Thread: American style capitalism

here dan, just for your reading comprehension problem, you might learn something today. Socialism is not a simple definition from your little limited Oxford dictionary for college students.

Originally Posted by Wiki

Socialism is not a concrete philosophy of fixed doctrine and programme; its branches advocate a degree of social interventionism and economic rationalisation (usually in the form of economic planning), sometimes opposing each other. A dividing feature of the socialist movement is the split between reformists and revolutionaries on how a socialist economy should be established. Some socialists advocate complete nationalisation of the means of production, distribution, and exchange; others advocate state control of capital within the framework of a market economy.

Originally Posted by Jet Gorgon

You're comparing elevator installers to CEOs? Jeezas, Norts. You want to go socialist? How about comparing education, responsibilities, commitments, strategy and future planning qualities?

guess you never figured it out little girl...

Yes, I wouldn't deny that some parties on the left, but operating completely within the context of capitalism, call themselves socialist. The British Labour Party does. This is what it says about itself:

‘The Labour Party is a democratic socialist party. It believes that by the strength of our common endeavour we achieve more than we achieve alone, so as to create for each of us the means to realise our true potential and for all of us a community in which power, wealth and opportunity are in the hands of the many, not the few.’

But you'd have to be certifiably insane to think that the actions of the Labour Party reflected in any way socialist principles. The issue isn't whether this or that party calls itself socialist. It's whether they are socialist and, going by the opening section of the wiki page - a fair summary of socialist principles - they're not.

If socialism means anything, it must stand in opposition to capitalism, otherwise it simply ceases to exist.

Originally Posted by Butterfly

others advocate state control of capital within the framework of a market economy.

Where in Europe is this practice? I'm not aware of anywhere but perhaps you are.

Originally Posted by Dan

‘The Labour Party is a democratic socialist party. It believes that by the strength of our common endeavour we achieve more than we achieve alone, so as to create for each of us the means to realise our true potential and for all of us a community in which power, wealth and opportunity are in the hands of the many, not the few.’

But you'd have to be certifiably insane to think that the actions of the Labour Party reflected in any way socialist principles.

The New Labor party is definitely not socialist, and never intended to be. It was basically a political change, a refreshing change from the incompetence of the Torries, but the strategic policies didn't change much, they were just a continuation of the past without making things worse, which itself was an improvement as the Torries usually fucked up everything they would endeavor.

Originally Posted by Dan

The issue isn't whether this or that party calls itself socialist. It's whether they are socialist and, going by the opening section of the wiki page - a fair summary of socialist principles - they're not.

yes and no, the historical definition is what it is, past movements. The new movements are based on past ideologies but they have been adapted to reflect modern realities. This is obviously not covered in Wiki, only superficially mentioned.

Originally Posted by Dan

If socialism means anything, it must stand in opposition to capitalism, otherwise it simply ceases to exist.

I really see modern Socialism as a smart extension of Capitalism, a responsible expansion of capitalism. They don't have to be dramatically opposed, only in their extreme they are, but in the middle ground they might achieve the same results. The problem is mild capitalism for the last 20 years didn't happen, it was a brutal and unregulated form of it, and we are paying now the price for it. Hence the renaissance of socialist movements for the last 20 years to oppose such obvious abuses that only a few could see.

In that case, you're using socialist to mean something different from either the wiki opening definition, or the OED one, or what's really been the historical understanding of socialism. That's fine - that's what the Labour Party did and what all the European socialist parties have done - but when you make statements like "the world is embracing socialism", you need to qualify that fairly heavily to show that you mean is "the world is embracing reformed/moderated capitalism".

^ it's called modern socialism, not reformed capitalism, this is the correct term. Your understanding of Socialism is a simple one, but the word is much more complex than a simple definition from the Oxford dictionary, which only use a simple proxy.

Why isn't called reformed Capitalism ? because the promoters of those reforms all come from Socialist movements. It's that simple.

Called by who? What you're describing sounds exactly like the Third Way bollocks from the 1990s.

^ the third way has been promoted to the only way

Dan and BF... entertaining... two who have tried to help me understand political and economic terminology trying to help each other understand political and economic terminology...

Dan, you'll never win with BF by the way... S/he always finds a way to get you to respond by saying something until you stop.

BF: So, are you a socialist?

So you didn't understand any of the posts on the previous page and a half. Congratulations.

too confusing... I shall require more assistance from Prof. Dan, renouned TD philospher and economist!!

Originally Posted by Norton

he ratio of CEO pay to average worker pay in the US is about 450:1. Compared to a few other countries; Japan - 11:1, Germany - 12:1, France - 15:1, Italy - 20:1, Canada - 20:1, UK - 22:1, Hong Kong - 41:1, Mexico - 47:1.

Conclusion I draw, US CEOs are grossly overpaid or the other country CEOs are grossly underpaid

It's a slam dunk argument- who can rationally deny that US CEO's are radically overpaid?

The only possible counter would be if US companies outperformed their counterparts in other democracies- but they do not.

Originally Posted by sabang

It's a slam dunk argument- who can rationally deny that US CEO's are radically overpaid? The only possible counter would be if US companies outperformed their counterparts in other democracies- but they do not.

You're right. Unfortunately its the same philosophy that dominate sports compensation. Alex Rodriquez gets paid $25 million per year on the expectation that he will deliver results. Execs with superstar pedigrees get big pay based upon expectation. As long as its part of the business model it doesn't matter much and there's nothing that can be done about it.

^ I beg to differ, there is something that can be done about it. Specifically, Shareholders- especially the large Institutional shareholders- should be a lot more active about this. It is, after all, they that are being robbed- and the Board reports to the Shareholders of a company, and furthermore has a legal obligation to them. As I pointed out before, they are being derelict in their duty not being more active in controlling Executive compensation.

A simple controlling measure- which I think should actually be legislated, given how obscene the issue has become in the USA- would be to copy the Germans, and set up an "Executive compensation" committee. This would comprise not just Board members and senior Executives, but Shareholder and employee representatives too.

this brings the whole discussions to the Board of Directors and the independence of such a board. The Japanese model is quite good, with independent reviews and functions to control management. In the US, the board is littered with executives from management so that fuckup the whole idea of independence.

There is just no incentive for the biggest blocs of shareholders, who are in control, to impose the kind of controls you are suggesting. As long as the company is succeeding why tinker with the formula? No body is going to vote for controlling Steve Ballmer's compensation if Microsoft has a couple of bad quarters.

Originally Posted by Humbert

As long as the company is succeeding why tinker with the formula?

As I pointed out, if you pay someone $700m instead of $100m per year (which is hardly paltry), that is $600m less attributable to the owners of the company, the Shareholders. It is not justifiable, because that Executive has risked absolutely none of his own money to receive this reward.

No other country pays anywhere near these obscene benefit packages (not even 10%), and US companies do not outperform their equivalents elsewhere- in fact currently you might argue the opposite is the case. So it is not justified. A further wrinkle is these lavish benefit packages are even paid to company CEO's that totally stuff it up- GM, Citi, Merrill Lynch, BofA to name a few.

Originally Posted by Humbert

There is just no incentive for the biggest blocs of shareholders, who are in control, to impose the kind of controls you are suggesting. As long as the company is succeeding why tinker with the formula? No body is going to vote for controlling Steve Ballmer's compensation if Microsoft has a couple of bad quarters.

what are you talking about ? Board of Directors are setup specifically to protect shareholders, big or small, so why wouldn't they do it ? the initiation process is a different matter, and in many countries it's required by law for companies of a certain size.

Management objective is to maximize their bonus, Board of Directors in theory are there to protect shareholders and maximize their wealth.

speaking of bonuses,

UK bank bonuses 'to rise by 50%'
BBC NEWS | Business | UK bank bonuses 'to rise by 50%'

Here is an example of a responsible CEO, who both delivers value to his shareholders, does not rob them blind, and is still an exceedingly wealthy man. Warren Buffet.

Guess how much Warren Buffet pays himself per year??




Nothing. Not a penny. His sole remuneration is the appreciation of the value of his shares. In a year that the value of his shares go down, he actually loses money.

Is Berkshire Hathaway an underperforming company then?

Originally Posted by Butterfly

Originally Posted by Humbert

There is just no incentive for the biggest blocs of shareholders, who are in control, to impose the kind of controls you are suggesting. As long as the company is succeeding why tinker with the formula? No body is going to vote for controlling Steve Ballmer's compensation if Microsoft has a couple of bad quarters.

what are you talking about ? Board of Directors are setup specifically to protect shareholders, big or small, so why wouldn't they do it ? the initiation process is a different matter, and in many countries it's required by law for companies of a certain size.b
Management objective is to maximize their bonus, Board of Directors in theory are there to protect shareholders and maximize their wealth.

Boards of directors are usually strongly influenced by a company's executive committee. It would be unlikely to see the kind of internal conflict you are suggesting arising in US companies, at least that was my experience when I was on an executive committee for one of the largest US retail corporations. As long as the company is meeting it's profit objectives boards will not try an steer the day to day management of the company.

Originally Posted by sabang

Guess how much Warren Buffet pays himself per year??

Does he live on the streets?

The current state and stage of American Capitalism.

It's not taking strategic risks and re-investing, it's Extraction Capitalism, which is using OPM - Other People's Money to invest - and if you fail, and even fail BIG - the taxpayers will be forced to bail you out.

This is brief and good.

February 2, 2016