Unemployment: is this another instance of the Tragedy of the Commons?

[Commie Pinko Dirtbag]

(If you don't know what the Tragedy of the Commons is, read this first.)

Behold Company A. Let's take a look at what passes for its thought process.

- I want to have mucho mucho profit. I know profit = revenue - expenses. Therefore, I want to increase revenue and minimize expenses.

- As a way of minimizing expenses, I want to have the smallest payroll possible. The ideal number being, of course, zero. I don't want to employ anybody if I can help it.

- However, it would be nice if other businesses employed people so they could buy my merchandise.

- But no, I don't have the slightest intention of contributing to their revenue. Fuck them. Moreover, employing workers amounts to helping poor people, and helping poor people makes Nordic Baby Jesus cry, besides giving me heartburn.

Every company thinks like that => everybody gets screwed. Including, ultimately, the companies themselves.

Discuss.

[jdlh8894]

1. Are you really in Rio?

[Commie Pinko Dirtbag]

2. Well, yes. Why?

[jdlh8894]

3. Expatriated?

[Commie Pinko Dirtbag]

4. Nope, Brazilian

[jdlh8894]

5. How are the people fareing after the rains?

Also,are you located closer to Copa,Ippa,the track,Christo,or downtown?

[Commie Pinko Dirtbag]

7. The lives of those who don't live on the hillsides returned to normalcy.

Those who do are the poorest, and were truly hosed, as always. Some emergency housing was built, but not nearly enough for everybody. :(

I live in the vast poor-but-not-favela area of Rio known as "subúrbio". Which means something completely different from the US "suburbia".

[jdlh8894]

17. "subúrbio" I understand.

I hope I didn't tick you off. Rio is a Beautiful city. I wish I could be there all the time.As it is, we only get there 2/3 times a year.My best to all that lost their lives,families,possessions,and homes to the storms.Best of luck my friend.
(Still working on my Portuguese)

[unpossibles]

6. I agree. I think much of our current world economic model is dangerously short-sighted

You can see it in the microcosm that is the so-called Tea Party here. They see taxation as robbery of their money, but they never stop to consider that the very things their taxes pay for are a HUGE part of what enables entrepreneurship and which rewards success. In other words, they never stop to consider that without a stable society full of people with even a modicum of spendable income, even the most brilliant and efficient business model will fail because they have no customers. Also, without society and the taxes which pay for that society, they would have little to no infrastructure in which to succeed financially on any sort of wide scale, other than a very small select group of elite who can buy their own.

So yes, to reduce cost/"increase" profit, payroll is often the first and most easily cut, which increases profit in the short run, but hamstrings a business' ability to truly grow itself. Same with offshoring - sure, it saves money short term, but eventually you are faced with (a) a lack of stable consumers at home and (b) as the world market grows, those cheap solutions turn out to be harder to find without resorting to dangerous working conditions, which also has a finite time span before workers will say "enough" and fight for better wages and conditions.

I really can't stand the idea of trickle-down supply-side economics, and I wish it had not caught on a few decades ago to the point where many see it as the only viable model. It really makes no sense.

[Commie Pinko Dirtbag]

8. OK, who's the libertarian? If you disagree with the OP, show yourself and say why. -nt

[leftstreet]

9. LOL K&R for "makes Nordic Baby Jesus cry"

:rofl:

Good post though!

[zipplewrath]

10. Henry Ford

There's not alot to like about the man. But even he figured out that if he paid his workers a decent wage, they could afford to buy his cars.

You wonder if Walmart ever figures out that all those workers in China don't shop in Walmart.

[Commie Pinko Dirtbag]

12. I read somewhere that other businesses cried foul.

As if it wasn't HIS money to spend as he saw fit.

Every now and then I see businesses being derided for paying well / allowing unionizing / providing healthcare / etc. Cartels, it seems, are what makes the aforementioned Nordic Baby Jesus happy.

[zipplewrath]

22. He bucked "the club"

It was sort of a gentlemen's agreement not to pay these folks what they were worth, but what they would work for. Ford kinda got pissed because people would change jobs every few WEEKS just for another nickle. He figured if he "over paid" them enough they would stick around. They did. And in the process became measurably more efficient at the way he had them building cars. Oh, and they also bought cars.

[Commie Pinko Dirtbag]

23. I saw on DU years ago that similar whining was directed at Costco. -nt

[zipplewrath]

25. After a fashion

Costco has a fairly strange business model. They basically don't make profit off of the items they sell (for various definitions of profit). Their primary revenue stream is from the membership fees. There are investors (stock holders) that complain about that, suggesting they could generate greater shareholder value if they tried for greater profits in the items they sell. Furthermore, Costco pays a relatively "fair" wage as compared to either Target or Walmart. Another complaint of some shareholders. They do fairly well so their hasn't been enough of a complaint to make them change their business model. You'll know the end is near for them about the time they change either or both of these policies. It will be the last hopeless act of some CEO who has managed to screw up the business model and now wants to cover his butt through short term profits generated by either slashing wages and/or raising prices.

[The2ndWheel]

11. Live by efficiency, die by efficiency

Our economy is really built on waste. The more waste there is(of whatever kind), the more jobs there are for people to do.

However, the same way that we all want fuel efficient cars, to get more bang for our buck, more miles per gallon, corporations want more efficient employees. Sure, at some point there might not be enough people to buy anything in our race to the bottom. At the same time, if you make the cars more efficient and cheaper to buy, then you might end up with a society where it will be increasingly necessary to own a car in our race to...wherever.

[alcibiades_mystery]

13. Correction

Profit = Cost of labor power - What you steal from workers.

Carry on.

[Commie Pinko Dirtbag]

14. Nitpick: something is mistakenly negatived in your equation. -nt

[alcibiades_mystery]

16. Oops: Don't think so

:-)

[Commie Pinko Dirtbag]

18. Aren't you spelling "revenue" as "what you steal from workers"?

And "expenses" as "cost of labor power"?

[alcibiades_mystery]

21. Neee-yope

...

[alcibiades_mystery]

15. ...

[Statistical]

19. On a larger scale entire recessions and depressions are tragedy of commons.

look U3 went from 5% to 10%. If the remaining 90% of people spent 6% more (even if they had to go into debt to do so) they would compensate for the lost demand by the increased number of people fired.

To capitalize on that increased demand companies would need to rapidly expand payroll.

This is why government stimulus is needed. To break the cycle of "tragedy of commons". It takes coordinated effort to overcome individual actions. This is something RWer will never understand.

[Commie Pinko Dirtbag]

20. And that's why libertarians are the worst kind of idiots -- dangerous idiots. -nt

[lib2DaBone]

24. Yes. This is Tragedy of the Commons... But with an insight we could get out of this easily...

First: Mr. Obama should have embarked on a massive Public Works Project. Used the TARP funds to rebuild roads, schools, hospitals, bridges...

For every dollar invested in infrastructure.. 4 dollars is returned to the economy.

Second:

Mr. Obama should have left the "too big to fail" ... fail.

He could have nationalized the banks and dumped the FED.. instead using interest free money to rebuild our economy.

Third

This goes without saying.. he should have ended the ten year wars and brought our kids home... start working on Wind Power and Solar and sustainable living.

Mr. Obama.. the answers are so clear... why you can't see them? It's a mystery why you are so blind. Do what is right for the American people... and the world.... please.. Mr. Obama.. get your head out of your ass...while there is still a chance of recovery.