Putting a stake thru the heart of corporations

POSTED BY: SignyM
UPDATED: Friday, June 16, 2006 15:31
VIEWED: 2162
PAGE 1 of 2

1 2 NEXT PAGE LAST PAGE

SIGNYM

Tuesday, June 13, 2006 7:54 PM

When people suggest that we hand over yet MORE money to corporations (and the wealthy) its because they're misguided into thinking that the wealthy are a source of wealth and growth. They believe in the trickle-down theory.

You'd think that those who believe this so strongly would have made a point to study economic theory and data. But - sadly- trickle-down theory doesn't survive very long in the reality-based community.

First a look at the theory itself.

Let's assume that some large amount of money has shifted to the wealthy and corporations. The theory is that increased saving leads to increased investment. But is that necessarily true? What would investors do with that money? Well, they could invest in increased production. But with fewer consumers in sight (remember that the average person who spends all of his money just lost a chunk o' change) that's not a likely scenario. They could take that money and buy up their competitors, leading to greater consolidation- a more likely scenario. They could take that money and invest in more automation and less costly production. Although that gives them a higher profit percentage, in the long run they have just reduced their consumer base because they just kicked a lot of folks out of work. They could perform basic research- a possibility but not one that many corporations do. Or they could speculate with it and buy up gold, commercial real estate etc. With each turn of the crank, more money goes into fewer hands. Ultimately, production capacity far exceeds aggregate demand which leads to a crash.

But what about the happy ending? What about us? Aren't we a product of massive inequality of wealth? Well, the answer is ... no. During the Age of Industrialization, when displaced farmers flocked to the cities and many people starved in the streets while a few became fabulously wealthy, there was no indication that situation would ever revert to a better life for all through sheer accumulation of wealth. It wasn't until unions began to demand better wages and shorter work hours that the life of the average person became better, not worse. The same situation repeated itself in the USA. Life became better for everyone only when unions demanded it.

But, you say, doesn't income equality lead to economic stagnation? Once again, the answer is no. Empiric data collected both across countries and through time series within countries indicate that economic growth is higher in nations with economic equality, not lower. http://66.102.7.104/search?q=cache:ymS3B0YdY_AJ:www.economics.neu.edu/
papers/documents/03-006.pdf+savings+%
22income+distribution%22+united+states&hl=en&gl=us&ct=clnk&cd=3

---------------------------------
Don't piss in my face and tell me it's raining.

CHRISISALL

Tuesday, June 13, 2006 8:24 PM

Well, we know that the rich will literally kill to stay rich (See: All of history, past and present), and we don't want starvation in the streets, so I think a baseline socialism mixed with an elitist capitalism (heavily regulated) might do the trick.
The rich can still cut eachother's throats for obscene profit, but the ones who want 'just enough' to start with would have it.

Or we could have a revolution. Viruses to shut down the computers of Earth. Then dumass CEO's would have to work for a living.

Chrisisall* wakes up from his dream...*

FREMDFIRMA

Tuesday, June 13, 2006 9:12 PM

You know, in hindsight, the Luddites weren't as crazy as people thought, were they ?

-Frem

CHRISISALL

Tuesday, June 13, 2006 9:26 PM

Quote:
Originally posted by Fremdfirma:
You know, in hindsight, the Luddites weren't as crazy as people thought, were they ?

I dunno, I'll ask the genetically designed replicant that replaced me at my last job.

Chrisisall

SIGNYM

Tuesday, June 13, 2006 9:50 PM

Since the pro-capitalists are very quiet I'm going to poke them with a stick and see if they respond.

Not only is redistribution of wealth downwards a nice thing to do, it makes economic sense. Progressive taxes make sense. Raising the minimum wage makes wonderful sense. Heatlh care for everyone- also sensible economically-speaking.

---------------------------------
Don't piss in my face and tell me it's raining.

CAUSAL

Tuesday, June 13, 2006 10:01 PM

I used to be a die-hard Reagonomic trickle-down capitalist. Then I found out that Bill Gates' personal wealth is larger than the bottom 40% of all Americans combined. That works out to something like $12,000 for every penny in the bottom 40%.

"In 1973, the typical CEO of a large company earned about forty times what a typical worker did; today, he earns from 190 to 419 times as much." (From Twilight of American Culture, by Morris Berman).

Just disgusting.

________________________________________________________________________
I wish I had a magical wish-granting plank.

CITIZEN

Tuesday, June 13, 2006 10:35 PM

Quote:
Originally posted by Causal:
I used to be a die-hard Reagonomic trickle-down capitalist. Then I found out that Bill Gates' personal wealth is larger than the bottom 40% of all Americans combined. That works out to something like $12,000 for every penny in the bottom 40%.

"In 1973, the typical CEO of a large company earned about forty times what a typical worker did; today, he earns from 190 to 419 times as much." (From Twilight of American Culture, by Morris Berman.

Just disgusting.

Obviously you are mistaken!!

I have it right here, this economic textbook says wealthy people making and keeping more and more money makes everyone better off, and since Economics tells us everything worth knowing about the world, and all other Human endeavours are worthless before it, the text book must be correct and this ‘evidence’ wrong.

Remember if the real world doesn't resemble what happens in an economics text book, the real world is wrong.

Whoa, what was that? Did I just start channelling an economist again?

Okay back to the car battery for some more treatment for me.

More insane ramblings by the people who brought you beeeer milkshakes!
"I had a rose named after me and I was very flattered. But I was not pleased to read the description in the catalog: 'No good in a bed, but fine against a wall'." -- Eleanor Roosevelt.

CITIZEN

Tuesday, June 13, 2006 10:42 PM

Quote:
Originally posted by SignyM:
They believe in the trickle-down theory.

Can we not elevate 'trickle down' to a theory? I mean I'd call it a religion but I've yet to find a religion that makes as little sense as trickle down.

By removing resources from the system everyone gains resources via, erm, err, Magic, yeah, economic magic.

Just like that.

More insane ramblings by the people who brought you beeeer milkshakes!
"I had a rose named after me and I was very flattered. But I was not pleased to read the description in the catalog: 'No good in a bed, but fine against a wall'." -- Eleanor Roosevelt.

SIMONWHO

Tuesday, June 13, 2006 11:48 PM

A physicist, a chemist and an economist get stuck on a desert island. Starving, they come across a crate of baked beans. Unfortunately, they're the old fashioned cans and there's no tin opener.

The physicist says "Well, let's put the cans on those hot rocks over there. The contents will heat up, expand and the tins will be forced open."

The chemist says "No, we ought to put them in those puddles of salt water which will weaken the bond holding the lid on enough for us to get into them."

The economist says "Let's assume we have a tin opener..."

CHRISISALL

Thursday, June 15, 2006 2:10 PM

Quote:
Originally posted by SimonWho:

The economist says "Let's assume we have a tin opener..."

BWAHAHAHAHAHAHAHAHAHAHAHAH!!!!!

Too true Chrisisall

1 2 NEXT PAGE LAST PAGE