'Time for a better capitalism'

[Catfish]

I stole this from a linked-In article, and i think it is a very good approach, even if it concentrates on the US here.
This is also what i think were Mises and his economical approach are so very wrong.

Did not want to post the direct link, but copied the text:


"Over the past few decades, the US economy has undergone a profound change.

This change has helped rich Americans get richer. But it has also contributed to growing income inequality and the decline of the middle class. And, in so doing, it has fueled populist anger across the political spectrum and slowed the growth of the economy as a whole.

What is this change?

The complete embrace of the idea that the only mission of companies is to maximize profit for their shareholders.

Talk to people in the money management business, and they’ll proclaim this as a law of capitalism. They’ll also cite others, including the idea that employees are “costs” and competent managers should minimize these costs by paying employees as little as possible.

These practices may help boost stock prices, at least temporarily. But they aren’t actually laws of capitalism.

They’re choices.

Not long ago, America’s corporate owners and managers made different choices—choices that were better for average Americans and the economy. They also had a profoundly different understanding of their responsibilities.

“The job of management,” proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in 1951, “is to maintain an equitable and working balance among of the claims of the various directly interested groups… stockholders, employees, customers, and the public at large.”

By paying good wages, investing in future products, and generating reasonable (not “maximized”) profits, American companies in the 1950s and 1960s created value for all of their constituencies, not just one. As a result, the country and economy boomed.

Over more recent decades, however, this balance has radically shifted.

The stagnation and bear market of the 1970s contributed to the rise of shareholder activism, a trend immortalized in the 1980s by the fictional corporate raider Gordon Gekko in the movie “Wall Street.” In that era, American companies had become bloated and complacent, and they needed a kick in the ass. “Greed is good,” Gekko declared, firing smug managers and restructuring weak companies. And the nation’s beleaguered shareholders justifiably cheered.

But 30 years later, Gekko’s shareholder revolution is still going strong, and the pendulum has swung too far the other way. Urged on by a vast and hyper-competitive money management industry, American companies now increasingly serve a single constituency — shareholders –while stiffing employees and cutting investments in future products.

The most salient illustration of this is the divergence between profits and wages.

Corporate profit margins have been rising for 15 years and are now near their highest levels ever. Corporate wages, meanwhile, have been declining for 4 decades.


>Stats in graphic<


Nor are these the only ways that the “shareholder value” religion has warped our economy.

The richest 1%’ of Americans now own nearly 45% of all the country’s wealth, near the highest level since the "Gilded Age" of the 1920s, with an average net worth of $14 million in 2013. Meanwhile, the average wealth of “90%-ers” has plunged in recent years to just above $80,000, the same level as in the mid-1980s. Millions of Americans who work full time for highly profitable corporations earn so little that they're below the poverty line. The bottom 50% of Americans own nothing.

Beyond fairness and decency — the ethical decision to share more of the economic value a company creates with the people who devote their lives to creating it — the problem with the profit-maximization obsession is that it hurts the economy.

Why?

Because wages and investments at one company become revenue for other companies.

Consumers account for about 70% of the spending in the economy, so our spending is what drives economic growth. Most people work, so another name for most consumers is “employees.” And except for the richest Americans, most of us spend almost everything we make.

When we are paid less, we have less to spend, and economic growth slows. When we are paid more, we spend more, and growth accelerates.

Consumer spending also drives business investment. When consumers are flush, businesses invest aggressively to meet demand. When consumers are strapped, however, companies sit on their cash — or just hand it to shareholders. Amid today’s already weak demand, companies are exacerbating the problem by cutting investments and increasing dividends and stock buybacks.

To be clear: There’s nothing necessarily wrong with some hedge fund managers making $500 million a year — or a presidential candidate being worth a self-reported $10 billion. Capitalism is the best economic system known to man, and the “profit motive” helps drive it.

The problem is that when capitalism is practiced the way it is today, wealth becomes so concentrated that much of it doesn’t get spent. (Billionaires can hire only so many service providers and purchase only so many cars, houses, and islands.)

Economists cite many factors that have contributed to the rise of profits and decline of wages over the past few decades — globalization, the “skills gap,” the decline of unions, the loss of “high-paying manufacturing jobs.”

These trends are real, but they obscure the real cause: Company owners are choosing to maximize short-term profit by paying their employees as little as possible.

It's time for a more balanced approach."


What do you think?

[Skybird]

Classic natiuonal economy capitalists knew all too well whgat a danger monopolism is, it destroys competition, and by that prevents the free market from functioning. Like "capital" is much more than just money, the idea of that "investing" means to spend a little to gain back mountains in return and company managing means only to maximise profits in as shortest time as possible, is misleading, and wrong. Investing does not mean revolutionary jackpot wins, but means to carefully chose and add very selective "investments" and then see thigns grow over long periods of time. THAT is the real meaning of capitalistic investment strategy, and it includes very well long time perspective and sustainability. Classic National Economics knew this. Austrian Economics know this. The overwhelming majority of other schools and managers and analysts - know this NOT.

From nothing comes nothing. The idea to let money work, is tempting, but hopelessly misled. It is not sustainable, it won the first generation of players wins in returns - at the cost of eroding the sustainability of the economy and its actor - the private producers, it is their substance that by inflating debts and paper money gets destroyed.

Now clever people pop up like mushrooms i autumn and say that capitalism needs to be regulated to become fair again. But it is regulation by the biggest monopolist of all: the state, who had seriously helped and supported the distortion of self-regulation of the market be endlessly intervening, and egg-heads in planning bureaus endlessly knowing better what the needs of people in five and ten years will be, and commanding what the value of this and that shall be independently form tis authentic market value and production costs. the whole scaling standard by which entrepreneurs can compare market entities in their real values, can assess whether this or that kind of investment will be needed to create this and that return int he future - this scale, this standard (it is the value of "money") has been totally destroyed and corrupted. It does nto serve as this tool anymore, and so business comes to false conclusions on what is needed to do and what not. At the same time the state seriously acts as if its bureaucrats can know so much better what will be needed in the near future, and what consequences action today will have even already i the near future. One must just look at the currency policies in the world in the past 30, 40, 50 years to see how wring this assumption is, one must just realise how often politicians and governments make decisions that at best render to be without effect and use, often seriously backfire and make the mess they should cure even worse. Planned economy - and that is what "social market economy" really is, it is a way to mean planed economy without admitting that - does not work. It cannot work. It does not reduce monopolists, but it helps to form them. Protectionism does its share, too, of course.

It still is valid what the best politicians acting as an economist that Germany after the war ever had, Ludwig Erhard, already said back then. "We must not call it 'social market economy', for the best way to be 'social' is to have market economy. Market economy IS social by essence and nature." Of course, they crucified him, both Adenauer who wanted economics to be only supporters of foreign political acting of nations, and the SPD, to whom Erhard formally belonged, also was glad when he finally was done. Erhard showed that the state'S paternalism and regulating was not only not needed, but damaging. By that he showed to what degree politicians and parties and their claim for power by implying that things cannot work without them, were opportunistic lies. And they are that until today.

I recommend to study the history of the Hanse, one of the most powerful trading alliances in European history. It run and managed itself - without an external government regulating them. The cities that belonged to it, blossomed up, Social standards went up, socially weak, widows and orphants suddenly were taken care of by own initiative of more successful traders, entrepreneurs, shipowners. In old Hanse cities, until today you can see the traces of their fundaments, some of their social organisations still live today, although the modern states tries to bring them under its own control, oh dear.

And this: we have a totally useless, schizophrenic definition of poverty. Poor is, in germany at least, who has less than 60% of the national populations average income available to him, may it be money he earned by work, may it be wellfare. This has an interesting effect. If for example over night by wonder and miracle all people in germany would have tripled their income, nevertheless still as many people as before would be considered to be "poor". If formerly "poor" people by that would suddenly, as a result of this tripling, have as much money available than formerly non-poor people, one would assume they are not poor anymore, would be three times better off. But they still count as "poor". What "poverty" really means in germany is a value indicating the amount of unequal distribution. But there is no human right that all people from birth on have claim for all other people to make them having the same like all others. We are, however, free to work and aspire an improvement of our income, if that is what we want. The best way to secure this, is free competition, free market. Unregulated, untwisted, and unpestered with quota rules for this and that,. Let everybody do what he can best and find his niche, and let supply and demand, competition and challenging, clear the question of who is fit to live up for supporting his freedom, and who not. I have done a dozen jobs in my life, plus several voluntary, unpaid social engagements, so i do not demand from others what I have not done myself in the past. The bad competitors will fall out of the market, and then will need to accept to work for somebody else. We cannot all be captains of our own ships, and many of us are also not really able to be captains of our own ships. But what is needed is also helm officers, navigators, machinists, sailors. Let everybody gain according to his capability and skill, motivation and interest.

There is nothing like a human right for material quality and being given for free what others have achieved by their own work and initiative and responsibility. There is only the freedom to try to achieve by one'S own action what one does aspire.

And no state has the right to define for the people living inside its territory what they should and must want to aspire. Some people may be "poor" by poverty criterion, and still enjoy their life for reasons the other must not necessarily understand. Others may be rich in money, and still unhappy. I myself for example have traded life time for higher income, I decided that to be the master of my day's time, which is life time nobody can ever give me back, is more precious to me than to crave for a 60 hours job that earns me a fortune, I have what I need for a living, and enough is enough, and nobody needs to pay for my living, I do not live at anyone's costs (and would never accept to do so).

The pursuit of happiness, America, does not mean that the world owes you the fulfilling of your dreams. It means that you are free to pursue the realisation of what you aspire - but walking the walk you must yourself, you have no claim for others to give you a free ride. The only human rights I accept to be that, are these: the right of man to own his own body and every implication and conclusion connected to that in natural law theory, the right to own what you find and what is not already claimed by anyone else, and is being made "yours" by you picking it up and transforming it by the process of work into something else again, natural law theory), and finally the right to be left alone by other people if I do not wish to have any business with them. Any claimed human right that cannot be traced back to these three fundaments, I reject to accept as "human rights".

Its easy to see that politics today, and socialism-communism, heavily violate all three of these fundamental human right constantly, notoriously. Violating these rights is the basis of state's - and political parties' and business monopolists' - power.

A basic finding in social psychology, known since long: if western people - examinations were run in the context of Western states' culture, not globally AFAIK - have the choice to either have a gain in material wealth for all (rich ones and not so rich ones as well), or a slight drop in wealth for all, but with a bigger drop for those who are richer so that the difference between them and formerly not so rich becomes smaller, then most people do not chose the first scenario which would give them greater wealth, but most people chose the latter scenario even if they end up having less by that.

Its not necessarily always about "social justice", and equality. Its about greed - plain and simple.
There are social deformations in many Western societies, no doubt. Consequences of decades of misled and corrupt politics, and the debt crisis (which is also caused by politics regulations...). Its getting worse. But why is this so? Because not only have people, allowed the state to bring things to this status, but people demand even more state in a wrong hope that the state - originator and cause of the crisis - now will repair it. Talking about fighting fire by spilling fuel into the flames.

One must not even be a fan of Austrian economics to forsee how this will end. Plain and healthy reason and an impartial mind already would suffice. But nothing seems to be harder to find today, than this. Ever more of what has brought us into the mess, that is the motto.
Well, every hope for being lucky there is a waste. Karma means the inevitability of causal consequences. And yes, most Karma is self-made, only some is unavoidable due to our human nature.

I also recommend this book LINK (https://www.amazon.co.uk/Education-Value-Investor-Guy-Spier/dp/1137278811/ref=sr_1_1?ie=UTF8&qid=1465996003&sr=8-1&keywords=guy+spier) that I read last year, a self-biography by a claimed-by-others "star investor", Guy Spier. (http://www.beyondproxy.com/guy-spier-on-businesses-to-avoid/) That should tell everybody a bit about what investing really means, and what kind of toghts you better spend on it that the bank adviser and the salesman will never debate with you; the guy deserves respect for quite mercilessly describing the mistakes and illusions he once has had about his job, and how it almost derailed his life, until he changed his business philosophy fundamentally. Socalled value investing, is quite close to the principles of Austrian economics. Usually a certain Warren Buffet is counted as one of these value investors. There are videos of Spier available on the web, and if that is not sound thinking and a much higher developed sense of responsibility than the cliche of the greedy locust would tell, than I do not know what. I have no clue, however, how his find is doing. At the writing date of this book, it did very well. - This is no strategy description of how to invest. But it may make you think.

Man barters since ten thousand years and longer. It needs no state, no parasitiy polticians, no power-crwving poltical larty to tell hiom how to run his business. Keep these imposters away from the market, they do not fix it - they mess it up, and thre result is the mess we see all so clear in the present.

"New capitalism". Bull. Reminds me of Katrin Wagenknecht's latest writings, and the interview where she said that "this now is a form of communism that we can talk of." (Wagenknecht is high ranking member of the German communist party Die Linke. Some of her criticisms are correct, but she always aims them at the wrong target, capitalism, while I often could immediately sign her criticism if she would identify the target correctly: monopolism. The recipes she recommend, however, I would not support her in. After all, she still is communist, and an opportunistic career politician).

[Captain Jeff]

"These little settlements were under the government of an exclusive company, which had the sole right, both of purchasing the surplus produce of the colonists, and with supplying them with such goods as they wanted, and which, therefore, both in its purchases and sales, had not only the power of oppressing them, but the greatest temptation to do so. The government of an exclusive company of merchants is, perhaps, the worst of all possible governments for any country whatsoever." Adam Smith

I don't think there's a need to fix capitalism. Capitalism works just fine when we have it. I think all we have to do is return to capitalism. End the monopolies. End collectivism. Return the right to manufacture and distribute modern products to the people.

It's time to recognize that people like Trump are not capitalists, have never been capitalists. They do not believe the people should have our own fixed capital so we can participate in the manufacture and distribution of modern products, our material wealth. Our "business leaders" think that only a small percentage of the population should have complete control over all production. Our business leaders are collectivists. They not only seize all the money, but they use the collective as a means of population control. You'll be their version of a good little boy or you won't be allowed to work or live indoors. There's a name for this kind of government. It was first described in a certain manifesto. It's time to recognize these people for what they really are. And it's time to get rid of them.

Capitalism was never supposed to focus on circulating capital, like money. Capitalism is the belief that all are entitled to possess fixed capital and participate in the manufacture and distribution of modern products, their material wealth.

[Betonov]

What Jeff said. My sentiment exactly.

A lot of my countries economic misfortunes are blamed on the introduction of capitalism after 1991. I mean, you can't blame the uninformed. Unemployment skyrocketed, social rights (we get by paying taxes) are slowly disolving (wthout taxes going down), engineer level jobs are payed minimum wage and the income disparity is sickening. People loosing homes over debts one hundret of the worth of their home all the while the corporate pigs and their goverment ass lickers get off with rewards for plundering the nation.

But what we have is not capitalism.
After 1991 we gave up worker class socialism for elite class socialism

[August]

It's time to recognize that people like Trump are not capitalists, have never been capitalists. They do not believe the people should have our own fixed capital so we can participate in the manufacture and distribution of modern products, our material wealth.

And I thought Trump was a real estate guy.

[Platapus]

I
Not long ago, America’s corporate owners and managers made different choices—choices that were better for average Americans and the economy.


When was this? When has a corporation made a decision that is better for the average American to the detriment of the business owners/stockholders?

[Catfish]

When was this? When has a corporation made a decision that is better for the average American to the detriment of the business owners/stockholders?

Well he says that, directly after your quote:
“The job of management,” proclaimed Frank Abrams, chairman of Standard Oil of New Jersey, in 1951, “is to maintain an equitable and working balance among of the claims of the various directly interested groups… stockholders, employees, customers, and the public at large.”

By paying good wages, investing in future products, and generating reasonable (not “maximized”) profits, American companies in the 1950s and 1960s created value for all of their constituencies, not just one. As a result, the country and economy boomed."

Of course, i have not been around in those days, but to me it seems economy and common sense were much stronger at that time, with a better positive situation (?)

[Platapus]

I have no problems believing that a corporation would say such a thing. It is whether they actually did that for those reasons that I am skeptical.

Methinks it is more a case of optimistic nostalgia.

A corporation acts in the corporation's best interest. There is nothing wrong with that. And if incidentally these actions help other people that's great and free PR.

But I have a hard time believing that a corporation would make a decision that is less in the best interest of the corporation and more in the best interest of the public.

I may be cynical but a cynic is a pessimist with experience. :03: