Flint
Posts: 478 Joined: Jan. 2006
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haceaton:
Quote | Certainly you must have in EC101. Why you dropped the ball in order to criticize my position that the Walmart owners are out to maximize their wealth, I don't know, so I appologize for calling you stupid. But the argument you made relied on this error so you should either make a good argument or concede that Walmart is run to make the most money. |
Multiple comments seem called for here.
First, it can reasonably be said that ALL for-profit businesses are out to maximize their wealth as a primary goal. I don't know why you would consider this a bad thing per se. According to even the most basic notions of the market, for-profit businesses are presumed to be attempting to increase their wealth. As Robert Townsend wrote in Up The Organization, if you're not in business for fun or profit, what are you doing here?
Second, I can't see why you refuse to accept that businesses (including WalMart) can have no other motivations. As you point out, they pay fairly low dividends, although they could pay much more. So the owners aren't taking advantage of dividends to maximize their wealth. How about the price of the stock? Well, no, WalMart stock is selling for 10% less than it did 5 years ago. They are *losing* money on the stock price.
Now, I suppose you might argue that WalMart's owners are stupid. They could easily extract a great deal more personal wealth out of their company, at least in the short run. Yet they do not. Perhaps their goal is to maximize their wealth over a much longer timespan? But doing this will entail reaching some kind of equilibrium with the communities where they operate...
(Incidentally, I've seen economic analyses indicating that WalMart's low-price policies have had a measurable effect on national inflation rates. A positive thing for most of us, even if it is ALSO positive for the major shareholders.)
Quote | Maybe, but I would say that they (Walmart management) doesn't think so. Since you disagree, what do you think is their motivation for low prices that makes them break the law, act unethically, etc.? |
With a business as large as WalMart, I'd take this on a case-by-case basis. My reading (YMMV certainly) is that most of the cases aren't WalMart corporate policy, and most have been zealousness on the part of individual store managers. But it also seems that corporate headquarters hasn't been aggressive in stopping some of the improper practices. And so I have been arguing from the start that regulation is a necessity. Certainly the motivation to make money is uppermost, and store managers are evaluated on that basis. In a larger sense, business success is evaluated on that basis, and the failures go broke and vanish. The motivation to bend or break rules and cut corners is strong. (Would you fall over backwards in astonishment if news were to come out that Toyota has been cooking the books?)
Quote | As for evil, no I don't think Walmart or the people that run it are evil. Greedy, yes. Unethical, yes. But this sort of greed and ethical lapses is very common in the business world - it is far from unique to Walmart. |
I regard it as inherent in any capitalist system, considered generally as any system where the more money one makes, the more one gets to keep. These aren't "lapses" so much as they are a continuous battle between those who make and enforce the rules, and those who seek ways to circumvent the rules. A story is told of a robber baron who called in his lawyer and said "Find me a legal way to do this." And the lawyer replied "But sir, you can't do that, it's illegal." And the robber baron replied, "That's not what I asked."
Quote | As you point out Walmart is vilified because of its success, not because it is peculiarly unethical. Heck, it probably even started out as a totally ethical, honest enterprise. |
Perhaps where we differ here is, I regard it as being as honest and ethical as (say) General Motors, or Sears or any other large business. And a LOT better than the Enrons of the world. I sincerely believe WalMart (and others) top management wishes to make a good-faith effort to keep integrity levels at or just above minimally acceptable. I don't think Sears achieved market dominance through underhanded management, nor lost it by becoming honest.
If you revisit your list of "how the real world works", you'll notice that nowhere do you even mention customers or competitors.
Quote | I make it a point to try to "do the right thing" in politics anyway. I do believe we have a seriously broken system... |
Well, I'm not trying to dispute your political preferences. I just don't believe there ever has been a "golden age" when politicians or businesses were more honest, and in fact my reading of American history is that there have been periods of truly boggling corruption. If you'd been alive 100 years ago and known what was going on, you'd have had apoplexy. Of course, the tycoons ran the media, so you wouldn't have known.
Quote | I respect most of what you've said in on-topic (i.e. TOE) posts on PT |
Do you post on PT also?
Quote | It surprised me that you said this because nearly all of economic theory seems to be based on the idea that unbounded growth is a necessity. |
We seem to approach this from different angles. Economic theory as I understand it provides tools for analysis of a shrinking, steady, or growing market. Growth isn't a necessity, but it has implications different from the other conditions. I'll observe that fertility is inversely proportional to living standard; if ALL nations could consume at the rate the US is consuming, perhaps the birth rate would go down more voluntarily?
Quote | Hey that's pretty close! |
Imagine my surprise.
Quote | Why do they want rules for pollution credit trading? Indeed it is to protect their profits. If they absolutely can't pollute then their costs will rise, their margins will shrink, and their market will shrink too. |
Um. No such thing as "absolutely can't pollute". There are only relative costs. Politicians aren't about to shut down the major employer in a community. The problem is wider: If running a non-polluting operation is prohibitively expensive (which it is for some sorts of manufacturing), then the level of polluting one can get away with influences the price of the product, which influences market share. Often, the competition is in China, where pollution levels are ghastly, and the Yellow River runs with sludge the half the year when it runs at all. Combine this with Chinese peasants working for peanuts, and its very hard for American businesses to compete. Competitive failure costs lots of American jobs and industries, and politicians are sensitive to this. Some balance needs to be struck between allowing pollution, and losing the businesses (which causes the people to elect the opponent!.
Quote | The good news is that there are some ethical people running some corporations (Toyota comes to mind) that instead want to invest in finding ways to reduce pollution even though it reduces their profits. |
But other tradeoffs must always be made. Perhaps I'm misunderstanding you, but you seem to be implying that the decision to pollute/break laws/act unethically implies a character trait without economic ramifications. But I doubt people buy Toyotas because corporate headquarters is populated by good citizens. Instead, they buy Toyotas because they are competitively priced in relation to their level of quality.
Now, I agree that the example set by Toyota and others shows that it CAN be done. But of course, Toyota is out to maximize their profits as well, and Toyota lobbies powerfully at local, state and national levels. And Toyota employees are paid less in both upfront wages and indirect benefits than GM employees. And Toyota's primary owners are very rich. And Toyota aggressively seeks favorable tax treatment. In my district, a new Toyota plant just opened that was enticed to locate here in exchange for *bonuses instead of taxes*.
(Incidentally, diluting stock as you described is a very serious SEC no-no. Recently the accounting rules were changed (admittedly over stuck-pig protests) to consider options differently, as actual stock. Keeping two sets of books, one for the SEC and one for the public, lands you in jail very #### quickly. Many other items on your list are "heads I win, tails you lose" things - if they pay high dividends, they are ripping us off. If they don't pay any dividends, they're ripping us off. If they pay enormous salaries to their top brass, they're ripping us off. If they don't they're ripping us off.
As for keeping wages in line with skills, this is problematic. Most WalMart jobs are unskilled or semi-skilled; nearly any retard can do them. This is in the nature of retailing. But WalMart must STILL compete for such people with other employers; they get no "first dibs" on anyone.)
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