Should salaries be capped?

[anthony022071]

No, anti-trust laws were made under pressure from capitalists and consumers to restore competition and make the system more capitalist.

And how did the anti-trust laws restore competition? By breaking apart the monopolies! What are you disagreeing with here? What do you think is meant by anti-trust? Even economic theorists don’t think that monopolies destroy capitalism.

polyconomics.com/searchbase/06-12-98.html

< To interpret the railroad history of the nineteenth century as “proof” of the failure of a free market, is a disastrous error. The same error – which persists to this day – was the nineteenth century’s fear of the “trusts.” The most formidable of the “trusts” was Standard Oil. Nevertheless, at the time of the passage of the Sherman Act, a pre-automotive period, the entire petroleum industry amounted to less than one percent of the Gross National Product and was barely one-third as large as the shoe industry. It was not the absolute size of the trusts, but their dominance within their own industries that gave rise to apprehension. What the observers failed to grasp, however, was the fact that the control by Standard Oil, at the turn of the century, of more than eighty percent of refining capacity made economic sense and accelerated the growth of the American economy.

Such control yielded obvious gains in efficiency, through the integration of divergent refining, marketing, and pipeline operations; it also made the raising of capital easier and cheaper. >

< No speculation, however, is required to assess the injustice and the damage to the careers, reputations, and lives of business executives jailed under the antitrust laws. Those who allege that the purpose of the antitrust laws is to protect competition, enterprise, and efficiency, need to be reminded of the following quotation from Judge Learned Hand’s indictment of ALCOA’s so-called monopolistic practices:

It was not inevitable that it should always anticipate increases in the demand for ingot and be prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the field. It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great organization, having the advantage of experience, trade connections and the elite of personnel.

ALCOA is being condemned for being too successful, too efficient, and too good a competitor. Whatever damage the antitrust laws may have done to our economy, whatever distortions of the structure of the nation’s capital they may have created, these are less disastrous than the fact that the effective purpose, the hidden intent, and the actual practice of the antitrust laws in the United States have led to the condemnation of the productive and efficient members of our society because they are productive and efficient. >

 

[consumedconvert]

In the meantime while they’re working in an entry level low income job, they need to be payed enough to exist, to afford study, or to save enough to start a business.

That’s almost exactly what JPII outlined in Centesimus Annus–that people must be paid enough to subsist and save.

 

[vern_humphrey]

And how did the anti-trust laws restore competition? By breaking apart the monopolies!

Exactly!

Anti-trust laws broke the power of anti-capitalist monopolies and restored competition.

 

[rlg94086]

That’s almost exactly what JPII outlined in Centesimus Annus–that people must be paid enough to subsist and save.

And unrelated to the capping of salaries. As I said before, no one is considering capping the salaries of entry-level jobs. Capping anyone’s salary will not insure that people are “paid enough to subsist and save.”

 

[stinkcat_14]

But to improve your situation and job prospects you need some basic things. The ability to afford food, shelter, spare time for study or training, enough in your wages to save beyond the cost of these.

Fortunately in the US, we have a lot of community colleges, which offer education very cheaply. Now, of course, it does take time and sacrifice to pursue education when you have little money, but it certainly can be done. In general, having skills gives the worker more bargaining power in the marketplace.

 

[anthony022071]

< Exactly! >

Then what was the point of your disagreement when I said that the anti-trust laws were made to break apart the monopolies?

< Anti-trust laws broke the power of anti-capitalist monopolies and restored competition. >

It depends on what we mean by the word “competition”. Competition doesn’t equate with fair play or a fair playing field in a given industry,and it isn’t limited to textbook ideas of capitalism.
When people take offence at monopolies,that is a matter of their sense of fairness,which is subjective. One man’s idea of fair competition is another man’s idea of being unfairly held held back from doing more business. With modern capitalism,any company that is highly productive,competent and efficient can be seen as justified by the results. If a company grows so large that its competitors are put out of business – well,that’s colateral damage. That’s why there should be ethical standards to go along with economic theory and economic practice.

Alan Greenspan obviously does not see monopolies as irreconcilable with the capitalist system.

< “Competition” is an active, not a passive, noun. It applies to the entire sphere of economic activity, not merely to production, but also to trade; it implies the necessity of taking action to affect the conditions of the market in one’s own favor. The error of the nineteenth-century observers was that they restricted a wide abstraction – competition – to a narrow set of particulars, to the “passive” competition projected by their own interpretation of classical economics. As a result, they concluded that the alleged “failure” of this fictitious “passive competition” negated the entire theoretical structure of classical economics, including the demonstration of the fact that laissez-faire is the most efficient and productive of all possible economic systems. They concluded that a free market, by its nature, leads to its own destruction – and they came to the grotesque contradiction of attempting to preserve the freedom of the market by government controls, i.e., to preserve the benefits of laissez-faire by abrogating it.

The crucial question which they failed to ask is whether “active” competition does inevitably lead to the establishment of coercive monopolies, as they supposed – or whether a laissez-faire economy of “active” competition has a built-in regulator that protects and preserves it. That is the question which we must now examine. >

 

[vern_humphrey]

<“Competition” is an active, not a passive, noun. It applies to the entire sphere of economic activity, not merely to production, but also to trade; it implies the necessity of taking action to affect the conditions of the market in one’s own favor.

Correct. Which is why in an open, free system (not one constrainied by governmental action that favors a particular supplier) the dynamics of competition will bring down monopolies.

Someone here came up with a story about cable TV companies “lobbying” to keep AT&T out of the cable market. What that story ignores is:

1. Sattellite TV is a strong competitor to all cable systems, and
2. The fact that AT&T is trying to enter the market is proof of competition.

In the end, monopolies can come into existance and be maintained only through biased laws and government power.

 

[stinkcat_14]

Correct. Which is why in an open, free system (not one constrainied by governmental action that favors a particular supplier) the dynamics of competition will bring down monopolies.

Someone here came up with a story about cable TV companies “lobbying” to keep AT&T out of the cable market. What that story ignores is:

1. Sattellite TV is a strong competitor to all cable systems, and
2. The fact that AT&T is trying to enter the market is proof of competition.

In the end, monopolies can come into existance and be maintained only through biased laws and government power.

Vern,

I never said competition didn’t exist. You claimed that businessmen prefer competition to monopoly. The key word is prefer. Now, if the cable companies really preferred competition to monopoly, why would they spend money to try and keep competitors out of the marketplace? If they really preferred competition, they would say: “great, consumers would have more options, so now we have to work harder”. There is no evidence that businesses prefer competition over monopoly.

 

[vern_humphrey]

Vern,

I never said competition didn’t exist. You claimed that businessmen prefer competition to monopoly. The key word is prefer. Now, if the cable companies really preferred competition to monopoly, why would they spend money to try and keep competitors out of the marketplace? If they really preferred competition, they would say: “great, consumers would have more options, so now we have to work harder”. There is no evidence that businesses prefer competition over monopoly.

Stinkcat – if businesses don’t generally prefer competition, why is AT&T trying to compete in the cable market?

Let me explain simply: Assume Joe Bzotz has a monopoly on wigits.

1. How many Joe Bzotz’s are there? (Hint: He has a monopoly.)
2. How many other business men would like to be able to sell wigits at the prices Joe Bzotz is getting?

 

[stinkcat_14]

Stinkcat – if businesses don’t generally prefer competition, why is AT&T trying to compete in the cable market?

Let me explain simply: Assume Joe Bzotz has a monopoly on wigits.

1. How many Joe Bzotz’s are there? (Hint: He has a monopoly.)
2. How many other business men would like to be able to sell wigits at the prices Joe Bzotz is getting?

Now, I see what you are saying. In somebody else’s industry, they want competition, in their own industry, they want monopoly. I took your comments from the standpoint of a business in their own industry, which of course means that they always want less competition over more.

 

[vern_humphrey]

Now, I see what you are saying. In somebody else’s industry, they want competition, in their own industry, they want monopoly. I took your comments from the standpoint of a business in their own industry, which of course means that they always want less competition over more.

No, there may be one person in any industry who wants monopoly – the person who stands a chance of achieving it. Everyone else wants competition.

And – lacking preferential treatment by the government – there is no way that one person can maintain a monopoly.

 

[manualman]

No – capitalism is as I defined it.

1. Private owership of the means of production and distribution.
2. Operated for profit
3. In a competitive environment.

The other things are tacked on by people who either don’t understand what capitalism is, or who have a specific agenda in mind.

For example, many people will cite monopolies as an evil of “capitalism.” Monopolies are anti-capitalistic, because they destroy the third element of capitalism, competition.

I’m a bit behind on this thread, but I couldn’t let this one lie. No Vern, the three tenets you mentioned are not the summation of the definition of capitalism because they also totally describe Distributism as explained by Chesterton and Belloc. Capitalism is so named quite simply because it favors the capitalist, the guy with the money to invest. Distributism involves the SAME free market structure, but sets up law and taxes to favor the start-up entrepenuer more than the already rich capitalist. The system you believe in and the one Belloc describes are different and yet all three of your tenets apply to Belloc’s. Thus, the three aren’t adequate description.

 

[anthony022071]

if businesses don’t generally prefer competition, why is AT&T trying to compete in the cable market?

Simply because they have to compete to stay in business,as long as they have competitors.
But the ultimate goal of competing is to dominate. If a company puts their competitors out of business,that means more customers,more profit.

 

[anthony022071]

< But first explain to us what you mean by “money circulation” being “cut off.” >

What I mean by “monetary circulation getting cut off” is that if your small business depends upon the sales of products and brands that Wal-Mart also sells,you will *not be able to compete *with them in pricing,and you will lose business.

Advocates of free-market competition say that competition keeps down the prices,but Wal-Mart got to where its at by* eliminating *the competiton *precisely because *of their ability to keep their prices low.

The theory of free-market competition becomes a joke when a small business has to compete against a corporate giant that sells the same products and brands for the lowest prices in town.

Moreover,Wal-Mart also has a bad effect on the monetary circulation,or turnover,of entire small towns. If the of people in a town can get almost everything that they need from a single store with the lowest prices,then they patronize that store to the detriment of other retailers. The other retailers go out of business and their employees are laid off,while the people of the town become dependent on a single store for most of their needs.

walmart.3cdn.net/6e5ad841f247a909d7_bcm6b9fdo.pdf

< Many economists believe that analyzing a retail trade area is much like analyzing a zero-sum game. Unless the population or incomes are growing substantially, there is a fixed amount of money to be spent in the retail sector. If a large store is opened in the trade area, it is going to capture a considerable amount of trade. That can only mean that, in total, other merchants in the trade area will lose a comparable amount of trade (Blair and Kumar, 1997). The results of this study are presented below and show strong evidence that the gains for Wal-Mart supercenters were matched by corresponding losses for existing businesses in the trade area. >

 

[manualman]

< Many economists believe that analyzing a retail trade area is much like analyzing a zero-sum game. Unless the population or incomes are growing substantially, there is a fixed amount of money to be spent in the retail sector. If a large store is opened in the trade area, it is going to capture a considerable amount of trade. That can only mean that, in total, other merchants in the trade area will lose a comparable amount of trade (Blair and Kumar, 1997). The results of this study are presented below and show strong evidence that the gains for Wal-Mart supercenters were matched by corresponding losses for existing businesses in the trade area. >

In fairness to the free market philosophy, this paragraph starts out with a flawed idea. The whole idea of a free market is that it is NOT a zero sum game. Each industry adds value and the end result is MORE wealth at the end of each exchange: I dig sand onto a cart and sell it to Bob for $5, Bob mixes it with lime and sells it to Fred for $15, Fred uses it to join stones to build a home for $100 (simplified math!). At the end, everybody has more, even the guy who shelled out the money for the home (an asset). This is especially the case with durable goods, which retain value as assets as opposed to services and consumables, which really are a zero sum transfer of wealth. To be valid, the study would need to determine what the money saved via low Walmart pricing was spent on. If it went to more services and consumables, then the impact was negative (siphons money out of the community). If it lead to more investment in assets then the net impact might actually be positive. Your quote just doesn’t give enough info to tell the difference.

 

[vern_humphrey]

I’m a bit behind on this thread, but I couldn’t let this one lie. No Vern, the three tenets you mentioned are not the summation of the definition of capitalism because **they also totally describe Distributism **as explained by Chesterton and Belloc. Capitalism is so named quite simply because it favors the capitalist, the guy with the money to invest. Distributism involves the SAME free market structure, but sets up law and taxes to favor the start-up entrepenuer more than the already rich capitalist. The system you believe in and the one Belloc describes are different and yet all three of your tenets apply to Belloc’s. Thus, the three aren’t adequate description.

So the three elements of capitalism do not describe Distributionism.

By the way, note that the capitalist is not “already rich.” Anyone who invests money in a business is a capitalist – even if he has only one share of stock. Most capitalists are middle class.

 

[anthony022071]

In fairness to the free market philosophy, this paragraph starts out with a flawed idea. The whole idea of a free market is that it is NOT a zero sum game. Each industry adds value and the end result is MORE wealth at the end of each exchange: I dig sand onto a cart and sell it to Bob for $5, Bob mixes it with lime and sells it to Fred for $15, Fred uses it to join stones to build a home for $100 (simplified math!). At the end, everybody has more, even the guy who shelled out the money for the home (an asset). This is especially the case with durable goods, which retain value as assets as opposed to services and consumables, which really are a zero sum transfer of wealth. To be valid, the study would need to determine what the money saved via low Walmart pricing was spent on. If it went to more services and consumables, then the impact was negative (siphons money out of the community). If it lead to more investment in assets then the net impact might actually be positive. Your quote just doesn’t give enough info to tell the difference.

You have to read the study.

It depends on what you mean by “adds value” and “more wealth”.
When a Wal-Mart opens in a small town,there might be an increase in the overall sales of that region,especially with non-competing businesses,but much of the wealth of the town is going to Wal-Mart,and from there straight out of town.
Wal-Mart sells most of the products and brands that people would want to shop for,and they sell cheap. So other businesses are adversely effected and go out of business,and the people who worked for them are unemployed. So there is a significant decrease in how many times a dollar is turned over in that town. Even if people are saving money and investing,much of the competition of privately-owned businesses within that town is mitigated.
Now,for those who think that competition of among privately-owned businesses is needed for a capitalist system,a corporation that has a track record like Wal-Mart must be something that should be kept out of small towns.

 

[vern_humphrey]

Simply because they have to compete to stay in business,as long as they have competitors.
But the ultimate goal of competing is to dominate. If a company puts their competitors out of business,that means more customers,more profit.

Ah, the old, “I know they did the right thing, but for the wrong reason” ploy.

The issue is not what is in the hearts and minds of AT&T (not even if you wear a turban and gaze into a crystal ball will I believe you’re a mind reader), but what their actions are. And their actions are to increase competition.;

 

[vern_humphrey]

You have to read the study.

It depends on what you mean by “adds value” and “more wealth”.
When a Wal-Mart opens in a small town,there might be an increase in the overall sales of that region,especially with non-competing businesses,but much of the wealth of the town is going to Wal-Mart,and from there straight out of town.
Wal-Mart sells most of the products and brands that people would want to shop for,and they sell cheap. So other businesses are adversely effected and go out of business,and the people who worked for them are unemployed. So there is a significant decrease in how many times a dollar is turned over in that town. Even if people are saving money and investing,much of the competition of privately-owned businesses within that town is mitigated.
Now,for those who think that competition of among privately-owned businesses is needed for a capitalist system,a corporation that has a track record like Wal-Mart must be something that should be kept out of small towns.

Oh, give me a break.

It’s one thing to make accusations like that – another to proove them.

Right here in Mountain View (population, 2,846), there was a paper circulating that claimed the new Super Wal-Mart would cost 80 jobs.

Guess what? The new Super Wal-Mart created more than 80 jobs, and several other businesses have started up or expanded after the Super Wal-Mart went in.

 

[anthony022071]

Oh, give me a break.

It’s one thing to make accusations like that – another to proove them.

Right here in Mountain View (population, 2,846), there was a paper circulating that claimed the new Super Wal-Mart would cost 80 jobs.

Guess what? The new Super Wal-Mart created more than 80 jobs, and several other businesses have started up or expanded after the Super Wal-Mart went in.

Wal-Mart doesn’t create jobs so much as it re-allocates existing jobs – and the turnover rate of employees is about 45 percent per year. If the Wal-Mart in that town closes,which they often do without announcement,those businesses that were dependent on Wal-Mart’s presence will probably close as well.