Business Owners, Leaders and Entrepreneurs are not all Evil

[ygolo]

Originally Posted by Magic Poriferan

Then I have to give you an important heads-up. Mancur Olson isn't really the source of my opinions about the growability of wealth. So he won't explain that part of belief.

That one is still a mystery to me, but the monetary vs. material distinction makes things more clear.

Originally Posted by Magic Poriferan

The reason I brought up Olson when I did, is because he has a lot of points against Libertarian, Classical Liberal, Objectivist, and Anarchist theories.
It's not coincidence that I brought him up after the essay Mercury linked to.

Olson dismisses the invisible hand as being insufficient.
He proves rational egosim to be often self-defeatist.
He shows that groups of rational people will not naturally do what is good for the whole group.
And from there, he points out why large society does not exist in the world today without extensive government oversight, (He explains why they are virtually always taxes, for example).

Those are a few examples of his suggestions that really go against the beliefs of the liberal set.

I don't think anyone with a basic understanding of economics holds relisiously to the "invisible hand" theory. We know about externalities, collusion, inefficiencies, limits to human rationality, etc.

However, the ideal of a very liquid, transparent, and highly competetive (often turbulent) market being left to its own devices is one that makes sense to me.

Originally Posted by Magic Poriferan

Both of these questions I suppose should be answered with a no.
I attempted to explain in a post I have made since that material wealth can change, but that monetary wealth cannot, and reliance on monetary wealth as a means or measure will always result in practical stagnation.
If you just put the words "monetary" or "financial" before "wealth" than the answer would be yes. The answer is therefore also yes to any kind of wealth if it is being founded on monetary wealth.

For this, I think it is important to consider the ideas of comparative advantage, and why financing can work-out.

I don't mean to be condescending when I explain concepts, but I have no idea what your background is.

Comparitive advantage and specialization:
Say Bubba, and Joe are on an island, and for now, assume that all they need are fish and apples to survive. Say Bubba needs 1 pound of apples, and a half a pound of fish, while Joe needs 2 pounds of apples, and 1 pound of fish to stay healthy.

Further assume that in a day of fishing, Bubba can get 2 pound of fish, or 2 pounds of apples. Assume that the splitting the work-day splits the results. So 1/2 days of fishing and apple collecting leads to 1 pound of fish and 1 pound of apples for Bubba.

Joe on the other had can get 4 pounds of apples/day or 1 pound of fish.

Say fish spoils in 1 day while apples spoil in 4 days.

Note that only Bubba can stay healthy by his own abilities (He's been on the island a while and is a good fisherman). However, based on higher needs and superior abilities that Joe is likely the stronger of the two.

However, Joe proposes the following deal:

Bubba will fish for the day, and Joe will collect apples.
Bubba will give 1 pound of fish to Joe in exchange for 2 pound of apples.

Note, that this deal is basically subsitance living for Joe, however, Bubba can survive on his own, and is distrustful of this stranger.

On his own, Bubba can full-full his needs and either have 1/2 a pound of fish, or half a pound of apples left-over at the end of the day, a nice buffer for other needs that comes up during the day.

Since fish spoil so quickly, taking this deal will essentially just keep gving him more apples at the end of the day. Bubba is going to get "rich" off this deal.

Bubba takes the deal. He becomes like a "boss."

Joe struggles to meet his quota for this same "deal," as he uses up what he collects and trades for each day, but he is happy to be alive.

Debt:

Bubba sees Joe struggling but spots how physically able he is. He realizes he can trade pound for pound on apples, and Joe will either have a pound of apples extra or free time.

He also, has a stock pile of apples that will last him three days, and fish to last him 1 day (including trading with Joe).

In addition, Bubba has worked out a plan for a fish-farming mechanism that will gain him 10 pounds of fish a day with only minor amounts of maintenance (Don't ask me how). It will take him 3 solid days to build this mechanism (otherwise he has to start over), but with Joe's help he can get it done in 1. He is getting old, and would like to simply rest and relax in old age, and see this as an opportunity.

There is a lot of work involved, and it will be hard to convince Joe, who is busy meeting his own needs.

So he proposes the following "loan" (which Bubba will be paying for the rest of his life):
Bubba will give a pound of fish, and 2 pounds of apples to Joe as a "down-payment" to get Joe to help with the fish farm, from them on (Bubba is old remember) he will give 1 pound of fish to Joe each day.

This is enough incentive for Joe to help Bubba for this mysterious fish farm, since he will only really need to make the "deal" with Bubba when he feels like it.

Being lazy, and a good apple picker, he no longer seeks to make the orignial deal with Bubba each day. He simply works half-days to get what he needs, and lives fat off of the loan from the old man, Bubba.

Equity:

Bubba is annoyed, since now he is working half-days collecting apples, instead of being completely financially free, like he wanted and has all this extra fish (He is wise, and realeases unused ones to keep some balance in the island ecosystem, but that's beside the point).

After some time, he thinks up an apple picking machine, that will get 10 pounds of apples with minimal maintancence work on the machine (again, don't ask me how), and with the free time, he could do it, but he may be dead from old age by the time it finishes. With Joe's help again (Joe is younger and stronger), it could be done within a couple of years.

There is no way he wants to take out another loan from Joe, and there probably isn't anything in particular Bubba can offer in compensation to convince Joe, so he decides to make him a partner of sorts instead.

It is difficult pitching this apple picker idea to Joe; Joe doesn't see the point initially--he already only works half days, and is now being asked to work full days again for years.

Bubba points out that it would end-up with both of them working only a little amount for well into the future, and that Joe (since he is younger) will have more to gain from this. He finally decides to give Joe the larger portion of the equity, and agrees to take only 20% of the yeild from the apple picker.

Eventually, they agree, build the apple picker. Joe gets 8 pounds of apples each day from the picker, and 1 pound of fish each day from his loan with Bubba.

Bubba nets 9 pounds of fish (most of which he lets go), and 2 pounds of apples a day based off his ventures.

Originally Posted by Magic Poriferan

I do believe that the whole existance of poverty is mostly attributable to inequality at this point in history.

Objectively, there is twise the demand for apples as fish, apples are more durable, and there is equal amounts of supply on the island, so Joe would be the "rich" one.

But Bubba is more well-off because; he is set for life. But once bubba dies, Joe will have to spend his entire day fishing to survive.

[Magic Poriferan]

Originally Posted by Lateralus

Are you talking about fiat currency? Or money, in general? Because the alternative to the use of money is a barter system. And that's horribly inefficient. Money evolved because it simplifies transactions.

Do you have another system in mind?

I don't have an alternative to money itself (and I was talking about all currency). I am well aware of why it exists.
I raise these points not to remove the use of money, but to challenge the policies on how we handle money. I contest capitalism in these matters, especially more contemporary capitalism. The policies that have become popular in our society are ones that treat money very much like it were a kind of material wealth. This does no good. We've established that it is not comperable to material wealth and should not be treated as such.

I do not care for using monetary growth as an objective. I consider this, as I have said, an illusory goal.

Because I think proportion of money is what matters most, that is why I'm an advocate of financial redistribution. The only way to really apply or remove pressure with money alone is to assign money in terms of its proportions to given situations. Finite increases of real wealth are influenced by the proportional distribution of monetary wealth.
Likewise, poverty can always exists if there is enough inequality. Some check on inequality has to be made to prevent poverty. Control of financial proportions becomes an imperative in this situation, too.

It is a frustrating fact that giving to one thing means taking from another, but I consider that a fact the goes well beyond politics.

Originally Posted by Lateralus

Yes, that's called inflation, which plagues both capitalist and socialist nations.

I know that.

Originally Posted by Lateralus

I fail to see the problem.

Trying to correlate something that is inconsistent and abstract to something as consistent and concrete as material wealth is problematic due to its incompability and incomperability.

Originally Posted by Lateralus

Please elaborate. As far as I know, no stock market crash has ever been the primary cause of a depression.

Well, maybe "gut" was excessive, but stock market crashes have played susbtantial, even if not primary parts in recessions and the depression.

Originally Posted by Lateralus

Money is a medium of exchange. Nothing more. Whether the supply/demand of money is fixed or not has absolutely no bearing on whether wealth can be created. I just don't see how you're making these connections.

I know that material wealth is technically independant of monetary wealth. I'd have to know that to have said half things I've said. It's also why I provided my example of people bypassing the use of money.
What I'm saying is that so long as we tie material wealth to monetary wealth for all intents and purposes in the government, than the nature of managing material wealth is going to be affected by the traits of the monetary wealth.

Are you insisting that adjustments to the treatment of money would not effect the nature of material wealth production and distribution in this country?

Originally Posted by Lateralus

Why is this problematic? And the value of everything is subjective. There is no way to objectively determine value, because objective value does not exist.

Somewhere along the lines, abritration is necessary to make the system work. The only thing that's necessary is some kind of scope to be arbitrarily defined so that one can have a sense of proportion.

I wonder if you are a moral and epystemological skeptic...

Originally Posted by Lateralus

That would destroy the economy? On what do you base this assumption?

Yes. I'm picturing a situation where a very substantial number of people begin rellying on transactions devoid of money, or taking unilateral action with no transaction at all. For a money powered economy, this would be devastating. All of these productions and trades would bypass taxes, have no use for banks, and put nothing on the financial market. Boom, the economy as we know it is dead.

Perhaps a new kind of economy with little to no use of money might arise, but as you said yourself, alternatives are extremely inefficient and money evolved to maintain complex society.

Originally Posted by Lateralus

I think your understanding of the money supply is flawed.

I appreciate the brevity, but I'd like an explanation.

Originally Posted by Lateralus

I don't think you're understanding the term 'make money'. The only way to really make money is to counterfeit.

I'm definitely not talking about literally minting more money.

Originally Posted by Lateralus

The US has the largest bureaucracy in the world.

It has a larger percentage of its citizens employed by the government than any other country?

Originally Posted by Lateralus

The greatest cause of poverty is political instability.

No, it is inequality. Instability often breeds inequality, but if country is stable and still has inequality, there will still be poverty.

I suppose, according to your reasoning, a Fascist government would be the best for preventing poverty.

Originally Posted by Lateralus

Absolute power? No one has absolute power. If a business owner were to engage in the practices you describe, he would be doing so at his own detriment. Firing good employees because you're in a bad mood is horrible business decision. The hypothetical business owner you describe would never be very successful and might eventually go out of business. The strongest companies in the world don't engage in these sorts of practices, and if these incidents do occur, they're so incredibly rare that government intervention is not needed.

I think you over-rate the human ability to know what is pragmatically best for oneself.

[The_Liquid_Laser]

Originally Posted by pure_mercury

The corporate income tax rate in the United States is the 2nd highest in the world, after Japan. That rate should be a lot lower. They are taxed at the same rate as individuals making millions of dollars a year. And small business owners are taxed as if they were, as well. The tax code in the United States is a mess.

Actually I agree with you for the most part. When I was talking about corporate tax rates, I was saying they were that way because of other corporations (like Lockheed Martin) lobbying the government to spend money. On the other hand when I was referring to Warren Buffet's protest about our tax system I think it had more to do with the capital gains tax.

Capital gains tax in the United States - Wikipedia, the free encyclopedia

Long-term capital gains, which apply to assets held for more than one year, are taxed at a lower rate than short-term gains. In 2003, this rate was reduced to 15%, and to 5% for individuals in the lowest two income tax brackets. These reduced tax rates were passed with a sunset provision and are effective through 2011; if they are not extended before that time, they will expire and revert to the rates in effect before 2003, which were generally 20%.

The capital gains tax is rediculously low compared to income and corporate tax levels. This is the worst kind of regressive tax, where non-working people pay far less taxes than many working people who directly contribute goods and services to the economy. This is robbing from the middle class to give to the rich! I would like to see income and corporate taxes reduced, but capital gains taxes increased to a similar level. Also while you are correct that the U.S. has the second highest corporate tax rate in the world it also has a lot of loopholes.

Taxation in the United States - Wikipedia, the free encyclopedia

The U.S. corporate tax rate is ranked as the second highest statutory rate among the OECD countries (the U.S. average rate of 39.3 ranks just behind Japan's 39.5 and well above the OECD average of 28.7).[25] However, the U.S also has the greatest number of corporate tax loopholes of any OECD member,[26] allowing many corporations to achieve a lower effective tax rate than the published rates.

[Lateralus]

Originally Posted by Magic Poriferan

I don't have an alternative to money itself (and I was talking about all currency). I am well aware of why it exists.
I raise these points not to remove the use of money, but to challenge the policies on how we handle money. I contest capitalism in these matters, especially more contemporary capitalism. The policies that have become popular in our society are ones that treat money very much like it were a kind of material wealth. This does no good. We've established that it is not comperable to material wealth and should not be treated as such.

You need to be more specific. What 'contemporary capitalist' monetary policies are you talking about?

I do not care for using monetary growth as an objective. I consider this, as I have said, an illusory goal.

By monetary growth, do you mean increases in the money supply?

Because I think proportion of money is what matters most, that is why I'm an advocate of financial redistribution. The only way to really apply or remove pressure with money alone is to assign money in terms of its proportions to given situations. Finite increases of real wealth are influenced by the proportional distribution of monetary wealth.
Likewise, poverty can always exists if there is enough inequality. Some check on inequality has to be made to prevent poverty. Control of financial proportions becomes an imperative in this situation, too.

This is where we'll never agree. I think the proportion isn't nearly as important as you make it out to be.

It is a frustrating fact that giving to one thing means taking from another, but I consider that a fact the goes well beyond politics.

Where does that growth come from? Unused potential resources. So the pool of unused potential resources is smaller (though that pool is essentially infinite, as whole).

So yes, you're taking from something else, something that wasn't being used by anyone. You're not taking from another individual.

Trying to correlate something that is inconsistent and abstract to something as consistent and concrete as material wealth is problematic due to its incompability and incomperability.

Money is inconsistent and abstract?

Well, maybe "gut" was excessive, but stock market crashes have played susbtantial, even if not primary parts in recessions and the depression.

This could be a thread of its own, but the stock market crash was not the cause of the Great Depression. The deflation of the money supply by the Federal Reserve was the primary cause. The stock market crash was simply the headline, and a red herring for the Fed to cast blame on the 'market' when it was the government's failed monetary policy that caused so much suffering.

I know that material wealth is technically independant of monetary wealth. I'd have to know that to have said half things I've said. It's also why I provided my example of people bypassing the use of money.
What I'm saying is that so long as we tie material wealth to monetary wealth for all intents and purposes in the government, than the nature of managing material wealth is going to be affected by the traits of the monetary wealth.

I just don't buy this. Money is an interface. If anything, money takes on the traits of material wealth, not the other way around.

Are you insisting that adjustments to the treatment of money would not effect the nature of material wealth production and distribution in this country?

The supply of money is important, but only in that it needs to stay consistent. What is harmful is change in the money supply.

Somewhere along the lines, abritration is necessary to make the system work. The only thing that's necessary is some kind of scope to be arbitrarily defined so that one can have a sense of proportion.

I wonder if you are a moral and epystemological skeptic...

So you want a gold standard (or something similar)?

Yes. I'm picturing a situation where a very substantial number of people begin rellying on transactions devoid of money, or taking unilateral action with no transaction at all. For a money powered economy, this would be devastating. All of these productions and trades would bypass taxes, have no use for banks, and put nothing on the financial market. Boom, the economy as we know it is dead.

Perhaps a new kind of economy with little to no use of money might arise, but as you said yourself, alternatives are extremely inefficient and money evolved to maintain complex society.

The way I see it, if people were voluntarily giving everything away, there would be no need to taxes and banks in the first place. The economy wouldn't be destroyed (by destroyed, I think massive suffering), but it would be drastically different. This is a pointless exercise, though. It'll never happen. People use money because it's the most efficient way to exchange goods.

It has a larger percentage of its citizens employed by the government than any other country?

Does the US have to have the highest percentage of government employees in order for my point to be valid?

No, it is inequality. Instability often breeds inequality, but if country is stable and still has inequality, there will still be poverty.

I suppose, according to your reasoning, a Fascist government would be the best for preventing poverty.

Without political stability there can be no equality. Look at what political instability has done to Iraq.

I think you over-rate the human ability to know what is pragmatically best for oneself.

If men can't decide what's best for themselves, how can they possibly decide what's best for others?

[niki]

is it just my feelings,
or is it true that most "computer-&-internet-savvy-hi-tech" Generation X & particulary Y youths nowadays don't really like to be a business-owner, as in a "big-corporation" kind of owner, but rather in a SMALL, and MEANINGFUL kind of business ? and i've also heard that many choose or rather prefer a CREATIVE kind of business nowadays (ie: design, computer-animation , internet-based business, 'cool' restaurant, funky apparels, etc). is this true? can anyone confirm to me? and 'why' is this?
i've even found some extreme cases where they don't want to be in a business field at all! and these are all from Gen Y's youths. some prefer a "low-paying" job like volunteering, or surfing couch, etc, as long as they ENJOY it (this seems to be a pretty BIG word nowadays, doesn't it? generation nowadays prefer enjoy & meaning over big $$$ money ?)

and I first thought this was only to some "very spoiled INFPs" , but how i was wrong! to find out quite so many Gen X & Y-ers who think the SAME thing, regardless of personality-type.
is it really this generation-thing?
what do u guys think about this?

[pure_mercury]

Originally Posted by niki

is it just my feelings,
or is it true that most "computer-&-internet-savvy-hi-tech" Generation X & particulary Y youths nowadays don't really like to be a business-owner, as in a "big-corporation" kind of owner, but rather in a SMALL, and MEANINGFUL kind of business ? and i've also heard that many choose or rather prefer a CREATIVE kind of business nowadays (ie: design, computer-animation , internet-based business, 'cool' restaurant, funky apparels, etc). is this true? can anyone confirm to me? and 'why' is this?
i've even found some extreme cases where they don't want to be in a business field at all! and these are all from Gen Y's youths. some prefer a "low-paying" job like volunteering, or surfing couch, etc, as long as they ENJOY it (this seems to be a pretty BIG word nowadays, doesn't it? generation nowadays prefer enjoy & meaning over big $$$ money ?)

and I first thought this was only to some "very spoiled INFPs" , but how i was wrong! to find out quite so many Gen X & Y-ers who think the SAME thing, regardless of personality-type.
is it really this generation-thing?
what do u guys think about this?

I think it's a function of the maturation of our economies in the Information Age. When the big industries were steel and automotive manufacturing and consumer electronics, it made sense that the brightest people coming out of school would go into management of those kinds of businesses (or into the professions). Nowadays, we have a service- and financials-based economy that is centered around new tech, marketing, creativity, etc. Smaller, more adaptive business entities are more adept to rapidly changing markets. Plus, we are VERY rich nowadays compared with even fifty years ago, and people tend to start "labor of love" type companies when they are less worried about making a high salary right away. It's a very American thing to do. Most people here would rather own their own restaurant or fishing boat or whatever than keep going into the office, if they had the money and time to do it. We also give more money as a percentage of income to charity than any other country, and tend to be more involved in a hands-on kind of way. I wish these elements were more celebrated in our culture.

[niki]

Originally Posted by pure_mercury

I think it's a function of the maturation of our economies in the Information Age. When the big industries were steel and automotive manufacturing and consumer electronics, it made sense that the brightest people coming out of school would go into management of those kinds of businesses (or into the professions). Nowadays, we have a service- and financials-based economy that is centered around new tech, marketing, creativity, etc. Smaller, more adaptive business entities are more adept to rapidly changing markets. Plus, we are VERY rich nowadays compared with even fifty years ago, and people tend to start "labor of love" type companies when they are less worried about making a high salary right away. It's a very American thing to do. Most people here would rather own their own restaurant or fishing boat or whatever than keep going into the office, if they had the money and time to do it. We also give more money as a percentage of income to charity than any other country, and tend to be more involved in a hands-on kind of way. I wish these elements were more celebrated in our culture.

what you said is really true..!

and i guess that's why (or no wonder) my 'traditional' chinese parents still kept pushing me that "having BIG factory, or BIG projects" is the ONLY way My life's supposed to be *sigh* ...
after all, this is indonesia, a still relatively developing country (at a very SLOW pace, unfortunately, due to heavy corruptions by government & its people!)
while all i want is to travel around the world and be a music composer, or play gigs..something like that.. but that's way too 'small' for them (parents) :/

[Samuel De Mazarin]

The really evil people are the ones killing people's souls through debt financing. We should be looking at trade and/or project-specific financing.

[kuranes]

My kind of entrepreneur - Ricardo Semler
YouTube - Seven Day Weekend
YouTube - The Caring Capitalist - Brazil


I can understand where Magic Poriferan is coming from also though -
BBC NEWS | UK | Magazine | To market, to market
Amazon.co.uk: The Gods That Failed: How Blind Faith in Markets Has Cost Us Our Future: Larry Elliott, Dan Atkinson: Books

[ygolo]

Originally Posted by kuranes

My kind of entrepreneur - Ricardo Semler
YouTube - Seven Day Weekend
YouTube - The Caring Capitalist - Brazil

Absolutely brilliant! Both Semco Inc. and the school.

"They're under a tremendous amount of responsibility because they're on their own. Meaning, if the sales don't happen, the business unit ceases to exist. If the student doesn't learn anything, they really don't have the capacity to go out into the world [...] and that responsibility is many times more unforgiving than it sounds. " -Ricardo Semler

I wonder if he still gives seminars in the U.S. Because, I think I just found the management style of the company I want to start sometime in the future.

Originally Posted by kuranes

I can understand where Magic Poriferan is coming from also though -
BBC NEWS | UK | Magazine | To market, to market
Amazon.co.uk: The Gods That Failed: How Blind Faith in Markets Has Cost Us Our Future: Larry Elliott, Dan Atkinson: Books

Blind faith in a completely laze fair market is not something I was advocating in the OP. I don't believe that "market forces" take care of all ills, magically. Ultimately, a market is nothing more tan a place to make trades.

When it comes down to it, what I advocate is an open, and trusted mechanism for people to negotiate for their own needs (and desires).