY_REFERENCE, all bad things will be swept away. The End!

drstrangevibes 16y ago

I think you'll find that economies have been doing this for centuries and theyve been crashing because of it too. http://ancienthistory.about.com/od/fallromeeconomic/a/econoffall.htm http://ancienthistory.about.com/od/fallromeeconomic/a/econof...