Some good news!

[Alondro]

Here's a list of some companies that are actually doing well.

No layoffs!

I note an interesting trend:  a fair number of those companies are publically owned.  They don't have to answer to shareholders.  They also keep costs constrained and focus on their product and workforce rather than quartlerly returns, and I believe not having stock is their strong point which makes all of that possible. 

Perhaps instead of resorting to 'wealth redistribution' and more government regulation to solve problems, we should do what would really work and ditch the antiquated and unstable system of the stock market altogether.  That system is proven to breed corruption and fraud and has demonstrated that even with ever-increasing regulations, massive criminal activities can take place for decades undetected or ignored by officials who are getting payoffs to look the other way:  the failure of Fannie & Freddie and Madoff's giant pyramid scam are perfect examples of what should have been stopped and wasn't, even when warning signs were popping up for years.

Without the stock market, business would have to actually do something useful and do it well to make money.  It would depend of hard work and intelligence rather than hype and speculation.   Just look at the dot.com crash:  a whole bunch of companies with absurd stock prices which actually didn't produce anything.  Those pseudo-businesses would never have existed without the stock market, and the crash wouldn't have happened, because there would have been nothing to crash.

Yes, along with the ticker-tape machine which was so long a symbol of the stock market, I believe the market itself is no longer of any use.  In the long run it causes far more harm to the economy in the massive crashes it triggers through speculation and greed. 

Touted as 'free market capitalism', I see nothing of freedom in it.  It enslaves the nation to the whims of an elite few and the reality that it can be brought down in an instant from a stampede of fear-selling.  A production-based economy would grow very slowly, but it would be far more stable, as it would be truly based on supply and demand.

I shall call this economic model:  Charles' perfect economic model which everyone should say is right or they'll be getting da smackdown.

[Lysander]

I don't yet know enough about business to place an opposing argument so until further notice, I completely agree. Good news is a rare thing.   

[superluser]

Yes, along with the ticker-tape machine which was so long a symbol of the stock market, I believe the market itself is no longer of any use.  In the long run it causes far more harm to the economy in the massive crashes it triggers through speculation and greed.

Ah, so you're finally coming around to my point of view.

Public ownership is a Bad Thing unless it's government (and even then it's simply the least bad thing).

See, for example:

http://multinationalmonitor.org/focus/focus.index.html

[Brunhidden]

i partially agree, but slightly disagree

its despicable how many companies are screwed by stockholders who only want the stock to go up by running the company into the dirt and bailing out before the crash to get top dollar for inflated stock.

however the upside to stock is that it allows a company to exist independently of its creators, providing stability for companies who don't just let the owners son inherent it


mostly i think the best solution is to create corporate cops who study corporations, then step in and say 'according to our records you laid off three thousand employees, claimed record profits, gave the board of directors bonuses in excess of six million dollars, and STILL collected corporate welfare. that's not right, in fact, im gonna have to ask you to put your hands on the wall as my partner and i beat you silly and then confiscate the golden toilet in your private bathroom'

however an idea ive liked for a long time would be to create a salary law that would encourage CEOs and other high ups to hire more people. simply put the salary of the highest paid member of the corporation (ceo, owner, or otherwise) would be limited by a mathematical equation based on the number of workers he has and their pay. for example owner of the monkeyspunk factory would be limited in pay of X because he has 200 employees that earn Y. to raise his pay he would have to either hire more workers, pay them more, or add another pay level which is still based on the income of employees below them. thus the owner of the monkeyspunk factory could make X times seven if he has seven hundred employees making Y plus four, fifty managers making Z (factory worker salary plus fifty percent), and ten executive managers making Z times two.

why do i like this plan? it makes the greed inherent in the system work for everyone else- if they want more cash they have to make more jobs or pay better. as every CEO wants more cash you will find a big surge in employment.

[Tezkat]

You do know that private corporations have shareholders, too... right? And that those shareholderes invested money in these companies with an expectation of return? We call that "capitalism".


How else do you promote innovation and wealth creation? The simple fact is that you need money to make money. There's equipment to buy, offices to rent, employees to pay, and so on. Thus, in order to build a business, you must...

A) be rich in the first place
B) borrow the money
C) convince other people to invest in you

Option A limits new wealth creation vehicles to the already wealthy, which some would consider to be a Bad Thing.

Option B is viable for small, traditional businesses with a lot of physical assets. But let's be realistic here: Debt financing for highly innovative ideas just doesn't happen very often, and startups with long R&D phases could go years with no revenues to support interest payments.

So that leaves Option C--selling an equity stake in your corporation. Now the question is: How do they get their money back? Investors who are in it for the long haul might be satisfied with regular dividend payments once your company finds its legs. The rest of the capitalists (and this includes most of the people in the business of funding new ventures) want an exit strategy. In other words, they need someone to buy their shares in the future--hopefully at a profit. In practice, that means either merger/acquisition or IPO. (And of course, the new buyers will want a return on their investment, and so on...)


I just don't see your idea working in a post-industrial society. If you got rid of the stock market(s) tomorrow, something would spring up to replace it. Probably with even less rules. The world is sufficiently wired that investors looking for liquidity will create ways to satisfy their needs.


Most new businesses will fail. That's why it's hard to make credible use of debt financing without significant collateral. It also means that you must aim for a very high rate of return to balance out the risk your investors are taking. Ask a venture capitalist about their business model, and they'll tell you that 7 out of 10 of companies in their portfolio will lose money, 2 out of 10 might break even, and the last one will make enough to outweigh all the other losses. They'll invest in all ten, because the market is a fickle beast, and they can't know in advance which one will be the winner.


Your argument presumes that the boom-bust cycle is necessarily a Bad Thing. Sure, lots of people lose money and jobs when the bust finally comes, but that's only a part of the picture.

Take the dot.com bubble, for instance. Thousands of startups formed. Investors threw money left and right. Many jobs were created. Then the bubble burst, and the flensing began. Thousands of companies went under. Most simply weren't viable businesses--they deserved to fail. Even trailblazers like Netscape were gobbled up. But hundreds of companies survived the cull, from industry leaders like Google and eBay to smaller niche companies--businesses whose managers understood the new paradigm. And that original influx of capital provided billions of dollars in infrastructure investment for the next generation of innovation. It left us with a world where almost everyone has e-mail, we have network pipes fat enough to stream video, and I can read this post on my cell phone.

Heck... would this forum even exist if nobody had invested in the web back then?

Ah, so you're finally coming around to my point of view.

Public ownership is a Bad Thing unless it's government (and even then it's simply the least bad thing).

State ownership has its place. I don't believe that public goods or natural monpolies (such as utilities, communications infrastructure, or national defence) belong in private hands, for instance. Beyond that, however, I generally consider the free flow of capital and private investment to be a Good Thing. Not that capitalism doesn't have issues. Capitalism is merely the worst type of economy--except all the others that have been tried.

[Valynth]

I'm with Tezkat on this.

Mostly because ANY type of government is resistant to change, but economics is an ever-changing system, half of which, is complete and utter fiction and thus the system changes like the wind.  The exceptions to this rule, as Tez said, are the natural monopolies (of which I consider education to be a part of.  If you've ever had to buy college books, you'd understand).  If they changed, they would eternally go up due to ever increasing demand.  So putting it under the great cinderblocks of Gov. bureaucracy is a good thing as it keeps the prices relatively stable and low.  Of course, the Gov. should always expect to run in the red on these things as a result.

Meanwhile, the Gov.  should try to break apart the unnatural monopolies that exist, not because of the shear requirement of their goods for human life, but a purposeful and artificial hike in the value of their items due to lack of competing business.