I want to start by saying that I'm certainly no economic expert. And I have a tenuous grasp of the intersection between economics and politics. Though it seems to me that my issues go beyond the conservative/liberal divide and are rooted more in fundamental problems in the system.
Corporations today are staggeringly large. And while it's not impossible for a smaller start up company to create a better product and become successful, it seems like the odds are all against that smaller company. And thus against the consumer as well. If the free market is supposed to encourage a system where the best product wins out in the end on its merits, I am not seeing that happen. How do you battle a company with a budget thousands of times your size? That can make things cheaper by outscourcing the work. I think the internet age helps with this somewhat, and that's heartening, but I think the problems are bigger than what the internet can solve alone. I also think that the very notion that we as consumers make rational decisions based on logic is from a scientific standpoint very disputable.
The scarier part to me is the broader impact on our planet and our future. Companies don't make money by thinking about the future. Or by being ethical...that hurts profits. Between the health insurance lobby and the energy lobby any meaningful change to either of those systems seems doomed from the start. Even if we as individuals see the danger and try to avert it, what can we do? We try to change policy at the government level and these industries use money and misinformation to stop it dead in its tracks, whether by buying off politicians or convincing citizens to act against their best interests.
Since I've gone vegetarian I've also tried to grow more informed about consuming ethically in general. And the more I learn about the food industry the more depressed I get.
I can't blame all these problems on capitalism. Whether it's the producer or the consumer, the have or the have not, they(we) are all products of our society and culture and our education system. If the population demanded reform or products manufactured using ethical practices, etc...then the corporations would most likely have to oblige. But in the end companies are out for their own best interest(for the most part) and because that is the bottom line, I have trouble buying the idea that the consumer or the population as a whole wins out because of this.
Posted by T:man (Member # 11614) on :
You had faith in capitalism?
Posted by Raymond Arnold (Member # 11712) on :
Yeah, that was my first thought too.
Posted by lem (Member # 6914) on :
quote: Corporations today are staggeringly large. And while it's not impossible for a smaller start up company to create a better product and become successful, it seems like the odds are all against that smaller company. And thus against the consumer as well. If the free market is supposed to encourage a system where the best product wins out in the end on its merits, I am not seeing that happen. How do you battle a company with a budget thousands of times your size?
What you are concerned about is corporatism. I think that it is unfairly associated with capitalism. You might like this interview of Ron Paul by Jon Stewert.
Starting at mark 5:18 they start to address the same thing as you. At minute 6:30, Jon Stewert asks a great question: "Who protects us from corporatism?"
To summarize Ron Paul's answer: "You do this more by prevention. The corporations have no right to go to government and get special benefits. If they make money because they gave a good product at a good price then it is good. If they are big because they wheel and deal with the government it is bad. The bigger the government gets the more incentive there is for lobbyists to get a piece of the pie."
Republicans, for sure, have encouraged corporatism and fought against a better form of capitalism where government protects you from fraud and abuse and doesn't grant special favors or bailouts to large industry. However, the Democrats (in my opinion) are just as bad because they want to fix corporatism with a bigger form of corporatism.
I say liquidate bad debt, suffer the consequences, stop printing and spending, and stop protecting/encouraging corporations. I think we would see a more healthy economy/society emerge.
Remember, most corporations (especially the favored few) love regulation and lobby for it because it stands as a barrier to the market place---which is anti-capitalism.
Posted by Raymond Arnold (Member # 11712) on :
Arr, this is a good conversation but it's totally ruining my master plan.
Posted by mr_porteiro_head (Member # 4644) on :
quote:Corporations today are staggeringly large. And while it's not impossible for a smaller start up company to create a better product and become successful, it seems like the odds are all against that smaller company. And thus against the consumer as well. If the free market is supposed to encourage a system where the best product wins out in the end on its merits, I am not seeing that happen.
I don't know about you, but large corporations have done a lot to increase the standard of living of this consumer.
Posted by King of Men (Member # 6684) on :
It's also worth noting that a lot of large corporations became large by starting small and providing a cheap, good service. Google and Amazon come to mind. It doesn't seem very reasonable to argue that an economy containing these two giants doesn't give the small startup a fair chance.
Posted by Jim-Me (Member # 6426) on :
Microsoft and EDS come to mind as well.
Posted by Samprimary (Member # 8561) on :
Don't lose faith in capitalism. It's exceedingly awesome. Just gain faith in appropriate oversight and regulation. I'm of the mind that neither capitalism nor socialism can stand up on its own and be very successful. Each needs the other to work well for so many people.
Posted by scholarette (Member # 11540) on :
Pure capitalism and pure socialism are deadly poisons. You need a mixture of both for success.
Posted by steven (Member # 8099) on :
"I'm of the mind that neither capitalism nor socialism can stand up on its own and be very successful. Each needs the other to work well for so many people."
It amazes me a little how difficult people find this to understand. It's so simple, yet the Rush Limbaughs and Hugo Chavez of the world continue to get attention.
Posted by Sterling (Member # 8096) on :
quote:Originally posted by King of Men: It's also worth noting that a lot of large corporations became large by starting small and providing a cheap, good service. Google and Amazon come to mind. It doesn't seem very reasonable to argue that an economy containing these two giants doesn't give the small startup a fair chance.
I should point out that Amazon had a lot of years in the red when it was starting out, far more than most "small" businesses could survive.
One wonders sometimes how stable a system in which businesses buy their inventories on credit to sell to customers who buy their goods on credit really is, and how much is a house of cards that stands as long as no one thinks about it too much.
Posted by King of Men (Member # 6684) on :
If you just track the movement of goods, labour, and services, and ignore all questions of when payment occurs, it seems to me you'll find a remarkably stable system.
Posted by fugu13 (Member # 2859) on :
Sterling: small businesses survive several years in the red all the time, especially venture capital funded ones. Of course, a lot don't, but that doesn't mean successful small businesses don't start all the time. That funding is required does not make them any less small businesses competing with larger ones.
As for your question of credit, it seems remarkably stable. Even in our current problems, which have some of the strongest credit contraction we've ever seen, most small businesses are mustering on, and they're also the site of most hiring.
Posted by Lisa (Member # 8384) on :
quote:Originally posted by mr_porteiro_head:
quote:Corporations today are staggeringly large. And while it's not impossible for a smaller start up company to create a better product and become successful, it seems like the odds are all against that smaller company. And thus against the consumer as well. If the free market is supposed to encourage a system where the best product wins out in the end on its merits, I am not seeing that happen.
I don't know about you, but large corporations have done a lot to increase the standard of living of this consumer.
So would bank robbery, if you got away with it.
Posted by Lisa (Member # 8384) on :
quote:Originally posted by scholarette: Pure capitalism and pure socialism are deadly poisons. You need a mixture of both for success.
Gross. I hate the fact that people criticize capitalism with strawmen. Corporatism is not capitalism. It's just one more form of statism.
Companies are fine. Corporations are not.
Posted by fugu13 (Member # 2859) on :
Would you care to elucidate the difference, with reference to the principals you are basing it on?
Posted by Jhai (Member # 5633) on :
quote:Originally posted by Strider: I want to start by saying that I'm certainly no economic expert. And I have a tenuous grasp of the intersection between economics and politics. Though it seems to me that my issues go beyond the conservative/liberal divide and are rooted more in fundamental problems in the system.
Corporations today are staggeringly large. And while it's not impossible for a smaller start up company to create a better product and become successful, it seems like the odds are all against that smaller company. And thus against the consumer as well.
Corporations are large. So's the US. So's the world. Being large isn't a bad thing, in and of itself. I like corporations - I like what they offer me in terms of goods and services. So do the vast majority of people, or the corporations wouldn't be that large - they got that way by offering things that people wanted. You're going to have to do better to argue that it's bad for the consumer that large corporations exist. That being said, I also like small companies, and I know plenty that succeed. The odds are far better now ("now" being the present era, not, like, the current recessionary year) for a small company to succeed than ever before, given the abundance of credit, information, and ability to reach long-tail consumers.
quote:If the free market is supposed to encourage a system where the best product wins out in the end on its merits, I am not seeing that happen. How do you battle a company with a budget thousands of times your size? That can make things cheaper by outscourcing the work. I think the internet age helps with this somewhat, and that's heartening, but I think the problems are bigger than what the internet can solve alone.
First of all, capitalism doesn't imply that the "best product" (however you define that...) always wins. That being said, what wonderful products are losing out because of a larger company with a better marketing team? Sure, we're probably losing some marginal increases in quality, but most of the time, either amazing products/services do well on their own, or they're acquired by larger companies which then market them more effectively. That's what I'm seeing happen.
My brother-in-law, for example, has had two startups. With the first, he saw a need for an online market in a particular industry in India - he developed the idea, hired some brilliant kids straight out college to program it, and then sold it to an industry giant, who is now using it to lower the costs of manufacturing materials in the industry for all players. With the second, he saw another missed opportunity in computing in the US, got the same (now extremely rich) brilliant kids to do the programming, marketed it well to get funding, and then sold it to a Silicon Valley giant, who markets the (very useful) program far better than he ever could (or would want to), meaning that more people get to use it. Now he works for the company that acquired his second startup, looking for other brilliant startups that they should think about acquiring.
Finally, what in the world is wrong with outsourcing work? Frankly, I'm almost always glad when jobs go overseas. I think it's awesome that people are getting jobs in developing nations - they'll certainly see a much larger increase in utility than the US workers' decrease. Why should I care more about US workers than about Chinese or Indian workers? They're all strangers to me, and they're all people.
quote:I also think that the very notion that we as consumers make rational decisions based on logic is from a scientific standpoint very disputable.
Neither capitalism nor economics (today) has this notion. What economics does have is models - which do make simplifying assumptions about humans' decision making process - which generally work very well to predict human behavior at the micro level. (Macro level is different, but that's a completely different set of assumptions than the ones I think you're referring to here.) Whether the simplifying assumptions are true or not doesn't really matter - because the (micro)models work to give us good results.
quote:The scarier part to me is the broader impact on our planet and our future. Companies don't make money by thinking about the future. Or by being ethical...that hurts profits.
Of course companies have to think about the future to make money - every company has a long-term business plan. I know that my company, which is the leading consultant on climate change, has a number of long-term plans in the pipeline on how it can best help itself - by helping out companies that are innovating in that field. Why does my company do that? Because the right incentives are there for the company to make money doing that. If you want to change how corporations act, change the incentives via consumer or governmental actions.
quote:Between the health insurance lobby and the energy lobby any meaningful change to either of those systems seems doomed from the start. Even if we as individuals see the danger and try to avert it, what can we do? We try to change policy at the government level and these industries use money and misinformation to stop it dead in its tracks, whether by buying off politicians or convincing citizens to act against their best interests.
I can't speak to the health insurance industry, but what do you think is so wrong with the energy industry? I mean, I work as a consultant for the EPA helping shape policy regarding the energy industry, so I'm pretty tied into most environmental (and other) concerns you could have. And really, I'm not coming up with much.
quote:Since I've gone vegetarian I've also tried to grow more informed about consuming ethically in general. And the more I learn about the food industry the more depressed I get.
I think there are ethical problems with the food industry, and some statinability ones as well. That said, I also think this article makes some good point.
quote:I can't blame all these problems on capitalism. Whether it's the producer or the consumer, the have or the have not, they(we) are all products of our society and culture and our education system. If the population demanded reform or products manufactured using ethical practices, etc...then the corporations would most likely have to oblige. But in the end companies are out for their own best interest(for the most part) and because that is the bottom line, I have trouble buying the idea that the consumer or the population as a whole wins out because of this.
Everyone is out for their best interest - the question is just how they each define it. Nothing new there.
Posted by Raymond Arnold (Member # 11712) on :
quote:That said, I also think this article makes some good point.
Man, the world is so complicated.... (I am Vegetarian so I'm not sure how much of the problems outlined therein are my fault, but I am wondering how the quality of life of a wild animal really does compare to a factory farm)
Posted by King of Men (Member # 6684) on :
That's not the right comparison, I think. There are way more cattle in the world than could be supported in the wild - yes, including herds of millions of buffalo on the Plains. So you should compare factory-farm conditions to no conditions at all. Providing you care about cattle in the first place, of course.
Posted by Sterling (Member # 8096) on :
quote:Originally posted by fugu13: Sterling: small businesses survive several years in the red all the time, especially venture capital funded ones. Of course, a lot don't, but that doesn't mean successful small businesses don't start all the time. That funding is required does not make them any less small businesses competing with larger ones.
Amazon was founded in 1994. It first turned a profit in 2004. Some small businesses have bad years, even sets of bad years, but the vast, vast majority of the ones that survive have those bad stretches buffered by profitable ones. I have to say that surviving ten years in the red makes Amazon sufficiently unique that it's difficult to accurately compare it to any other company or class of companies.
Some small businesses survive and even thrive within their niches. Some die out. A lot of the ones that become big enough to become notable do so for just long enough to get bought up and merged with the likes of Microsoft, Adobe, Amazon, etc.
As far as credit goes... Time will tell. Too much of the U.S. economy is dependent on a constant and unsustainable expansion, even when that expansion borders on illusion. I'm not seeing a lot of evidence that the recent downturn is bringing about quite as much soul-searching as it might.
Posted by King of Men (Member # 6684) on :
quote:Too much of the U.S. economy is dependent on a constant and unsustainable expansion, even when that expansion borders on illusion.
How do you know? To me it looks like a good 95% of the American economy is steady, unspectacular businesses that turn a small profit in bad years and a moderate one in good years; of the remaining 5%, half flame out in a spectacular fashion - Enron, anyone? Lehman? - and the other half eventually turn into steady-state companies, as Amazon did. Possibly you are being fooled by the media view of the economy, in which this proportion is, unsurprisingly, reversed.
Posted by twinky (Member # 693) on :
quote:Originally posted by King of Men:
quote:Too much of the U.S. economy is dependent on a constant and unsustainable expansion, even when that expansion borders on illusion.
How do you know? To me it looks like a good 95% of the American economy is steady, unspectacular businesses that turn a small profit in bad years and a moderate one in good years; of the remaining 5%, half flame out in a spectacular fashion - Enron, anyone? Lehman? - and the other half eventually turn into steady-state companies, as Amazon did. Possibly you are being fooled by the media view of the economy, in which this proportion is, unsurprisingly, reversed.
You've conflated enumerating businesses with enumerating their economic impact.
Posted by fugu13 (Member # 2859) on :
Most of the US economy still exists and is being very productive (especially compared to other places) even though we're undergoing contraction. How does that involve a dependency on expansion?
Not to mention that expansion of human activity, as far as the data suggests, has been the rule for hundreds and hundreds of years, at minimum, with relatively small deviations from that trend. Given that, I find it very hard to fault businesses for trying to follow the trend during times of expansion (which dominate in modern history).
Sterling: And yet, Amazon was still a small business in the very beginning. But I'd be happy to provide lists of other businesses that started out small and became large and had fewer years without profit, if you'd like to have their existence proven, though.
Posted by mr_porteiro_head (Member # 4644) on :
quote:Originally posted by Lisa:
quote:Originally posted by mr_porteiro_head:
quote:Corporations today are staggeringly large. And while it's not impossible for a smaller start up company to create a better product and become successful, it seems like the odds are all against that smaller company. And thus against the consumer as well. If the free market is supposed to encourage a system where the best product wins out in the end on its merits, I am not seeing that happen.
I don't know about you, but large corporations have done a lot to increase the standard of living of this consumer.
So would bank robbery, if you got away with it.
If you are trying to make a point, I don't know what it is.
Posted by King of Men (Member # 6684) on :
quote:You've conflated enumerating businesses with enumerating their economic impact.
No, my 95% number was intended to be weighted by dollar size.
Posted by Sterling (Member # 8096) on :
quote:Originally posted by fugu13: Sterling: And yet, Amazon was still a small business in the very beginning. But I'd be happy to provide lists of other businesses that started out small and became large and had fewer years without profit, if you'd like to have their existence proven, though.
I've never said that small businesses don't ever turn into big businesses; obviously, they do. But it's nothing like commonplace for that to happen. One study concluded that nearly two-thirds of small businesses fail in a ten year period ( link) Of those that succeed, the majority remain small; of those that become large, most either receed under the onslaught of other large competitors, are bought up or merged with those competitors, or fall under their own weight. I'm just saying that Amazon is far from typical for a start-up; suggesting it in any way typifies the life story of a small business is a little like saying that because so-and-so grew up in the slums and went on to be an NBA star, anyone can do it.
As far as credit goes, according to 2004 numbers, approximately 43% of American families spend more than they earn each year. (link)Consumer spending accounts for, depending on how the numbers are crunched, between a third and over two thirds of the GDP. The gross national debt is anticipated to exceed the GDP as of 2011, which is likely to preceed a sharp decline in the already waning value of the dollar.
I do not think the current state of affairs is sustainable.
Posted by sndrake (Member # 4941) on :
Jhai,
I'd take the article you linked with a huge grain of salt. The author lost me with his outrageous claim about turkeys drowning in the rain.
The guy devotes a paragraph to it, making a point. A completely bogus one. I don't know enough about farming to know how to sort what parts of the article are true and what parts are similar to the "turkeys are so dumb they drown in the rain" thing.
Posted by fugu13 (Member # 2859) on :
It isn't commonplace in the sense that most don't, but of course, that's impossible. There are far more big businesses than small businesses (edit: obviously, I meant the reverse). However, there are small businesses that become big businesses all the time (dozens per year, at minimum, for commonly accepted definitions of small business). Of course the very largest are rarely toppled, but they are toppled -- it isn't hard to name some huge companies that existed a few decades ago that no longer exist, while their former smaller competitors dominate.
Of course amazon is far from typical for a startup. Any startup that succeeds really well is. That does not mean, however, that the startup model doesn't generate a lot of successes, and Amazon is one of numerous examples of those.
That a lot of people spend more than they earn is neither particularly unusual nor necessarily concerning, though it was getting somewhat extreme towards the end of the latest bubble. Almost everyone who buys a house or a car or sends a child to college spends more than they earn; add all the households in a year that do those and you'll get a fairly substantial percentage. However, most of the time the people making those decisions are making pretty reasonable ones, that they can reasonably pay off in years they don't spend more than they earn.
Also, those statistics tend to not include government aid in "earnings". So, everyone who receives some kind of government aid goes in that number, too, even though that isn't really a fair way of looking at their behavior -- most people on gov't aid live firmly within their means, but their means include that gov't aid. They're reasonable transfer payments from other people in the economy, not the addition of debt.
Returning to something I touched on tangentially, you're using statistics from the height of a bubble period to try to say a general pattern of behavior isn't sustainable in the long run. But if you look at those statistics, during our normal course of behavior they fluctuate considerably. During the bubble, credit was cheap. It made sense to use a lot of it. Now that credit is dear, people use a lot less. If you want to assess the sustainability of a strategy, you need to look at how it responds to the normal course of events, not an extreme point. Of course certain extreme points aren't sustainable.
[ October 15, 2009, 09:47 PM: Message edited by: fugu13 ]
Posted by rivka (Member # 4859) on :
quote:Originally posted by sndrake: I don't know enough about farming to know how to sort what parts of the article are true and what parts are similar to the "turkeys are so dumb they drown in the rain" thing.
More than that, the entire article is anecdotes as data gone amuck.
Posted by King of Men (Member # 6684) on :
The 43% statistic, even taking it at face value, is a perfect example of fun, games, and dam' lies with statistics. The intended implication, clearly, is that 43% of households are buying Prada shoes on their credit cards, and going to be bankrupt in another decade. No. Your average college student spends, say, twenty thousand a year on tuition and whatnot, on an income of zero; bang she goes into the 43%. Ten years later she is still paying off that loan on her nice degree-supported income, and an entirely different set of people is taking up college loans. And god forbid that anyone should buy a house; 200k on an income of 50k! Terrible!
Even if true, this is just not a problem. But there are, clearly, people who would like others to think that it is.
Posted by fugu13 (Member # 2859) on :
Quite a few of the statements are supported by data, and are not just anecdotes. I do wonder about the turkey story due to using the myth, though recently born turkeys do die in the rain (not due to drowning while looking up, however).
Posted by rivka (Member # 4859) on :
quote:Originally posted by fugu13: Quite a few of the statements are supported by data, and are not just anecdotes.
But liberally mixed in with the unsupported anecdotes. Which make the article as a whole fairly useless, IMO.
Posted by fugu13 (Member # 2859) on :
Fairly useless if someone were using it to prove something. However, unsupported anecdotes are part and parcel of most news stories and editorials, and often serve to make people think, which I suspect was the point of the article. Note that Jhai just said the article made some good points, not that it showed modern farming was morally upstanding. Many of the points in the article are even abstract, and not really something that can be proven (or disproven) with data; just different ways of thinking about a situation.
Posted by sndrake (Member # 4941) on :
quote: Quite a few of the statements are supported by data, and are not just anecdotes. I do wonder about the turkey story due to using the myth, though recently born turkeys do die in the rain (not due to drowning while looking up, however).
Right, but according to the Straight Dope, those deaths are from exposure, due to the lack of insulating feathers on the chicks. Farmers know enough to get turkey chicks out of the rain for this reason.
It gives another slant on the sad story about the farmer with a dream in the story - who apparently didn't know this about turkey chicks.
Posted by rivka (Member # 4859) on :
Assuming he existed in the first place.
Posted by Jhai (Member # 5633) on :
*shrug* You can find other articles - data-driven journal articles - that point out the same sort of flaws with some of the criticism aimed at the agriculture industry. This was just the first I came across.
I think the main point to draw from these sort of pieces is that Michael Pollan is a journalist, not a scientist, agriculturalist, nor even someone who has at least been practicing farming for most of his life. I've read The Omnivore's Dilemma, and, while I think it raises some good points, there are some places that make it very clear that Pollan is laughably unfamiliar with some economic realities at the very least. (I haven't studied agriculture, but I have touched on agriculture economics through development - so I'll only comment on the parts I know are criticizable).
Posted by rivka (Member # 4859) on :
quote:Originally posted by Jhai: Michael Pollan is a journalist, not a scientist, agriculturalist, nor even someone who has at least been practicing farming for most of his life.
Certainly. And anyone who changes their life based solely on his book (and I know some people who have) without doing any further research on the points he raises . . . well, I don't think it's very smart. Let's leave it at that.
Posted by fugu13 (Member # 2859) on :
sndrake: of course, bringing thousands of young birds, or finding thousands of eggs to be born inside before being allowed outside when older, would be very labor intensive, I suspect.
But I share rivka's suspicion that the turkey story is made up, or at least third or fourth hand rather than second-hand as presented. I am tempted to write and inquire about the details.
Posted by SenojRetep (Member # 8614) on :
I've been dying to try and make a joke out of Strider's post title and the tepid critical and financial reception of Michael Moore's new movie, but I just can't make it work.
Posted by Samprimary (Member # 8561) on :
The only movie of moore's that I could stand was Sicko, and that's more or less because he stayed off camera for a while and pulled a much lower than average amount of his stupid bullhorn stunts that make me want to throw pens at his head, and because the american healthcare industry is such a fertile feeding ground for outrage anyway.
I think I would walk out of his newest one if the previews are any indication.
Posted by FlyingCow (Member # 2150) on :
quote:There are far more big businesses than small businesses.
There are quite literally millions of small businesses in the US. There are fewer than 20,000 businesses with at least 500 employees.
Small businesses are born all the time. Some become quite successful and become big businesses, some become quite successful and remain small/medium sized businesses, and some struggle and fail.
Usually success comes from offering a superior product, or superior quality of service - or from filling a niche, or offering a personal touch to their business.
While I'm not a big fan of certain corporations (I'm looking at you, here, Walmart), I choose not to support them. If you don't like their business practices, don't buy from them. There are plenty of smaller storefronts on teh interwebs that can likely get you what you want without having to go through a mega-corporation.
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by FlyingCow:
quote:There are far more big businesses than small businesses.
There are quite literally millions of small businesses in the US. There are fewer than 20,000 businesses with at least 500 employees.
Perhaps what was meant was that there is far more *big business* than there is "small" business. I don't know if that's even true or not, but big businesses of course garner the most public attention, so it's easy to assume they also account for the larger share of all the commercial activity of the nation. What I'm wondering is what the actual figures are, or where you'd look for them.
Posted by Blayne Bradley (Member # 8565) on :
Whats wrong with Wal-Mart? Penn and Teller I think did a good coverage of the very benefitial effects Walmart has on smaller towns and poor neighbourhoods.
Posted by Orincoro (Member # 8854) on :
quote:Originally posted by Samprimary: The only movie of moore's that I could stand was Sicko, and that's more or less because he stayed off camera for a while and pulled a much lower than average amount of his stupid bullhorn stunts that make me want to throw pens at his head, and because the american healthcare industry is such a fertile feeding ground for outrage anyway.
One of Moore's oddball strengths as a commentator is his haplessness in the face of complex issues. A lot of the time: "I don't get it," is played half jokingly in his films, but is also at least half serious as well. He has always espoused the average joe perspective on big issues, and actually I tend to think he really isn't a very sophisticated guy in a lot of ways, although he is opinionated and imperturbable.
That works, as I say, with big issues where Moore wants to get down to the brass tacks of right and wrong. It's easy to make a case that someone not getting the right healthcare for a stupid unfathomable reason = wrong. It's easy to argue that kids shooting up a school = wrong, and whatever else is concomitant with that act is also a sign of something going wrong.
But I sense that probably when Moore tries to tackle a less tangible subject like economics and related broad sociological questions, his go-to approach doesn't exactly put him ahead in the game. Unlike with governments and companies involved in wars and health care debacles, the economy doesn't fulfill a stated purpose, and is not itself embodied in any one organization, or even a collective of organizations. So there's nobody for Moore to approach with a microphone and say: "why did you hurt the economy?" I mean, he can do that, but it's going to look silly and weirdly childlike and macabre if he actually does. It just doesn't sound like a fight Moore is suited to.
Personally I really wish the guys at NPR's Planet Money would get together and pen a screenplay about the financial crisis. It's a story best told in small pieces, hinting at the larger framework.
Posted by fugu13 (Member # 2859) on :
No, it was just a switched typo. I meant far more small businesses than big businesses. As should be clear if you read the next few sentences Posted by FlyingCow (Member # 2150) on :
quote:Whats wrong with Wal-Mart?
Wow.
This question deserves so much more than I can put together in a single post.
Just googling "walmart" with the words "bad", "unfair", "evil", etc. brings up countless hits.
Here is one list of possible responses to your question from the website of a Walmart documentary.
BUT, Walmart is another perfect example of a small, single-store business becoming hugely successful, and in a short peroid of time (even though I disagree with their methods).
Posted by Raymond Arnold (Member # 11712) on :
The thing that bothers about Walmart facts like that, though, is I don't know how they compare to every other superstore out there (both those successfully competing and those that are getting crushed under Walmart's boot). Because while a lot of those figures look alarming, they don't strike me as that different from what I assume most supermarkets and deparment stores do.
Posted by fugu13 (Member # 2859) on :
Not only that, but you don't know how they compare to all the small stores they and other large stores replaced.
To mention a few things not touched upon on the website just linked for Wal-Mart: if retail wages were driven down .5 to .9 percent (a decrease in retail wages, I would point out, of around $100 a year for a low-wage worker), but Wal-Mart also lowers prices on a significant fraction of the goods the worker would normally be buying, that is a net positive for the worker. That is, if the person saves more than $100 or so a year due to the presence of Wal-Mart, the overall effect is something to be encouraged, not discouraged.
I am sympathetic to the public assistance argument, but I don't think that's much of an indictment against Wal-Mart (excepting where they adopt coercive policies to avoid people earning health insurance) so much as it is an indictment of how health care is tied to employer in the US.
Posted by Strider (Member # 1807) on :
oh man! I'm so sorry, I did a "post and run". I didn't mean to do that. I got really busy after I posted this and by the time I made it back to Hatrack the thread had slipped off and out of my mind. I have a lot of responding to do, but I'm leaving early tomorrow morning for the weekend. I promise to respond to people who addressed me when I get the chance!
Posted by Blayne Bradley (Member # 8565) on :
I mean whats specifically wrong with Walmart in particular that other US corporations haven't already done?
Posted by Threads (Member # 10863) on :
quote:Originally posted by rivka:
quote:Originally posted by Jhai: Michael Pollan is a journalist, not a scientist, agriculturalist, nor even someone who has at least been practicing farming for most of his life.
Certainly. And anyone who changes their life based solely on his book (and I know some people who have) without doing any further research on the points he raises . . . well, I don't think it's very smart. Let's leave it at that.
I would tend to agree. I found the book to be very enjoyable and informative but I didn't buy into Pollan's interpretation of how things should be. However, I think it provides a good starting point for considering the medical and ethical implications of our eating habits.
Posted by FlyingCow (Member # 2150) on :
One of Walmart's (many) business practices that I don't like is that they pressure manufacturers to decrease the quality of their product so that Walmart can sell it cheaper.
For instance, the Levi jeans you get at Walmart are not of the same quality as the Levi jeans you get at other stores - Levi has produced a separate "Walmart line" of clothes to meet Walmart's pricing demands.
Snapper lawnmower told Walmart "thanks but no thanks" because of this and pulled their product from Walmart stores, standing by the quality of their name and not sacrificing their quality for Walmart's distribution. Walmart wanted to sell their mowers at a price below Snapper's cost to produce them - and when Snapper asked how exactly they thought this was possible, Walmart said to create a separate line of mowers for Walmart that are of lower quality and cheaper to produce. After that, Snapper walked (and good for them).
It is one of the reasons I don't shop there, because I know that the monetary "savings" often comes along with a matching decrease in quality. If I buy something for 20% less money, but I have to replace it 30% sooner than I would a more quality product... did I really save anything?
Vlassic is another example - where the drive for "low costs" nearly destroyed the supplier, forcing it to declare bankruptcy.
Here is another article, and here is another. There are really no end to these types of articles, and they're not difficult to find.
It's no big secret that Walmart sells certain products at a loss to drive out competitors who cannot match those cuts with profits in other areas, and that they strong-arm their suppliers (first becoming the primary or even sole distributor of product, then demanding price cuts that force the supplier to cut employees, benefits, and factories).
I'm not sure why selling lower quality goods is a bad thing. Sometimes I want to buy lower quality goods, if they're cheaper.
If you don't want to, bully for you, but don't discount those of us who like to. Walmart was a godsend for me when I lived in rural Indiana. Loved it.
I also don't have much sympathy for the suppliers. It's a business, and they need to compete or close shop. I'm fine with them moving jobs overseas (I'll send up a cheer, even), and if they have to lay off some employees to cut costs, well, again, that's business.
I truly do not understand articles that complain about the business world being business-like. Or that companies are being forced to change to stay competitive. Is it really that much of a shocker?
Posted by twinky (Member # 693) on :
quote:Originally posted by Jhai: I'm not sure why selling lower quality goods is a bad thing. Sometimes I want to buy lower quality goods, if they're cheaper.
If you don't want to, bully for you, but don't discount those of us who like to. Walmart was a godsend for me when I lived in rural Indiana. Loved it.
I also don't have much sympathy for the suppliers. It's a business, and they need to compete or close shop. I'm fine with them moving jobs overseas (I'll send up a cheer, even), and if they have to lay off some employees to cut costs, well, again, that's business.
I truly do not understand articles that complain about the business world being business-like. Or that companies are being forced to change to stay competitive. Is it really that much of a shocker?
Well, it's for a short term gain. Do the extra dollars from the bottom line go to the company or the (new) workers or the CEO's pocket?
Are the extra dollars worth the blow to the American economy? The extra dollars come from the fact that the company is getting away with paying a worker overseas (who yes, does want a job) substandard wages. The extra dollars come from the fact that America has defined an acceptable minimum wage (which is quite low), and that companies have to pay for the health insurance that a lot of America doesn't even get and that we are arguing about so bitterly right now. The extra dollars come from the fact that American factories are subject to American laws about pollution and the environment. Basically, all those horrible working conditions and low wages for immigrants we read about in our history books got fixed because of unions and regulations on industry. They got fixed because they were happening in our backyard and we couldn't ignore them. Now all this stuff still happens, but we can't see it, because it's in China and we're not, so that's all okay. Prices are low.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Jhai: I'm not sure why selling lower quality goods is a bad thing. Sometimes I want to buy lower quality goods, if they're cheaper.
I think part of the issue is that we're not being adequately compensated for the change in quality and much of the process is quite non-transparent making it difficult for the consumer to gauge the change in reliability and/or possible risks.
When Wal-mart or any retailer sells products from overseas, they get hefty profits because the change in what they pay can drop much more drastically than the drop that the consumer will see at the cash register. You can verify this yourself by physically going to places like China and seeing how little stuff costs, but more numerically there was a good Atlantic article on just how little of the cost of a product filters down to the manufacturer these days.
What we're essentially doing is paying first-world prices for products from the third-world, but we're also relying upon third-world Q/A and safety regulations to control what kinds of products we're getting. This seems to me to be a very dangerous state of affairs.
Consumers and/or the government should really accept that overseas outsourcing is inevitable. Rather than wasting time fighting small irrelevant battles like getting tariffs on car tires and candles, or focusing on specific countries, we should both really advocate that companies that import overseas products use a greater portion of their savings to verify publicly (or contribute to third-party or government agencies that can) that the safety of their product is unchanged and up to "our" standards. I wouldn't even object to better oversight on domestic industry, just to make the whole thing fair across-the-board.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by theamazeeaz: ... They got fixed because they were happening in our backyard and we couldn't ignore them. Now all this stuff still happens, but we can't see it, because it's in China and we're not, so that's all okay. Prices are low.
Well, some of it.
No, we don't enslave people anymore, but even in our backyard, some of our industries still use illegal immigrants heavily, such as in agricultural fields or housing construction. This is not necessarily a bad thing mind you, but still important to note.
Posted by katharina (Member # 827) on :
Wal-Mart pays the average for the retail sector and more employees get health insurance than the average in the retail sector.
Over 30% of Wal-Mart's customers are at or below the poverty line.
Wal-Mart prices in general are over 20% lower than at the competition.
The competition's prices are about 15% lower than they would be without Wal-Mart.
(All numbers from Dr. Robert Waples from Wake Forest University)
If Wal-Mart were a government anti-poverty program, it would be declared a screaming success. It has raised the standard of living for the poorest and a few levels up, which includes the people it employs, and it has enabled ALL Americans to enjoy low interest rates without the inflation that would normally accompany it.
I do not cry for its competition or the suppliers. Customers shouldn't have to pay higher prices over misplaced sentimentality. Become more efficient or get out of the game.
You know who doesn't shop there? High middle-class to wealthy. I'm not surprised that the same high middle class to wealthy are Wal-Mart's biggest detractors.
Posted by FlyingCow (Member # 2150) on :
I'm not telling you not to buy there, just saying I don't.
Blayne asked "What's wrong with Walmart?" - and I responded with the tip of a very, very large iceberg.
It's everyone's choice whether they want to feed the beast, or not.
I choose not to. I will not buy anything in their stores, choosing to "vote with my wallet" so to speak.
At this point, I would happily pay more money to a local shop for the same (and quite often better) product - or do without.
Posted by katharina (Member # 827) on :
quote:I would happily pay more money to a local shop for the same (and quite often better) product - or do without. --------------------------------------------------------------------------------
That's marvelous that you have the financial wherewithall to make that choice.
For most of Wal-Mart's customers, simply not buying new clothes, for instance, isn't an option. Not when the kid outgrew the other stuff.
For myself, I LOVE Wal-Mart's workout clothes. The last time I went there I got a pair of running pants and 3 sports bras for $20. Last time I went to Target I got A sports bra for $20. Sometimes, a whole lot of cheaper items are better.
I really think a lot of the condemnation of Wal-Mart is a class war. Declaring yourself to shop only at, say, Target and never at Wal-Mart is a declaration of comfortable economic status.
Posted by fugu13 (Member # 2859) on :
quote:When Wal-mart or any retailer sells products from overseas, they get hefty profits because the change in what they pay can drop much more drastically than the drop that the consumer will see at the cash register. You can verify this yourself by physically going to places like China and seeing how little stuff costs, but more numerically there was a good Atlantic article on just how little of the cost of a product filters down to the manufacturer these days.
This isn't accurate. Wal-Mart's profits are generally around 3% -- that's the most they could lower their prices across the board and still be in business. It is much more expensive to sell things in the US (labor, real estate, et cetera) than it is to sell things in China. Sure, Wal-Mart buys things more cheaply from China (of course, so do most retailers, and this is a good thing; cheaper goods here making people better off, more decent-paying jobs in China making people better off), but it does not follow that because you can see such things available for very cheap in China Wal-Mart could offer them for a lot less here and pocket the difference.
Indeed, that this is not what is happening can be checked empirically very quickly. Their profit margin is just 3%, and there isn't some hidden excess going into executives' pockets. Their executives are paid low wages compared to those at other companies.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by fugu13: ... Their executives are paid low wages compared to those at other companies.
This seems unlikely. I'm looking for the Atlantic article on manufacturing, but I do know this.
quote:Today, however, average public company CEO compensation is 400 times that of the average employee. And thousands of senior managers in addition to CEOs are drinking at the same frothy trough, especially, as we have all just seen, senior managers in the financial services industry. (By contrast, the ratio of CEO pay to that of the average employee has remained around 22 in Britain, 20 in Canada and 11 in Japan.)
quote:In 2004, the average United States Wal-Mart employee made $9.68 an hour. Wal-mart subcontracted employees in China and Bangladesh made $.17 an hour. H. Lee Scott Jr., Wal-Mart CEO in 2004, made $8,434.49 per hour (IPS). Wal-Mart has a long history of problems with employee wage and labor relations, working conditions, lack of health insurance, labor union opposition, and overseas labor concerns. Even considering these large legal, political and moral issues, CEO compensation has remained 871 times higher than the average Wal-mart employee (IPS).
871 times for Walmart versus 400 times for an average company is a pretty hefty difference even in the US, let alone a more reasonable 20 or 11 as in Canada or Japan.
Posted by theamazeeaz (Member # 6970) on :
quote:Originally posted by katharina:
quote:I would happily pay more money to a local shop for the same (and quite often better) product - or do without. --------------------------------------------------------------------------------
That's marvelous that you have the financial wherewithall to make that choice.
For most of Wal-Mart's customers, simply not buying new clothes, for instance, isn't an option. Not when the kid outgrew the other stuff.
For myself, I LOVE Wal-Mart's workout clothes. The last time I went there I got a pair of running pants and 3 sports bras for $20. Last time I went to Target I got A sports bra for $20. Sometimes, a whole lot of cheaper items are better.
I really think a lot of the condemnation of Wal-Mart is a class war. Declaring yourself to shop only at, say, Target and never at Wal-Mart is a declaration of comfortable economic status.
Then don't buy new clothes for your kids. Buy new what you have to and get the rest from other sources. That's what thrift stores and friends with kids bigger than yours are for.
Posted by FlyingCow (Member # 2150) on :
Man, I had a whole post written out and somehow my computer lost it.
In brief, calling it a class war is oversimplifying. Though an argument could be made that those living hand-to-mouth are less likely to question (or care about) the quality or source of what they are buying, or care so much about sustainability or further-reaching reprucussions of their choices.
But there are always choices.
The links above are a small glimpse into why some people don't shop at Walmart, and they are not economically based.
Everyone's free to make their own choice, and I choose to shop elsewhere.
I'm not knocking those who feel they are financially pressured into shopping at Walmart - I'm knocking Walmart's business practices. It's similar to knocking OPEC, rather than the average commuter.
Posted by twinky (Member # 693) on :
quote:Originally posted by katharina: I do not cry for its competition or the suppliers. Customers shouldn't have to pay higher prices over misplaced sentimentality. Become more efficient or get out of the game.
That would be a fair statement if Wal-Mart was not artificially -- and, arguably, illegally -- distorting the functioning of the free market you're alluding to here.
Posted by katharina (Member # 827) on :
You haven't convinced me that they do.
Posted by katharina (Member # 827) on :
quote:Then don't buy new clothes for your kids. Buy new what you have to and get the rest from other sources. That's what thrift stores and friends with kids bigger than yours are for.
Or...buy them from Wal-Mart, where the lower quality doesn't matter because the kids will outgrow them before they wear them out.
Because, you know, poor people should never have new things. It's better for them to LOOK like they are poor for easier identification. Wearing out of style clothes that don't quite fit and not being able to get something pretty and new is the perfect way to shame those without extra cash.
There is clearly a place for low-quality but still new and stylish children's clothing. I can't believe that you want to decide for someone else that they had better LOOK poor unless they want to shell out serious money for clothes that will be worn for less than a year.
Posted by mr_porteiro_head (Member # 4644) on :
quote:I really think a lot of the condemnation of Wal-Mart is a class war.
It sure seems that way to me.
Posted by mr_porteiro_head (Member # 4644) on :
quote: Declaring yourself to shop only at, say, Target and never at Wal-Mart is a declaration of comfortable economic status.
What's interesting is that so many of the things (not all of them, granted) that people complain about WalMart are also true of Target.
[ October 16, 2009, 02:06 PM: Message edited by: mr_porteiro_head ]
Posted by MrSquicky (Member # 1802) on :
quote:Originally posted by mr_porteiro_head:
quote:I really think a lot of the condemnation of Wal-Mart is a class war.
It sure seems that way to me.
I'm not sure I understand that statement. Are you saying that people who have a problem with Walmart have this problem because they feel that it helps out poor people?
Posted by FlyingCow (Member # 2150) on :
Out of curiosity, kat, did you read through the links above?
Posted by Jhai (Member # 5633) on :
quote:Originally posted by FlyingCow: Out of curiosity, kat, did you read through the links above?
I did. The arguments in most of them are either incorrect, bad economics, things I don't really care about because I don't think they're morally wrong (i.e. suppliers being "bullied" by WalMart), or things I do care about and think are morally great (i.e. jobs being shipped overseas).
Posted by FlyingCow (Member # 2150) on :
Squick, I think the argument is "people with money can afford to care about things that people without money find trivial hairsplitting"... and also sort of a "let them eat cake" impression, that those that can barely afford poor quality things should pay for better things.
It's similar to the "poor people are overweight because McDonalds is cheap" argument.
I don't see it that way.
I think class is a factor in the discussion because Walmart most directly benefits those with less money, giving them a vested interest in protecting it. As those with more money don't benefit *as much*, they have more freedom to shop elsewhere (and thus less of a vested interest).
Therefore, Walmart has little fear of backlash from those in lower class segments because their vested interest dissuades them from questioning Walmart's practices.
So, while those in lower income brackets may claim that those in higher brackets are "attacking their way of life" - it's just not true. Those with more perceived freedom to shop elsewhere simply have less vested interest in the continued success of Walmart, and look at the company's actions without fear of "biting the hand that feeds them".
Posted by Jhai (Member # 5633) on :
quote:Originally posted by Mucus:
quote:Originally posted by fugu13: ... Their executives are paid low wages compared to those at other companies.
This seems unlikely. I'm looking for the Atlantic article on manufacturing, but I do know this.
Wrong comparison to what fugu was saying, I believe. Compared to other executives running equally large corporations, WalMart executives are not paid that much more.
Comparing one company's executive vs. average employee salary is a really silly thing to do, since industries differ so much. If I'm the CEO of a cutting-edge biotech firm of course the gap between what I'm paid and what my average employees - i.e. research scientists - are paid is going to be less than if I'm the CEO of a retail firm. Seriously, dude. That's going to be true whatever country you're in. That's why reputable studies comparing CEO pay across countries control for industry effects, since the industry spread across countries is not identical.
Posted by FlyingCow (Member # 2150) on :
Jhai, I'm actually curious about your comment that shipping jobs overseas is "morally great".
Part of what I do is manage projects to outsource job functions overseas, and I work with many vendors that have both on- and off-shore associates. Personally, I don't have a problem so much with the concept of sourcing work overseas, but the words "morally great" stuck out for me.
If every manufacturing, clerical, call center, technical support, etc job in the US was sourced overseas, leaving only face-to-face jobs such as doctors, store clerks, landscapers, plumbers, etc. in the US... would that be your idea of a morally ideal environment?
I think I'm just curious about degree. I understand the need for sourcing at times (and even more the need for automation), but I don't know if I would agree with shutting down every manufacturing plant in the country.
Posted by Raymond Arnold (Member # 11712) on :
quote:I'm not sure I understand that statement. Are you saying that people who have a problem with Walmart have this problem because they feel that it helps out poor people?
I actually think Kat has a (partially) good point here. A lot of problems in the world stem, not from the upper class deliberately "fighting" against the lower class, but merely from acting in self interest in ways that happen to hurt poor people without regard to the consequences, often with some kind of "justification."
I'm not sure whether I think WalMart does worse things than other giant corporations do, either way I think there are certain practices that many larger corporations partake in that are worth criticizing. But it's worth considering how the things we advocate would impact all aspects of society.
Posted by FlyingCow (Member # 2150) on :
Jhai, I'm also curious about your not having any problem with the largest economic mover in the country bullying smaller businesses. Following in that vein, would you want current anti-trust legislation to be repealed?
Posted by FlyingCow (Member # 2150) on :
quote:But it's worth considering how the things we advocate would impact all aspects of society.
Which cuts both ways. Forcing "low low prices" at all costs has impact on other aspects of society, too.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Jhai: Compared to other executives running equally large corporations, WalMart executives are not paid that much more.
*shrug* I thought that would help adjust for purchasing power, because if you didn't I would expect the CEO in the US to be paid even more absurd amounts in absolute dollars when compared to other countries.
I think executive compensation in the US is just bizarre when you look at the results, and I don't think the industry spread between the US, Japan, and Canada is enough to account for it. We're different, but not more than an order of magnitude different.
In any case, I don't know why we're focusing on Walmart in my first statement because the first and only time I mention Walmart is "Wal-mart or any retailer sells products from overseas." I reserve my ire not just for Walmart, but all retailers in the US, so pointing out that other retailers in the US are just as bad ... not really relevant to me.
Posted by FlyingCow (Member # 2150) on :
Mucus, I think the Walmart focus came when I mentioned them parenthetically on page 1 of this thread, and then Blayne asked what was wrong with Walmart in particular.
Then again, the thread drift from capitalism to corporatism would naturally lead to a discussion about the country's single largest corporation, so maybe it was inevitable.
Posted by Mucus (Member # 9735) on :
I know that the thread as a whole had drifted to focus on Walmart, but my initial response was about the "low quality" issue. I don't really consider that to be a specifically Walmart issue, so I responded in general, but I can see how it can be confusing. Ack.
Posted by Jhai (Member # 5633) on :
quote:Originally posted by FlyingCow: Jhai, I'm actually curious about your comment that shipping jobs overseas is "morally great".
Part of what I do is manage projects to outsource job functions overseas, and I work with many vendors that have both on- and off-shore associates. Personally, I don't have a problem so much with the concept of sourcing work overseas, but the words "morally great" stuck out for me.
If every manufacturing, clerical, call center, technical support, etc job in the US was sourced overseas, leaving only face-to-face jobs such as doctors, store clerks, landscapers, plumbers, etc. in the US... would that be your idea of a morally ideal environment?
I think I'm just curious about degree. I understand the need for sourcing at times (and even more the need for automation), but I don't know if I would agree with shutting down every manufacturing plant in the country.
Basic argument: Poor people in developing countries need jobs far more than any individual in the US does. A manufacturing job in a developing country will add far more utility on the margin to individuals there than the loss of a manufacturing job will to individuals here. Generally speaking, as long as that remains true, I'll support jobs going overseas. I don't see why I should care more about the happiness of a random American stranger than I do about the happiness of a random stranger elsewhere in the world.
Slightly more complicating details, which nonetheless do not change the main point: the US's competitive advantages (and positioning for future industries), the marginal costs of pollution here vs. in developing countries, industry build-up as a development tool, fringe benefits that a manufacturing plant brings to communities here vs. overseas, increased economic freedoms overseas leading to other freedoms, I can expand on any of those if you wish.
Posted by katharina (Member # 827) on :
quote:Forcing "low low prices" at all costs has impact on other aspects of society, too.
It certainly does. Prices at department stores are about 15% cheaper than they would be if Wal-Mart didn't exist.
Yay!
Posted by mr_porteiro_head (Member # 4644) on :
quote:Originally posted by MrSquicky:
quote:Originally posted by mr_porteiro_head:
quote:I really think a lot of the condemnation of Wal-Mart is a class war.
It sure seems that way to me.
I'm not sure I understand that statement. Are you saying that people who have a problem with Walmart have this problem because they feel that it helps out poor people?
Here's what I'm saying. Comparing WalMart practices with the rest of the industry and the criticism of WalMart with the criticism of the rest of the industry, it appears that WalMart gets far more criticism than it deserves, relatively speaking. It appears that there is an emotional (or some other non-rational) component in a lot of the criticism against WalMart. I think that a good part of that is a negative emotional reaction to WalMart's association with the lower classes and rural America.
My personal problem with WalMart is that so much of their stuff is junk. More and more I'm moving to paying more for quality merchandise. But that's a personal preference, not a moral judgment.
[ October 16, 2009, 02:41 PM: Message edited by: mr_porteiro_head ]
Posted by fugu13 (Member # 2859) on :
Interestingly, people have studied that. For instance, executive compensation is very strongly correlated with firm size. There are more very large firms in the US, so there are more executives with very high compensation.
This makes sense. If the impact of an executive is some percentage of firm activity, then it makes sense to pay a lot more to get the best executive one can afford, even if they are only a little better than the next-best executive. A 1% increase in executive quality can mean billions of dollars a year in revenue, making it a no-brainer to pay hundreds of millions in pursuit of that. That companies are seeking that (and are fairly successful at doing so) is also borne out in studies.
But anyways, Wal-Mart employs 1.8 million people. For the top executive to forego pay entirely would give each of them something like an extra ten or twenty dollars a year (the CEO's total compensation in 2007 was about $23 million -- quite low for a CEO of such a major corporation).
Alternatively, the CEO could forego his pay to reduce the prices of each thing sold at Wal-Mart by about what, a hundredth of a cent?
As I said, the empirical evidence is clear: Wal-Mart is not extracting large amounts of money from its customers by selling things at much above their total costs. They could not lower prices to anywhere near what they are in China (or much more than a few percent, in fact) and still exist. Believing that is ignoring the facts. Indeed, it would be somewhat of a perverse belief; if it were so possible, surely someone would do it -- indeed, you should do it, and become a billionaire.
Posted by twinky (Member # 693) on :
quote:Originally posted by katharina: You haven't convinced me that they do.
The facts are extant. Wal-Mart does more than simply dictate price terms to its suppliers; it dictates how its suppliers compete with one another. This is plainly market-distorting.
quote:Until recently, every retailer would draw up its own merchandising plan, detailing which brands to promote, how much shelf space to grant each, which products to place at eye level. These days, Wal-Mart and a growing number of other retailers ask a single supplier to serve as its “Category Captain” and to manage the shelving and marketing decisions for an entire family of products, say, dental care. Wal-Mart then requires all other producers of this class of products to cooperate with the new “Captain.” One obvious result is that a producer like Colgate-Palmolive will end up working intensely with firms it formerly competed with, such as Crest manufacturer P&G, to find the mix of products that will allow Wal-Mart to earn the most it can from its shelf space. If Wal-Mart discovers that a supplier promotes its own product at the expense of Wal-Mart's revenue, the retailer may name a new captain in its stead.(1)
(1) Such blatantly enforced collusion has not gone entirely unnoticed in Washington. Toward the end of its time in office, even the merger-happy Clinton Administration allowed the Federal Trade Commission to launch an investigation of these practices, and an FTC report in early 2001 identified four ways that Category Management may violate even the remarkably loose antitrust guidelines of the last generation. All four of these violations cut right to the core of the free-market system. As the FTC put it, a category captain might “(1) learn confidential information about rivals' plans; (2) hinder the expansion of rivals, (3) promote collusion among retailers; or (4) facilitate collusion among manufacturers.” In Wal-Mart's world, all four violations are present to at least some extent.
Wal-Mart is not the only offender here, but it is the biggest.
quote:Originally posted by katharina: Because, you know, poor people should never have new things.
Who has said that in this thread, other than you?
Posted by Jhai (Member # 5633) on :
quote:Originally posted by FlyingCow: Jhai, I'm also curious about your not having any problem with the largest economic mover in the country bullying smaller businesses. Following in that vein, would you want current anti-trust legislation to be repealed?
I don't think that what WalMart does is properly considered bullying (those the quotes when I used the term that had been used in the articles you linked to). Frankly, I think it's silly to use such emotive terms when discussing economics.
Generally, I think the idea of anti-trust legislation is a good one. However, I am not a lawyer, nor have I studied the economics of anti-trust legislation (outside of the WTO, anyways) in any great detail, so I don't think I can give an educated opinion on specific law in practice today.
My understanding is that economists today generally think that the US' anti-trust legislation is roughly on target - and from what I know of it, I would agree.
I do think that anti-trust laws are less important today than they were in the past due to the increased transparency of our economy, and the incredibly decreased transaction costs. Given my knowledge today (which, granted, is relatively scant), I would not repel any US anti-trust legislation.
I believe that most monopolies today - or industries where you have one extremely dominant player - are that way because of either the natural structuring of the industry or because one player has just been really, really good at what they do. I also think that most monopoly-esque businesses today (like, say, Microsoft & WalMart) add far more value to consumers than whatever hurts they may cause by monopolistic efforts. And I have no moral sympathy for any company as a whole - individuals at a company, yes, but companies as a whole need to be willing to change as the market does or die.
Posted by katharina (Member # 827) on :
You are talking about how suppliers get products on the shelf?
I think Wal-Mart is an innovator. Sure, they do things differently, but that's fine. They should be lauded for it. If suppliers don't like their (legal) terms, they don't have to supply Wal-Mart stores.
The issue you are speaking of does not support your stance.
Even your own quote doesn't say anything definitive:
quote:identified four ways that Category Management may violate even the remarkably loose antitrust guidelines of the last generation. All four of these violations cut right to the core of the free-market system. As the FTC put it, a category captain might “(1) learn confidential information about rivals' plans; (2) hinder the expansion of rivals, (3) promote collusion among retailers; or (4) facilitate collusion among manufacturers.”
And...the Clinton administration? Do you have anything that doesn't come from the 1990s?
----
And, from this page:
quote:Then don't buy new clothes for your kids.
Posted by mr_porteiro_head (Member # 4644) on :
quote:Originally posted by twinky:
quote:Originally posted by katharina: Because, you know, poor people should never have new things.
Who has said that in this thread, other than you? [/QB]
Theamazeeaz seems to have said that if you can't afford to pay more than WalMart prices, you should shop at thrift stores.
quote:Then don't buy new clothes for your kids. Buy new what you have to and get the rest from other sources. That's what thrift stores and friends with kids bigger than yours are for.
Posted by FlyingCow (Member # 2150) on :
Jhai, very interesting. Do you feel that as a taxpayer and citizen in the United States that you have more vested interest in the success of US Citizens than you do in citizens of countries in which you do not pay taxes (or receive benefits from those tax dollars) or have a vote?
For a microcosmic example, the schools in northern NJ are very good, in large part because of the tax dollars collected in the state from the many, many white collar workers who live here. If those jobs were to be dispersed throughout the developing world, the quality of education, policing, infrastructure, etc would necessarily go down as fewer tax dollars were available to fund them.
Therefore, the continued employment of someone local to me has more impact on my life/family than the continued employment of someone who lives in Bangalore. So, the global benefits of sourcing all of our labor to other countries is tempered considerably by the local impact of such a move.
mph, I think there are other companies that have drawn the same fire. Microsoft is probably relieved that Walmart assumed the "evil empire" mantle from them. Enron is a pretty good example of a big company taking a lot of criticism for exploiting the marketplace, too.
Yet, far fewer people point to Google as a "big bad" company, or Amazon, or Home Depot. I'd imagine it has a lot to do with the quality of product produced - which is why you're moving away from Walmart, yourself.
Walmart's size alone makes its moves more impactful. Its size allows it to do things that most other companies can't (for instance selling a product at a loss to corner the market and drive out competition). And if the supplier doesn't want to lower its prices for fear of bankruptcy, it's no matter to Walmart - the supplier can't live without them because they're the biggest retailer in the business, and if they grind the supplier to dust there's always another around the corner.
Posted by twinky (Member # 693) on :
quote:Originally posted by katharina: You are talking about how suppliers get products on the shelf?
There are a number of ways in which Wal-Mart exercises control over its suppliers. I've only excerpted one of the many examples given in the link I provided earlier.
quote:Originally posted by katharina: I think Wal-Mart is an innovator. Sure, they do things differently, but that's fine. They should be lauded for it. If suppliers don't like their (legal) terms, they don't have to supply Wal-Mart stores.
I don't grant your unsupported assertion that the terms are legal. In fact, there are reasonable grounds to conclude that they are not legal.
Wal-Mart is such a large customer that its demands place some of its suppliers in lose-lose positions: stop supplying Wal-Mart and go bankrupt now, or conform to Wal-Mart's demands, and go bankrupt later.
quote:Originally posted by katharina: The issue you are speaking of does not support your stance.
They do.
You've repeatedly alluded to the ability of suppliers to "take it or leave it," which only exists in less distorted markets where Wal-Mart is not a major player.
*
One example does not a class war make.
Posted by katharina (Member # 827) on :
Did you read the same quote? It doesn't say what you think it says.
I don't grant your assertion that what "may" be happening is definitely what is happening, at all. Clearly this is an area that hasn't been settled, but acting as if it HAD been settled and then extending that to a general, biased, unbalanced of condemnation of Wal-Mart across the board is unwarranted.
And, you asked for an example. You got an example. I get that you don't want to accept it, but my part is done.
quote:Yet, far fewer people point to Google as a "big bad" company, or Amazon, or Home Depot. I'd imagine it has a lot to do with the quality of product produced - which is why you're moving away from Walmart, yourself.
See, and I imagine it's because Wal-Mart's customers are poor, and condemning Wal-Mart serves the happy purpose of distancing the speaker from the people who don't have a choice other than to shop there. In other words, serious snobbery.
I see Wal-Mart getting a disporportionate share of crap for standard procedures as a condemnation of the speakers, not of the target.
Posted by Mucus (Member # 9735) on :
quote:Originally posted by fugu13: Interestingly, people have studied that. For instance, executive compensation is very strongly correlated with firm size. There are more very large firms in the US, so there are more executives with very high compensation.
Dubious.
For example, if you fix bank size
quote:You wouldn't know it by his pay stubs, but Jiang Jianqing heads the world's largest bank.
Jiang, chairman of Industrial and Commercial Bank of China, made just $234,700 in 2008. That's less than 2 percent of the $19.6 million awarded to Jamie Dimon, chief executive of the world's fourth-largest bank, JPMorgan Chase & Co.
The contrast illustrates the massive differences in pay among the CEOs of the world's top banks. The compensation of the CEOs of the largest U.S. banks towers above what's paid to banking chiefs in other parts of the world, according to a Reuters analysis of pay at the 18 biggest banks by market value.
quote:HSBC Holdings, the world's third-largest bank by market capitalization, paid CEO Michael Geoghegan $2.8 million in 2008 -- much more than his Chinese counterparts but far less than JPMorgan paid Dimon.
Alternatively, if you fix auto manufacturer size, something like the top 30 executives at Toyota made the same salary as the single CEO at GM when both companies have about the same market share now.
Executive compensation should be much more correlated to culture than to firm size.
quote:... it makes sense to pay a lot more to get the best executive one can afford, even if they are only a little better than the next-best executive.
Assuming that paying a lot gets you a "better" executive rather than just an executive thats better at getting more compensation. I think the performance of those aforementioned American banks and GM is pretty self-explanatory.
Edit to add: Or this
quote:Too often, executive compensation in the U.S. is ridiculously out of line with performance. That won’t change, moreover, because the deck is stacked against investors when it comes to the CEO’s pay. The upshot is that a mediocre-or-worse CEO – aided by his handpicked VP of human relations and a consultant from the ever-accommodating firm of Ratchet, Ratchet and Bingo – all too often receives gobs of money from an ill-designed compensation arrangement
quote:For the top executive to forego pay entirely would give each of them something like an extra ten or twenty dollars a year
Only if you assume that only the CEO is overpaid and all other board members, vice presidents, etc. are magically fairly paid.
If in fact the problem is systemic, then the difference would be much larger.
[ October 16, 2009, 03:24 PM: Message edited by: Mucus ]
Posted by twinky (Member # 693) on :
quote:Originally posted by katharina: Did you read the same quote? It doesn't say what you think it says.
I don't grant your assertion that what "may" be happening is definitely what is happening, at all. Clearly this is an area that hasn't been settled, but acting as if it HAD been settled and then extending that to a general, biased, unbalanced of condemnation of Wal-Mart across the board is unwarranted.
No, you've misread. I asserted two things:
1) Wal-Mart's actions with respect to its suppliers distort some markets;
2) There's a reasonable argument to be made that this is illegal.
You're saying that because (2) is not unquestionably, undeniably true [added: that is, because the argument is only reasonable, not proven in court], (1) is also not true. That's incorrect.
quote:Originally posted by katharina: And, you asked for an example. You got an example. I get that you don't want to accept it, but my part is done.
Very well; I'm now asking for evidence that class warfare is the motive of one side of this discussion -- an assertion you've made repeatedly, both implicitly and explicitly.
Posted by FlyingCow (Member # 2150) on :
quote:If suppliers don't like their (legal) terms, they don't have to supply Wal-Mart stores.
I think this is the essential issue. If a supplier doesn't like a Mom and Pop store's terms, they can leave and do business elsewhere.
Walmart has gotten to the point that there is virtually no elsewhere for certain market demographics. If you want to reach market at all, you'll do what Walmart wants... even if it means hurting your own company, employees, and shareholders.
Walmart is unique in this - it can force companies to change more than any other retailer, simply by dint of its size and share of the marketplace.
Vlasic is a good example, as linked above. They were forced to make decisions that led to bankruptcy because they couldn't lose Walmart's business (which also likely would have led to bankruptcy).
No other retailer could have done that - as Vlasic could have walked away from any other retailer. The power differential between Walmart and the rest of the industry is so great that their actions carry that much more weight.
Posted by FlyingCow (Member # 2150) on :
quote:See, and I imagine it's because Wal-Mart's customers are poor
Did you miss the part where I said the vitriol toward Walmart was inherited from Microsoft? Are you going to tell me people hated Microsoft because its customers are poor?
And, btw, Google is free... so economic status isn't exactly a factor, there. Their customers are anyone who gets on a computer, ever. And before you jump in and say that poor people don't have computers, *Walmart sells computers*.
It's not the customers, it's the company. Much like one can condemn the actions of OPEC without condemning car drivers everywhere.
Honestly, I don't have a problem with people shopping at Walmart (unless they are shopping on my behalf). I understand the reliance many people have on Walmart that has grown in the last two decades or so - which is even more pronounced now that many of the options that lower income families turned to in the 70's and 80's have now been run out of business.
It is possible to love a smoker and hate Phillip Morris - just because a company draws fire, doesn't mean its customers are the true targets.
Posted by kmbboots (Member # 8576) on :
I don't think that people are so much condemning people who have no choice but to shop at Walmart as being concerned that Walmart is their only choice and suggesting that those of us who are able to, make decisions that alleviate that.
*Except for twinky. He just hates poor people. Why, twinky,why do you hate poor people?
Posted by fugu13 (Member # 2859) on :
The Chinese firm is not allowed to pay the CEO more; this is not necessarily preferable, just authoritarian. I would also bet that the CEO at the Chinese bank extracts considerably more political power in compensation, and I don't think we'd view that as preferable.
GM is not a good example at all. If they hadn't been subject to extreme amounts of political protection for years now, they would have gone out of business.
Posted by Jhai (Member # 5633) on :
quote:Originally posted by FlyingCow: Jhai, very interesting. Do you feel that as a taxpayer and citizen in the United States that you have more vested interest in the success of US Citizens than you do in citizens of countries in which you do not pay taxes (or receive benefits from those tax dollars) or have a vote?
For a microcosmic example, the schools in northern NJ are very good, in large part because of the tax dollars collected in the state from the many, many white collar workers who live here. If those jobs were to be dispersed throughout the developing world, the quality of education, policing, infrastructure, etc would necessarily go down as fewer tax dollars were available to fund them.
Therefore, the continued employment of someone local to me has more impact on my life/family than the continued employment of someone who lives in Bangalore. So, the global benefits of sourcing all of our labor to other countries is tempered considerably by the local impact of such a move.
Of course I have a vested interest in seeing the communities I live in do well. That self-interest, however, doesn't override my moral belief that it's better that people here lose jobs than that people abroad starve. (Not necessarily an either/or, of course, but if it were, I'd go with an American losing his job.) Self-interest should not overrule ethics, and I believe an impartial observer would agree that it's better overall that jobs go overseas.
I'm a citizen of the US, but my husband's not. He's a citizen of India. One thing I've realized as part of an international couple is that community - geographically/nationally-speaking - doesn't matter that much. We both care about our local community out of self-interest. So I'll gladly pay my taxes if I think that the taxes will go towards things that will help my living standards (and pay 'em grudgingly otherwise). But that's it. If the community we're currently living in isn't meeting our needs, then we'll move elsewhere. Another state, another country - whatever fits our needs.
We do give quite a bit of money to charity. But we direct our charity money to where we think it will do the most good - which is never the United States or our local community. Compared to developing countries, people mostly have their shit together here. $1,000 towards health care in Africa or much of Asia means 10 or 20 fewer dead children - that's better than any return you can get for your charity dollars here in the US.
Posted by Mucus (Member # 9735) on :
First, HSBC isn't a Chinese firm.
Also, I would take that bet. American bank CEOs have much more control over the US government than the equivalent in China. In China, SEO executives are often assigned by politics, rather than the other way around as in the US.
If you don't like GM, you can use Chrysler or Ford for that matter, I'm confident that their compensation is similarly out of line when compared to their Japanese counterparts of similar size.
Posted by katharina (Member # 827) on :
quote:Did you miss the part where I said the vitriol toward Walmart was inherited from Microsoft?
I didn't miss it. I think you are wrong.
Posted by FlyingCow (Member # 2150) on :
Okay, fair enough.
But the "evil empire" of the early 1990s was pretty clearly Microsoft, though you hear far more these days about Walmart than you do about MS.
Not to say MS is loved by any stretch, it just seems that the anti-monopoly folk have moved on from MS to WM. Also, Apple's advertising team has done a great job of making MS seem incompetent rather than uber-powerful these days, which might have added to it.
I am curious, though, if you believe a company can be criticized *without* also criticizing the customers of that company. Essentially, do you feel all criticism of companies is due in large part to the customers, or just Walmart in particular?
As an aside, my sister thinks Walmart is the greatest thing since sliced bread (though she also shops at Target and various other stores). She is pretty solidly middle class, I'd say, as I am. So, my antagonism toward Walmart... do you think its targeted toward her too, or does she make too much money?
Posted by fugu13 (Member # 2859) on :
. . two other firms that have been significantly propped up by government action? The only one even remotely close to sensible would be Ford, and even they've been subject to huge subsidies to keep up bad business practices.
As I said, this has been studied. If you'd like, read a few analyses about how CEO pay is related to firm size and firms doing well:
quote:Originally posted by Mucus: First, HSBC isn't a Chinese firm.
Also, I would take that bet. American bank CEOs have much more control over the US government than the equivalent in China. In China, SEO executives are often assigned by politics, rather than the other way around as in the US.
If you don't like GM, you can use Chrysler or Ford for that matter, I'm confident that their compensation is similarly out of line when compared to their Japanese counterparts of similar size.
Mucus, you simply can't argue economics via anecdotes. Cherry-picking two or three companies (or even ten or twenty) isn't going to convince anyone (worth convincing) that your argument is correct. Read the studies fugu has pointed out, and if you have disagreements with their methodologies or find some of their results particularly interesting, let's discuss it.
Posted by MrSquicky (Member # 1802) on :
So far as I can tell, the studies that fugu presented are only concerned with US companies. Is that correct?
Posted by Mucus (Member # 9735) on :
*shrug* If American culture encourages government action, then what of it? I'm unconvinced that we should write off essentially the vast majority of the US auto industry as special cases.
The first paper and third paper use data only on S&P companies from 1993 onwards. In fact, both appear to have the same authors and use the same data.
The second is explicitly titled as handling only US companies.
Therefore all three are irrelevant when comparing between countries.
Posted by MrSquicky (Member # 1802) on :
I'm not sure how the papers fugu presented show firms "doing well". They seem to focus only on expanding the firm.
I didn't give them a full read through, but it seems that the papers state that this expansion does not correlate with shareholder value or profitability of the company.
For example:
quote:The effect of firm size on compensation is the primary focus of the earlier studies, for example, Baumol (1959) contends that executive salaries are more correlated with the scale of a firm's operation than with its profitability, McGuire, Chiu, and Elbing (1962), find executive compensation (measured by salary plus bonus) more correlated with sales than profitability, thus lending further support to the "revenue-maximizing" theory of the firm. Baker, Jensen and Murphy (1988) also find that the compensation of CEOs varies with firm size, and strongly note that CEOs can increase their pay by increasing firm size even at the expense of a reduction in the firms' market value.
Posted by Jhai (Member # 5633) on :
MrSquicky, the papers cited are from many years ago, and likely use outdated statistical techniques.
Consider these papers: this, this, and this. The first compares US to international CEOs and shows that the earnings are reasonable. The second & third expand on why CEOs earn as much as they do, particularly at larger corporations.
My broader point is to show that this is a subject under much scrutiny by academic economics. There is a wide body of literature available, as you'll note if you read the references for several of these articles. Like many economics fields of study, exactly what is happening is not entirely clear, and there are multiple models, each of which likely shows some portion of the truth.
Skimming a couple of articles & declaring the issue done, or citing one ratio, like the average CEO's pay vs. his average employee's pay, is not going to do anything besides give you a few talking points that don't actually get to the root of the matter or prove anything other than that you (general you) don't understand anything about economics.
Posted by Blayne Bradley (Member # 8565) on :
quote:Originally posted by fugu13: The Chinese firm is not allowed to pay the CEO more; this is not necessarily preferable, just authoritarian. I would also bet that the CEO at the Chinese bank extracts considerably more political power in compensation, and I don't think we'd view that as preferable.
GM is not a good example at all. If they hadn't been subject to extreme amounts of political protection for years now, they would have gone out of business.
Chinese businessmen have very little say in politics, there's only one afaik Alternate member of the Central Commitee who is a businessman.
I also do not see how it is authoritarian for the business firm to now pay its CEOs more, to me it just seems like responsible rules, there's also no evidence to support that any particular CEOs gain any political compensation in direct proportion to how much they are officially paid.
Posted by King of Men (Member # 6684) on :
You have a really touching faith in official channels, Blayne. It doesn't occur to you that in a country with a millennial tradition of working by favours and back channels, formal representation on the Central Committee is not a necessary signifier of power?
Posted by Blayne Bradley (Member # 8565) on :
According to Susan L. Shirk author of 'China: Fragile Superpower' the business sector of China has very little official representation which is the one that matters. 'Unofficial' channels doesn't hold sway over Chinese power politics to the degree you think it does.
Posted by theamazeeaz (Member # 6970) on :
quote:Originally posted by katharina:
quote:Then don't buy new clothes for your kids. Buy new what you have to and get the rest from other sources. That's what thrift stores and friends with kids bigger than yours are for.
Or...buy them from Wal-Mart, where the lower quality doesn't matter because the kids will outgrow them before they wear them out.
Because, you know, poor people should never have new things. It's better for them to LOOK like they are poor for easier identification. Wearing out of style clothes that don't quite fit and not being able to get something pretty and new is the perfect way to shame those without extra cash.
There is clearly a place for low-quality but still new and stylish children's clothing. I can't believe that you want to decide for someone else that they had better LOOK poor unless they want to shell out serious money for clothes that will be worn for less than a year.
Not all clothes that are hand-me-downs are out of style, nor do they immediately brand a person as "poor". You can't actually tell if a garment in good repair belonged to someone else once you take it home, wash it, then put in it the closet with the rest of your stuff. No, used clothes don't look new, but neither does any garment after you wash it a couple of times.
With children's' clothes, there's enough people trying to get rid of theirs that nothing is going to look terribly out of date. And given that fitting pre-pubescent children is nothing like fitting a woman's curves. Yes, there are a bunch of items that are out of style, damaged or the wrong size, but there are things at every store you wouldn't look twice at. I will not deny that finding good used items is a skill. Having clothes that don't fit, out of style or are in bad condition are a mark of the stupidity of the parents, not the source of the clothing.
I grew up on a mix of hand-me-downs, clothes from relatives and new things. We got clothes from my cousin Jaime, I got clothes from my older sister and then we passed them all to my mother's friend's daughter Kay. We probably also gave clothes back for Jaime's little sister Kelly. About 10 years after that, Kay, though four years younger than me, turned out to be about five inches taller than me and I inherited a pair of her pants that I still wear. We were not "poor" at all and the two families I have mentioned had more money than us. My childhood included dance lessons, loads of toys, afterschool activities and trips to Disney World. Sharing clothes among growing children is just smart.
Some of my currently most-worn purchases have come from a rummage sale that I cleaned out during my college years, a sale that was exceptional in terms of quality and items available. I dragged a few skeptical friends to that annual sale, and they came out with a lot of items and a very different attitude towards "used" clothes.
When I have kids, even if my finances are healthy, I will be looking towards used items for my children where possible.
It's a really stupid sort of irony that people who are 'poor' don't do things that will save them serious money for fear of seeming 'poor' (but don't make a difference) and yet are limited in what they can do with the money they have because they are 'poor'.
I really hate the Wal-Mart and Target commercials that tout how much money you can save by shopping at their stores when repairing and sharing save more money.
Frugality is not a condemnation. If you still think so, I recommend reading Amy Dacyczyn's Tightwad Gazette, one of the best resources for people who would like to spend less money than they do.
Posted by King of Men (Member # 6684) on :
If you say so.
Edit: In response to Blayne.
[ October 16, 2009, 06:46 PM: Message edited by: King of Men ]
Posted by Mucus (Member # 9735) on :
quote:Originally posted by Jhai: ... this, this, and this. The first compares US to international CEOs and shows that the earnings are reasonable.
Definitely a cut above the previous three. But I would note that the authors themselves do not actually seem to offer an opinion as to whether earnings are reasonable across countries. They merely note that firm size explains "many of the patterns in CEO pay ... between countries" and it is clear that international comparisons are still merely a small side-track in the overall paper which focuses on the US.
They also note
quote:A large amount of the variation in CEO compensation across countries remains unexplained and country specificities may sometimes dominate the mechanism highlighted in our paper. For example, in Japan, despite a very important rise of firm values during the 1980s, there is no evidence that CEO pay has gone up by a similarly high fraction
and hedge by calling for more data and research. If these authors reserve the right to declare that country-specific factors (e.g. culture) can dominate CEO pay, then certainly I can
quote: ... or citing one ratio, like the average CEO's pay vs. his average employee's pay, is not going to do anything besides give you a few talking points ...
Good thing I cited multiple things.
For example, the second link I provided on the previous page notes a number of studies that shed doubt on the idea that executive compensation is not excessive.
Posted by Jhai (Member # 5633) on :
Heh. Mucus, every economic paper "hedges" by calling for more data and research. Writing that at the end of an econ article is like signing your name at the end of a letter. And pretty much no economist writing an academic paper would offer a personal opinion on whether something is "reasonable" or not (that's moving into the normative stuff, that is!).
Anyways, I really don't have a horse in this race. I have no interest in researching this topic further than the five minutes it took me to find the NBER papers (very good source for quality econ papers, btw). *shrug* However, I do know enough about the topic to know that there have been 100+ papers written on the topic - it's a popular line of research. It's also a highly publicized one, which means that you shouldn't trust anything you read in the mass media about what the studies are saying - you should read the studies themselves.
Posted by Mucus (Member # 9735) on :
I don't particularly advocate a particular course of action yet, so not caring that much either.
On the balance, I still find that judged on a moral and ethical framework, I think it is a good thing to shop (and for others to shop) at Walmart or similar retailers.
However, the day is fast approaching when I think I will have to oppose that on environmental and the societal grounds that some others have mentioned.
That said, I still think that the North American consumer is getting a raw deal when it comes to the discount that they're paying versus the safety risks that they are taking. On a personal level, I can mildly counter-act that by skipping the middleman every couple of years or so or more frequently, using Internet retailers, so the issue is hardly critical for me, just annoying.
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