What Did They Expect - Corporate Greed Caused This Economic Downturn......

[global1]

When you don't raise pay or don't want to pay minimum wage. When you cut workers to push profits higher for the year. When prices rise to eke out more profit. What do you expect? Ultimately - the very people that you want to buy your products - can't afford them anymore. You just shot yourself in the foot - you corporate greedy bastards.

I hope you learn that in order for this economy to work - people must have money. If you don't pay your employees a decent wage. If you don't let your employees keep up with rising prices - by giving them raises. If you don't keep your employees - employed. Soon you will be out of business - because your buddies at other companies are doing the same. You thought you were smart - but your profit performance was short sighted. You forgot that you weren't the only company doing this. Now it has caught up with you and its probably too late. You'll probably go out of business.

The only way to fuel this economy is to put people back to work. Pay them well. And encourage your corporate competitors to do the same. Once people feel that they have some security at work. Have a decent pay check coming in again. Maybe - just maybe - they might begin to spend again and buy your products. Once they start buying your products. You will have to make more. You'll have to buy raw materials from other companies and that will even help put other people to work and making money to buy your products as well.

Jobs and decent wages fuel this economy. That's the trick.

It's not the consumers that are at fault. They would still like to consume. Don't blame them. Blame your corporate greed and doing everything possible to squeeze out that last penny of profit. It's come home to roost. In your greed you've also zapped your stockholders.

[elehhhhna]

1. the great humanitarian (eyeroll) Henry Ford figured this out a centtury ago.

[elehhhhna]

2. btw, corporate (human) greed will always exist...and must be policed.

The wink/nod style of regulation has suddenly lost its luster. Again.

[elleng]

4. Yes,

A functioning economy must include reasonable regulation.

"Free markets, in order to be free, must be properly regulated."

General Wesley Clark

[elleng]

3. Was gonna say the same thing!

He DID understand something about 'economics.'

[truedelphi]

5. I have some tar and feathers for every person who supported the

Bastardization of the Milton Friedman "Supply Side" economics theory.

Before this theory came out in its bastardized form, it was a given that all societies must depend on the creation of local jobs and also tariffs.

But then those in the Reagan administration who desperately wanted to get control of the discussion and eliminate decent wages here in the USA came up with a theory whose total discussion revolved around the notion of perpetually supplying our nation with cheap goods. You can read pages and pages of this theory, and never see the word "jobs" or the word "tariffs"

Our forefathers knew all about these two words. It is why they were so angry with Britain.

Also, it would be unfair to say it was always the Repugs doing this. Bill Clinton supporting NAFTA and then GATT deserves his share of blame for gutting our economy. Then the odious Banking "reform" Act of 1999 came along, and Clinton eagerly signed that one too.

Plus if Clinton had not encouraged the 1996 Telecommunications Act, the media would not be consolidated in the hands of a few. With only a small small group of people controlling the airwaves, lies flourished and truth was ignored. Perhaps had there NOT been a 1996 Federal Telecommunciations Act, then the truths about our economy would have been leaked, preventing this final meltdown.

[lifesbeautifulmagic]

6. yes, when the corp philosophy began to value investors over employees, and employees

are seen as "liabilities", there is no where to go but down.

[B o d i]

10. Frank Zappa said

"The VERY BIG STUPID is a thing which breeds by eating The Future. Have you seen it? It sometimes disguises itself as a good-looking quarterly bottom line, derived by closing the R & D Department." - Frank Zappa



We've clearly been living under the VERY BIG STUPID for roughly 8 years now, and arguably much longer than that.

[TahitiNut]

7. The key (imho) is the degree to which 'ownership' siphons off the wealth generated by labor.

I tend to view the ECONOMY as an extensive array of interconnected Black Boxes, with each Black Box characterized by the degree to which capital creation is proportionally distributed to workers vs owners. (In owner-operated Black Boxes, the owner is both owner and worker.)

With all of the argument and conflict over the decades regarding the evils of Capitalism and posturing regarding an array (from the ridiculous to the sublime) of 'solutions,' I have yet (probably because I have no formal training in economics) to see any analysis or assessment of the degree to which Ownership can keep the wealth generated by Labor for themselves, assumedly to be 'reinvested' in ever more Ownership once their consumption (even in the wretched excess of conspicuous consumption a la Veblen) is maxed out. The myth of "Trickle Down" is, afaik, based on some (unstated?) assumptions regarding the degree to which such wealth is redistributed to Ownership, even as Labor productivity increases.

With this proportional (re)distribution in mind, I've monitored National Income statistics for some years. It seems clear to me (probably because I'm 'uneducated' in economics) that there's a MAXIMUM apportionment to Ownership which, if exceeded, drives the overall economy into the shitter. (I feel confident that my good friend for whom I have the utmost respect, ProfessorGAC, could describe my sophomoric intuitions far more aptly.)

It seems to me that when Corporate Profits (measured, of course, AFTER labor compensation) exceeds 15% (or 10% for a long period of time) of Employee Compensation, we're seeing the imminent COLLAPSE of an economy that depends on Labor-As-Consumers.



Ownership (shown in the form here of Corporate Profits) has eating the economy's seed corn and drinking its priming water. 'Ownership' cannot, due to its (human) APPETITES, be trusted to act rationally in the interests of the overall Economy. Indeed, we are now in the condition that NOBODY can be trusted to act in the overall best interests of the economy while rational people understand that self-interest has been put in direct opposition to economic health. (The mythical "invisible hand" is now a clenched fist.)

The "System" is not designed to 'tune' itself and keep the balance between Ownership 'share' and Labor 'share' at some optimum level (probably about 10%) for the HEALTH of the Overall Economy - which, we must acknowledge, is the fundamental purpose of an 'Economic System'. If we view an automobile as a 'system,' we don't need to be automotive engineers to know that an automotive 'system' that repeatedly careens into the ditch is a flawed 'system.' So, if we agree on the paramount objective of such a system, we can agree that it's flawed if it fails to meet those objectives. Our Economic System is broken. I don't need to be an economist to see it. Engaging in the analysis above, it seems clear that there's an obvious symptom that is a precursor to its collapse and failure. The question becomes one of how to best and most efficiently fix it.

[ProfessorGAC]

11. Interesting Take

The notion of interconnected black boxes is a nice analogy. It is consistent with the mathematical fact that macroeconomics is mutivariant with a large number of two and three factor interactions. (There might be four factor interacations, but that generally confuses the model and distorts any adjusted R^2. You get a really, really good fit, but when the proper adjustments are made, it isn't really that good.)

I'm not sure i accept your conclusion about a maximum profitabbility. I think there is s strong effect of product mix involved. Certain companies with a very hot and novel product will be able to justify higher prices without driving up costs. So, they make a higher profit per unit without negatively impacting worker compensation.

Now, that requries some sort of significant shift in a whole microeconomic sector, so that doesn't mean what i'm describing happened, or is happening, just that it could, so that would create a situation wherein your proposed maximum would be violated with no downside.

As to the spread of ownership, capitalism is not at all violated by distributing the capital outward. While it's a redistribution of capital, just like socialism, or any other economic system, capitalism does not REQUIRE upward flow of all capital or even any specific majority of it. So, expanding the ownership element of the workers is completely consistent with capitalistic principles, since the same motivational and incentivization elements exists.

You've expressed my sentiment about supply-side pretty accurately, so no need to comment.

Lastly, your final statement about the system not "tuning" itself, is consistent with my analyses that suggest that macroeconomic health has been routinely IMPROVED during periods of strict regulation. The opposite of what free marketeers claim is what actaully happens. So, the subrogation of the right to be greedy is actually fuel for the economy. It might impact specific elements of someone's microeconomic world, but it contributes positively to the overall.
GAC

[tblue37]

8. While it is obvious that an economy that depends on

endless consumption and waste is pathological, a reasonable degree of consumption and production is necessary to keep the economy afloat, but the greedy corporate bastards did what greedy bastards always do--they killed the goose that laid the golden egg.

[Leftest]

9. K&R: Plus here's a good article.

Wages, It all gets down to wages.

A strong economy must be built on a solid foundation of steadily rising wages. If wages don't keep pace with production, the only way the economy can grow is through the expansion of debt, which leads to disaster.

Consider this: the US economy is 72 percent consumer spending. That means the Gross Domestic Product (GDP) cannot grow if salaries don't keep up with the price of living. Low Income Families (LOF)--that is, any couple making less than $80,000--represent 50 percent of all consumer spending. These LOF's spend everything they earn just to maintain their present standard of living. So, how can these families help to grow the economy if they're already spending every last farthing they earn?

They can't! Which is why wages have to go up. The cost to short-term profits is miniscule compared to the turmoil of a deep recession which is what the world is facing right now. The present crisis could have been avoided if there was a better balance between management and labor. But the unions are weak, so salaries have languished while Wall Street has grown more powerful, stretching its tentacles into the government and spreading its anti-labor dogma wherever it goes.

The investor class has rejiggered the system to meet their particular needs. Financial wizardry has replaced factories, capital formation and hard assets while real wealth has been replaced by chopped up bits of mortgage paper, stitched together by Ivy League MBAs, and sold to investors as priceless gemstones. This is the system that Bernanke is trying to resuscitate with his multi-trillion dollar injections; a system that shifts a larger and larger amount of the nation's wealth to a smaller and smaller group of elites.


http://www.globalresearch.ca/index.php?context=va&aid=11477

[lpbk2713]

12. Corporate ethics --- the biggest contradiction in terms you can find.

It would be a waste of time to try to tell MBA's about ethics. They have no grasp of the concept.