Why do you think lowering the maximum wage is a bad idea?

[wrs]

It absolutely does. Those kinds of high-risk investments are typically made by small groups of focused investors who can afford to risk significant capital, provided they have a lot of control over the investment. In other words, very wealthy individuals like Musk who earned his money as an executive.

You mean to say that all wealthy individuals earned their money as executives? None started their own business and sold it? None succeeded in the oil patch or some other area that doesn't involve being an executive? Furthermore, if the big players were broken up, the barrier to entry would be far lower.

Cars are a bad example anyway but retail is another matter altogether and the main street retailer in small towns is nearly non-existent today.

In other words, if ALL cars were significantly more expensive, then niche car makers would be competitive.

Tell me again: who is supposed to benefit in this scenario? Because it's not the average consumer, I can tell you that.

You say that but then you don't have any proof that breaking up big companies wouldn't be a net benefit to consumers. There would be more jobs available and maybe for a while things would be a little more expensive but as more businesses compete, prices will drop. Isn't this what the market is supposed to respond to, competition?

There's nothing "of course" about it. These are assertions of yours for which you have provided neither evidence nor argument.

First of all the top executives of smaller corporations make substantially less compensation than those of the top 100 corporations in the US. Compare the Russell 2k CEO compensation with the SP100 or DJIA CEO compensations. If the biggest 100 were broken down into smaller pieces, the CEO compensation would be spread out among a number of CEOs instead of going to one single guy. Suppose each of the top 100 were broken up into 10 sub entities. Now you have 1000 CEOs instead of 100 and those 1000 CEOs are making collectively the same as the 100 were but now the wealth is spread around.

The second effect of the breakups would be the flattening of the management hierarchy in these smaller companies. There are management layers just to manage management. In the smaller companies that stuff would be gone and so there would be less cost organizationally on management. Each entity would now increase it's staff at the lower level to manage customer interfaces because now there are more customer facing interfaces. In a vertically integrated company, much of the interface is inside the company and there is less accountability to the customer and more leeway to politic. I saw that in spades at big companies when I consulted inside them. Much less at the smaller ones I dealt with. The smaller companies were results oriented not focused nearly as much on office politicking. So the result will be more people thinking about the needs of the customer and more emphasis on customer satisfaction and cost of the produced good. If the customer is captive, cost isn't nearly as much an issue.

People aren't just "consumers" people are producers and the way you present your arguments ignores that. There are very many people that would like to have a higher paying job and wouldn't mind paying a little more if slightly higher prices were the result. With all that in mind, breaking up the big corporations would be good for producers who want jobs and a decent income.

I don't care if corporations "abuse" other corporations, small or not. Corporations have no right to survival if they can't compete, and if they can then they won't get "abused". And small companies can (and do) treat their employees just as badly as large corporations.

A lot of smaller companies are on much more equal and competitive basis than one big company and two or three smaller competitors that the big one can snuff out.

You don't get it. The problem is not that I can't conceive of it working, the problem is that I see specific mechanisms that will make it fail. And you don't seem to have the faintest clue about these mechanisms, let alone have any suggestions for how to prevent that failure.



And have you never thought to wonder why? It's precisely because they cannot afford to NOT own government. Government interferes in the marketplace to such an extent that businesses which don't lobby extensively get eaten by their competitors who do lobby extensively to use the power of government against them. The fundamental problem is one of incentive: we've created a situation in which bribing government has one of the highest returns on investment. The solution to that problem is not more government. The solution to that problem is not to make it even more worthwhile to bribe government. The solution is to extract government from the market as much as possible so that bribing government is no longer as profitable as simply investing in the business itself. Businesses won't pay costs when there isn't a return.

Lot's of smaller companies have less impact than a few big ones. Each one has less resource to bribe with and too many offering to small of a bribe.

It's naive to think that you can or will. They'll just form trade groups to do the lobbying they want to, the effects will be the same.

Those already exist so while we are at it, we will eliminate lobbying altogether, it's unseemly and corrupting anyway.

Once again, you have no idea of what you're talking about. That's a recipe to drive small investors out of the market completely, depriving the middle class of the best means of significant wealth accumulation. If you think that's going to create a better economy for the middle class, you will be sorely disappointed if you ever get what you want.

Shielding from liability is just a way to keep a person from paying for the consequences of their mistakes or their intentional wrong doing to the extent it's not criminal. I was never sued in my business because I never gave anyone a reason to sue me. I was incorporated because I needed it to get the Sub S tax status which was better than sole proprietor at the time I started my business.

That's a very different matter than what you have discussed so far, and it's a very different matter from shareholder liability. But you probably don't have a clue about how to do that sensibly either.

No, of course not, I am just a dog typing away on the internet just like you..............LOL!

 

[kedo1981]

If this has been said already I'm sorry.
But the real problem isn't the amount of the minimum wage, it's the fact that so many spend decades at minimum wage jobs, and try to raise their family on it.
The opportunities to get better jobs appear to have been taken away.

 

[Ziggurat]

You mean to say that all wealthy individuals earned their money as executives?

I'm saying that Elon Musk, the founder of Tesla, certainly did. And so do a lot of other very wealthy people.

None started their own business and sold it?

So if you start your own business and keep it, then you're not allowed to get rich?

None succeeded in the oil patch or some other area that doesn't involve being an executive?

Who exactly do you think is getting rich from those oil patches? Pickens, for example, got rich on oil because he was an executive of an oil company.

Furthermore, if the big players were broken up, the barrier to entry would be far lower.

Why on earth would the barrier to entry in a market be any lower if there were no big players?

The only way this argument makes sense is if the "barrier" you refer to is the economies of scale that large companies have. So yes, eliminate those economies of scale, and smaller companies can be competitive. But when you remove those economies of scale, you screw over consumers. The people actually buying products get the shaft because of your size fetish.

Cars are a bad example anyway

That's quite the retreat from "Cars do not need to be produced by large corporations, Tesla is a good case in point."

but retail is another matter altogether and the main street retailer in small towns is nearly non-existent today.

By "nearly non-existent" you really mean "is no longer the only form of retailer". Because I gotta tell ya, there are plenty of small retailers left.

And so the hell what anyways? Why is it better to have some mom and pop shop which pays their employees crap wages with no hope of career advancement and charges customers high prices, than to have a Walmart which offers customers low prices and its employees the opportunity for advancement beyond cashier?

You say that but then you don't have any proof that breaking up big companies wouldn't be a net benefit to consumers.

Sure I do. Costs would be higher, quality would be lower. That is in fact a NECESSARY condition for your claim that barriers to market entry would be lower.

There would be more jobs available

This assumes that the same number of cars would be purchased. And it also proves my point about costs being higher: if you're paying for more workers, costs will have to go up. But if costs are higher (and they would be), there's absolutely no reason to think that the number of cars purchased would stay the same. In fact, we know from simple supply and demand that the number of cars purchased would drop. So the number of available jobs could easily drop too.

and maybe for a while things would be a little more expensive but as more businesses compete, prices will drop. Isn't this what the market is supposed to respond to, competition?

Prices don't drop magically. The car market is already competitive, so prices will only drop further if more efficient methods of manufacturing are developed. But your scheme will ensure that it is harder to develop such improvements.

First of all the top executives of smaller corporations make substantially less compensation than those of the top 100 corporations in the US.

Irrelevant. If you break up one of those big companies into lots of little companies, the CEO of each of those little companies might be making substantially less, but there are correspondingly more of them. You haven't demonstrated that management overhead would be improved, which means that you haven't actually liberated any money from management to now be spent on workers.

Now you have 1000 CEOs instead of 100 and those 1000 CEOs are making collectively the same as the 100 were but now the wealth is spread around.

And why the **** should I give a rat's ass about that? It makes not one god-damn lick of difference to me whether there's 1000 really rich people or 100 mega-rich people.

The second effect of the breakups would be the flattening of the management hierarchy in these smaller companies.

Yeah, um... that's not a given.

People aren't just "consumers" people are producers and the way you present your arguments ignores that. There are very many people that would like to have a higher paying job and wouldn't mind paying a little more if slightly higher prices were the result.

Yes, just like there are very many people who buy luxury cars.

Your limousine liberalism shines through once again.

A lot of smaller companies are on much more equal and competitive basis than one big company and two or three smaller competitors that the big one can snuff out.

How exactly do you think big companies "snuff out" smaller competitors?

Well, either they use the power of government to drive those competitors out of the market (which your proposal will assist in doing, BTW), or they make a better product and offer it at a lower price to consumers. In the latter case, the wealth of society is increased as a result. That's a good thing. Why are you portraying it as a bad thing?

Lot's of smaller companies have less impact than a few big ones. Each one has less resource to bribe with and too many offering to small of a bribe.

Bwahahahahahaha!

Are you really ignorant about how industry lobbies work? Have you never heard of the lobbying efforts of the MPAA or the RIAA?

Those already exist so while we are at it, we will eliminate lobbying altogether, it's unseemly and corrupting anyway.

You cannot eliminate lobbying. It would be both unconstitutional and impossible as a practical matter. And lobbying isn't the only way that politics can be corrupted by money either. In fact, it's among the more benign ways. Outlaw lobbying and you eliminate the ability of unions, consumer advocates, environmental activists, etc. to push for protections for workers, customers, natural habitat, etc.

But that senator can still get a job with ChemCo after he leaves office. Too bad about that chemical spill.

Shielding from liability is just a way to keep a person from paying for the consequences of their mistakes or their intentional wrong doing to the extent it's not criminal.

Shielding from liability allows people without significant wealth to invest what wealth they do have without fear of financial ruin. Why do you hate the middle class?

Oh, that's right: they won't pay the price premium to get a Tesla. Selfish bastards.

I was never sued in my business because I never gave anyone a reason to sue me.

Are you really so naive as to think only people who deserve to get sued are sued?

Perhaps you are.

 

[wrs]

Wow, ziggurat is invincible

You have all the answers so I guess I don't know crap and I will bow out from discussing this further.

 

[The Don]

Why would you think this?

Because of what you have posted to date including......

Then caveat emptor.

Exactly ! You clearly don't understand the purpose of drug testing.

Since I am in the US, maybe you should restrict your responses to the situation in the US. I am well aware that the UK has a vastly different but probably not better medical system than we have here in the US. The fact is that doctors do shill drug products here in the US and they get shilled by the drug manufacturers who shill them on TV to me and others. If you don't ask your doctor, he probably will ask you.

Why should I restrict my contributions to pander to your ignorance ?

Your attitude is still insulting to all those doctors who aren't drugs shills. Do you think they have just abandoned the hippocratic oath ?

Well that isn't the way I understand it. Boeing bought out MD and Lockheed built the L-1011 but it was just a money loser and so they dropped it. I am not sure what you mean by the vastly expensive process of getting them certified. It's a vastly expensive process to certify any jet aircraft including the military ones.

Nevertheless, isn't AirBus pretty much a GSE over there in Europe?

Correct, but you were talking about commercial airliners not the aerospace industry as a whole. Military aircraft are a slightly different case because strategic interests often mean that financial competition doesn't come into it.

It costs billions of dollars to develop a new aircraft - which is what I meant.

No the people buying Teslas aren't just enthusiasts, I see more and more of them on the road here in Austin. Since you are in the UK, maybe you shouldn't make such generalizations about the US. At the new Whole Foods they have special parking spots for rechargeable cars. Austin is very progressive.

They're enthusiasts. It's a small volume manufacturer building cars for people who prioritise greenness over price.

Helps out with unemployment doesn't it?

Not in the long term. Inefficiency means less employment in the long term and lower standards of living overall.

Not if there are lot's of widget manufacturers competing for your contract. Don't forget, this works across the board. Lot's of smaller companies producing the same or greater number of higher quality goods.

No, things will be more expensive because they lack the economies of scale. the only way they can produce more cheaply is to cut staff costs. Because they have to employ all these people, they will have to pay them much less.

Well you don't know much about oil here in Texas. That isn't the way it works here. I think you might be biased in your thinking by what you have read about really deep water projects. The problem there is that the big oil companies are so big, that to maintain their size, they have to find gargantuan fields.

That's an atypical example of the oil industry globally. Basing your entire view on a subset of a small market isn't the best way to proceed. Look at any of the large oilfields globally (not just deep water).

Even if you have managed to drag the oil out of the ground in a mom and pop operation, you still need a multi-billion dollar refinery to turn it into something usable.

You should google Wolfcamp shale or Eaglebine or Eagleford or permian basin to see how it has worked out here in Texas. I have leases on a number of productive wells here in Texas and not one of them is with a major. In fact, the well that is currently being drilled on my West Texas acreage is being drilled by a wildcatter. The field is being developed by a very large number of E&P companies including Cimarex, Devon, Petrohawk, COG and a lot of really small outfits. If you are curious about who drills oil wells in Texas, go to the RRC website and search the W-1s, you might be surprised by what you find.

Texas <> Global oil industry

as pointed out above, who builds the multi-billion dollar refineries to process the oil ?

 

[wrs]

That's an atypical example of the oil industry globally. Basing your entire view on a subset of a small market isn't the best way to proceed. Look at any of the large oilfields globally (not just deep water).

What do you want me to look for? Anything special?

Even if you have managed to drag the oil out of the ground in a mom and pop operation, you still need a multi-billion dollar refinery to turn it into something usable.

Not the way it works.

Texas <> Global oil industry

No, thankfully, not. However, I would point out that the OPEC is modeled after the Texas RRC.

as pointed out above, who builds the multi-billion dollar refineries to process the oil ?

Not who you think, apparently.

 

[psionl0]

You say that but then you don't have any proof that breaking up big companies wouldn't be a net benefit to consumers. There would be more jobs available and maybe for a while things would be a little more expensive but as more businesses compete, prices will drop. Isn't this what the market is supposed to respond to, competition?

This is not a real world response and denies the concept of "economies of scale".

Way back in the dark ages, my parents did their shopping at a small general store owned by a couple who also owned a butchers shop. This couple were forced out of business when a supermarket opened up across the street. The supermarket was able to offer products at retail prices that were less than the wholesale prices that the couple paid (and AFAIK it wasn't predatory pricing - the lower prices continued long after the couple disappeared).

Here in Western Australia, a number of smaller supermarket chains joined together to form the "Independent Grocer's Association" (IGA) which was the only way they could effectively compete against the big two (Coles and Woolworths). As a purchasing block, they are able to get wholesale prices similar to what the big two pay.

At a typical individual motel I used to work for (105 rooms), individuals were charged a "rack rate" for a room each night. Firms that were in a position to offer enough business were given a discount (ranging from 10% to as much as 50%) depending on how much business they could guarantee. The motel was also a member of a motel chain which guaranteed business but at rates far lower than the "rack rate" and charged membership fees besides.

This is typical of the motel industry and typical of practices of businesses everywhere that are necessary to survive in a competitive world.

 

[wrs]

This is not a real world response and denies the concept of "economies of scale".

Economies of scale exist because of large conglomerates. My response is completely real world but people are so locked into the status quo that they don't realize things could work differently yet simultaneously bitch and moan about the problems that the "economies of scale" are producing.

Look if you think that you want to buy the stuff Walmart sells and that a cheap Toyota box is what a good life amounts to, then don't complain that along with that life you get paid poorly, have no chance for improvement and have to watch the people at the top stay there and get more.

 

[psionl0]

If you think you can have a competitive business model where no business wins then you live in Gaetan's world.

It wouldn't upset me if there were only corner shops to shop at but as long as consumers want to pay minimum prices, businesses will expand/merge/swallow up competitors in an attempt to meet that goal.

 

[wrs]

Way back in the dark ages, my parents did their shopping at a small general store owned by a couple who also owned a butchers shop. This couple were forced out of business when a supermarket opened up across the street. The supermarket was able to offer products at retail prices that were less than the wholesale prices that the couple paid (and AFAIK it wasn't predatory pricing - the lower prices continued long after the couple disappeared).

I have a friend who worked for a grocery chain and who bought wine for the chain. He moved to the produce department and started buying produce. What he discovered is that produce could be had cheaper if you went to the source. So he bought a truck and started going down to South Texas and buying his produce direct from the same people that sold to the store. He would go down Saturday to the Valley and drive a load back up and then sell it on the roadside on Sunday.

He made more money doing this than his store job so he bought another truck and got his manager to go into business with him. He realized that there are more people that need good produce every day that will pay to have it delivered i.e. restaurants so he started going around and selling them. They of course had big suppliers like Schwann and Sysco that sold them stuff but the produce was the same as the store stuff. So he has made a whole business out of developing supplier relationships and then selling directly to the right consumer that needs that product. He is the quintessential middleman and deserves the money he makes because he gets a better product for a good price that the Sysco cannot provide with their "economy of scale".

If Sysco didn't exist or was a bunch of smaller companies, then there would be more opportunities for people like my friend to take part of the Sysco operation. This is only one example of where a small guy can do a better job than a big guy and still not cost much more. In fact, the higher price is offset by much better quality and freshness in the product.

There are a lot of areas in the economy where economies of scale don't result in lower priced better products for consumer. These "economies of scale" produce lower priced second rate crap that the consumer has no choice to buy because they are part of the poorly made, low priced, high margin, product chain and as a component, their cost is pushed as low as possible. But of course, the consumer can barely afford to buy the second rate crap they produce because their value as a producer is part of the cost of the crap they produce. GIGO.

My friend didn't finish high school and he lives very well and has for a very long time. He did a similar thing with wine because he sold his part of the business to his partner and signed a non-compete for five years. As soon as the non-compete was up, he started over with produce and has gotten just as large as before. Some people are going to see the opportunity no matter what the backdrop is.

 

[wrs]

If you think you can have a competitive business model where no business wins then you live in Gaetan's world.

What do you mean no business wins? You mean a zero sum game, right?

It wouldn't upset me if there were only corner shops to shop at but as long as consumers want to pay minimum prices, businesses will expand/merge/swallow up competitors in an attempt to meet that goal.

Once again, you seem to be willing to accept that the structure forced on the consumer is only about price and not about opportunity to take part of what is going to the top and staying there which by the way, Gaetan is absolutely correct about. His solution is probably unrealistic but I think what I am suggesting isn't and oh yes, it still uses money.

 

[psionl0]

Gaetan is absolutely correct .............

 

[wrs]

So you don't agree that the money is going to the top and staying there?

 

[psionl0]

So you don't agree that the money is going to the top and staying there?

I don't believe that "Gaetan is absolutely correct" and I doubt that anybody else in the entire forum does either.

 

[wrs]

I don't believe that "Gaetan is absolutely correct" and I doubt that anybody else in the entire forum does either.

Since that is a phrase taken out of context I don't see your point.

 

[psionl0]

Since that is a phrase taken out of context I don't see your point.

The minor point is that the opposite of anything Gaetan says is most likely the truth.

The more important point is that you can't set up a glass ceiling that keeps all businesses small and expect any sort of efficiency. That is not to say that corporations should be bigger than countries (happens when governments bow and scrape before them) nor that they should be allowed use their size to engage in anti-competitive practices to drive out any potential competitors (again, this often requires a complicit government).

 

[wrs]

The more important point is that you can't set up a glass ceiling that keeps all businesses small and expect any sort of efficiency.

So are you saying that small and medium size businesses are inherently inefficient?

That is not to say that corporations should be bigger than countries (happens when governments bow and scrape before them) nor that they should be allowed use their size to engage in anti-competitive practices to drive out any potential competitors (again, this often requires a complicit government).

Agree.

 

[The Don]

Not the way it works.

<snip>

Not who you think, apparently.

Enlighten me

 

[Ziggurat]

So are you saying that small and medium size businesses are inherently inefficient?

That depends very much on the business in question. For manufacturing cars, for example, yes, small businesses are inherently inefficient compared to large businesses. Other businesses may reach appropriate economies of scale at much smaller sizes. It all depends, but your approach will either ignore these differences between different industries (and thereby harm consumers and the economy) or open itself up to corruption when businesses lobby government to affect the decision-making process about which industries get to have large companies and which don't (and thereby harm democracy itself).

 

[The Don]

Once again, you seem to be willing to accept that the structure forced on the consumer is only about price and not about opportunity to take part of what is going to the top and staying there which by the way,

It's more about "value" however that is defined. In the case of some things it's just about price, for others it may be mostly about quality and although price may be an element, it's not the only element. Then again value may be just about supporting local producers.

My "local" pub isn't the closest to me, neither is the beer the cheapest, the food the best or cheapest but I chose to go there.

Forcing inefficiencies into the system to prevent true price competition sounds like a bad idea to me.