Thom mentioned this case during the first hour of yesterday's show. There's a description of the case here - I don't know how accurate it is.

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Henry Ford started the Ford Motor Company in 1903. By 1916, the company was worth $130 million and was paying regular dividends of over $1 million per year. And it was growing exponentially. Between 1911 and 1915, it paid out a total of $41 million in "special dividends" to its shareholders, on top of the regular dividends. In today's money, that's roughly $800 million; not a bad return over four years.

Ford himself owned over half of the company's stock. This meant that he controlled the company more or less single-handedly. And, as many history students will know, Ford wasn't a particularly profit-driven businessman; he was expansionist. He would rather sell more cars than sell more expensive cars, even if more expensive cars would be more profitable. He believed that profits weren't everything—that they were incidental to core goals of employing people and making cars.

To this end, in 1916, Ford decided that the company would not pay another special dividend. Instead, it would reinvest its profits. Ford wanted to double the size of the factory in Highland Park, purchase iron ore mines in northern Michigan, and build a new smelting plant in River Rouge. He planned to cut the prices of Ford cars to increase sales and keep the expanded assembly lines busy.

Looking at the article, I have sympathy with the Dodge brothers in this particular case, if they had been led to expect a share of the profits on car manufacturing and Ford decided to do something different, depriving them of the return on their money, at least in the short term. Perhaps he should at least have bought them out, so they could invest their money elsewhere. However, the case does raise a couple of more general questions for me.

Should this one case mean that all companies and all shareholders should have as their only aim the maximisation of profits? Shouldn't an entrepreneur be able to choose what the aim of his corporation is and how much of the profits to reinvest in building for growth or in diversifying? And shouldn't the minority shareholders, provided they have not been misled, either support the majority owner or sell their shares?

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Should this one case mean that all companies and all shareholders should have as their only aim the maximisation of profits?

That should be the stated goal of every public company. It's why investors buy stock. Stock prices rise in growing profitable companies.

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Shouldn't an entrepreneur be able to choose what the aim of his corporation is and how much of the profits to reinvest in building for growth or in diversifying?

Of coarse. Share holders invest for a couple of financial stratagies. Some stocks pay dividends and some stocks hopefully increase in value. As long as the company doesn't lose track of it's primary focus which should be producing a quality product or providing a quality service they are fulfilling their primary duty to shareholders of creating value. Creative accounting to manipulate stock price doesn't serve shareholder value in the long term.

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And shouldn't the minority shareholders, provided they have not been misled, either support the majority owner or sell their shares?

That's not a duty of minority shareholders. It's certainly an option.

Franz Segber's "Another Economy is Possible" is available at
http://portland.indymedia.org/en/2007/12/369879.shtml

"The world economy increasingly has the character of a plutonomy, a wealth economy where the rich appropriate an ever larger share of the social wealth."

Imagine an economy that serves justice, peace and creation, where competition and cooperation coexist, where the economy is only a part of life and not a steamroller leading to narcissism and traumatization and where the future is safeguarded.

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That should be the stated goal of every public company. It's why investors buy stock. Stock prices rise in growing profitable companies.

Perhaps if there were companies with different stated goals, there would be investors for them too. Not everybody puts financial gain, particularly short term financiial game, before everything else. But thanks to Dodge v. Ford, they have little choice.

Sue, if I started a company to help clean up the environmnet as a stated goal, and it had no chance of turning a profit, do you think the company would be sustainable and would you be encouraged to invest in it with the assurance that your investment would be worthless eventually?

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That should be the stated goal of every public company. It's why investors buy stock. Stock prices rise in growing profitable companies.

Here's the philosophical problem I have with corporations. You basically have four players: Stockholders, Management, Labor, and Customers. Putting aside for the moment that there is some admixture between the four components, let's look at the roles of these four players.

The Stockholders are partial owners. The Management makes the decisions. Labor does the actual work. Finally, the Customers purchase the product or service.

Without Customers the Corporation is dead.

If Management is clueless the corporation is dead.

If Labor doesn't work the corporation is dead.

But aside from the initial IPO, which injects financial capital, what do the shareholders do to forward the corporation? Nothing.

Yet, BY LAW, the utmost aim of Management is to maximize shareholder value. It's a fiduciary duty. So the folks who have contributed the least are first in line for the benefits.

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As long as the company doesn't lose track of it's primary focus which should be producing a quality product or providing a quality service they are fulfilling their primary duty to shareholders of creating value.

Producing a quality product or providing a quality service are actually, BY LAW, secondary to the goal of profit. Whatever product or service a corporation produces is merely incidental to the real goal. It's just a means to an end. Much of the time this distinction doesn't really matter; the goal of profit provides the incentive to produce a good product. But what really matters to that end is sales and perceived value can serve just as well as actual value. The difference often isn't apparent until farther down the road.

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Sue, if I started a company to help clean up the environmnet as a stated goal, and it had no chance of turning a profit, do you think the company would be sustainable and would you be encouraged to invest in it with the assurance that your investment would be worthless eventually?

You wouldn't start a company like that obviously. But that's why environmental protection has to be the purview of government. Why does the environment need to be cleaned up in the first place? Because pollution control is an externality that, absent government mandates, a corporation has a fiduciary duty to avoid in order to maximize shareholder profit. So prior to the the Clean Air and Water Act and the EPA and all the other stuff that conservatives and libertarians hate, factories weren't committing some kind of sin by polluting the environment, they were simply doing what corporate law practically required them to do to fulfill their fiduciary duty to the shareholders.

It's all about how you set up the playing field.

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Sue, if I started a company to help clean up the environmnet as a stated goal, and it had no chance of turning a profit, do you think the company would be sustainable and would you be encouraged to invest in it with the assurance that your investment would be worthless eventually?

We have charities which which have no intention of making a profit, and non-profits which try to break even, with just enough reserves tocarry on. So why should all corporations be right on the extreme of money above everything? Why can't we have corporations that put ethics before profits, yet still try to make a profit?

Very well put, Randomthots.

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We have charities which which have no intention of making a profit, and non-profits which try to break even, with just enough reserves tocarry on. So why should all corporations be right on the extreme of money above everything?

Can you think of a company that people just donate money to like a charity so they can continue to operate? You do know that non profits can pay their employees anything they want to pay them? Certainly there are people who work for charities that work for less than the market demands but as a Catholic nun once told me, "everyone is as nice to you as they can afford to be."

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So prior to the the Clean Air and Water Act and the EPA and all the other stuff that conservatives and libertarians hate, factories weren't committing some kind of sin by polluting the environment, they were simply doing what corporate law practically required them to do to fulfill their fiduciary duty to the shareholders

This is a classic strawman. You can't in good conscience make the statement that conservatives and libertarians want a dirty environment. They don't. What we are talking about here is who gets to decide what a companies goals are. Public companies are responsible to the public, private companies are responsible to private individuals with respect to goals. Both are responsible to their communities to be responsible stewards of the community and community resources.

Nobody is suggesting that laws designed to protect the environment be broken, except your strawman.

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You can't in good conscience make the statement that conservatives and libertarians want a dirty environment. They don't. What we are talking about here is who gets to decide what a companies goals are. Public companies are responsible to the public, private companies are responsible to private individuals with respect to goals. Both are responsible to their communities to be responsible stewards of the community and community resources.

In a bookkeeper's sense, though, cutting costs to increase profits creates a perverse incentive to race to the bottom.

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In a bookkeeper's sense, though, cutting costs to increase profits creates a perverse incentive to race to the bottom.

Here's a rule of thumb Kate. Technologies which help improve the environment are never employed unless they are affordable. Profit is what makes them affordable.

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Originally posted by Sawdust:

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So prior to the the Clean Air and Water Act and the EPA and all the other stuff that conservatives and libertarians hate, factories weren't committing some kind of sin by polluting the environment, they were simply doing what corporate law practically required them to do to fulfill their fiduciary duty to the shareholders

This is a classic strawman. You can't in good conscience make the statement that conservatives and libertarians want a dirty environment. They don't. What we are talking about here is who gets to decide what a companies' goals are. Public companies are responsible to the public, private companies are responsible to private individuals with respect to goals. Both are responsible to their communities to be responsible stewards of the community and community resources.

Nobody is suggesting that laws designed to protect the environment be broken, except your strawman.

Indeed, Don, the question is: who gets to decide?

One never hears any of the free marketeeers suggesting the laws be broken, true; after all, that contradicts the libertarian argument that government is there to set and enforce laws and that's the limits to its role in maintaining a fair playing field. Minimal government intervention is the ongoing mantra, therefore minimum regulations.

So who decides?

We don't like democracy, so not the people.

A monarch? An elite from the revolving doors of business and government, like say a Bush? A Cheney?

If what's necessary is an open entrepreneurial free market playing field, then what's generally suggested is that the "big" inefficient and expensive government be broken so the laws don't get created that might inhibit that field in the first place. So it's the argument of: who "decides" -- or in this case, what "mechanism" makes it possible, i.e., the profit incentive of the free market -- what a clean environment is supposed to look like when you step back and see the system and what it creates. Business has no incentive to add overhead and clean up after itself, so how does an incentive get created? And that conundrum is supposedly solved by the argument free marketeers keep chanting about profit.

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Here's a rule of thumb Kate. Technologies which help improve the environment are never employed unless they are affordable. Profit is what makes them affordable.

The generality you state there is a logical truth, perhaps, i.e., that the technologies must be profitable or there is no incentive to create and employ them, but the specific is also a logical truth: i.e., that such technologies won't even be developed because it costs money to clean up after ourselves.

Who is going to expend capital on the clean up of their piece of property if they don't have to? In fact, if their legal mandate is to make a profit, as much a profit as possible, the law then supports them in their desire for the profit incentive by mandating that corporations serve their shareholders by returning a capital gain on their investment. Your free market argument keeps running into this sort of paradox, because overhead features like clean up, and long term planning (in the case of the conditions we discussed regarding Atlanta and the drought), which puts off the immediate padding of the bottom line, are contradictory to the long term needs of a society and its relation to the environment.

As a logical system, the market is reactive, not proactive. Anything, like government regulations, which inhibits the market's necessary reactive flexibility, in principle, must be struggled against by the entities that make a profit, even if we all watch helplessly as our environment gradually degrades in the process. So we get the principles of "neoliberalism" imbued in government policies, a set of policy principles that began in earnest with the smiling face of Ronald Reagan.

Profit is what makes technologies "affordable" in the short term, of course, but crisis makes them necessary in the long term, and with a crisis, who makes the profit then?

The argument Randomthots put together implies the problem of profit disincentives that regulations create, which of course adds a legally induced cost to business and reduces the overall "health" of an expanding and entrepreneurially inventive marketplace, which has been logically determined by the free market advocates to be the best way to harvest resources and distribute goods, the crux of a healthy civilization in their world view. I don't see where he's saying anyone wants a dirty environment. He summarized the conundrum well with this, I thought:

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Randomthots: But what really matters to that end is sales and perceived value can serve just as well as actual value. The difference often isn't apparent until farther down the road.

"Actual" value to the whole of society can be perceived on different levels, and in a time spectrum that includes a point "much further down the road." What that value may be can be difficult to measure and determine.

What businesses logically need to make their needed profits is freedom to do business in ways that will enable them to make as much profit as they can, and Randomthots notes that they will satisfy the law as well in doing so. If anyone introduced a strawman, here, it was you, Don.

This message has been edited. Last edited by: /rén,

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Indeed, Don, the question is: who gets to decide?

There are a couple issues here, one is what the thread is about which was who decides company business strategy and the other is who decides what environmental measures are taken to protect the public.

I suppose the answer might be the same in both instances. The responsible party. The government has the right to dictate to business and private individuals how businesses deal with quality of life issues are managed. Business can't dump waste into a stream and an individual can't hook a sewer into one either.

I think that people who don't understand libertarians have a difficult time grasping what limited government means. Libertarians believe that individuals can form communities which act for the common good but don't believe that those communities should act in favor of one group to the detriment of another. They don't believe that government should interfer in the market to give any group a price advantage at the cost of people who own the government. Price supports for milk are a good example. A person who doesn't drink milk shouldn't have his tax dollars used to subsidise dairy farmers so that someone who does drink milk can buy it at under fair market value. The market alone should set the price for milk.

It doesn't mean that government should allow one company to buy all the cows and charge what ever they want for milk. Monopolies work against market forces. Libertarians like free markets but that doesn't mean no regulation and limited government doesn't mean no government.

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The generality you state there is a logical truth, perhaps, i.e., that the technologies must be profitable or there is no incentive to create and employ them, but the specific is also a logical truth: i.e., that such technologies won't even be developed because it costs money to clean up after ourselves.

Technology doesn't have to be profitable, it has to be affordable. Stack scrubbers don't turn a profit but if they were unaffordable they wouldn't exist because people who needed them would move to were they weren't required instead of installing them.

The costs of keeping property clean or regulatory compliance is overhead or just the cost of doing business. It's not a profit center but it's the last task accomplished in a business that isn't profitable. That's why profit is important. It not only provides the incentive to do business but it makes businesses possible to operate within the mechanisms in place to provide a safe and sanitary work place. The first place non profitable businesses cut corners is non producing overhead. Rather than remediate spent chemicals which is expensive, they dump them illegally and take the risk. Profit makes that liability unnecessary.

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The argument Randomthots put together implies the problem of profit disincentives that regulations create, which of course adds a legally induced cost to business and reduces the overall "health" of an expanding and entrepreneurially inventive marketplace

Ramdomthots simplistic argument indicates that he's never owned a piece of commerical property and gone through a phase 1, 2, or 3 audit, never been through an OSHA inspection or never had to get a permit from the EPC. I have and in the real world his theory just doesn't stand up.

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What businesses logically need to make their needed profits is freedom to do business in ways that will enable them to make as much profit as they can, and Randomthots notes that they will satisfy the law as well in doing so. If anyone introduced a strawman, here, it was you, Don.

Attempting to establish that libertarians don't like regulation is the strawman that Randomthots used to establish that business put profit above a clean environment. That's just nonsense. Clean technologies are made possible because of profit, not in spite of it. Even evil libertarians like clean air and water. Imagine that. Limited government doesn't mean the elemination of regulation so that you can dump mineral spirits in a sewer.

This stuff is so obvious, I've lost track of why I even bother to write it.

"The Empire of Debt" by Dee Hon published in Adbusters #74 Nov/Dec 2007 is available at
http://adbusters.org/the_magazine/74/The_Empire_of_Debt.html

"Money for nothing. Own a home for no money down. Do not pay for your appliances until 2012. This is the new American dream, and for the last few years, millions have been giddily living it."

The rich, Voltaire said, require an abundant supply of poor.

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Can you think of a company that people just donate money to like a charity so they can continue to operate? You do know that non profits can pay their employees anything they want to pay them? Certainly there are people who work for charities that work for less than the market demands but as a Catholic nun once told me, "everyone is as nice to you as they can afford to be."

There are some people who are willing to take greater risks with their investment funds to invest in a company that they believe in, though I don't know of any who actually give it away. If I wanted to invest in renewable energy, for example, at present the only choice is a corporation that has to put competing in the marketplace first, and therefore would be strongly tempted to cut corners. I don't know of any non-profits. If a non-profit tries to so the same things as a for-profit, then the for profits are likely to target them.

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This is a classic strawman. You can't in good conscience make the statement that conservatives and libertarians want a dirty environment. They don't. What we are talking about here is who gets to decide what a companies goals are. Public companies are responsible to the public, private companies are responsible to private individuals with respect to goals. Both are responsible to their communities to be responsible stewards of the community and community resources.

There must be something wrong with our current system, since there has been so much pollution and so many deaths.

Deaths?

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I don't know of any non-profits. If a non-profit tries to so the same things as a for-profit, then the for profits are likely to target them.

Sue, you realize that non profits strive to make profit don't you?

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Sawdust:

I think that people who don't understand libertarians have a difficult time grasping what limited government means.

I don't consider it all that tough to understand.

What I think libertarians have problems understanding is what creates the need for big governments. That's the point where I found I had to leave the libertarian thinking, which I once enjoyed, behind.

It feels to me that you missed the gist of what I said, and you don't recognize the essential conundrum that we are looking at here.

Here is what I set out as a kind of thesis paragraph:

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/rén:

If what's necessary is an open entrepreneurial free market playing field, then what's generally suggested is that the "big" inefficient and expensive government be broken so the laws don't get created that might inhibit that field in the first place. So it's the argument of: who "decides" -- or in this case, what "mechanism" makes it possible, i.e., the profit incentive of the free market -- what a clean environment is supposed to look like when you step back and see the system and what it creates. Business has no incentive to add overhead and clean up after itself, so how does an incentive get created? And that conundrum is supposedly solved by the argument free marketeers keep chanting about profit.

If we are talking about the free market system, there is no "who" that gets to decide about the system. But you said:

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What we are talking about here is who gets to decide what a companies goals are.

I'm suggesting that's the strawman you created.

When I look at what's involved in the free market concept, it turns out to be a system. A system that is not linear starting from a causal point of decision making, but one based on everyone making decisions about what they need for themselves, which ideally interactively works out in a dynamic free market as a perfect distribution system that rewards everyone according to their interests, their abilities, and the energy they put out, and keeps itself balanced as a thermostat keeps a room temperature balanced within a range. In that hypothetical, logical system, I asked:

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Who is going to expend capital on the clean up of their piece of property if they don't have to? In fact, if their legal mandate is to make a profit, as much a profit as possible, the law then supports them in their desire for the profit incentive by mandating that corporations serve their shareholders by returning a capital gain on their investment. Your free market argument keeps running into this sort of paradox, because overhead features like clean up, and long term planning (in the case of the conditions we discussed regarding Atlanta and the drought), which puts off the immediate padding of the bottom line, are contradictory to the long term needs of a society and its relation to the environment.

I'm not sure what you are responding to of what I said, so I'm not quite sure how to organize what I want to say from here. This is the comment that drew my attention in the first place, and why I tried to describe the conundrum I can't find you addressing, at least to my way of seeing it, I welcome your response to that and anything that will help me understand what I'm missing:

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Here's a rule of thumb Kate. Technologies which help improve the environment are never employed unless they are affordable. Profit is what makes them affordable.

To which I said:

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The generality you state there is a logical truth, perhaps, i.e., that the technologies must be profitable or there is no incentive to create and employ them, but the specific is also a logical truth: i.e., that such technologies won't even be developed because it costs money to clean up after ourselves.

To which you respond:

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Technology doesn't have to be profitable, it has to be affordable.

Well, if it's affordable, then somebody making the technology makes a profit, and somebody using it makes a profit. So it damn well better be profitable to have it around in a profit making business system. How do you see separating the issue of affordable from profitable serving you in any way here? I see the two together as a completing causal system. All parts are necessary and interrelated.

As some supporting explanatory experience, I can offer something about how regulations requiring this technology came about. I did research on the smoke stack issue back in the early nineties to provide a professor friend of mine with some arguments against the NAFTA and GATT agreements, with regards to the effects they would have on a global regulation environment. In my research I discovered that no business wanted to employ stack scrubbers of their own free will, and to deal with the complaints they were getting in their local areas, they had, before regulations, just built the smoke stacks higher and sent the fumes off in the atmosphere somewhere else. It took something besides the industries responsible for the pollution to figure out that the problems they were looking at far from the source, like acid rain, was even related to those industries, and then somehow the political system had to generate regulations and a bureaucracy of enforcement, including all the lawyers and everything else. The global environment itself is far more anarchistic, and the agreements were setting up legalities that would allow the industries to play states off against each other to minimize or even contradict set regulations if they were to inhibit profitability potential.

I think that's just the way business works. It's not a matter of individual motivation to have a clean environment and to do good in the community. Business must profit.

Describing to me the process of how the profit motive works and how it is made, as you did:

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The costs of keeping property clean or regulatory compliance is overhead or just the cost of doing business. It's not a profit center but it's the last task accomplished in a business that isn't profitable. That's why profit is important. It not only provides the incentive to do business but it makes businesses possible to operate within the mechanisms in place to provide a safe and sanitary work place. The first place non profitable businesses cut corners is non producing overhead. Rather than remediate spent chemicals which is expensive, they dump them illegally and take the risk. Profit makes that liability unnecessary.

is not saying anything I didn't suggest. Yes, indeed, that's how the system works. I'd wager that even Randomthots knows that, as simplistic as you consider him to be. To most of them employing stack scrubbers, until they were required, stack scrubbers were what you call a non producing cost that allowed an environmental degradation elsewhere that many other's had to pay for with an expense no one calculated into their profit margin or the GNP, called a degraded environment. How would you sort out who is benefiting at the expense of others in this much more complex environmental problem issue this type of problem brings up? That's really what's being asked of you here. We already know about how the profits are made and how the accounting is done.

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It doesn't mean that government should allow one company to buy all the cows and charge what ever they want for milk. Monopolies work against market forces. Libertarians like free markets but that doesn't mean no regulation and limited government doesn't mean no government.

Well, then, the questions obviously become something like: What regulations are reasonable? What kind of government and how best can it be organized? And, still, "who decides" within this framework we call government? Those are the ongoing conundrums I keep seeing. What was it that the Reagan Revolution represented if it wasn't some notion of cutting the expense of government?

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Domestically, the administration favored tax cuts and smaller government, introducing the largest tax cuts in American history. The economic policies enacted in 1981, known as "Reaganomics," were similar to those of supply-side economics and advocated free markets. The policies aimed to reduce the growth of government spending through tax cuts, as well as reduce regulation and inflation. It is arguable, however, to what extent they were achieved. As well as the economy, Reagan ordered a massive buildup of the military amidst the Cold War. (source)

Doesn't your philosophy about all this go back to the early 1980s when your were struggling to put businesses together that worked for you?

I don't see that you've solved the conundrum, only that you've restated the problem. I still see this as a valid problem:

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The argument Randomthots put together implies the problem of profit disincentives that regulations create, which of course adds a legally induced cost to business and reduces the overall "health" of an expanding and entrepreneurially inventive marketplace

I don't see that he is being simplistic, as you suggest, because he's never gone through what you've described, and I don't see that it has any thing to do with the essential problem he's presented, which is that businesses need to make a profit and government regulations, taxes and all those messy things get in the way:

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Ramdomthots simplistic argument indicates that he's never owned a piece of commerical property and gone through a phase 1, 2, or 3 audit, never been through an OSHA inspection or never had to get a permit from the EPC. I have and in the real world his theory just doesn't stand up.

In the short term, in the real world, which has long term survivability problems as well as the short term competitive stresses related to business survival, that cost of doing business must be dealt with to allow the vaunted system to work. Reducing the costs is the goal of those who want minimum government and thereby minimizing the costs that government can represent. If that's not true, it will be news to me. I'll venture also, that the idea of what stands up in the real world may not have met it's biggest, long term test yet. The idea that this may all be an experiment that is in the making of its own failure is still a possibility. In general we need to look through history to recognize our potential for short term thinking. Of course, this could be the great advance in human existence many believe it to be, but it's also possible that it's not. Maybe the whole system doesn't stand up. Maybe many costs have been passed on and we are all waiting to pay them collectively at some point we don't yet understand that well enough to anticipate when or how.

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Attempting to establish that libertarians don't like regulation is the strawman that Randomthots used to establish that business put profit above a clean environment. That's just nonsense. Clean technologies are made possible because of profit, not in spite of it. Even evil libertarians like clean air and water. Imagine that. Limited government doesn't mean the elemination of regulation so that you can dump mineral spirits in a sewer.

No, if anything he may have personified the notion by saying they "don't like" such things. Other than that, I see that Randomthots accurately pointed out that regulations are costs, costs are what corporations with stockholders avoid if they can, because they are in business to make a profit. This is somewhat mechanistic in nature and it also appears you have agreed with that. You've gone a bit further to add all businesses into his formula, where I believe he was talking about corporations and their legal requirements to their stockholders. So I'm not sure he would agree with your formulation, I wouldn't if I were him.

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This stuff is so obvious, I've lost track of why I even bother to write it.

It's so obvious to just about anyone, you didn't need to. What was asked of you was something else, which you I don't see that you have addressed.
rén

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What I think libertarians have problems understanding is what creates the need for big governments

Understanding and accepting are different. I understand how government grows. I don't accept as fact that it has to.

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I'm suggesting that's the strawman you created.

And I'm suggesting that the name of the thread is Dodge vs. Ford and Sue asked the question "who gets to decide what company goals are?"

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If we are talking about the free market system, there is no "who" that gets to decide about the system

That's an irrelevant conclusion, logically speaking. Markets are collections of people who make all kinds of decisions. In truth, few free markets exist. Most are governed by anti trust and trade sanctions. The issue that you've avoided is that when we talk about free markets, what we are really talking about are markets free of external price manipulation or subsidy by government. The market should set price, not financial manipulation using tax dollars.

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When I look at what's involved in the free market concept, it turns out to be a system. A system that is not linear starting from a causal point of decision making, but one based on everyone making decisions about what they need for themselves, which ideally interactively works out in a dynamic free market as a perfect distribution system that rewards everyone according to their interests, their abilities, and the energy they put out, and keeps itself balanced as a thermostat keeps a room temperature balanced within a range.

Overly simple and missing key elements but basically true. Complex industrial societies exert control over markets preventing monopolies and use markets to drive government revenue, thus exerting additional controls.

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Who is going to expend capital on the clean up of their piece of property if they don't have to?

Anyone who owns commercial property and has a relationship with a bank. Have you ever had to commission an environmental audit on commercial property? I've had to do several.

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Well, if it's affordable, then somebody making the technology makes a profit, and somebody using it makes a profit.

To address your conundrum. It's in the accounting. Remediation, the purchase and implementation of anti pollution procedures and technologies is overhead. Overhead falls into three classes, controllable, fixed and semi controllable. Overhead is necessary but it's not revenue producing in a manufacturing environment. The purchase of technology is semi controllable it's implementation is fixed. The best you can achieve by efficiently managing industrial waste is controlling excess overhead. It's not a profit center.

Sometimes accountants think that the reason companies make things is so there can be accounting. It's kind of like that.

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Reducing the costs is the goal of those who want minimum government and thereby minimizing the costs that government can represent.

I repeat. Free markets are market in which government doesn't use tax dollars to influence price. There are instances where government has gone overboard with regulation as well but when talking about markets, that's what I'm talking about.

With respect to regulation, I know several people involved with public companies. Every one of them says Sarbanes Oxley is impossible and adds hundreds of thousands if not millions to unnecessary overhead.

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Other than that, I see that Randomthots accurately pointed out that regulations are costs, costs are what corporations with stockholders avoid if they can, because they are in business to make a profit.

Compliance costs are overhead. Overhead is necessary. They are controllable, semi controllable or fixed. They are managed like material cost and labor costs, not eliminated. They are regulated by banks and Federal agencies. They are permitted and often inspected and audited. Saying they are costs that companies try to avoid is ridiculous and simplistic. The unnecessary costs are fines and penalties for breaking the law. There isn't a movement in the business community to create dirty air or water. We all live here for the love of God. The assertion that there is a dirty air and water lobby is insulting to anyone's intelligence.

This message has been edited. Last edited by: Sawdust,

You seem to have gone off on your own ramble here, Don, and I don't have much interest in following up on most of it. I've never much enjoyed the disjointed quote and quip method.

I'll just restate what I saw as a problem and let it go at that.

I want to focus on the straw man fallacy issue, because that's what caught my attention and brought me to put my comments in this thread. One can find a number of different descriptions of the straw man fallacy, I like this one, it offers a nicely organized way to illustrate what I was responding to yesterday:

quote:

The Straw Man fallacy is committed when a person simply ignores a person's actual position and substitutes a distorted, exaggerated or misrepresented version of that position. This sort of "reasoning" has the following pattern:

[LIST]

Person A has position X.

Person B presents position Y (which is a distorted version of X).

Person B attacks position Y.

Therefore X is false/incorrect/flawed.

Person A (Randomthots) position X:

quote:

quote:

Sawdust:

Sue, if I started a company to help clean up the environmnet as a stated goal, and it had no chance of turning a profit, do you think the company would be sustainable and would you be encouraged to invest in it with the assurance that your investment would be worthless eventually?

You wouldn't start a company like that obviously. But that's why environmental protection has to be the purview of government. Why does the environment need to be cleaned up in the first place? Because pollution control is an externality that, absent government mandates, a corporation has a fiduciary duty to avoid in order to maximize shareholder profit. So prior to the the Clean Air and Water Act and the EPA and all the other stuff that conservatives and libertarians hate, factories weren't committing some kind of sin by polluting the environment, they were simply doing what corporate law practically required them to do to fulfill their fiduciary duty to the shareholders.

It's all about how you set up the playing field.

Person B (Sawdust) presents position Y:

quote:

quote:

So prior to the the Clean Air and Water Act and the EPA and all the other stuff that conservatives and libertarians hate, factories weren't committing some kind of sin by polluting the environment, they were simply doing what corporate law practically required them to do to fulfill their fiduciary duty to the shareholders

This is a classic strawman. You can't in good conscience make the statement that conservatives and libertarians want a dirty environment. They don't. What we are talking about here is who gets to decide what a companies goals are. Public companies are responsible to the public, private companies are responsible to private individuals with respect to goals. Both are responsible to their communities to be responsible stewards of the community and community resources.

Nobody is suggesting that laws designed to protect the environment be broken, except your strawman.

Position X is as follows: no one would intentionally start a company that would not return the investment with profit. Presents Argument that government is necessary because businesses won't voluntarily spend the money it takes to clean up the environment after themselves, and to make sure it is kept clean and protected from abuse.

Position Y: position X is a statement saying conservatives and libertarians want a dirty environment, and further clarifies what the discussion is about is who gets to decide what a company's goals are, with supporting statements about various types of corporate responsibilities.

Assessment: Position Y does not clearly represent the quote to which Position X was formulated as a response, the quote being about starting a company to clean the environment, which would be its stated goal, but a goal which would have no chance of turning a profit, clearly something no sane investor would invest in, which position X acknowledges. Additionally position Y distorts position X by stating: You can't in good conscience make the statement that conservatives and libertarians want a dirty environment. And Nobody is suggesting that laws designed to protect the environment be broken, except your strawman..

No such statement or was made, I think any reader can see. Nor is there a suggestion that laws be broken.

Rather, an argument was advanced that an outside agency (such as a government) is necessary in order to ensure that the environment is cleaned up after businesses, because that's a cost business is not likely to take on. Before the government regulations, which conservatives and libertarians hate (position X doesn't say why), businesses followed the stated legal requirements that they make a profit and make sure their investors get a return on investment as required by law.

So we have the following distortions in position Y:

Position X is determined to be a classic Straw Man Fallacy. (It doesn't look like a straw man, it directly answers the proposition in the quote it answers: "no one would start such a company with those stated goals." Then it states the government's job is to set those goals for companies.)

Position X is implied to have stated in bad conscience that conservatives and libertarians want a dirty environment. (No such statement was made. What was implied was businesses don't want to be regulated by government. What was stated was that conservatives and libertarians hate regulations, but no reason for that was advanced. In the context of the discussion about legal requirements, it would seem reasonable to assume the issue would be about the legal requirements, not "wanting" a dirty environment. But there's no question that an assumption had to be made to state that they want a dirty environment.)

Postition X is not talking about what "we" are talking about, "who gets to decide what a company's goals are." Then Position Y states positions of responsibility without offering mechanisms (corporate goal statements, for instance)of how those responsibilities are fulfilled. (Position X notes that no one would set such goals for a company, and recognizes that no one would be likely to invest if such goals were set. Furthermore, notes that the government needs to set certain goals for companies that can and have done damage to the environment because the companies themselves are unlikely. Position X also notes that conservatives and libertarians hate government regulations, though that itself appears to be an extraneous thought and not necessarily related to the whole position.)

------

So that's what I meant by you yourself created a straw man. Sorry I didn't write it out that clearly before. You can agree with me or not, Don, but that's what I see.

As far as your tutorial in accounting, thanks, I've done my own accounting for my businesses for the past thirty years, but it never hurts to get another point of view on things. I never know when I'm going to learn something useful.

Mostly we agree: Free markets are abstract theories that don't work any where in the real world at this time. Deregulation is not appreciated by at least some companies, and you mentioned your own experienced reports from those who are not happy about the relatively recent Sarbanes Oxley legislation, which they consider an expensive intrusion into accounting practices by government.

As far as whatever you mean by free markets, and the relationship you seem to want to exclude with regulation by defining it narrowly as you have, without going into the works of Hyatt and others, here is a simple version of what I have in mind when I am referring to free markets, and free marketeeers:

quote:

Laissez-faire economics

The necessary components for the functioning of an idealized free market include the complete absence of artificial price pressures from taxes, subsidies, tariffs, or government regulation (other than protection from coercion and theft), and no government-granted monopolies (usually classified as coercive monopoly by free market advocates) like the United States Post Office, Amtrak, arguably patents, etc.

------>

The laissez-faire means that the neoclassical school of economic thought holds a pure or economically liberal market view: that the free market is best left to its own devices, and that it will dispense with inefficiencies in a more deliberate and quick manner than any legislating body could. The basic idea is that less government interference in private economic decisions such as pricing, production, consumption, and distribution of goods and services makes for a better, or more efficient, economy.

Deregulation

In an absolutely free-market economy, all capital, goods, services, and money flow transfers are unregulated by the government except to stop collusion that may take place among market participants. As this protection must be funded, such a government taxes only to the extent necessary to perform this function, if at all. This state of affairs is also known as laissez-faire. Internationally, free markets are advocated by proponents of economic liberalism; in Europe this is usually simply called liberalism. In the United States, support for free market is associated most with libertarianism. Since the 1970s, promotion of a global free-market economy, deregulation and privatization, is often described as neoliberalism. The term free market economy is sometimes used to describe some economies that exist today (such as Hong Kong), but pro-market groups would only accept that description if the government practices laissez-faire policies, rather than state intervention in the economy.[specify] An economy that contains significant economic interventionism by government, while still retaining some characteristics found in a free market is often called a mixed economy.

----------->
Deregulation


Deregulation, a term which gained widespread currency in the period 1970-2000, can be seen as a process by which governments remove, reduce, or simplify restrictions on business and individuals with the intent of encouraging the efficient operation of markets.

The stated rationale for 'deregulation' is often that fewer and simpler regulations will lead to a raised level of competitiveness, therefore higher productivity, more efficiency and lower prices overall.

Deregulation is different from liberalization because a liberalized market, while often having less and simpler regulations, can also have regulations in order to increase efficiency and protect consumer's rights, one example being anti-trust legislation. However, the terms are often used interchangeably within deregulated/liberalised industries.

A parallel development with 'deregulation' has been organized, ongoing programs to review regulatory initiatives with a view to minimizing, simplifying, and making more cost effective regulations. Such efforts, given impetus by the Regulatory Flexibility Act of 1980, are embodied in the United States Office of Management and Budget's Office of Information and Regulatory Affairs, and the United Kingdon's Better Regulation Commission. Cost-benefit analysis is frequently used in such reviews. In addition, there have been regulatory innovations, usually suggested by economists, such as emissions trading. Academic research on wedding economic theory with regulatory activity continues.

Other than that, I don't see what else there is to say that's pertinent to this thread. The only point that drew me in was what I saw as your misconstruing of Randomthot's response to your proposal for a company that would have goals that woudn't be profitable. Most of the rest of this discussion I've already resolved for myself and I'm not into wrangling about the legalities of corporations these days.

I do disagree with your position that anyone might be putting forth a position that anyone (conservatives, libertarians, or anyone) wants a dirty environment. What I would suggest instead is, the issue is essentially about the degree of outside control by governments over business practices, and various positions taken on that. After that, we get into definitions where people will differ regarding what "clean" and "safe" might mean.

I commented on Dodge v Ford and didn't know the difference between that thread and this one, though I see discussion here. A point may have already been made, though not sure, but regulation doesn't affect costs of a well run company offering a needed or desired product, since the costs of any regulation come down equally on all COMPETITORS in the particular market effected. If it's a necessary product, safety standards don't cost a thing- in the competitive, free market, price comparison world. An inefficient, or monopoly, or business used to bribing inspectors might have a concern, but a true free marketer would consider it a challenge they were quite up for, even seeing a step up against the competition that is already inept and unable to adapt to changes seen coming by the business with a plan, and continual evaluations of the plan.

quote:

You seem to have gone off on your own ramble here, Don, and I don't have much interest in following up on most of it. I've never much enjoyed the disjointed quote and quip method.

I don't like it either and that's one of the reasons I try to be brief most of the time on this board. Harder to dissect. You bring up so many issues that should be addressed most of the time, it's difficult to address the issues without separating them. We each have our own ramble I guess.

In reading through the market definitions you posted something occurred to me. We've intertwined markets, which involves trade and manufacturing, which involves production. Trade and production are intertwined but they aren't the same processes. Being involved with manufacturing it's easy for me to slip back and forth but I think that for purpose of discussion it might be clearer to stick to one or the other.

Do I think government shouldn't manipulate price of commodities through subsidy, embargo or trade sanction? Yes but not to the point where another country takes unfair advantage.

Do I think government should be able to protect business and consumers from force and fraud and encourage competition in markets with anti trust legislation? Sure.

Do I think that government has the right to regulate manufacturing practices to safeguard the environment? Yes.

Should markets be free as possible? Yup.

That's about all I have to say after untangling the ropes.

None of that has anything to do with the original post on the thread, but I've addressed that.

Addressing the strawman explanation, which I agree with, I hope you understand that creating an extreme libertarian laissez-faire position to argue against fits nicely into your model.

quote:

Originally posted by Sue N:

quote:

That should be the stated goal of every public company. It's why investors buy stock. Stock prices rise in growing profitable companies.

Perhaps if there were companies with different stated goals, there would be investors for them too. Not everybody puts financial gain, particularly short term financiial game, before everything else. But thanks to Dodge v. Ford, they have little choice.

It was suggested by Three El, on 'Dodge v. Ford', Thom's Show, that philanthropy won out in this U.S. court case, SueN. Apparantly, Henry Ford's goal of mass producing low-priced cars was/is ironically unsuitable to qualify as such, according to the courts! However, my point is that the context of the late 1800's and early 1900's, was the establishment of Not-For-Profit groups. These filled a sore need in communities across America. Hospitals. Clinics. Shelters. Kitchens. Teams of 'strangers' with diverse skills-BANDED FOR A SINGULAR PURPOSE. (Hope Hospital, Chicago?) This helped, but represented an ABJECT FAILURE of the huge corporation to maintain the standard of living in its community!
The Sherman Anti-Trust Act, and other rulings like this one, apparantly did little to stop the quick metastasis of all manner of corporations at the expense of meaningful non-profits. For now, NPs are restricted, and pale in numbers compared to Inc's.

the title is repealing but it could say stealing All the employee rights protected in the ERISA regulations are being stripped by the Robrerts court

quote:

Roberts Court will expand Rehnquist Court doctrines that have stripped workers and retirees of remedies for abuse by employers, health maintenance organizations (HMOs), and entities that administer their health and retirement plans. These doctrines have provoked outrage from legions of scholars and lower-court federal judges, who have complained that they mandate unjust decisions and grotesquely misconstrue the landmark federal Employee Retirement and Income Security Act of 1974 (ERISA). This is not an abstract or isolated problem; over 130 million Americans currently count on employer-sponsored plans for retirement and health-care protection.

ERISA was enacted after more than a decade of congressional investigations into widespread abuses of employee-benefit plans by company and union administrators. ERISA mandated that plan administrators would be required as a matter of federal law to act "solely in the interest of the participants and beneficiaries for the exclusive purpose of providing benefits" to them, and to do so with "care, skill, prudence, and diligence." But over the past 30 years, principally in 1993 and 2002 decisions authored by Justice Antonin Scalia, the Supreme Court has turned these common-sense goals upside-down. According to the Court's mystifying doctrine, victims of unlawful abuse cannot secure "make whole" monetary relief from ERISA plan administrators who have violated their fiduciary duties.

SCOTUS says it's alright to steal pensions [and of course elections], default on insurance claims,

Earlier in this thread, the sole purpose of a business or corporation was posted as it's usually held in a talking point, or accepted fact, or just holy grail status, never questioned, and if done so the questioner shall be delegated to the looney left, or somewhere outside 'Realworld' discussion, Well I challenge, and don't accept the normal stealing, cheating, lying, now called innovation, of US business practices. Peter Drucker had a few opinions, Here,

quote:

* The need for community. Early in his career, Drucker predicted the "end of economic man" and advocated the creation of a "plant community" where individuals' social needs could be met. He later admitted that the plant community never materialized, and by the 1980s, suggested that volunteering in the non-profit sector might be the key to community.
* He wrote extensively about management by objectives.
* A company's primary responsibility is to serve its customers, to provide the goods or services which the company exists to produce. Profit is not the primary goal, but rather an essential condition for the company's continued existence. Other responsibilities, e.g., to employees and society, exist to support the company's continued ability to carry out its primary purpose.

[edit] Awards and critique

Drucker was awarded the Presidential Medal of Freedom by U.S. President George W. Bush on July 9, 2002[1]. He was the Honorary Chairman of the Peter F. Drucker Foundation for Nonprofit Management, now the Leader to Leader Institute, from 1990 through 2002. His most controversial work was on compensation schemes, in which he said that senior management should not be compensated more than twenty times the lowest paid employees. This attracted criticism from some of the same people who had previously praised him.

from the first link

quote:

A lifetime of wisdom.


Read My Lips > Global Business
Drucker’s Top 10: Wisdom for the Ages

By The Globalist | Wednesday, November 16, 2005

Born in 1909, Peter F. Drucker died last Friday at the age of 95. From his beginnings in Vienna, Drucker transformed himself into a world-renowned management guru. Our Read My Lips takes a look at Drucker over the years through his thoughts on everything from government to technology.

Global Icons

On Government:

“Government — not business — is going to be the most important area of entrepreneurship and innovation over the next 25 years.”

On the Global Economy:

“When we talk about the global economy, I hope nobody believes it can be managed. It can't.”

On Business Meetings:

“One either meets — or one works.”

On the Goal of Business:

“There is only one valid definition of business purpose: to create a customer.”

On Large Corporations:

“I couldn't work in a large organization. They bore me to tears.”

On Technology:

“Make your reports come to see you. Use technology, it's cheaper than traveling. I don't know anybody who can work while traveling. Do you?”

On Evaluating a Company:

“Warren Buffet once said that if he wants to find out how a company is doing, he doesn't listen to security analysts. They talk profit, which is irrelevant. He listens to bank credit analysts. They talk cash flow.”

On Opting Out:

“Stock options plans reward the executive for doing the wrong thing. Instead of asking, 'Are we making the right decision?' he asks, 'How did we close today?' It is encouragement to loot the corporation.”

On U.S. Society:

“In the United States, we have a very healthy economy — but a very sick society.”

On Politics:

“If this century proves one thing, it is the futility of politics.”

I made the one goal point bold, and it's one I always agreed with

quote:

I made the one goal point bold, and it's one I always agreed with

And why create a customer?

There are lots of steps required to make a profit and that is certainly one of them. It's not the ultimate purpose however. Starting a company includes quite a bit of risk. The reason people take risks is reward.

I never saw a business yet that could function without a customer unless it was a subsistence farmer.

Retired Monk
"Ideology is a disease"

Duh.

quote:

The reason people take risks is reward.

Seems you can apply the motivational carrot "reward" to just about anything anyone does.


I suppose curiosity, investigation into risky circumstances outside the box, and surprise at the unexpected can be their own rewards, but somehow, setting it all up as a giant Skinner Box takes all the joy out of it for me.

The journey to your dreams, may stop at a bank entrance. The 'ten page' business plan submitted to first-time, start-up bank officers, amounts to a contract with the devil.
Most start-ups go down, within the first year. The questionnaires multi-layer requirements threaten to extract relevant AND irrelevant sub-plans, from the vantage point of other corporate sectors/industries, that may or may not compete.
At what point is the privacy of an entrepreneur & his/her family respected? Their ideas? Their integrity? Their vision of an improved community? Of a democratic nation?!

Edwards, For President

quote:

The journey to your dreams, may stop at a bank entrance. The 'ten page' business plan submitted to first-time, start-up bank officers, amounts to a contract with the devil.

Bankers don't lend money to uncapitalized startups. They lend money to people with collateral.

Most startups are funded by friends, families and savings.

PeeWee Returns: You are always right, here; but only these three points I insist, as my post may have been carried too far: 1) Is it fair that a small start-up, whose equipment and supplies don't even rise up to the level of a bank's 'collateral', may be unable to expand or compete, without a plan for loan-expansion? (maybe the business 'idea' is very small) 2) Why is the idea that business size always implies some level of indebtedness to some remote financial slush pot? (An innovative business idea itself may defy or resist the idea-snatching threat of immediate definition, and settlement, in answers to arbitrary questions on big blank bank papers) And, 3) Why are small-business loans available anywhere at any interest, if some significant chunk of these small-to-medium company borrowers go under in the short term to suffer bankruptcy and maybe crushing personal obligations?

Thank you, sir...

quote:

1) Is it fair that a small start-up, whose equipment and supplies don't even rise up to the level of a bank's 'collateral', may be unable to expand or compete, without a plan for loan-expansion? (maybe the business 'idea' is very small)

No. It is not fair. Bankers don't care about fair.

They want to make sure the entrepreneur has some skin in the game. It's easy to walk away from an easy loan; it's hard to walk away from a loan where you will lose everything.

New businesses generally have at most two things going for them: a great concept and a big personality behind the idea. Bankers don't care about the second, but your family and friends do. Successful business people are often looking for other successful business ventures to invest in.

quote:

2) Why is the idea that business size always implies some level of indebtedness to some remote financial slush pot?

I'm not sure what your point is here. I've worked for big businesses; I have a small to medium sized business. The problems are the same, the scale is different. In a way, smaller businesses have a bit of an advantage because they are more nimble. It's hard to be nimble when you have 200,000 employees that you are trying to move in the same direction.

quote:

(An innovative business idea itself may defy or resist the idea-snatching threat of immediate definition, and settlement, in answers to arbitrary questions on big blank bank papers)

The best ideas are usually simple and obvious. If you have trouble articulating your idea to bankers and potential investors, you probably don't have a viable idea.

quote:

3) Why are small-business loans available anywhere at any interest, if some significant chunk of these small-to-medium company borrowers go under in the short term to suffer bankruptcy and maybe crushing personal obligations?

GB, where do you live? I don't know of anywhere where new business loans are readily available at ANY interest rate.

Also, your comment about bankruptcy and personal obligations is true. Most new businesses fail - starting a business is a risk. That's why banks are reluctant to fund new businesses.

My wife and I started our business in 1994. We had a great idea, but little capital. We capitalized the business with personal savings and sweat (my wife worked full time for a year without taking a paycheck; I kept my day job and moonlighted at the business). We were profitable from day one, but not because of our bankers. It took us probably five to seven years before commercial bankers began treating us as a viable business.

If you have a good idea, hunt around for some people that might be investors. It will be easier to convince friends and family to invest in you than it will be for you to convince a commercial banker.

Thanks again, Sir. It seems very hard, but a little bit very possible what you have achieved; that represents the American Dream to me! I will keep trying to further my idea...WITHOUT...investing too much of my own self-esteem in rapid expansion.

My family congratulates you; for, I have been taught that the hard work someone like you and your family accomplishes, is appreciated by others around you. Good luck!

quote:

Bankers don't lend money to uncapitalized startups. They lend money to people with collateral.

Was that true during the dot com bubble?

ren pretty effectively summed up what my response to Sawdust would have been had I not been too busy to immediately respond, but let me add a couple of things...

quote:

Ramdomthots simplistic argument indicates that he's never owned a piece of commerical property and gone through a phase 1, 2, or 3 audit, never been through an OSHA inspection or never had to get a permit from the EPC. I have and in the real world his theory just doesn't stand up.

I've read the above statement several times and I still can't figure out what you think I said that you're responding to or what the relationship to the above is to my "theory". In any case, if the point you're is trying to make is that the above regulatory requirements are expensive, time-consuming, aggravating, pain-in-the-rear exercises, then "I feel your pain." And you are correct, I haven't gone through those things personally, but I spent some time in the Navy and I will wager that none of them can light a candle to an engineering "in-serv" inspection.

Regulations should be clear, concise and directly responsive to the enabling legislation. It shouldn't require a mountain of paper to demonstrate compliance. If a permitting process is required it shouldn't take any longer to complete than absolutely necessary since time is literally money in business.

Furthermore, the aim of regulators and inspectors should be to aid the businessman in complying rather than engaging in a game of "gotcha" to write up infractions.

To the extent that regulations and regulatory agencies fall short of the above then reform is indicated.

quote:

Attempting to establish that libertarians don't like regulation is the strawman that Randomthots used to establish that business put profit above a clean environment. That's just nonsense. Clean technologies are made possible because of profit, not in spite of it. Even evil libertarians like clean air and water. Imagine that. Limited government doesn't mean the elemination of regulation so that you can dump mineral spirits in a sewer.

I don't believe (and I didn't say) that libs or cons actively desire to foul the environment, although it seems fairly obvious that environmental protection is pretty low on the list of priorities of many of them. It's more a case of indifference than antipathy. In either event, that wasn't the thrust of my thesis. What I was trying to say (and obviously didn't do so clearly enough) was that the directors of a public corporation, particularly one in a competitive sector, enjoy precious little leeway to act altruistically if their actions would negatively affect the bottom line. Even aside from the issue of fiduciary duty to maximize profit, a corp that unilaterally utilizes "clean" technology will incur a cost that puts them at a competitive disadvantage compared to those that don't. The stock price will suffer and capital will flow to the competitors.

So it's not profit that enables clean technologies, rather it's an outside force such as government or even overwhelming public opinion that enables it by requiring that ALL the competitors in an industry incur the same costs thereby eliminating the competitive disadvantage problem.

quote:

Technology doesn't have to be profitable, it has to be affordable.

What does that term, "affordable", mean precisely? That's a remarkably elastic term it seems to me that can be invoked (actually the inverse, "unaffordable") to argue against any proposed regulatory action.

quote:

The costs of keeping property clean or regulatory compliance is overhead or just the cost of doing business. It's not a profit center but it's the last task accomplished in a business that isn't profitable. That's why profit is important. It not only provides the incentive to do business but it makes businesses possible to operate within the mechanisms in place to provide a safe and sanitary work place. The first place non profitable businesses cut corners is non producing overhead. Rather than remediate spent chemicals which is expensive, they dump them illegally and take the risk. Profit makes that liability unnecessary.

Here it sounds as if you are arguing that society has a duty to ensure business profitability in order to ensure regulatory compliance. I mean, if everyone was assured that they could make a good living with a minimum of effort, then we wouldn't have thieves, burglars, or drug dealers either, but I'm sure you wouldn't make that argument (nor would I).

--------------------

Finally, I don't think YOU have a very good grasp of libertarian principles. As I've said before, I spent a fair amount of time in their midst. Honestly, I don't believe you really ARE a libertarian, rather you are a conservative (Republican, most likely) who just likes the sound of the word. Why do I say that? Because you wrote:

quote:

Do I think government shouldn't manipulate price of commodities through subsidy, embargo or trade sanction? Yes but not to the point where another country takes unfair advantage.

Do I think government should be able to protect business and consumers from force and fraud and encourage competition in markets with anti trust legislation? Sure.

Do I think that government has the right to regulate manufacturing practices to safeguard the environment? Yes.

Should markets be free as possible? Yup.

Aside from the last your statements are in direct contravention to the party platform or are somewhat "mushy" by allowing for exceptions. In fact, I would agree with all of the above (are you sure you're not really a liberal -- oh, horrors!) although I imagine we would have different interpretations and inflection points for action.

From the Platform of the Libertarian Party:

quote:

Eliminate all federal grants of monopoly or subsidy to any private companies, such as utilities, airlines, energy companies, agriculture, science, medicine, broadcasting, the arts and sports teams. Repeal all anti-trust laws. All federal agencies whose primary function is to make or guarantee corporate loans must be abolished or privatized.

Your third point isn't addressed in the platform but I can assure you they are pretty much against any and all environmental regs. In fact, the first time I even heard of Libertarians was a CSPAN presentation where they were arguing that they were unnecessary. The argument was that if pollution was a problem then a private citizen should file a lawsuit, a tort action, claiming damages. If no one could show (or more to the point, prove) damages to an individual then there wasn't a pollution problem.

quote:

Finally, I don't think YOU have a very good grasp of libertarian principles.

Actually I do, but I don't agree with all of them. I'll try to get back to the rest of your response later if I have time. I'm burried right now.

Competition: n. the right to make important decisions!
To Compete: v. The offering of various alternative solutions, to a problem.

A regulatory environment limits the power of the citizen to make informed decisions; Non-profits are necessary to exploit loop-holes in the laws, which enable citizens to help one-another. This may be happening to us because corporations cannot understand men and women's hearts.

quote:

Was that true during the dot com bubble?

Yes. Those dotcoms were mostly funded by stupid money.

Ben Barber on Robert Reich's 'Supercapitalism' Where

quote:

In something of a surprise, Reich embraces the late Milton Friedman’s argument that “the business of business is to make a profit, not to engage in socially beneficial acts.” Friedman’s point, writes Reich approvingly, is that companies “should not seek to accomplish social ends because companies are not the appropriate vehicles for social benevolence.” Consumers may like the idea of social responsibility but, Reich observes, are unwilling to pay for it. They may regret trade with countries whose human-rights records are dubious, like China’s, and they may criticize companies whose labor practices are less than savory, like Wal-Mart’s, but they will nonetheless purchase China’s and Wal-Mart’s cheap goods. Thus, argues Reich, we cannot and should not rely on producers or consumers to create the public goods and public regulations that are the provenance of democratic institutions. That is the task of citizens and must be done by them.

Barber thinks Reich is on right path but missed or ignored a psychological perspective as represented in this quote

quote:

After all, the very meaning of democratic sovereignty is that the democratic we (public liberty) always and necessarily trumps the private me (individual liberty). Only public liberty can serve the commonweal.

Democratic sovereignty me or we is simple

quote:

Actually I do, but I don't agree with all of them. I'll try to get back to the rest of your response later if I have time. I'm burried right now.

That's fine. But the Libertarians I knew weren't what you would call "Big Tent" kind of folks. About as close as you could get to a "moderate" libertarian position was to allow that any kind of bare-bones government was a necessary evil as long as it did practically nothing but supply a military... and only until the other countries of the world had been converted as well.

I tried to walk that line for a while myself... calling myself a Libertarian while holding differing opinions particularly on economic issues. After a while I just gave up and admitted that I was really a Liberal. I've been a lot happier ever since.

Hey there, Randomthots,

Why not call yourself a human?

I tend to be conservative on some things and liberal on others. And, I figure the thing that my views have in common has mostly to do with self-determination. It seems to me to be the height of rudeness to impose a point of view on me, or anyone, especially when the support for that point of view isn't plain.

"Morgan Stanley Issues Full US Recession Alert" by Ambrose Evans-Pritchard, The Telegraph (Britain) is available at
http://portland.indymedia.org/en/2007/12/370174.shtml

"Morgan Stanley has issued a full recession alert for the US economy, warning of a sharp slowdown in business investments and a perfect storm for consumers as the housing slump spreads.. Under the progressive definition, money is the servant of man. Under the conservative definition, man is the servant of money."

Long live alternative economics, our only hope for a human non-feudal future!

quote:

Originally posted by PeeWee Returns:

quote:

Was that true during the dot com bubble?

Yes. Those dotcoms were mostly funded by stupid money.

I think that most of it was funded by equity markets thus the Stock market bubble. Stupid still but a risky investment anyway you slice it. I thought I had avoided most of the high P/E tech-stocks but still took a major cut in assets.

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Looking at the article, I have sympathy with the Dodge brothers in this particular case, if they had been led to expect a share of the profits on car manufacturing and Ford decided to do something different, depriving them of the return on their money, at least in the short term. Perhaps he should at least have bought them out, so they could invest their money elsewhere. However, the case does raise a couple of more general questions for me.

Should this one case mean that all companies and all shareholders should have as their only aim the maximisation of profits? Shouldn't an entrepreneur be able to choose what the aim of his corporation is and how much of the profits to reinvest in building for growth or in diversifying? And shouldn't the minority shareholders, provided they have not been misled, either support the majority owner or sell their shares?

Let me correct the record for you,Ford Motor only became a public corporation in March 1956. Henry Ford was not answerable to public shareholders, as there were none. The Dodge brothers,investors in a private corporation whose boss owned the majority of the stock should have known with whom they were getting into bed with as investors.

There was a time when management of publicly traded companies understood their fiduciary responsiblities as being the long-term financial health and profitability of the company. That changed in the go-go eighties when CEO's were judged on the latest quarterly earnings report. You can thank the LBOers, Henry Kravis, William Simon and others for that.