Capitalist Karma

[Tao1]

Maximizing profits is of course the goal of any business. However, opinions obviously vary as to how to best meet that goal. Acts of benevolence may not help the bottom line in the current quarter, but the positive PR helps when looking at the long term picture. Conversely, in the case from the OP of a guy jacking up the price of a drug from 13.50 to 750 a pop, the extremely negative press coupled with the entry of a competitor make such a large price increase rather asinine.

This is true. Negative press can hurt a company, but not as much as you would think. Walmart is fairly notorious for a bunch of practices, but they still thrive. This is because consumers almost always act in their own interest. This is why boycotts never really gain momentum. You may get a boycott going in a town, but a boycott movement never effectively spreads across a nation or even the globe.

In the case of pharmaceuticals, elasticity of demand really limits people's abilities to boycott. If you are sick you NEED a treatment, and in the worst cases it is spend the money or die.

 

[Irvrobinson]

Using more socialist policies is what gives many developed nations a better standard of living than the US.

I said there is an argument for money "sitting idle". Essentially the interest mechanic breaks the system. If you lend me money, I should pay it back with something extra for your troubles no? Interest makes sense in this respect. However this isn't really how it plays out. Interest ends up being a tax on the less wealthy, and a system to funnel money up to the wealthy. If a person has a few extra millions they can't spend, yes they do invest it. However do they even notice it being gone into a loan at all? no not really. The put those millions away, go on with their lives, and come back to see it grown. The new money is from people who otherwise can't afford to do what they want. This lump of money grows larger and larger serving no useful purpose other than to siphon more money out of circulation.

The argument is showcased in the Documentary "inequality for All"

Baloney. Interest is a tax on the less wealthy? Interest is the enticement to get someone with money to do *anything* with it, other than just sit on it. Interest theory works even when interest rates are negative, as they have been with some central banks. Why would someone tolerate negative interest, where you pay for someone else to hold your money? Because it's the safest place to keep your money, and that has value for some people.

There are some really great conspiracies that have been around, and are still around, but the concept of interest isn't one of them. If you want me to give you some money, you're paying interest. End of story.

 

[Tao1]

The fact that no one has questioned this statement yet makes me think it may be true! Is this really the case?
I understand it is the job duty/expectation as well as share-holder's expectations for a traded company, but I am astounded that a CEO may be prosecuted for missing an "opportunity" to profit. In my management training, ethics was often given a little discussion time, but this would imply that considering ethics is illegal if it conflicts with legal means to a profit.
Public opinion is always a factor, however, if activities can occur discretely, that is no concern. That is why lobbyists have bought our government to allow SuperPacs - so a company does not have to reveal how much it is spending to manipulate politics.

I should clarify: the shareholders SUE on behalf of the company. We never did learn of the specific cases, only that there is a lot of very old case law out there which upholds this.

*If you do a Google search there is a quagmire of people's opinions there going in many different directions.

EDIT forgot the bit about ethics:

I also have a business degree and we of course were taught ethics, and had discussions about "corporate social responsability". I was always for CSR, but I ended up comming to the conclusion that the rules of the game didn't allow much room for it. Essentially a socially responsible company only really can exist when market demand is favouring these goods and services over others. Of course consumer demand can change with the wind, so CSR in our society will never be a permanent thing without legislation.

I actually argued that is a company wants to do a CSR strategy that they should use the system to their benefit and actually tell government the truth. Essentially tell them that some environmental goals or what not are actually viable, and have government the legislate the industry so the company can practice these behaviours without being at a competitive disadvantage. We all know lobbying is used in a corrupt way, and they probably skew the truth when it comes down to what practices are really detrimental to their sector of the economy. Why not use lobbying in the way it was meant to be used?


Anyway the point is from my original post: Corporate 'greed' can really only be reigned in by legislation.

 

[Irvrobinson]

Using more socialist policies is what gives many developed nations a better standard of living than the US.

Okay, Bernie Sanders, which countries might those be, that didn't build up massive sovereign wealth funds from oil revenues, and aren't subsidized by the US defense umbrella, and whose products and innovation actually make positive contributions to worldwide economic growth?

 

[Tao1]

Baloney. Interest is a tax on the less wealthy? Interest is the enticement to get someone with money to do *anything* with it, other than just sit on it. Interest theory works even when interest rates are negative, as they have been with some central banks. Why would someone tolerate negative interest, where you pay for someone else to hold your money? Because it's the safest place to keep your money, and that has value for some people.

There are some really great conspiracies that have been around, and are still around, but the concept of interest isn't one of them. If you want me to give you some money, you're paying interest. End of story.

The argument that that is the way the system plays out. There is usually a difference in the way the system is designed and the way it functions.

One example is law suits. This is a mechanism for people to recover damages. Unfortunately the legal system is just to busy to deal with 'small' amounts of money. Depending on the court, $500 might be the minimum sum they are willing to hear about. Also the cost of action really whittles away at getting your damages back. This can leave some companies who sell say a $30 item to bend the rules a bit.

 

[Steve81]

The fact that no one has questioned this statement yet makes me think it may be true! Is this really the case?

Maximizing profits isn't a legal requirement, but directors & officers of a company do have the responsibility to act in the best interest of the company:
http://www.nolo.com/legal-encyclopedia/fiduciary-responsibility-corporations.html

there's also this tidbit:
https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the non-distribution of profits among stockholders in order to devote them to other purposes...

 

[Tao1]

Okay, Bernie Sanders, which countries might those be, that didn't build up massive sovereign wealth funds from oil revenues, and aren't subsidized by the US defense umbrella, and whose products and innovation actually make positive contributions to worldwide economic growth?

Variability of natural resources has nothing to do with economic policy.

Ironically being 'subsidized by the US defense umbrella" would be more of a socialist policy. However the US going into some of our neighbours yards and kicking their dog is causing us more trouble than we probably would normally as far as terrorism goes.

As far as products and innovation adding to a Global effort:

Japan
Germany,
Great Britain
Canada
The US
and many more

A subtle contribution is quality control and the concept of making products with 0 defects, which also reduces cost. Some of the founding fathers were Americans in manufacturing in the 50s. They proposed the idea that their respective companies could manufacture with 0 defects. At that point in time this was considered impossible, and they were laughed out of the industry. Of course Japan was still recovering from the war, and trying to find their niche to be competitive. They welcomed these people with open arms. That is the story of how Japan has been a leader and primary innovator in manufacturing ever since.

 

[Tao1]

Maximizing profits isn't a legal requirement, but directors & officers of a company do have some responsibilities:
http://www.nolo.com/legal-encyclopedia/fiduciary-responsibility-corporations.html

there's also this tidbit:
https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

A business corporation is organized and carried on primarily for the profit of the stockholders. The powers of the directors are to be employed for that end. The discretion of directors is to be exercised in the choice of means to attain that end, and does not extend to a change in the end itself, to the reduction of profits, or to the non-distribution of profits among stockholders in order to devote them to other purposes...

This tells the longer version of the story (my original post was already getting long). Essentially there is indeed room for some philanthropy, but when it comes down between a choice of profit maximization and anything else when it comes to choosing a price, profit maximization must be the dominant factor.

Henry Ford probably could have gotten away with raising workers wages, especially since at the very least there could be a noticeable improvement in efficiency and productivity.

 

[Irvrobinson]

Japan
Germany,
Great Britain
Canada
The US
and many more

None of these countries have a higher standard of living than the US, as measured by per capita GDP. Bernie's favorite example of Norway does, but that's oil money pumping up the numbers, like it does for Qatar. Only Luxembourg and Switzerland are really better off. And all of them have minuscule defense budgets, though interestingly they all have some very successful defense industry companies...

 

[Tao1]

None of these countries have a higher standard of living than the US, as measured by per capita GDP. Bernie's favorite example of Norway does, but that's oil money pumping up the numbers, like it does for Qatar. Only Luxembourg and Switzerland are really better off. And all of them have minuscule defense budgets, though interestingly they all have some very successful defense industry companies...

GDP is not a very good measure of quality of life of the average individual, especially comparing economic policy varying between purely capitalist and purely socialist.

The way GDP is calculated spending is good. But is it really?

Under GDP the more that is spent in health care the better, as well as the more that is spent on producing military equipment the better. Also Government spending is in here. But wouldn't how that money is spent have an effect on quality of life? Social programs vs waging war perhaps?

Higher spending in health care does not necessarily mean a better standard of living. It can mean:

-More people are being treated for diseases (could be good, or could mean an increase in illness which is bad)
-increase in treatment levels for diseases (which is good)
-increase in health care cost (going back to the $700/pill statement which is bad)

Are the military firms adding to the wealth of individuals in society?

Is the level of security to prevent terrorism, or government spending money on non-reusable items such as bullets and bombs adding to the quality of life to their citizens? The answer is no.


In comparing Canada to the US for example:

Our GDP is less for obvious reasons as we have a smaller population than California. However health care being 'sold' at cost rather than having profit included in the bill gives us a better quality of life, but technically a lower GDP. We could also borrow money to throw away resources in a war which would also increase our GDP. Would we be better off? nope. The financial sector is one of the biggest chunks of the US GDP, but in Canada we shoot ourselves in the foot as it were with state owned insurance, selling services at a lower rate than for profit.

There are many measurements within GDP which are solid contributors to quality of life, but the system is flawed.


Going purely socialist also doesn't make a good comparison in other standards, since equal pay is there, but the lowest paid person in a more capitalist country may be making the average wage in the socialist country. There is a balance in between the two systems there somewhere, but the trick is finding it. It is just unfortunate the the arbitrary systems so far aren't perfect measurements of how well off we are.

 

[Irvrobinson]

GDP is not a very good measure of quality of life of the average individual, especially comparing economic policy varying between purely capitalist and purely socialist.

Per-capita GDP is the generally accepted method of comparing living standards world-wide. And, by the way, GDP measures production, meaning value-added, not spending.

As an aside, I like Canada a lot. When I was in my twenties I seriously contemplated moving there permanently. It didn't work out that way, so I stayed in the US, but it was tempting. Nonetheless, and I've looked quite a bit, if I had a similar job to the one I have, but in Canada, I'd earn less, and to top it off most things would cost more than in the US. I think there's no question that my standard of living would be lower.

 

[Tao1]

Per-capita GDP is the generally accepted method of comparing living standards world-wide. And, by the way, GDP measures production, meaning value-added, not spending.

As an aside, I like Canada a lot. When I was in my twenties I seriously contemplated moving there permanently. It didn't work out that way, so I stayed in the US, but it was tempting. Nonetheless, and I've looked quite a bit, if I had a similar job to the one I have, but in Canada, I'd earn less, and to top it off most things would cost more than in the US. I think there's no question that my standard of living would be lower.

Sorry I did use the wrong term here (i.e. spending), but I think my message comes across. Military goods are considered 'value added' when they are mostly throwing away resources. It depends on the circumstances, but a country going to war for the sake of it will have a larger GDP.

Many jobs such as upper management in larger corporations, engineers, generally can make a higher salary in the US for sure. Usually people who are making higher salaries like that won't benefit much from what we have to offer in Canada. You would still get some things like paid maternity/paternity leave, better employment law (you can't be fired without just cause and not be compensated).

I would say that the average household has it better in Canada than the US:
not being able to loose your home (and some other things) if you go bankrupt (unless you really truck up). Health care, especially things like free dental for children.

Some of the thing I hear my friends who live in the US say really make me cringe. Talking about possibly being fired on a whim with no recourse. Hospital bills for having a baby. Things like that.

 

[Chu Gai]

The argument that that is the way the system plays out. There is usually a difference in the way the system is designed and the way it functions.

One example is law suits. This is a mechanism for people to recover damages. Unfortunately the legal system is just to busy to deal with 'small' amounts of money. Depending on the court, $500 might be the minimum sum they are willing to hear about. Also the cost of action really whittles away at getting your damages back. This can leave some companies who sell say a $30 item to bend the rules a bit.

That's very vague. Nothing prevents the consumer in the US from going to Small Claims Court which are designed for smaller amounts (varies by State) where the evidentiary rules are quite relaxed and in most cases there are no lawyers. Filing fees are quite nominal. If that's not it then what are you talking about?

 

[Chu Gai]

Sorry I did use the wrong term here (i.e. spending), but I think my message comes across. Military goods are considered 'value added' when they are mostly throwing away resources. It depends on the circumstances, but a country going to war for the sake of it will have a larger GDP.

Many jobs such as upper management in larger corporations, engineers, generally can make a higher salary in the US for sure. Usually people who are making higher salaries like that won't benefit much from what we have to offer in Canada. You would still get some things like paid maternity/paternity leave, better employment law (you can't be fired without just cause and not be compensated).

I would say that the average household has it better in Canada than the US:
not being able to loose your home (and some other things) if you go bankrupt (unless you really truck up). Health care, especially things like free dental for children.

Some of the thing I hear my friends who live in the US say really make me cringe. Talking about possibly being fired on a whim with no recourse. Hospital bills for having a baby. Things like that.

Nothing is really free now. I found this article on Foreclosures informative when looking at the differences between the US and Canada.

 

[Tao1]

That's very vague. Nothing prevents the consumer in the US from going to Small Claims Court which are designed for smaller amounts (varies by State) where the evidentiary rules are quite relaxed and in most cases there are no lawyers. Filing fees are quite nominal. If that's not it then what are you talking about?

Small amounts here are under $20000. A lawyer told be that taking someone to small claims for $100 would at best get you your $100- fees, and a thorough scolding from the judge about wasting his time. Like I said it will vary from place to place.

 

[Chu Gai]

Don't you think it's rather silly to get into a my country is better than yours because...? It's not like we all have the same common interests, problems, history, governments, laws, or whatever.

 

[Tao1]

Don't you think it's rather silly to get into a my country is better than yours because...? It's not like we all have the same common interests, problems, history, governments, laws, or whatever.

I agree, but I think that is settled already.

 

[herbu]

health care being 'sold' at cost rather than having profit included in the bill gives us a better quality of life

I hope you continue to believe that, and are very happy where you are.

 

[KEW]

I hope you continue to believe that, and are very happy where you are.

I think you are buying into the media propaganda on this one. I know three Canadian professionals (6 figure salaries). They have maintained dual citizenship and all plan to retire to Canada. Their reason is for the HealthCare. They have all been exposed to both systems (moved here between 28 and 36 years old as career opportunities arose) and have extended family still in Canada.
I think they are in a better position to know how healthcare compares than you or I.

Of course, the flip side of this story is they found better opportunities to fulfull their ambitions here in the USA! But don't believe everything that pundits say about healthcare quality abroad.

 

[herbu]

I think you are buying into the media propaganda on this one.

That's possible. I have heard a lot that people here like to buy their meds, (cheaper), in Canada. But a lot of people there like to come here for their surgery. Without personal experience, it's hard to know what's true.

The main reason for my comment was about preventing another liberal voter here.