movies matter | criticism by maryann johanson
Wed Oct 22 2008, 11:58am | 37 comments
Richard Wolff, professor of economics at UMass Amherst, explains the roots of the current financial crisis and capitalism in general:
His basic premise (real wages have stagnated) has been debated in economics circles for quite a while now – the bundle of goods approach has been (I believe) rightly criticized on many grounds. He also levels the charge that the Republican party has pushed the current economic model – unfortunately, the Republican party didn’t have control of Congress until 1992, the first time in 40 years they had that control – and while they did push legislation that arguably accelerated the process, the economics set in motion in the 1970s were all well under way by then.
(He also seems to imply that the FDR policies implemented in the Great Depression had any kind of effect on making the economy recover. They probably didn’t, the U.S. economy was still in shambles until WWII revived it).
His prescription is odd too – there isn’t anything that prevents people from doing exactly what he says corporations should do. One would think that if wages were as badly out of whack as he argues, that the type of small start up, employee run business would be more prevalent now. There isn’t anything that keeps people from doing that, and if they could make a lot more money and have more enjoyable jobs, one would think that over the last 35 plus years, we would have shifted much more to that sort of situation without the need for a push. But we don’t see lots of employee owned companies – we see some in highly specialized fields (usually collections of the professionals he derided early in the talk), and a handful of “employee owned” corporations that don’t seem to be any better for employees than the other more conventionally operated companies. If being an employee owned organization was that much better for employees, they should be more prevalent.
So, on the whole, meh.
The truth is, lots of businesses are employee owned. It’s called stock options. The model of democratized corporations he pushes is impractical in a modern society where a single business may need to employ thousands of people in highly specialized positions, spread out across the whole country or world.
That said, Communist philosophy is useful as a counter to Libertarian philosophy, and vice-versa. If conservative middle-class voters would listen closer to folks like this (while still being careful to take his message with a grain of salt) then maybe they wouldn’t be so quick to jump on the deregulation bandwagon.
If being an employee owned organization was that much better for employees, they should be more prevalent.
Might as well say that if single-payer health care actually were much better, we’d already have that.
The truth is, lots of businesses are employee owned. It’s called stock options.
Is that really the same thing Wolff is talking about?
The model of democratized corporations he pushes is impractical in a modern society where a single business may need to employ thousands of people in highly specialized positions, spread out across the whole country or world.
Interesting that you assume that this is the way things *must* be…
“Might as well say that if single-payer health care actually were much better, we’d already have that.”
Not really. You see, to have a single payer health care system requires that the government actually do something to set it up. A single payer system has no way to spontaneously generate. (And we do have a version of a single-payer health care system – Medicare).
To have employees abandon poor paying jobs at corporations run on the Stockholder-Director-Employee model in favor of corporations they set up and run themselves only requires people to decide they can pay themselves better than their current employer can. No government action is required.
If employees at employee-owned companies really were doing a lot better financially, then it is hard to see why people who remained employees any way didn’t choose that option. It is common to criticize economists because they often say “if so-and-so was viable, it would have already happened”, without accounting for information to spread through the system – but the allegation here is something that has been happening for thirty-five years. That’s more than enough time for people to say, “Hey, these guys are making a lot of money doing things this way, why don’t I do that”.
But people haven’t done that – few people have taken up the idea of being an employee-owner, and most of those have been professionals who (according to Wolff) have generally benefitted from the eonomic systems he says has been in place during that time period, and the various “employee-owned” companies out there haven’t had an especially superior track record at paying people more than other people working in comparable positions in non-employee owner companies were paid.
The idea that employee ownership is a much better option is, like many things about socialism (and I can feel comfortable labeling the proposed solution that, because Wolff does), an appealing fantasy. But if it were truly a better option for employees, we would see people switching to that over time in increasing numebrs, and that hasn’t happened. This is a hole in the argument made by Wolff that really needs explanation, and he offers none.
Yes and no. Wolff is talking about employees owning the company and making joint decisions about its operation. In theory that’s exactly what stock options do.
It is the way things must be for many industries. For example, an auto company has to employ factory workers, a research and development department, engineers, folks to design aesthetically appealing cars, market analysts, retail workers, repair workers, etc. Factories and dealerships can be located all over the world.
Any of the above might have no idea how to run a business. Does it make sense to open a new factory? Do we manufacture our own car radios or buy them from a third party? Which new fuel technology is most promising? Do we explore several fuel technologies? How much are we willing to spend before we make a decision?
In the real world you can’t expect every employee of the company to make intelligent decisions on these points. So the employees/stockholders cede their authority to people who they feel are qualified. Presto, you have a board of directors. Back to the traditional corporate model.
Wolff is talking about employees owning the company and making joint decisions about its operation. In theory that’s exactly what stock options do.
But in practice stock options are a form of compensation intended to act as an incentive to stay with the company through the vesting period of the options (and, perhaps, to work to increase the value of the options). And I suspect that the number of employees with options who don’t exercise them and then either sell the shares immediately (if they need the cash), or after owning them for a year (if they can afford to wait and pay lower taxes) is pretty small.
In order for the employees to be in a position to make joint decisions, they’d need to have enough of the shares to — potentially in conjunction with other shareholders — form a majority. In most public companies, the majority shareholders are collectively on the board of directors, or are concentrated in a few large investment institutions. Regular (non “C-level”) employees typically aren’t even holding a small fraction of the outstanding shares.
As an example, I have stock options where I work. I’m fairly well-paid, but by no means a senior employee. If I were to never sell any of my initial grant of options, I’d control 1/200,000th of the outstanding shares. Even assuming that my grant was average across all employees in my company (it isn’t), and assuming there were 20,000 such employees (there aren’t), the employees would still only control 10% of the outstanding shares.
I have experience with a very large employee owned company.
It was an excellent and well run company but I never observed the sea change that the good professor was predicting.
The senior management controled a large enough block of shares to form what the Professor would recognise as a ruling class, the employee/shareholders acted pretty much like any other bunch of shareholders.
I would say that the wealth distribution was flatter from top to bottem. I would say that was a good thing but not revolutionary. A well run publicly held company with a diverse board of directors would act the same way. (Yes, for you cynics out there, such companies do exist although not in the numbers I would like.)
All in all, I enjoyed the Profs lecture. I would suggest though that a truely democraticly run employee owned company would be inefficient. Picture a film shoot where the grips get to vote on the editing. When top down management works at all it works remarkably well.
Intriguing lecture, but I’m skeptical about the validity of his proposal.
His model for this new society is a garage-based start-up with a handful of highly-educated people who interact face to face. The larger the enterprise the more unwieldy things get.
Plus the start-up company was not a true communist economy which provided all the services of a functioning society — it was a partnership that operated within a capitalist society.
Even if this were feasible, I can’t envision how the country could ever go from today’s situation to this proposed solution. Each business or corporation has equipment which somebody owns. How could a MacDonald’s worker hope to get enough money to buy a share of even one franchise? Would they nationalize each and every business, to be parceled out? There are too many moving parts for such a radical change to be implemented; rather than evolve, the system would collapse.
One final note: Stock options are nothing like the joint ownership that he proposes. Even if an employee votes his shares, the votes are on proposals that the board of directors allow to be brought up at a shareholders’ meeting.
One final note: Stock options are nothing like the joint ownership that he proposes. Even if an employee votes his shares, the votes are on proposals that the board of directors allow to be brought up at a shareholders’ meeting…
…because a board of directors is a more efficient management system than true employee democracy as he proposes it. That’s my point.
Just for the record, I don’t necessarily agree or disagree with Wolff. But I found his approach and ideas interesting, and not the kind of thing we’re typically hearing. (For instance, Alan Greenspan is testifying before Congress right now, and he just said it’s a big mystery why monetary policies that have been working just fine for decades suddenly failed. He’s either a moron or he’s lying if he really believes things have been fine for decades, or else he’s only talking about the superrich.)
And now it’s interesting to see the assumption you all are making about the way things *must* be. The way things are now is *not* the way they must be.
To have employees abandon poor paying jobs at corporations run on the Stockholder-Director-Employee model in favor of corporations they set up and run themselves only requires people to decide they can pay themselves better than their current employer can. No government action is required.
This assumes that the deck is not currently stacked against individuals striking out on their own to start a business, both in the law and in practice.
an auto company has to employ factory workers, a research and development department, engineers, folks to design aesthetically appealing cars, market analysts, retail workers, repair workers, etc. Factories and dealerships can be located all over the world.
This assumes that one company *must* do all those things. If the deck were not stacked toward large international corporations, perhaps it would be more feasible for one small company to design a car, another to build it, and another to sell it.
I can’t envision how the country could ever go from today’s situation to this proposed solution. … How could a MacDonald’s worker hope to get enough money to buy a share of even one franchise?
You might start by trying to envision a world without chains like McDonald’s and one in which small independent restaurants sold locally produced food actually prepared by talented cooks, instead of factory produced food flash frozen a thousand miles away slapped in a microwave by a minimum-wage teenager.
I grant that all of these things that I’m suggesting would require a shift away from money as the primary motivator in our culture toward one more concerned with creating a pleasant quality of life for everyone. But if we’re not even willing to concede that that’s not a flat-out impossibility, and that the way we structure our political and legal systems can help foster that, then yes, we’re stuck with the shitty system we have now.
One thing that Wolff seems to discount is the value brought to a compnay by skilled management, and coupled with this he seems to gloss over the limits of what he terms “democracy”.
A direct democracy only works for small numbers of people. A direct corporate democracy quickly becomes not only unwieldy, but detracts from the ability of the corporation to do business.
For example, suppose we have that IT start-up Wolff extolls that gets together every Friday and decides how to run the business. If there are ten employee-owners, they effectively lose 10 working days of IT work every week because of this. Suppose, instead, nine employee-owners decide to have a tenth work exclusively running the business. They lose five IT working days every week, but that is better than losing ten. And this does not even begin to account for any benefits that might be derived from the tenth person being an expert in running a business rather than an expert in IT work.
But that just moves us back to the shareholder-director model that we have now – the employee-owners are the shareholders, and they have elected a specialized individual to act as adirector to run the company. The key here is that specialization is valuable, even specialization in the kind of work that Wolff apparently discounts (managing a business).
But we keep coming back to the simple question: if this kind of company works so well for employees, why don’t more groups of current employees strike out on their own and reap these alleged benefits? If there is a huge amount of surplus salary that could be had by going this route, the financial incentive to do this should be huge. But we don’t see that, not even over a thirty-five year period. We see a handful of small employee-owned business that work the way Wolff says all businesses should work, and a lot of businesses that work in a myriad of other ways. And we don’t see a mass exodus of exploited labor.
Since nothing prevents this mass exodus, one is left to ask why not. And one can only conclude that the benefits that accrue to those who do leave aren’t as glorious as Wolff seems to think they are.
“This assumes that the deck is not currently stacked against individuals striking out on their own to start a business, both in the law and in practice.”
Exactly what do you see as stacking the deck against small employee-owned companies in the law? U.S. law is generally very friendly to people starting up companies. What obstacles do you think a group of five of six people in a garage face legally that prevent them from going into business?
What practices work against them? In most cases, large companies show no compunction against using the products of s amll company if they do a good job – that’s pretty much the entire basis for the existence of consulting firms. The government actually has a prejudice in favor of small companies (although the federal definition of a small business is somewhat silly). Is it hard for a group of employees to run a successful business? Of course, but that’s the nature of running a business in general.
“This assumes that one company *must* do all those things. If the deck were not stacked toward large international corporations, perhaps it would be more feasible for one small company to design a car, another to build it, and another to sell it.”
Once again, what stacks the deck? If it is that a company that does all three is more competitive than one that does not, then having employee-owned companies won’t change that one way or the other. The proposal Wolff floats doesn’t change anything but the ownership structure, and there really isn’t anything that prevents that ownership structure right now.
“You might start by trying to envision a world without chains like McDonald’s and one in which small independent restaurants sold locally produced food actually prepared by talented cooks, instead of factory produced food flash frozen a thousand miles away slapped in a microwave by a minimum-wage teenager.”
Ah, the anti-McDonalds rant. I’ll note that I didn’t make the argument concerning McDonalds to begin with, but most people simply don’t get what McDonalds offers that locally owned retsurants can’t: reliability across large areas. A locally owned restaurant may be great. Or it may be terrible. I have both kinds in the town where I live. I, as a resident, know which is which because I learned this through trial and error.
But someone passing through town has no idea which local restaurant is good and which isn’t. Now, McDonalds (and other fast food chains) don’t offer good food, but they offer reliable food – someone passing through your area on the way to Maine doesn’t have to guess as to whether the local place they are walking into is worth eating at or not.
One thing that Wolff seems to discount (and the anti-McDonalds argument does too) is that brands have value. Not value to their owners, but value to the customer – they provide information to the customer as to what they are buying.
Not value to their owners, but value to the customer – they provide information to the customer as to what they are buying.
And aren’t movies one of the most obvious examples of this phenomena? Why are certain actors and directors paid so much? Presumably because they have become brands in their own way, with name recognition affecting the willingness of the public to check out their movies.
The broader question I have about mom-and-pop businesses such as restaurants is whether they truly pay higher wages than the chains. Does a cook or a waitress at a locally owned diner really have a measurably higher standard of living than someone doing similar work at a Denny’s.
Regarding the question of whether the pay is better at a chain or a diner: I have no facts to back this up but I would say the pay is better at a diner. The base pay for both is set by law and the MacDonalds and their ilk pay right at the legal minimum. But people tip at diners and they don’t tip at fast food chains. So, I would say advantage to the non- chain diner.
Re: actors as brands
You have certainly made an interesting point but I think that actors as brands doesn’t quite work in this context.
Yes, an actor is a valuable marketing tool and, on occasion, the actor can rise to the status of a brand e.g. ‘a John Wayne Movie’ or ‘a Bruce Lee Movie’. Each of those designations has a specific meaning to the consumer concerning the nature and content of the film beyond just the name of the lead actor, while ‘a Brad Pitt movie’ means only that Brad Pitt is in it.
Now that I think of it, film brands today tend to be characters, ‘a James Bond movie’ transcends the actor that plays Bond. So would a ‘Harry Potter film’. There have been directors as brands, i.e. Hitchcock and Tarrantino, or even studios, ‘a Disney film’.
U.S. law is generally very friendly to people starting up companies.
U.S. law is much friendlier to big corporations, and to people who make money off investments over people who make money actually making things or providing services.
What obstacles do you think a group of five of six people in a garage face legally that prevent them from going into business?
For one, the bankruptcy laws that once provided an out for a business run by one or two people that failed have been changed to make it harder for such entrepreneurs to start over. For two, providing health insurance to those five or six people is exorbitantly expensive, and will limit the talent available to start up such a company to those who already have other resources (a spouse with insurance, independent wealth) or who are ready to dare being uninsured.
Ah, the anti-McDonalds rant.
It’s not an anti-McDonald’s rant: it’s an anti corporate blandness rant.
most people simply don’t get what McDonalds offers that locally owned retsurants can’t: reliability across large areas.
I understand that. But I don’t see it as a feature: I see it as a bug. Why is guaranteed mediocrity a good thing? Why does our culture see it as a good thing? It didn’t always.
The broader question I have about mom-and-pop businesses such as restaurants is whether they truly pay higher wages than the chains.
Obviously I am not making myself clear, or else I’m rare in that I don’t make assumptions about how things *must* be. This question assumes that chains are essential and that mom-and-pops will always be competing with them. I’m trying to suggest that a paradigm shift could eliminate what we see as the “necessity” of chains, that we could come to a realization that, in this specific instance of McDonald’s, quality food and supporting local restaurant owners is more important — and healthier not just for our bodies but for our culture — than being assured that we can get, everywhere we go, a reliably just-okay burger that makes corporate stockholders in another city richer. I’m suggesting that we could create a paradigm shift that sees more value in teenagers studying than in working a shitty minimum-wage job, and that that could, consequently, result in a higher salary for a career waitress or career short-order cook.
What I’m saying is: The price of a McDonald’s hamburger — or a Ford automobile, or a pair of made-in-China jeans at Wal-Mart — is more than just the number of the price sticker.
It took a paradigm shift in our culture — one fueled by a tilt in Washingto toward big corporations over small indepentdent businesses — to make things the way they are today. So there’s no reason why things couldn’t tilt the other way again.
“Regarding the question of whether the pay is better at a chain or a diner: I have no facts to back this up but I would say the pay is better at a diner. The base pay for both is set by law and the MacDonalds and their ilk pay right at the legal minimum. But people tip at diners and they don’t tip at fast food chains. So, I would say advantage to the non-chain diner.”
McDonalds isn’t a diner – and the pay scale is different. McDonalds has a base pay scale that is higher than most restaurants because resturants can pay people who are expected to derive tips on a lower scale than other employers.
To compare to a local diner, you need some sort of chain diner, and we have some of those, and from anecdotal experience, I believe that the pay scale is pretty much the same for both. Both pay waiters the waiter minimum, both pay their cooks and other kitchen staff as little as they can get away with.
The only real exceptions are people who are part owners of the restaurants they work for, who generally get paid better. On the other hand, owning and running a restaurant comes with a huge set of other headaches – and that is the part that Wolff truly glosses over. Owning a business means both chaining oneself to the business, and staking your fortunes to the fortunes of the business. If you invest a lot into the business, and it fails, you are in a much worse situation than someone who simply was an employee and only need to seek out other employment.
Many people don’t own their own businesses because they are essentially risk-averse, not because of some evil plot by the government to keep them from owning one.
“U.S. law is much friendlier to big corporations, and to people who make money off investments over people who make money actually making things or providing services.”
Enlighten us as to how. You keep saying this, but you haven’t provided anything to back this claim up.
“For one, the bankruptcy laws that once provided an out for a business run by one or two people that failed have been changed to make it harder for such entrepreneurs to start over. For two, providing health insurance to those five or six people is exorbitantly expensive, and will limit the talent available to start up such a company to those who already have other resources (a spouse with insurance, independent wealth) or who are ready to dare being uninsured.”
The change in the bankruptcy laws probably won’t affect those who start their own businesses and fail. The changes were mostly aimed at unsecured consumer credit, and while I agree that the changes were basically evil in nature, they don’t affect most small business owners.
For a small company, health care is expensive, but no more so for all but the very largest companies, and even those are affected by the costs. The only entity that hasn’t had its health care coverage become significantly more expensive recently is probably the government. This is not a problem unique to small businesses, nor is it an impediment to starting those businesses vis a vis running a larger business. It is an indicator as to one of the reasons why wages in general have not risen – benefits have become more expensive to provide.
“I understand that. But I don’t see it as a feature: I see it as a bug. Why is guaranteed mediocrity a good thing? Why does our culture see it as a good thing? It didn’t always.”
Our culture wasn’t always a mobile society in which people move several times and travel on a regular basis. The rise of McDonalds coincides almost exactly with the rise of the automobile – as people began taking regular trips about the country they could no longer rely on knowing that Al’s Diner was good, but Joe’s was horrible.
You say McDonalds is guaranteed mediocrity, but that doesn’t account for what McDonalds replaced – the greasy spoon road stop, which was often a much worse alternative to McDonalds. McDonalds offers something that the “fresh food made by local cooks in local restaurants” simply doesn’t, and no amount of wishful thinking will change that.
“Obviously I am not making myself clear, or else I’m rare in that I don’t make assumptions about how things *must* be. This question assumes that chains are essential and that mom-and-pops will always be competing with them. I’m trying to suggest that a paradigm shift could eliminate what we see as the “necessity” of chains, that we could come to a realization that, in this specific instance of McDonald’s, quality food and supporting local restaurant owners is more important — and healthier not just for our bodies but for our culture — than being assured that we can get, everywhere we go, a reliably just-okay burger that makes corporate stockholders in another city richer. I’m suggesting that we could create a paradigm shift that sees more value in teenagers studying than in working a shitty minimum-wage job, and that that could, consequently, result in a higher salary for a career waitress or career short-order cook.”
But that isn’t what Wolff has proposed, and his solution does nothing for that. Wolff argues that to get back to increasing wages for workers, we need to move to employee-owned businesses, which would then pay people a lot more. The only way to evaluate this is to examine this idea in contrast to the system we have now – he says that wages will be higher if we were to do this. That’s a comparison, so lets compare.
And one way we have to compare two ideas like this is to look at people’s revealed preferences shown by their behaviour. There isn’t any significant impediment to starting a business on your own with a small group of like minded individuals right now. People do it all the time. So we have examples to compare, and the question is this: are those individuals working for employee-owned businesses getting better wages than the rest of the work force? Further, if they are, why don’t more people join them?
I think the answer is that they aren’t making more money than most other people. Otherwise, we’d see lots of material published, both in economics and business journals and the mainstream press talking about this class of well-off self-made people.
And the other thing that is usually missed in this type of discussion is that most of the ‘corporate stockholders in another city” are us. The largest stockholder in the U.S. is pension funds – in other words, regular working people. The class of “wealthy stockholders” hold a relatively small proportion of stocks – individually their holdings are quite large, but there are a lot more of us than there are of them.
Finally, as a side note – most McDonalds (and other franchises) are locally owned. A certain portion of what they make goes to the holding corporation, essentially a licensing fee to use the brand name, but the bulk of the profits stay in the same area.
For one, the bankruptcy laws…For two, providing health insurance
But that’s not the government making it harder, that’s the government not actively making it any easier. There’s a huge difference both practically and philosophically.
You keep using the word assumpion. It seems as though you think the present system was designed, and all we need to do is design another system. There is your false assumption.
The present system evolved naturally. This is what happens under laissez faire capitalism. The present legal philosophy is that the government should interfere at a bare minimum, not that it should intervene on behalf of large corporations as you suggest.
Large business dominates small business because it is a more efficient system, not because the law made it so. What Wolff proposes is that we force ourselves into a demonstrably less efficient system in hopes that it somehow improves quality of life.
You say we should make bankruptcy easier to obtain. A conservative economist will correctly point out that someone has to pay when a company declares bankruptcy. If more people file for bankruptcy then responsible credit consumers pay in the form of higher interest rates. Higher interest rates also make it harder to start a small business. Higher interest rates make it harder for customers to patronize your small business.
You say the law should provide healthcare so small employers don’t have to. Someone has to pay. It means higher taxes. Higher taxes make it harder to start a small business. Higher taxes make it harder for customers to patronize your small business.
Like it or not, you can’t simply dismiss conservative thinking on the economy like you can on most other issues.
I’m trying to suggest that a paradigm shift could eliminate what we see as the “necessity” of chains…
I understood your point, which is why I mentioned brands in the context of movies. I view the Hollywood movie-making machine as the ultimate in bland, lowest common denominator product-making, and I’ve wondered whether a similar shift is possible with regards to film-making. However, I suspect that as long as people want to see familiar stars and big-budget effects, we’re pretty much stuck with what we’ve got.
In a broader context, the command structure of a large organization is pretty much essential for certain ventures. For example, I doubt we would have a commercial airline industry today if not for the partnership between government and large companies. Substantial portions of modern production simply aren’t operational as small employee-directed ventures.
“I’m trying to suggest that a paradigm shift could eliminate what we see as the “necessity” of chains,”
The value that a brand, and consequently a chain, gives is information. You know what you are going to get for your money. I’m not sure how you can structure the economy to do away with informational costs entirely, which is what you would need to do in order to eliminate the value of branding.
The problem you see is not the result of the actions of evil capitalist overlords who twirl their moustances before they dive into piles of cash. The problem is that information costs – it costs money and time to obtain, and in many cases, people would rather simply go with what they know before investing the time and effort to get more it, because the increased pay out (a better quality lunch while they are on the road, for example), just isn’t worth the cost to them.
Right now nothing really prevents most people from obtaining that information – especially in the age of the internet when you can get information on almost everything just by hunting for it. But people don’t anyway, because the increased value just doesn’t appear to be worth the invetment of their time.
Effectively, the pradigm shift you are seeking is “no information costs”. I don’t see any realistic way to obtain that.
The Mondragon movement has often been offered as an an example of worker-owned enterprise. Here is a link to an article on the movement for the interested:
It truly is shocking how many people think the way things are currently is “natural” and “just how it is” and “the best way things can be, because if they weren’t, they’d be different.”
For a start on how the deck is stacked toward big corps, read this.
Many small businesses are financed by “unsecured consumer credit,” hence my reference to the change in bankruptcy laws. (Funny how when it’s big corps that go bankrupt, though, there’s a federal bailout ready and waiting.)
And anyone who says, in this day and age, that nationalized single payer health care ISN’T both far cheaper AND far better than our current system is either completely ignorant of how the rest of the world works or is completely deluded.
And this is simply hilarious:
The present legal philosophy is that the government should interfere at a bare minimum, not that it should intervene on behalf of large corporations as you suggest.
What planet do you live on?
Your link doesn’t provide any useful information on the relative difficulty of starting either a small business or a worker cooperative. What argument are you trying to supposrt with this?
Your link doesn’t provide any useful information on the relative difficulty of starting either a small business or a worker cooperative. What argument are you trying to support with this?
I’m gonna go a step farther, Jolly. Maryann, the link you posted SUPPORTS my argument. Taxation is a form of government involvement in the economy that conservative ideology opposes. Especially on successful businesses who by virtue of their success have shown that they put that money to good use.
Or so the theory goes. I never said that I’m a dogmatic supporter of laissez faire. But I’m certainly not a supporter of dogmatic socialism either. I believe in the (mostly) free market. I believe in a non-profit entity (the elected government) with the power to curb the worst impulses of greed. The fact that the government failed to avoid the current clusterfuck doesn’t mean the system needs to be replaced.
Does that include people in other countries? Doctors in Canada, maybe?
Again, I support national health care for humanitarian reasons. But I seriously doubt that it will be a boon for the economy.
Taxation is a form of government involvement in the economy that conservative ideology opposes.
Are you for real? The current bail-out, undertaken by a conservative administration, isn’t exactly an example of non-intervention. I don’t think MaryAnn’s link supports your argument…I just don’t think there is anything on it that is especially useful for supporting her earlier thesis.
Does that include people in other countries? Doctors in Canada, maybe?
I am Canadian. I also live in the city in which the story you linked is set. Furthermore, I waited 8 months for “elective surgery” on my knee a few years ago. However, I don’t think the case for or against universal health care is as clear cut as proponents and opponents alike make it out to be. The Canadian system has problems, especially with wait lists for certain procedures. There is also a general shortage of general practitioners, making it increasingly difficult to find a family doctor. At the same time, it is generally possible to get care, and the quality of the care is reasonably good. There is little worry about being denied insurance. Medical conditions are less likely to result in financial ruin, but the system does not insure against lost earnings and the like, unless other insurance applies (e.g. private health insurance, worker’s compensation, etc.). Having said that, those that can afford to often choose to opt out of the system altogether and have procedures done in the U.S. and elsewhere. We also have limited private provision of health care on a private fee basis, which includes MRIs and orthopedic surgery in some provinces.
In short, the Canadian system is universal, but does face it’s own set of problems. Expanding funding might address some of these problems, but I see little evidence of the political will to further enrich a program which has already been consuming an ever increasing share of national and provincial budgets.
(P.S. MaryAnn, I apologize for this “dissertation-length” post. I’ll keep any further posts on this thread to less than a 100 words.)
The current bail-out, undertaken by a conservative administration, isn’t exactly an example of non-intervention
Were you there when conservatives almost killed the bailout? Bush committed a spectacular violation of Republican philosophy in proposing the bailout, and it would have cost him the support of his party if he hadn’t wasted it away years ago. I can hardly believe you think that’s a valid point.
It seems to me that you can’t tell the difference between corruption in government and honest fiscal policy. Trickle-down is the latter, and it may or may not be the best policy (I don’t think it is) but it’s not a nefarious scheme. On the other hand, there are corrupt Republicans who abuse this philosophy. Shocking revelation, I know. Try to recognize the difference.
The bailout is hardly the only example of an intervention that many “conservative” supported. Reagan’s expansion of military spending comes to mind. However, I’m not sure what the relevance of “pure” ideology is to this thread. MaryAnn asked whether an alternative economic paradigm was possible. I suspect the answer is yes, but I’m not convinced that it would necessarily be preferable. Though my convictions faltered as I typed the previous sentence….
The relevance is that you have to identify what’s wrong with the current paradigm before you even consider an alternative.
If one asks, “Is the current paradigm an unholy scheme to rob from the poor and give to the rich?” then I submit that the correct answer cannot possibly be a yes or no. It is so, SO much more complicated than that.
Which is why Wolff’s proposal looks like a fantasy, at least to me.
Marxists have a long history of prematurely declaring the patient dead. Even if one buys Wolff’s explanation of the crisis, I suspect we’re far more likely to see Keynesian remedies.
FYI, since this seems not to be clear, the link I posted was not in support of Wolff but in support of the direction the conversation had taken from there. It’s a beginning to understanding the corporate welfare that goes on the U.S., which benefits large corporations at the expense of individuals and small entrepreneurial companies.
Also FYI, no one has ever said or suggested that there are NO problems at all with the way health care works in Canada, France, or the U.K. We’re just saying that it’s a helluva lot better and cheaper than what we have now in the U.S., which benefits ONLY insurance company executives and, by extensions, the politicians that take a lot of money from them. And YES, I know that includes Barack Obama and Hillary Clinton, too.
As for the conservatives who opposed the bailout… that was the first time they’ve acted like fiscal conservatives in a long, long time… if ever.
In China the vast majority of restuarants are individually owned. The menus differ and the way particular dishes are prepared differ. When I want one dish a certain way, I go to one place. When I want a different dish another way, I go to a different place right down the road. I don’t like everything everywhere, obviously, but altogether the food is wonderful. It’s even much better than Chinese food in America, which has also been standardized down to a common average to appeal to general expectations.
So sometimes in China I’m surprised in a good way or a bad way, but in America I’m never surprised. Restuarants might have different decors and themes and costumes, but the food is pretty much the same. Never horrible, never wonderful. Quantity over quality, certainly.
Part of this difference comes from the way food is served. In China, as dishes come people share them, so all the food doesn’t have to show up at the same time as in American restuarants. This gives the chefs time to really prepare food.
As for the fiscal crisis, Adam Smith warned us 200+ years ago that joint stock companies were bad ideas because he believed a managerial class wouldn’t have the best interests of shareholders at heart; they’d have their own interests at heart. Of course, he was also pro-union, pro-public education (and merit pay for teachers, to be fair), pro-vanity taxes on the rich, and anti-foreign wars as a drain on the economy. It’s amazing the fine print that gets left out when conservatives talk about their prophets.
“It’s amazing the fine print that gets left out when conservatives talk about their prophets”
Do tell. Just to focus on the ‘vanity tax’ portion of your post:
Adam Smiths’ proposed ‘Vanity Tax’ was simply a tax on income derived from rack rents during an era that had no income tax on wages, no capital gains tax, no value added taxes, etc.
From this you apparently decide that Smith really supported a progressive taxation scheme and that todays conservatives are ignoring the ‘fine print’.
Talk about selective. I have never met the conservative that wouldn’t happily accept a tax on apartment rentals in place of the current tax schedule.
The part you leave out is the part where the vanity tax is added to the current tax program. If you think Adam Smith would have supported that you haven’t read very deeply into the mans work.
—“In China the vast majority of restuarants are individually owned. The menus differ and the way particular dishes are prepared differ. When I want one dish a certain way, I go to one place. When I want a different dish another way, I go to a different place right down the road. I don’t like everything everywhere, obviously, but altogether the food is wonderful.”
Are you talking about restaurants in general, or the expensive restaurants that cater to foreigners? What I’ve heard from natives and visitors alike is that at the lower-end of the cost scale the restaurants can be pretty damn horrible.
Drew: The vanity tax I was thinking of specifically was when he proposed rich people should pay more for road use depending upon the weight of their personal mode of transport. The bigger and fancier their carriages the more they should pay to use them. In China they have the same idea, except the bigger the car you buy the higher the sales tax you pay, ranging from 5% to 50%.
As for Smith’s real opinion of the rich, he wrote that you should always look twice at any laws proposed by them, because you could never trust their motives. I’m about 3/4 of the way through his Wealth of Nations, and as far as I can tell, he was against government intervention in the economy because the government was usually on the side of the rich and as such had policies that enhanced their short term profits instead of the country’s general interest. He wrote entire chapters about how the government-business alliance decreased the overall profitability of imperialism in favor of a few companies getting a higher percentage of the smaller pie.
Frizzy: there are basically four levels of Chinese restaurants. There are the expensive ones where prices for feeding people per person can range from 50 RMB to 500 or more (assuming you drink beer, too). Most of these are in hotels. In US dollars, that $7 to $70 per person. I don’t eat in those unless a director or official is footing the bill.
Then there are the restaurants I take dates to. They have the same quality of food, plenty of service, and I walk out having spend anywhere from 100 to (once) 300 RMB.
Then there are the restaurants where I go alone or with friends. Same quality of food, but smaller and family operated (with a few extra employees), and 50 RMB can feed five Chinese or two Americans. They aren’t very clean, but I’ve never been sick. Maybe I’m a goat.
Then there are the little places where the food is cheap, fast, and so-so. Students usually eat there. Soup and noodles or something like that for 2-5 RMB per person. And I almost forgot the sidewalk stalls and stands; the Chinese version of a hotdog stand. Chinese wraps or spicy noodles for 2-3 RMB.
Maybe I’ve been luckier than your friends, or having the advantage of living in the same city for three years gives me an edge. There are also four major cooking traditions in China, so maybe they just went to the wrong part of the country.
Paul: The road tax you mention is already in place. Repeatedly. At heart it is only a use tax that falls heavier on those that use the roads more and with weightier vehicles therefore requireing more mainainence with public monies. The current taxes that effect this purpose are sales taxes on cars (the more the car costs the more you pay in tax) and gasoline taxes (the more you drive the more you use the more you pay). Neither features heavily on any modern republicans agenda.
You are quite correct about his feeling that less government is better for business, and therefore the nation. This is, in doctrine if not practise, the essence of the modern republican position on the economy. Hence why Smith is revered on the right but not the left (witness Prof Wolff).
As for Smith on the rich and, what you described in your earlier post as, Smiths’ fervent opposition to war as an economic drain, lets turn to the man himself. The following quote is in book 5, chapter 3 of The Wealth of Nations, you may have already gotten to it. You tell me if this man sounds like a war protesting anti-wealth and global expansion sort of guy:
In great empires the people who live in the capital, and in the provinces remote from the scene of action, feel, many of them, scarce any inconveniency from the war; but enjoy, at their ease, the amusement of reading in the newspapers the exploits of their own fleets and armies. To them this amusement compensates the small difference between the taxes which they pay on account of the war, and those which they had been accustomed to pay in time of peace. They are commonly dissatisfied with the return of peace, which puts an end to their amusement, and to a thousand visionary hopes of conquest and national glory from a longer continuance of the war.
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