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Yep, the capital owning class just doesn't care if their businesses go into shock because they already have their cash in hand. They'll never go back to pre-ROE

Yep, the capital owning class just doesn't care if their businesses go into shock because they already have their cash in hand. They'll never go back to pre-ROE days because they'd have to live with less money and worse less control. While they still have personal reserves in the billions they can decide the fate of their ventures but if say 20% of their current cash was on the balance sheets of corporations with boards that don't vote their way most of the time then they're forced in the medium to long term acceptance of their policies. This isn't an argument for a return to traditional corporate power because they bungled so many things (GM and the rest of Detroit got their rear ends handed to them by the Japanese and their application of JIT). Rather, it seems like to me the reliance of having a few owners or a few institutions with consolidated power in the form of money or assets is a recipe for disaster. If anything, it's time to disperse the wealth and responsibility of production to as many firms as reasonably as possible. I'd rather have 20 smaller companies making the same thing than 3 big ones that supposedly make them cheaper due to scales of economy which imo is wrong and that most big firms are in diseconomy of said scales now (prices imo reflect this). Basically, we need to both economically and politically Switzerfy the economy (more dispersed institutions, less central control where reasonably possible).

amelius 5y ago
> Yep, the capital owning class just doesn't care if their businesses go into shock because they already have their cash in hand. What if there was inflation?
- nostrademons 5y ago
  Inflation generally helps big business and its owners. They get to raise prices, and they usually get to raise prices more than the average firm does because they have little competition. You're seeing this now with record-high corporate earnings. As long as the capital-owning class is holding equity (stocks, real estate) they benefit from inflation.
  - Supermancho 5y ago
    > Inflation generally helps big business and its owners. I'm not sure that follows in extreme cases. I don't even think it follows in baseline cases (2% inflation yoy). Raising prices leaves customers with limited resources, as wages do not follow at anywhere near the same rate. If inflation brings prices up, consumers can only spend on specific items, prioritizing necessities over entire verticals of goods. For the vast majority of companies, it's bad.
    - nostrademons 5y ago
      That effect is true, but the vast majority of big (top-100 in S&P 500) businesses are in relative necessities. That's how you get to be big: position yourself as a critical component in a key consumer value chain. Take a look at a sampling of the top 50 or so companies by market cap. There's computing & telecom (Apple, Google, Facebook, Microsoft, NVidia, Intel, Comcast, AT&T, Verizon, Broadcom, Cisco), which is fundamental to obtaining products & services these days. Retail (Amazon, Walmart, Costco, Target, Home Depot, and Lowe's). Financial services, necessary for paying for things (JPMorgan Chase, Wells Fargo, Visa, Mastercard, Bank of America). Critical enterprise software (Oracle, Salesforce). Health care (United Health, Johnson & Johnson, Eli Lilly, Pfizer, Abbott Labs, Merck). Oil (Exxon and Chevron). Of the top 50, the only ones that I think would be seriously vulnerable are Tesla, Netflix, and possibly branded foodstuffs (Coke/Pepsi/McDonalds). Sure, it'll be devastating to the vast majority of companies - but it's companies like restaurants, niche hobby stores, luxury activities, etc, not the staples that make up the S&P 500.
- ajmurmann 5y ago
  AND Ryan's point about taxing unrealized capital gains was that it forces founders to divest over time. Which one is it?
xyzzyz 5y ago
> Yep, the capital owning class just doesn't care if their businesses go into shock because they already have their cash in hand. Billionaires have relatively very little cash in hand. Their billions typically are in form of business equity, and so they very much care of the businesses go into shock.
- lupire 5y ago
  Billionaires have massive personal loans (compared to human needs, not compatrd do their owned equity) collateralized by their business equity.
  - xyzzyz 5y ago
    Yes, they are “massive” by normal people’s standard, but they are usually minuscule relative to their equity holdings.
    - Swenrekcah 5y ago
      Which is kind of to the point, they have more money on hand than a small country’s budget and even if they lose it all it almost doesn’t make a dent in their net worth. In this situation it is almost reasonable to want a small crisis to shake out your upcoming competitors and buy some more land or other things of real value at a discount.
      - xyzzyz 5y ago
        > Which is kind of to the point, they have more money on hand than a small country’s budget They don’t, though, that’s the entire point. > and even if they lose it all it almost doesn’t make a dent in their net worth. > In this situation it is almost reasonable to want a small crisis to shake out your upcoming competitors and buy some more land or other things of real value at a discount. A small crisis will in fact not cause them to lose significant amount of cash, but will cause them to lose significant amount of their net worth. Nobody wants that.
legutierr 5y ago
https://en.wikipedia.org/wiki/Distributism https://en.wikipedia.org/wiki/Distributism
gruez 5y ago
>Yep, the capital owning class just doesn't care if their businesses go into shock because they already have their cash in hand. You do realize when we talk about jeff bezos being a billionaire, it doesn't mean he has his billions in gold/cash in a vault somewhere? The overwhelming majority of his wealth is tied in various financial assets (eg. equities) that certainly do get affected when "businesses go into shock". Sure, he'll be in a much better position to weather such "shocks", but it's still in his best interest to ensure that the economy doesn't crash.
- xmprt 5y ago
  Genuine question: 2020 feels like the biggest shock to the economy in a while yet it was one of the best years for most big businesses. If Jeff Bezos didn't feel the shock from 2020 then when will he feel the shock?
  - gruez 5y ago
    >2020 feels like the biggest shock to the economy in a while yet it was one of the best years for most big businesses. by what metric?
    - munificent 5y ago
      The millions of people who lost their jobs and had to rely on emergency cash payments from the government to pay for food and rent?
      - gruez 5y ago
        How does this have anything to do with the claim that it was "best years for most big businesses"? Do "most big businesses" do better when that happens?
        ironSkillet 5y ago
        There were two quantified subjects in the quote you referenced - "biggest shock to economy" and "best years for most big businesses". My guess is he was replying about the first subject.
MR4D 5y ago
> Switzerfy the economy Just off the top of my head, the Swiss: don't make airplanes (no Boeing, Embraer) don't make cars (no GM, Ford, Toyota, etc) have big consolidated banks (UBS & CS) have large trading firms (Glencore, Trafigura) etc.... My point is not to nitpick (I actually agree with your post) , but to show that even in a tiny country like Switzerland (smaller than Chicago), it is hard to do that.
- jet_32951 5y ago
  Pilatus.[0] <null>. UBS Switzerland. [1] Glencore. [2] [0]https://www.pilatus-aircraft.com/en https://www.pilatus-aircraft.com/en [1]https://swissfirma.com/largest-swiss-companies https://swissfirma.com/largest-swiss-companies [2]https://www.topmba.com/jobs/15-fortune-500-companies-headquartered-switzerland https://www.topmba.com/jobs/15-fortune-500-companies-headqua...
- ladyattis 5y ago
  No, my point about Switzerfy is to mean that we need to distribute power and assets more evenly just as the Swiss distribute power more evenly politically. We've left too much to float to the top of the economy where those who have enough wealth which they can roll over interest with little effort on their part.
ethbr0 5y ago
> GM and the rest of Detroit got their rear ends handed to them by the Japanese and their application of JIT GM and the rest of Detroit got their rear ends handed to them because they'd underinvested in fuel-efficient engine designs (the lost 70s) and grown lazy in reliability. Lean manufacturing may have allowed Japanese manufacturers to price more competitively and be more agile, but at the end of the day, they increased their sales because they made better cars.
- nickff 5y ago
  >"GM and the rest of Detroit got their rear ends handed to them because they'd underinvested in fuel-efficient engine designs (the lost 70s) and grown lazy in reliability." You're leaving out some pressures which caused Detroit to be un-competitive in the small car space, including high labor costs.
  - wombatpm 5y ago
    I owned a 79 Ford Mustang in 1986. By 1988 and 88k miles the engine was shot because it was an underpowered 2liter 4 cylinder with a turbo. Detroit was uncompetitive because they made sucky cars. To this day I haven’t owned another Ford and never will.
mensetmanusman 5y ago
R&D in 20 small companies is less effective than in 3 big ones due to less diverse teams and more inefficient double spending, e.g. twenty $5M microscopes utilized at 15% versus three at 90%.
- bsder 5y ago
  If only we could overcome the negatives of the bureaucracy of a large company with a mere double-spend on equipment. It would be cheap at 10x that price. The whole point of the startup culture is that they can do things better than a large company. And, quite often, they can. But not always. A semiconductor plant, for example, is not a startup thing because the capital cost is so gigantic. However, most fields are not that bad. Even bio equipment just isn't that expensive relative to the cost of the people to use that equipment. The bigger problem, right now, is that investors don't want to fund anything which requires more than 18 months before flameout/unicorn. That blocks startups that have a 5+ year horizon.
Spooky23 5y ago
The endgame isn’t going to a fix, it’s defeat. Newer, smarter Asian companies will displace stupid old American ones, just as the Americans crushed the Europeans.
outside1234 5y ago
By swissify do you mean go full-on with money laundering and then hide it with privacy laws?

amelius 5y ago

> Yep, the capital owning class just doesn't care if their businesses go into shock because they already have their cash in hand. What if there was inflation?

nostrademons 5y ago
Inflation generally helps big business and its owners. They get to raise prices, and they usually get to raise prices more than the average firm does because they have little competition. You're seeing this now with record-high corporate earnings. As long as the capital-owning class is holding equity (stocks, real estate) they benefit from inflation.
- Supermancho 5y ago
  > Inflation generally helps big business and its owners. I'm not sure that follows in extreme cases. I don't even think it follows in baseline cases (2% inflation yoy). Raising prices leaves customers with limited resources, as wages do not follow at anywhere near the same rate. If inflation brings prices up, consumers can only spend on specific items, prioritizing necessities over entire verticals of goods. For the vast majority of companies, it's bad.
  - nostrademons 5y ago
    That effect is true, but the vast majority of big (top-100 in S&P 500) businesses are in relative necessities. That's how you get to be big: position yourself as a critical component in a key consumer value chain. Take a look at a sampling of the top 50 or so companies by market cap. There's computing & telecom (Apple, Google, Facebook, Microsoft, NVidia, Intel, Comcast, AT&T, Verizon, Broadcom, Cisco), which is fundamental to obtaining products & services these days. Retail (Amazon, Walmart, Costco, Target, Home Depot, and Lowe's). Financial services, necessary for paying for things (JPMorgan Chase, Wells Fargo, Visa, Mastercard, Bank of America). Critical enterprise software (Oracle, Salesforce). Health care (United Health, Johnson & Johnson, Eli Lilly, Pfizer, Abbott Labs, Merck). Oil (Exxon and Chevron). Of the top 50, the only ones that I think would be seriously vulnerable are Tesla, Netflix, and possibly branded foodstuffs (Coke/Pepsi/McDonalds). Sure, it'll be devastating to the vast majority of companies - but it's companies like restaurants, niche hobby stores, luxury activities, etc, not the staples that make up the S&P 500.
ajmurmann 5y ago
AND Ryan's point about taxing unrealized capital gains was that it forces founders to divest over time. Which one is it?

xyzzyz 5y ago

> Yep, the capital owning class just doesn't care if their businesses go into shock because they already have their cash in hand. Billionaires have relatively very little cash in hand. Their billions typically are in form of business equity, and so they very much care of the businesses go into shock.

lupire 5y ago
Billionaires have massive personal loans (compared to human needs, not compatrd do their owned equity) collateralized by their business equity.
- xyzzyz 5y ago
  Yes, they are “massive” by normal people’s standard, but they are usually minuscule relative to their equity holdings.
  - Swenrekcah 5y ago
    Which is kind of to the point, they have more money on hand than a small country’s budget and even if they lose it all it almost doesn’t make a dent in their net worth. In this situation it is almost reasonable to want a small crisis to shake out your upcoming competitors and buy some more land or other things of real value at a discount.
    - xyzzyz 5y ago
      > Which is kind of to the point, they have more money on hand than a small country’s budget They don’t, though, that’s the entire point. > and even if they lose it all it almost doesn’t make a dent in their net worth. > In this situation it is almost reasonable to want a small crisis to shake out your upcoming competitors and buy some more land or other things of real value at a discount. A small crisis will in fact not cause them to lose significant amount of cash, but will cause them to lose significant amount of their net worth. Nobody wants that.

legutierr 5y ago

https://en.wikipedia.org/wiki/Distributism https://en.wikipedia.org/wiki/Distributism

gruez 5y ago

>Yep, the capital owning class just doesn't care if their businesses go into shock because they already have their cash in hand. You do realize when we talk about jeff bezos being a billionaire, it doesn't mean he has his billions in gold/cash in a vault somewhere? The overwhelming majority of his wealth is tied in various financial assets (eg. equities) that certainly do get affected when "businesses go into shock". Sure, he'll be in a much better position to weather such "shocks", but it's still in his best interest to ensure that the economy doesn't crash.

xmprt 5y ago
Genuine question: 2020 feels like the biggest shock to the economy in a while yet it was one of the best years for most big businesses. If Jeff Bezos didn't feel the shock from 2020 then when will he feel the shock?
- gruez 5y ago
  >2020 feels like the biggest shock to the economy in a while yet it was one of the best years for most big businesses. by what metric?
  - munificent 5y ago
    The millions of people who lost their jobs and had to rely on emergency cash payments from the government to pay for food and rent?
    - gruez 5y ago
      How does this have anything to do with the claim that it was "best years for most big businesses"? Do "most big businesses" do better when that happens?
      - ironSkillet 5y ago
        There were two quantified subjects in the quote you referenced - "biggest shock to economy" and "best years for most big businesses". My guess is he was replying about the first subject.

MR4D 5y ago

> Switzerfy the economy Just off the top of my head, the Swiss: don't make airplanes (no Boeing, Embraer) don't make cars (no GM, Ford, Toyota, etc) have big consolidated banks (UBS & CS) have large trading firms (Glencore, Trafigura) etc.... My point is not to nitpick (I actually agree with your post) , but to show that even in a tiny country like Switzerland (smaller than Chicago), it is hard to do that.

jet_32951 5y ago
Pilatus.[0] <null>. UBS Switzerland. [1] Glencore. [2] [0]https://www.pilatus-aircraft.com/en https://www.pilatus-aircraft.com/en [1]https://swissfirma.com/largest-swiss-companies https://swissfirma.com/largest-swiss-companies [2]https://www.topmba.com/jobs/15-fortune-500-companies-headquartered-switzerland https://www.topmba.com/jobs/15-fortune-500-companies-headqua...
ladyattis 5y ago
No, my point about Switzerfy is to mean that we need to distribute power and assets more evenly just as the Swiss distribute power more evenly politically. We've left too much to float to the top of the economy where those who have enough wealth which they can roll over interest with little effort on their part.

ethbr0 5y ago

> GM and the rest of Detroit got their rear ends handed to them by the Japanese and their application of JIT GM and the rest of Detroit got their rear ends handed to them because they'd underinvested in fuel-efficient engine designs (the lost 70s) and grown lazy in reliability. Lean manufacturing may have allowed Japanese manufacturers to price more competitively and be more agile, but at the end of the day, they increased their sales because they made better cars.

nickff 5y ago
>"GM and the rest of Detroit got their rear ends handed to them because they'd underinvested in fuel-efficient engine designs (the lost 70s) and grown lazy in reliability." You're leaving out some pressures which caused Detroit to be un-competitive in the small car space, including high labor costs.
- wombatpm 5y ago
  I owned a 79 Ford Mustang in 1986. By 1988 and 88k miles the engine was shot because it was an underpowered 2liter 4 cylinder with a turbo. Detroit was uncompetitive because they made sucky cars. To this day I haven’t owned another Ford and never will.

mensetmanusman 5y ago

R&D in 20 small companies is less effective than in 3 big ones due to less diverse teams and more inefficient double spending, e.g. twenty $5M microscopes utilized at 15% versus three at 90%.

bsder 5y ago
If only we could overcome the negatives of the bureaucracy of a large company with a mere double-spend on equipment. It would be cheap at 10x that price. The whole point of the startup culture is that they can do things better than a large company. And, quite often, they can. But not always. A semiconductor plant, for example, is not a startup thing because the capital cost is so gigantic. However, most fields are not that bad. Even bio equipment just isn't that expensive relative to the cost of the people to use that equipment. The bigger problem, right now, is that investors don't want to fund anything which requires more than 18 months before flameout/unicorn. That blocks startups that have a 5+ year horizon.

Spooky23 5y ago

The endgame isn’t going to a fix, it’s defeat. Newer, smarter Asian companies will displace stupid old American ones, just as the Americans crushed the Europeans.

outside1234 5y ago

By swissify do you mean go full-on with money laundering and then hide it with privacy laws?