Is the private sector really that efficient anyway?

[Gaddafi Duck]

I don't think it really is as efficient as many try to make it out to be. Mind you I'm not very far in my professional life, but all of the jobs/internships I have had circle around politics rather than productivity. I can't tell you how more often than not incompetent people are in charge of vital functions in private companies---this point is especially true the larger the company is compared to smaller scale operations. Most businesses claim to have Policy A engrained in their mission statements and is carried out in day-to-day work, but in reality, it's all fluff. I've had jobs where the average time to get hired took up to 2 months for entry level positions and required 3 rounds of interviews, while temps were hired instantly from temp agencies. I've had to speak with several individuals regarding compensation (of which none gave satisfactory explanations), to where I had to go to the person ahead of the payroll department and they couldn't even answer a basic question.

Back in the Summer of 2010, I noticed an employee would be absent from work up to 4 hours at a time (many times without clocking out) to watch FIFA World Cup soccer. How did he get away with it? He was Iranian and the "head" guy was Iranian as well--yet others who worked far harder and yielded a better output were fired as if their contributions were trivial.

I've worked for Union Pacific and had to present market analysis to senior management. I witnessed great ideas (not necessarily from my own proposals) be heavily criticized while others, which were not very thoroughly argued on the part of the employee, won out because they were more "aligned" with what managers were going with. It's as if "rocking the boat" was not something they were interested in--like, say, pointing out the economic problems facing the US market to where resources would be better invested elsewhere.

Now, the free market viewpoint claims that if employers fire the efficient workers for the sake of politics/sexism/racism/whatever, then those companies will lose market share to companies that don't conduct such practices. The truth is, I find so many inefficiencies in every company I have worked for to the point of annoyance, and the fact is pervasive among all companies at least in my experience.

It seems the free market viewpoint is unsatisfactory in explaining and defending the idea that it is efficient. It's certainly more efficient than the alternatives out there, like state-run institutions where politics is heralded as the centerpiece of all business transactions, but the subtle yet blatant installment of politics in private companies appears to create a considerable amount of waste. I just wonder how much is left on the table day-to-day due to this.

[brushfire]

Bureaucracy at work :D

That's not to say that the free market is not without flaws, but only that its nearly perfect when compared to the emerging corporatist system we have now.

Somewhat along the lines of this topic "Corporatism":

http://www.youtube.com/watch?v=cl8vP9L6Imo&feature=player_embedded

[sailingaway]

It is compared to the alternatives. You get all that in government run business too, plus on TOP of that don't even have to satisfy a customer that the cost is right for the product.

[hazek]

Guess who bails out the private sector when someone messes up and goes bankrupt? No one. <- this is why it is as efficient as it's being "made out to be" on these forums, there's no moral hazard present to fuel malinvestment. Profit and loss decide the winners and the losers as it should be everywhere if we actually had capitalism.

[Gaddafi Duck]

Bureaucracy at work :D

That's not to say that the free market is not without flaws, but only that its nearly perfect when compared to the emerging corporatist system we have now.

Somewhat along the lines of this topic "Corporatism":

http://www.youtube.com/watch?v=cl8vP9L6Imo&feature=player_embedded

Right--I agree, but it seems like the free market = efficiency wet dream is only really around in small scale operations and in companies that are in their early stages of development. For medium, large, and mature businesses, it seems they lose their entrepreneurial luster and become dinosaurs that don't move fast, but for whatever reason have managed to secure the same business whether they worked harder or provided the same sub-par services. It seems once you reach a certain stage in development, there's no real gain from trying harder as you'll essentially get about the same amount of business regardless. The exceptions only really being in areas where new development is starting out, or is a field that is about to be discovered/invented--but that goes back to my point about free market efficiency only being around in the early stages of development.

It's the case with the Internet. Over a decade ago, the Internet was an amazing place to be. Now, it's a boring utility. There're only a few major websites around that people frequent on a daily basis only out of necessity. Granted, the technology (high speeds, more multimedia, all the bells and whistles) has come along considerably, but to me the Internet isn't the same as when Yahoo! was a popular search tool, Google was unheard of, and eBay was where you went and stayed up till 3 AM to snipe a winning bid on a Pokemon card.

Bleh..I think I'm nostalgically ranting...

[acptulsa]

What private enterprise do we have to judge by? I mean seriously. Small business is efficient. It's also nearly extinct, thanks to the massive regulation imposed by the corporatist forces of D.C. The main purpose of most of the laws of the last few decades seem to be to make it impossible for small business to operate more nimbly and efficiently than huge corporations. If it takes a staff of seven to manage all of the compliance issues facing any business in a particular trade, this obviously benefits the huge over the small.

I guess we should be grateful for all of our modern prohibitions. If it weren't for the black market, we'd have no free market at all.

[silverhandorder]

OP you are going around it the wrong way. People are this inefficient in both private and public sphere. In private sphere they are continuously rooted out and replaced by more competent people. In public the incompetent people move up.

You can't judge the market based on individual experience. Look on the whole.

Also to clear up something there is nothing inherently better about being small business. They get just as many subsidies from government as the big business.

[oyarde]

In comparison to Fed govt . , yes .

[MRoCkEd]

Yea.. It's fair to say the profit motive won't eliminate inefficiency or solve problems like racism and sexism. But we do know that, for the most part, government intervention doesn't help but in fact makes things worse.

[acptulsa]

OP you are going around it the wrong way. People are this inefficient in both private and public sphere. In private sphere they are continuously rooted out and replaced by more competent people. In public the incompetent people move up.

This begs the question--is Goldman Sachs private or public sector? By this definition, it's public sector.


Also to clear up something there is nothing inherently better about being small business. They get just as many subsidies from government as the big business.

I'm inclined to disagree. Obviously big business has advantages in diversification, widespread markets (which are less likely to all experience recession at the same time) and economies of scale. But politics is less rampant in small business, and it tends to be more nimble. If the corporatists are powerless enough to allow it to be.

Some small businesses get subsidies, yes, if they're connected enough. But most don't. And I'm firmly convinced that if corporatism hadn't placed the burdens on small business that it has, our economy would be doing quite well right now.

[silverhandorder]

Well our disagreement is then in the numbers. Peter G Klein has data that shows that small business gets a lot more subsidies mainly in small business owner credit they can take out.

[Travlyr]

What private enterprise do we have to judge by? I mean seriously. Small business is efficient. It's also nearly extinct, thanks to the massive regulation imposed by the corporatist forces of D.C. The main purpose of most of the laws of the last few decades seem to be to make it impossible for small business to operate more nimbly and efficiently than huge corporations. If it takes a staff of seven to manage all of the compliance issues facing any business in a particular trade, this obviously benefits the huge over the small.

I guess we should be grateful for all of our modern prohibitions. If it weren't for the black market, we'd have no free market at all.
There is reality; free markets are illegal. Markets taking weekends and government holidays off along with it being illegal to grow industrial hemp is proof enough.

[acptulsa]

Well our disagreement is then in the numbers. Peter G Klein has data that shows that small business gets a lot more subsidies mainly in small business owner credit they can take out.

Oh, I'm sure that number is high indeed. This is the kind of thing that has always gotten Republicans one hell of a lot of campaign contributions. But I can't help but think the corporatists consider this one pretty harmless, as (if I understand it correctly) this does nothing whatsoever to encourage reinvestment...

[Brian4Liberty]

I don't think it really is as efficient as many try to make it out to be. Mind you I'm not very far in my professional life, but all of the jobs/internships I have had circle around politics rather than productivity. I can't tell you how more often than not incompetent people are in charge of vital functions in private companies---this point is especially true the larger the company is compared to smaller scale operations.

I do have have many years of experience at many different companies, and your observations are spot on. People are people. In government or the private sector, you will have good, efficient people and groups, and you will have less than efficient. Profit margins in the private sector can support a lot of waste. Forced taxation can support even more. Like you said, the bigger the organization, the worse it gets, and government is the biggest of all.

[Brian4Liberty]

OP you are going around it the wrong way. People are this inefficient in both private and public sphere. In private sphere they are continuously rooted out and replaced by more competent people. In public the incompetent people move up.


In large private sector organizations, incompetent people also move up. There is not much difference in that regard.

[sailingaway]

Right--I agree, but it seems like the free market = efficiency wet dream is only really around in small scale operations and in companies that are in their early stages of development. For medium, large, and mature businesses, it seems they lose their entrepreneurial luster and become dinosaurs that don't move fast, but for whatever reason have managed to secure the same business whether they worked harder or provided the same sub-par services. It seems once you reach a certain stage in development, there's no real gain from trying harder as you'll essentially get about the same amount of business regardless. The exceptions only really being in areas where new development is starting out, or is a field that is about to be discovered/invented--but that goes back to my point about free market efficiency only being around in the early stages of development.

It's the case with the Internet. Over a decade ago, the Internet was an amazing place to be. Now, it's a boring utility. There're only a few major websites around that people frequent on a daily basis only out of necessity. Granted, the technology (high speeds, more multimedia, all the bells and whistles) has come along considerably, but to me the Internet isn't the same as when Yahoo! was a popular search tool, Google was unheard of, and eBay was where you went and stayed up till 3 AM to snipe a winning bid on a Pokemon card.

Bleh..I think I'm nostalgically ranting...

Always, the government does worse because on top of all that, it doesn't even have to PERFORM. However, large corporations get into crony capitalism, which isn't free market, it is corporatism. That is very different, and Ron is against that, too.

[TheBlackPeterSchiff]

Usually companies with polciies like you speak of end up failing (unless they get some sort of preferential propping up from the govt.)

The companies with good policies, that treat their employees right, that innovate and provide customers with good products and services eventually outlast the bad ones.

Capitalism doesn't mean "All private companies do great jobs" Off course not, but it give you the choice. When the govt does a shitty job, you don't have a choice. If you work at a company that sucks, quit, and go somewhere else. If you are a smart worker, it's their loss and the next companies gain.

There is cronyism every, in private and public places. It's human nature, but unlike govt agencies, companies have a bottom line to worry about.

[dannno]

The OP makes the mistake of believing we have a free market.

High taxes and regulations push out competitors, and so the monopolist/oligopolist institutions that remain are allowed be less efficient than they would in a free market.

Also blame the Fed.

[TheBlackPeterSchiff]

In large private sector organizations, incompetent people also move up. There is not much difference in that regard.

This is true. And in the grand scheme of things companies like this end up losing money, going out of business or get bought out by a more efficient competitor.

[dannno]

the free market = efficiency wet dream

What free market are you talking about?

[Gaddafi Duck]

The OP makes the mistake of believing we have a free market.

High taxes and regulations push out competitors, and so the monopolist/oligopolist institutions that remain are allowed be less efficient than they would in a free market.

Also blame the Fed.

Uhhmm...high taxes/regulations doesn't explain the politics within a private industry--at least not the politics I'm talking about. When an Iranian-American skips work for 4 hours ON THE CLOCK, and isn't fired or even sat down to have a discussion, to watch a soccer match, I blame that on the fact of intraorganizational politics rather than Barack Obama. You can't blame Washington D.C. for why the person in charge of compensation for a company of 500+ people cannot answer a basic question on shift differentials. You can't blame the Fed for why people who are less competent get promotions instead of those who are obviously better candidates in a private business.

You make the mistake in assuming a default "it's the government's fault" argument is sufficient in explaining why the private sector isn't as efficient as many like to make it out to be.

The idea that the most efficient/best worker will move up in a company is bullshit and naive. Intraorganizational politics supersede any marginal increase in profit margins for virtually all companies.

[brandon]

Yea.. It's fair to say the profit motive won't eliminate inefficiency or solve problems like racism and sexism.

I respectfully disagree here. If racism and sexism are in fact a problem, then they will hurt the bottom line. If a boss unjustly fires people it will hurt morale of the remaining workers and drag down productivity, and possibly create a mass exodus of employees. Then of course there is the PR disaster that would be caused by open sexism or racism, which too will hurt the bottom line.

And the profit motive will continuously root out inefficiency. There will always be inefficiencies everywhere until the end of time, but the profit motive is what makes us strive to reduce them.

[acptulsa]

When an Iranian-American skips work for 4 hours ON THE CLOCK, and isn't fired or even sat down to have a discussion, to watch a soccer match, I blame that on the fact of intraorganizational politics rather than Barack Obama. You can't blame Washington D.C. for why the person in charge of compensation for a company of 500+ people cannot answer a basic question on shift differentials.

Maybe not, but you can sure blame them when this kind of crap fails to drive Goldman Sachs out of business, can't you?

[BrendenR]

The idea that the most efficient/best worker will move up in a company is bullshit and naive. Intraorganizational politics supersede any marginal increase in profit margins for virtually all companies.

And, so what? What does this prove? All it proves is that humans are humans, fallible beings. This is a fact the market readily admits. Free markets never have and never would expect things to always be perfect, just the opposite.

Where are your best workers going to go if they are not promoted? Guess what, in my company, lots of great employees left because they were not advancing in their career. That's how these things work. It's not perfect, but what it IS, is better than any alternative.

[Brian4Liberty]

This is true. And in the grand scheme of things companies like this end up losing money, going out of business or get bought out by a more efficient competitor.

They don't always go out of business. That is the point of this thread. Just like a successful society with a large government, a large, successful company can support a lot of dead weight, and never go out of business. The dead weight becomes part of the accepted and anticipated overhead cost.

Don't get me started on buy-outs. I hate 'em! That either gives a second life to a failed company, or destroys a successful one! But Wall St. loves their M&A.

[fisharmor]

I can't tell you how more often than not incompetent people are in charge of vital functions in private companies---this point is especially true the larger the company is compared to smaller scale operations.
Tax structures and legal protections encourage operations to grow to these sizes. Absent any state penalties or rewards, the natural limit to an organization's size is generally much smaller - for precisely the reason you list. As size increases, inefficiency increases with it. Without state intervention, smaller competitors (if they're allowed to exist!) will outperform larger organizations pretty much every time.


Most businesses claim to have Policy A engrained in their mission statements and is carried out in day-to-day work, but in reality, it's all fluff.
So what?


I've had jobs where the average time to get hired took up to 2 months for entry level positions and required 3 rounds of interviews, while temps were hired instantly from temp agencies. I've had to speak with several individuals regarding compensation (of which none gave satisfactory explanations), to where I had to go to the person ahead of the payroll department and they couldn't even answer a basic question.
Remove all the state mandated and encouraged jobs from that HR person and you'd get answers.
If that person isn't spending all his time figuring out whether you've filled out your health insurance forms, or whether your social security got withdrawn properly, or whether you've attended your sensitivity training, or whether your federal withholding is in line with your W-4, the question becomes "did I get X dollars on MM/DD/YY", and there's nothing else to answer.


Back in the Summer of 2010, I noticed an employee would be absent from work up to 4 hours at a time (many times without clocking out) to watch FIFA World Cup soccer. How did he get away with it? He was Iranian and the "head" guy was Iranian as well--yet others who worked far harder and yielded a better output were fired as if their contributions were trivial.
Are you free to organize the productive employees to walk out for 4 hours one day? If not, why not? Can you or can you not get the situation corrected? If you can't, are you free - truly free - to compete with an organization which prefers back scratching to productivity?


I've worked for Union Pacific and had to present market analysis to senior management. I witnessed great ideas (not necessarily from my own proposals) be heavily criticized while others, which were not very thoroughly argued on the part of the employee, won out because they were more "aligned" with what managers were going with. It's as if "rocking the boat" was not something they were interested in--like, say, pointing out the economic problems facing the US market to where resources would be better invested elsewhere.
Management does this. They see bottom lines. Visionaries don't always get attention, because it's hard to get everyone aboard on that vision, and even if you do there's no guarantee it'll work. It sucks, I've been there many times. Management has to keep the paychecks going out and they have boat payments to make. It's the way it works.
The question, again, is are you free to implement those ideas elsewhere?


Now, the free market viewpoint claims that if employers fire the efficient workers for the sake of politics/sexism/racism/whatever, then those companies will lose market share to companies that don't conduct such practices. The truth is, I find so many inefficiencies in every company I have worked for to the point of annoyance, and the fact is pervasive among all companies at least in my experience.
I don't think the free market viewpoint says that. The free market viewpoint says that the market will determine who wins and loses, and that this may or may not be based on politics/sexism/racism.
Like it or not, there will never be a big demand for black Olympic swimmers, the Cato institute will probably not hire Marxists, the porn industry doesn't favor fat chicks, and union certified welders are probably going to be much more low brow than polite society would prefer. So the hiring is racist, sexist, and political to begin with.
I don't see the point in getting so wrapped up in the firing practices either. The question, again, is are you free to compete with those who practice "bad" firing?


It seems the free market viewpoint is unsatisfactory in explaining and defending the idea that it is efficient. It's certainly more efficient than the alternatives out there, like state-run institutions where politics is heralded as the centerpiece of all business transactions, but the subtle yet blatant installment of politics in private companies appears to create a considerable amount of waste.

I agree, but again, I see the politics injected into the market coming from one place generally, and I don't consider the market free as long as it's happening.

[Diurdi]

In short: Yes, if they are not - they will be outcompeted by people who are more efficient.

[TheBlackPeterSchiff]

They don't always go out of business. That is the point of this thread. Just like a successful society with a large government, a large, successful company can support a lot of dead weight, and never go out of business. The dead weight becomes part of the accepted and anticipated overhead cost.

Don't get me started on buy-outs. I hate 'em! That either gives a second life to a failed company, or destroys a successful one! But Wall St. loves their M&A.

Ok, so your argument is there are companies out there with shitty management and they still succeed. Why do they succeed. They must be providing a service or a good that consumers like. How is that a failure? Because a couple of the employees are unhappy there? Easily solved, quit. Take your labor elsewhere. That doesn't mean the private sector is not efficient. If the consumers of those services or goods are satisfied with what they are paying for, and the company is able to meet it's obligations that it sounds like a success to me. The fact that an employee does not agree with internal practices of the work place has no bearing on the functionality of producer/consumer relationship.

[TheBlackPeterSchiff]

The premise of this thread is dumb.


My boss is an asshole = Capitalism Fails.


Ooooook.

[TheViper]

The free market will always be more efficient because it is driven by the risk/reward concept. If they do not provide a good service or product, someone else will. With government, there is no incentive or risk in the quality of the product or in the funding of the operation. They do X, you get X and that's it. There is no competition involved, no risk/reward involved, no incentive for product/service improvement, etc...

Incompetence on the human level is universal but far more likely to be eliminated in a risk/reward market than in a government setting that has no risk or reward.

[MRoCkEd]

I respectfully disagree here. If racism and sexism are in fact a problem, then they will hurt the bottom line. If a boss unjustly fires people it will hurt morale of the remaining workers and drag down productivity, and possibly create a mass exodus of employees. Then of course there is the PR disaster that would be caused by open sexism or racism, which too will hurt the bottom line.

And the profit motive will continuously root out inefficiency. There will always be inefficiencies everywhere until the end of time, but the profit motive is what makes us strive to reduce them.
I agree. I meant the profit motive won't *completely* eliminate those things. Of course it will reduce them.

[Brian4Liberty]

Ok, so your argument is there are companies out there with shitty management and they still succeed. Why do they succeed. They must be providing a service or a good that consumers like. How is that a failure? Because a couple of the employees are unhappy there? Easily solved, quit. Take your labor elsewhere. That doesn't mean the private sector is not efficient. If the consumers of those services or goods are satisfied with what they are paying for, and the company is able to meet it's obligations that it sounds like a success to me. The fact that an employee does not agree with internal practices of the work place has no bearing on the functionality of producer/consumer relationship.

That's basically what I already said. What is tiring is that every time someone says that there is waste or inefficiency somewhere in the private sector, some yahoo has to jump in and say "no there isn't, the company would go out of business". The world isn't black and white. There are many variables.


I do have have many years of experience at many different companies, and your observations are spot on. People are people. In government or the private sector, you will have good, efficient people and groups, and you will have less than efficient. Profit margins in the private sector can support a lot of waste. Forced taxation can support even more. Like you said, the bigger the organization, the worse it gets, and government is the biggest of all.

[dannno]

When an Iranian-American skips work for 4 hours ON THE CLOCK, and isn't fired or even sat down to have a discussion, to watch a soccer match, I blame that on the fact of intraorganizational politics rather than Barack Obama.


Who the fuck are you to judge this "Iranian-American employee", do you review their work? What kind of job do they have? How much are they worth to the company? My boss is Iranian-American and is here working 8 hours a day consistently. They let me take long lunches because I still am able to get my work done and I am worth a lot to the company. My co-workers don't get the privilege because their jobs are more reliant on them actually being here to help others whereas my job is more reliant on my individual work. My old boss used to let me go home early sometimes. Why does it matter if I'm providing a lot of profitability to my company?

If this Iranian-American employee is worth it to the company, then a four hour extra vacation perk is a good thing. It is a cheap way to help give them a better attitude about their company and their pay/benefits.

Or maybe I'm wrong, the Iranian dude is just friends with the higher ups and buys them beers on the weekend, and this is more applicable:




You make the mistake in assuming a default "it's the government's fault" argument is sufficient in explaining why the private sector isn't as efficient as many like to make it out to be.

The idea that the most efficient/best worker will move up in a company is bullshit and naive. Intraorganizational politics supersede any marginal increase in profit margins for virtually all companies.

Why didn't you read my post and think about it before responding? I just told you that the government regulations and taxes reduce competition, so that the companies that are left don't have to compete as hard. That means companies with a lot of politics that are getting in the way of their profitability WOULDN'T EXIST in the free market because there would be competition that was more efficient and would be able to lower their prices and take away their market share.

The reason why government sucks is because it is a monopoly and they have no competition. Then they intervene in the market and take away competition from other companies and have the same leeching effect as they do themselves. This isn't a difficult subject.

[dannno]

That's basically what I already said. What is tiring is that every time someone says that there is waste or inefficiency somewhere in the private sector, some yahoo has to jump in and say "no there isn't, the company would go out of business". The world isn't black and white. There are many variables.

Hi, my name is Yahoo.

The point is, if there IS inefficiency or waste in the private sector, in a free market this allows for the OPPORTUNITY for another business to come in, take out this waste and inefficiency, lower their prices and take away a significant amount of the other company's market share and possibly even drive them out of business. Regulations and high taxes reduce this possibility significantly.

Of course not all waste and inefficiency will be removed, but the reason you can make the argument as I do is because the waste and inefficiency is being blamed on the free market when the free market is a tool to REDUCE waste and inefficiency. It's just an analogy for them to understand how the free market works, and it is a very effective way to do it.

Sincerely,

Yahoo

[outspoken]

To the OP, you have obviously never spent any time working inside the fed govt. The big difference between private bureaucracy and public is that when private becomes overly inundated with inefficiency it becomes unprofitable at some point and thus ceases to exist. Stuff that would get someone fired in a heartbeat in the private sector is consider par for the course in government. In the the public sector, when an entity becomes inefficient and bloated there is virtually no means by which to make it more efficient as there really is no incentive to do so. The only thing that happens is the those pulling the levers within govt actually subsidize the inefficiency more.

[Brian4Liberty]

Hi, my name is Yahoo.

The point is, if there IS inefficiency or waste in the private sector, in a free market this allows for the OPPORTUNITY for another business to come in, take out this waste and inefficiency, lower their prices and take away a significant amount of the other company's market share and possibly even drive them out of business. Regulations and high taxes reduce this possibility significantly.

Of course not all waste and inefficiency will be removed, but the reason you can make the argument as I do is because the waste and inefficiency is being blamed on the free market when the free market is a tool to REDUCE waste and inefficiency. It's just an analogy for them to understand how the free market works, and it is a very effective way to do it.

Sincerely,

Yahoo

No one is blaming the free market for inefficiency. it's just not the nirvana with instant optimization, reward and punishment that some people make it out to be. Obviously we all agree that it is better than the public sector.

Of course inefficiencies may create an opportunity for a new player, but not always. The large company may have economies of scale and established production that still makes it more profitable, even with massive waste and bureaucracy. Things just aren't that simple.

[TheBlackPeterSchiff]

No one is blaming the free market for inefficiency. it's just not the nirvana with instant optimization, reward and punishment that some people make it out to be. Obviously we all agree that it is better than the public sector.


Nobody is saying Free Market = Utopia. Because the Utopian society where every thing is just fine and dandy does not exist.

In a free market there will be greed, cronyism, incompetence, fraud, malpractice, etc.

But at least it provides a mechanism for change. All those things I listed also exist in the public sector, yet there can be no competition. The only mechanism for change is to vote in the next idiot.

[Gaddafi Duck]

Who the fuck are you to judge this "Iranian-American employee", do you review their work? What kind of job do they have? How much are they worth to the company? My boss is Iranian-American and is here working 8 hours a day consistently. They let me take long lunches because I still am able to get my work done and I am worth a lot to the company. My co-workers don't get the privilege because their jobs are more reliant on them actually being here to help others whereas my job is more reliant on my individual work. My old boss used to let me go home early sometimes. Why does it matter if I'm providing a lot of profitability to my company?

If this Iranian-American employee is worth it to the company, then a four hour extra vacation perk is a good thing. It is a cheap way to help give them a better attitude about their company and their pay/benefits.

Or maybe I'm wrong, the Iranian dude is just friends with the higher ups and buys them beers on the weekend, and this is more applicable:




Why didn't you read my post and think about it before responding? I just told you that the government regulations and taxes reduce competition, so that the companies that are left don't have to compete as hard. That means companies with a lot of politics that are getting in the way of their profitability WOULDN'T EXIST in the free market because there would be competition that was more efficient and would be able to lower their prices and take away their market share.

The reason why government sucks is because it is a monopoly and they have no competition. Then they intervene in the market and take away competition from other companies and have the same leeching effect as they do themselves. This isn't a difficult subject.

Lol--right, the value of one's attitude is worth more than the animosity and morale strangulation to the others in the department. It's all nepotism..because the "head" guy of the department and the regular employee are from the same country is all. The guy even claims no one "can do shit to him" because he's from the same country as the boss. Anymore bullshit morale boosters you want to toss this way, danno?

I think your replies to this thread illustrate the embracement of a theoretical utopia rather than everyday truth. My point is quite simple: most companies allow, as Brian said, deadweight to persist because in the end, the marginal gains from doing the 'right thing' are irrelevant. And many times the people at the very top are unaware of what middle management does with regard to nepotism. So you mistakenly identify a middle manager's decision with that of 'the company's'.

Step back from the Mises Institute and the books and look around. Or keep thinking government regulations have anything to do with the fact that companies allow inefficiencies to persist due to internal company politics. Yeah, because whenever I see someone who deserves a promotion not get it, I always think of Barack Obama or the Federal Register.

Get a grip.

[Gaddafi Duck]

Nobody is saying Free Market = Utopia. Because the Utopian society where every thing is just fine and dandy does not exist.

In a free market there will be greed, cronyism, incompetence, fraud, malpractice, etc.

But at least it provides a mechanism for change. All those things I listed also exist in the public sector, yet there can be no competition. The only mechanism for change is to vote in the next idiot.

Yes, and the point is to illustate the free market isn't some white knight people like to think it is. I find the explanations of rothbard/hayek/paul are incomplete. Sure the free market is better than government, but I'm not a utilitarian. Be more realistic, companies have a lot of waste. And for reasons the Rothbardian arguments don't appear to address.. it's all theoretical. To a degree rothbard is right, but I think he goes too far and his disciples fall with him.

Don't get me wrong, the free market is good, but it's not the pretty picture many like to paint.

[Raudsarw]

Efficient at doing what? Efficiency is entirely subjective, as any Austrian economist will tell you.

[TheBlackPeterSchiff]

Lol--right, the value of one's attitude is worth more than the animosity and morale strangulation to the others in the department. It's all nepotism..because the "head" guy of the department and the regular employee are from the same country is all. The guy even claims no one "can do shit to him" because he's from the same country as the boss. Anymore bullshit morale boosters you want to toss this way, danno?

I think your replies to this thread illustrate the embracement of a theoretical utopia rather than everyday truth. My point is quite simple: most companies allow, as Brian said, deadweight to persist because in the end, the marginal gains from doing the 'right thing' are irrelevant. And many times the people at the very top are unaware of what middle management does with regard to nepotism. So you mistakenly identify a middle manager's decision with that of 'the company's'.

Step back from the Mises Institute and the books and look around. Or keep thinking government regulations have anything to do with the fact that companies allow inefficiencies to persist due to internal company politics. Yeah, because whenever I see someone who deserves a promotion not get it, I always think of Barack Obama or the Federal Register.

Get a grip.

Still trying to understand your point. What's your alternative or solution to end nepotism?

[Diurdi]

Mises Institute never claims the private sector has perfect efficiency. It is however the best we can do, as those who become too inefficient get outcompeted and disappear because of their inability to create profit.

Human "flaws" will always be a burden on efficiency, those who let it become too much of a burden go bankrupt.

[dannno]

Lol--right, the value of one's attitude is worth more than the animosity and morale strangulation to the others in the department. It's all nepotism..because the "head" guy of the department and the regular employee are from the same country is all. The guy even claims no one "can do shit to him" because he's from the same country as the boss. Anymore bullshit morale boosters you want to toss this way, danno?

Ok, so my second point is more applicable, and you're STILL not getting it.




I think your replies to this thread illustrate the embracement of a theoretical utopia rather than everyday truth. My point is quite simple: most companies allow, as Brian said, deadweight to persist because in the end, the marginal gains from doing the 'right thing' are irrelevant. And many times the people at the very top are unaware of what middle management does with regard to nepotism. So you mistakenly identify a middle manager's decision with that of 'the company's'.

Step back from the Mises Institute and the books and look around. Or keep thinking government regulations have anything to do with the fact that companies allow inefficiencies to persist due to internal company politics. Yeah, because whenever I see someone who deserves a promotion not get it, I always think of Barack Obama or the Federal Register.

Get a grip.

The Federal Register?? And you seem to think you know about Austrian Economics?

Are you really just not reading my posts at all? I keep saying that companies where internal efficiencies persist don't have the competition that they would have in the free market due to regulations and taxes. Ok, that's point #1, do you understand that point?

Ok, point #2, if said competition existed, then that would give the opportunity for other companies with less internal inefficiencies to come along and drive them out of business. There is no motivation for a lot of companies to reduce these internal inefficiencies because there is no competition.

Your problem is you act like we are in a free market, and are blaming problems you see on the free market when there is none.

[Gaddafi Duck]

Efficient at doing what? Efficiency is entirely subjective, as any Austrian economist will tell you.


Ok, so my second point is more applicable, and you're STILL not getting it.




The Federal Register?? And you seem to think you know about Austrian Economics?

Are you really just not reading my posts at all? I keep saying that companies where internal efficiencies persist don't have the competition that they would have in the free market due to regulations and taxes. Ok, that's point #1, do you understand that point?

Ok, point #2, if said competition existed, then that would give the opportunity for other companies with less internal inefficiencies to come along and drive them out of business. There is no motivation for a lot of companies to reduce these internal inefficiencies because there is no competition.

Your problem is you act like we are in a free market, and are blaming problems you see on the free market when there is none.

Hahah...this is classic. Someone who keeps saying "no, that's not my point," then continuing to regurgitate the same sentences. I've more than once addressed this-- I think we're done.

[Diurdi]

Hahah...this is classic. Someone who keeps saying "no, that's not my point," then continuing to regurgitate the same sentences. I've more than once addressed this-- I think we're done.
You believe Austrians - or anybody for that matter, say the Private Sector is perfectly efficient.

What Austrians (and others) really say is that in a free market "the efficient" tend to weed out "the inefficient".
"The efficient" are not perfect but they are the best that exist thus far.

[RCA]

We can only have a free market without a State. Everything else is just splitting hairs.

[Gaddafi Duck]

Rig
You believe Austrians - or anybody for that matter, say the Private Sector is perfectly efficient.

What Austrians (and others) really say is that in a free market "the efficient" tend to weed out "the inefficient".
"The efficient" are not perfect but they are the best that exist thus far.

Right, but supposedly if you have enough nepotism to where those companies that aren't nepotistic, they'll attract the worthy employees while the politics of the other organizations will be their own undoing.

I'm saying that's bullshit. Hardly any company around, in practice beyond mission statements, actually places good ideas above personal egos. How many companies actually have CEOs listen to a recent hire? None. Case #1: people assume good ideas can't come from little or new guys. That goes back to politics. Dannno believes because we have regulations, that's the problem. I think there's more there, there that simple robotic Mises Institute talking points don't address. Most mises fellows are tenured professors--at least the "respected" ones. They sit around and think--they lack the application to their theories. Great thinkers, but nature gave us hands and eyes and ears too in order to observe the world.

[dannno]

Hahah...this is classic. Someone who keeps saying "no, that's not my point," then continuing to regurgitate the same sentences. I've more than once addressed this-- I think we're done.

You haven't logically addressed ANY of my points!! What the hell are you talking about?

Why can't you understand the simple logic of barriers to entry and that if we had less regulations and taxes, YOUR COMPANY AND NEARLY EVERY OTHER COMPANY would face additional competition at some level at some point in the future as there would be more opportunity to gain market share, and they would either have to reduce their internal inefficiencies to compete or go out of business? Currently that competition isn't there, so more cronyism exists in the workplace because of it. You haven't refuted ANY of that, all you have done is repeat things like "my office sucks and I don't blame it on Barack Obama, I blame it on the free market", but you don't use any logic to prove your point.

You also referred to the Federal Reserve as the Federal Register. That's one of the biggest wtf's I've seen on this forum.

[BrendenR]

I'm saying that's bullshit. Hardly any company around, in practice beyond mission statements, actually places good ideas above personal egos. How many companies actually have CEOs listen to a recent hire? None. Case #1: people assume good ideas can't come from little or new guys. That goes back to politics. Dannno believes because we have regulations, that's the problem. I think there's more there, there that simple robotic Mises Institute talking points don't address. Most mises fellows are tenured professors--at least the "respected" ones. They sit around and think--they lack the application to their theories. Great thinkers, but nature gave us hands and eyes and ears too in order to observe the world.

So my previous post was ignored, apparently, so I'll repeat myself:

So What? What do you propose to do about the fact that humans are humans, and sometimes make mistakes, don't listen to people with good ideas, and have all these bad qualities?

You can't do anything about it.

[dannno]

You can't do anything about it.

We could abolish the Federal Register :rolleyes:

[Diurdi]

Rig

Right, but supposedly if you have enough nepotism to where those companies that aren't nepotistic, they'll attract the worthy employees while the politics of the other organizations will be their own undoing.

I'm saying that's bullshit. Hardly any company around, in practice beyond mission statements, actually places good ideas above personal egos. How many companies actually have CEOs listen to a recent hire? None. Case #1: people assume good ideas can't come from little or new guys. That goes back to politics. Dannno believes because we have regulations, that's the problem. I think there's more there, there that simple robotic Mises Institute talking points don't address. Most mises fellows are tenured professors--at least the "respected" ones. They sit around and think--they lack the application to their theories. Great thinkers, but nature gave us hands and eyes and ears too in order to observe the world.

So you refuse to believe that companies, that allow internal politics or other factors to weaken their competitiveness, get outcompeted by companies where those factors cause less problems?

The truth is that those companies that are not bankrupt must be doing 'something right' as they're making profits while providing a product/service to the customer. The companies that manage to do the 'most right' will get the most profits and outcompete those who don't do 'enough right'.

Government regulation is in many fields the very cause of inefficiency as this regulation artificially reduces competition. This artificial lack of competition means that the company can be less efficient while still retaining profitability.

[Cutlerzzz]

A free market is not 100% efficient. A socialist economy is not 100% inefficient. However, it is indisputable that a free market is more efficient, as there is an internal pricing system and profit loss system.

[lx43]

Of course the private sector is not 100% efficient, nothing ever is; but I can promise you this: its far more efficient than the govt ever will be. Look at how efficent the North Korean regime is? It can't even feed its own people without help from the outside; now compare that to more privately run systems. Its a world of difference my friend.

As a business owner, I'm glad my competitors aren't 100% efficent because it allows me to take market share from them by offering lower prices and making more profit. Thats the beauty of capitalism. Business that don't innovate, provide a service or product that customers want at a reasonabe price will die.

[Kade]

Corporatist system we have now, like overpopulated deer eating themselves to death, is the end result of an unregulated market of any sort.

Of course, you will ALWAYS hear on here "but the government created the blah blah blah, or the government causes the blah blah blah.

This just deflects from the fact that the Corporatist environment that the government does protect was an end result of a private market buying itself into the government. It is ultimately inevitable. No un-princinpled system will lend itself to simply ignoring the opportunity to abuse the artifiacts of its creation when the only motivation is resources. The corporatist government protects the corporations... go figure.

Only reason works.

[heavenlyboy34]

Corporatist system we have now, like overpopulated deer eating themselves to death, is the end result of an unregulated market of any sort.

Of course, you will ALWAYS hear on here "but the government created the blah blah blah, or the government causes the blah blah blah.

This just deflects from the fact that the Corporatist environment that the government does protect was an end result of a private market buying itself into the government. It is ultimately inevitable. No un-princinpled system will lend itself to simply ignoring the opportunity to abuse the artifiacts of its creation when the only motivation is resources. The corporatist government protects the corporations... go figure.

Only reason works.
Keep on beating that Strawman, Kade. It's amusing. :) Hopefully you'll get around to using reason eventually.

[acptulsa]

Strawman? I missed the strawman. The government is corporatist and is protecting the corporations. Who can argue with that? And why would a voluntaryist do so?

[afwjam]

Think of the most successful private companies of the past 10 years.... Lets take Apple for example, I believe they are now the second largest company in the world by market cap. Why are they worth so much? How can they be making so much money? Can any private corporation, let alone a government compete? Do you think they are efficient? You think their customers are happy?

[Diurdi]

Strawman? I missed the strawman. The government is corporatist and is protecting the corporations. Who can argue with that? And why would a voluntaryist do so? He's saying an unregulated market will result in corporatism and "overpopulated deer eating themselves to death".

Firstly Corporatism necessarily requires government regulations. Secondly, the free market is the best rationing mechanism that there is, thanks to the price system and private property.

[heavenlyboy34]

Strawman? I missed the strawman. The government is corporatist and is protecting the corporations. Who can argue with that? And why would a voluntaryist do so?

He said >Corporatist system we have now, like overpopulated deer eating themselves to death, is the end result of an unregulated market of any sort.

He is correct to say that we have a corporatist system now (and that it is corrupt and wrong), but he is using this to rail against "unregulated" systems, which is utterly untrue.

[acptulsa]

He's saying an unregulated market will result in corporatism and "overpopulated deer eating themselves to death".

Firstly Corporatism necessarily requires government regulations.

No arguing with that. Which is why I read it as a lack of regulation of the government by us. But maybe I'm wrong and Kade will set me straight.


Secondly, the free market is the best rationing mechanism that there is, thanks to the price system and private property.

True, so long as the entrepreneurs don't (as they often do) start colluding with each other.

[heavenlyboy34]

Think of the most successful private companies of the past 10 years.... Lets take Apple for example, I believe they are now the second largest company in the world by market cap. Why are they worth so much? How can they be making so much money? Can any private corporation, let alone a government compete? Do you think they are efficient? You think their customers are happy?

Apple makes their customers very happy. According to apple users I've met, their customer service is top notch, and their products are (in their opinions) superior. They're worth so much because they make products that people want(which in turn makes them money). A private corporation could certainly compete-they would just have to be more innovative and provide what customers demand. Governments could never compete because of their very nature. I know that apple customers are happy because they keep buying Apple stuff year after year when they could easily switch to another OS.

[heavenlyboy34]

True, so long as the entrepreneurs don't (as they often do) start colluding with each other.

Entrepreneurs often collude? Since when? It happens, but I see no evidence of it happening "often". Got some examples?

[acptulsa]

Entrepreneurs often collude? Since when? It happens, but I see no evidence of it happening "often". Got some examples?

Well, you pretty much have to go back before Teddy Roosevelt to find a free enough market, but hell yes. Just about every bank and railroad of the nineteenth century did, and often as not J.P. Morgan was present at either negotiation. That said, the banks tended to stick together better than the railroads did.

Read your history.

[JamesButabi]

Difference is, I'm not forced to support inefficient endeavors in the ever diminishing private market.

[Sam I am]

One of the major problems I have with Ron Paul, is that he always defers to the same unproven(and untrue) argument that the private sector always works better and more efficiently than the government.

The government actually does a lot better than private sector in many areas that belong to the public domain such as the fire control, police, roads and prisons.

[acptulsa]

The government actually does a lot better than private sector in many areas that belong to the public domain such as the fire control, police, roads and prisons.

You can believe these things and still have no problem with Ron Paul. All you have to do is believe local government does this much better without federal interference, and remember that both U.S. Represenative and U.S. President are federal offices. Just that simple.

[afwjam]

Some would argue that volunteer fire departments are far more efficient taking into account resources. Private security has also been shown to be very effective. I would argue that the whole prison system needs to be eliminated. Imagine if Apple ran a network of toll roads around the US.... I would pay a hefty privilege to drive on Apple's roads, they would be faster, safer and cleaner.

[acptulsa]

I actually want the Oklahoma Turnpike Authority taken over by the Bondurant School. That would be good.

[heavenlyboy34]

One of the major problems I have with Ron Paul, is that he always defers to the same unproven(and untrue) argument that the private sector always works better and more efficiently than the government.

The government actually does a lot better than private sector in many areas that belong to the public domain such as the fire control, police, roads and prisons.

That point is debatable (and there's much literature that demonstrates the opposite of your claim, such as Block's book on roads), so it's not wise to say so.

[Sam I am]

Yeah, There's literature for and against everything

http://cdn.publicinterestnetwork.org/assets/H5Ql0NcoPVeVJwymwlURRw/Private-Roads-Public-Costs.pdf

[Sam I am]

If you want to privatize security, you might want to study up on the Chicago of the 20s or feudal Japan. The major providers of this "security" WILL NOT be as close to the law as the public police will. Your own provider of security hold a certain sway over you that no organization should hold other.

And if you thought that police didn't respect your rights before wait until they privatize all police. The private "police" whom are not those who you've hired will not care at all.



Imagine your town if all roads were privately made and owned. Would they all be there? would the road that goes by your house and every other person's house even be there? Would you have to pay multiple tolls on your way to work? Do you like to be able to walk across public land that you have the freedom to travel across?

[Superfly]

If you want to privatize security, you might want to study up on the Chicago of the 20s or feudal Japan. The major providers of this "security" WILL NOT be as close to the law as the public police will. Your own provider of security hold a certain sway over you that no organization should hold other.

And if you thought that police didn't respect your rights before wait until they privatize all police. The private "police" whom are not those who you've hired will not care at all.



Imagine your town if all roads were privately made and owned. Would they all be there? would the road that goes by your house and every other person's house even be there? Would you have to pay multiple tolls on your way to work? Do you like to be able to walk across public land that you have the freedom to travel across?

Intentionally naive or what? You provide chicago in the 20's as an example of privatized security but do you have any idea how much political corruption there was in chicago which led to the gangs cooperating with police? it was anything but some libertarian experiment.

here's some assigned reading, for starters, look up the "not so wild west" by Terry L. Anderson and P. J. Hill for an example of how private security actually does work.

[heavenlyboy34]

If you want to privatize security, you might want to study up on the Chicago of the 20s or feudal Japan. The major providers of this "security" WILL NOT be as close to the law as the public police will. Your own provider of security hold a certain sway over you that no organization should hold other.

And if you thought that police didn't respect your rights before wait until they privatize all police. The private "police" whom are not those who you've hired will not care at all.



Imagine your town if all roads were privately made and owned. Would they all be there? would the road that goes by your house and every other person's house even be there? Would you have to pay multiple tolls on your way to work? Do you like to be able to walk across public land that you have the freedom to travel across?
There's a difference between security and police. Police are not security, and are unnecessary (not to mention unconstitutional, if you believe in the constitution). Security is handled just fine without them. ETA: Did you know that US courts at all levels have ruled that the cops have no legal obligation to protect you?

[heavenlyboy34]

Intentionally naive or what? You provide chicago in the 20's as an example of privatized security but do you have any idea how much political corruption there was in chicago which led to the gangs cooperating with police? it was anything but some libertarian experiment.

here's some assigned reading, for starters, look up the "not so wild west" by Terry L. Anderson and P. J. Hill for an example of how private security actually does work.
this^^ Also, our forum-mate Brooklyn Red Leg is in the private security business and can talk about it from first hand experience, FWIW.

[Kade]

Entrepreneurs often collude? Since when? It happens, but I see no evidence of it happening "often". Got some examples?

Who is to say what an Entrepreneur is? The wireless companies were enterprising companies when they were first forged from the breakup of AT&T, now their prices are generally a product of collusion. The infrastructure they use was built on the backs of the taxpayer, and our just reward is a system of $40 text message plans!!!? Where is the outrage in this... do you have any idea how much it costs them to allow you to send texts? The only step left in this world is to start charging us to breathe, because Thor knows we can't communicate without spending money -- we already can't eat, shit, drink, sit, fuck, without the ALMIGHTY dollar. CHARGE MONEY FOR AIR!

Brilliant, I figured out where I'm investing soon... air futures.

[silverhandorder]

If you want to privatize security, you might want to study up on the Chicago of the 20s or feudal Japan. The major providers of this "security" WILL NOT be as close to the law as the public police will. Your own provider of security hold a certain sway over you that no organization should hold other.

And if you thought that police didn't respect your rights before wait until they privatize all police. The private "police" whom are not those who you've hired will not care at all.



Imagine your town if all roads were privately made and owned. Would they all be there? would the road that goes by your house and every other person's house even be there? Would you have to pay multiple tolls on your way to work? Do you like to be able to walk across public land that you have the freedom to travel across?
That is bs. How about we look at real cases of privatization. Argentina can not provide government services anymore because they are a defunct government. So people now pay for their own security there. You don't see any feudal lords springing up there or people becoming slaves to the security services they hire.

[Ronulus]

I'm only 25 and had spent a fair chunk of my adult life going to school and not working. However once I had landed my first job (even though it was retail just to have something at the time), I noticed that the incompetent workers tend to be the ones that are replaced. It may seem like the managers or higher ups are completely incompetent yet still keeping their jobs. The ones I have seen have been demoted/fired/or moved around to other locations while those that worked hard got promotions.

[Grubb556]

Well if a government run industry (which it will usualy have a monopoly on) makes a mistake, everybody is screwed. But if a private enterprise makes a mistake, less people are screwed.

[A Son of Liberty]

lol did that dude refer to Chicago in the 20's? Really? During PROHIBITION?

lolololololol

[erowe1]

I don't think it really is as efficient as many try to make it out to be. Mind you I'm not very far in my professional life, but all of the jobs/internships I have had circle around politics rather than productivity. I can't tell you how more often than not incompetent people are in charge of vital functions in private companies---this point is especially true the larger the company is compared to smaller scale operations. Most businesses claim to have Policy A engrained in their mission statements and is carried out in day-to-day work, but in reality, it's all fluff. I've had jobs where the average time to get hired took up to 2 months for entry level positions and required 3 rounds of interviews, while temps were hired instantly from temp agencies. I've had to speak with several individuals regarding compensation (of which none gave satisfactory explanations), to where I had to go to the person ahead of the payroll department and they couldn't even answer a basic question.

Back in the Summer of 2010, I noticed an employee would be absent from work up to 4 hours at a time (many times without clocking out) to watch FIFA World Cup soccer. How did he get away with it? He was Iranian and the "head" guy was Iranian as well--yet others who worked far harder and yielded a better output were fired as if their contributions were trivial.

I've worked for Union Pacific and had to present market analysis to senior management. I witnessed great ideas (not necessarily from my own proposals) be heavily criticized while others, which were not very thoroughly argued on the part of the employee, won out because they were more "aligned" with what managers were going with. It's as if "rocking the boat" was not something they were interested in--like, say, pointing out the economic problems facing the US market to where resources would be better invested elsewhere.

Now, the free market viewpoint claims that if employers fire the efficient workers for the sake of politics/sexism/racism/whatever, then those companies will lose market share to companies that don't conduct such practices. The truth is, I find so many inefficiencies in every company I have worked for to the point of annoyance, and the fact is pervasive among all companies at least in my experience.

It seems the free market viewpoint is unsatisfactory in explaining and defending the idea that it is efficient. It's certainly more efficient than the alternatives out there, like state-run institutions where politics is heralded as the centerpiece of all business transactions, but the subtle yet blatant installment of politics in private companies appears to create a considerable amount of waste. I just wonder how much is left on the table day-to-day due to this.

There's no way to eliminate that kind of thing. But the free market has a way of punishing those inefficiencies and rewarding companies that avoid them.

Also, understand that the environment you're applying for these jobs in is not really a free market. There are all kinds of bailouts, regulations, and other things that motivate companies to devote their energies to political ends rather than economic ones.

Free market economists have always been very blunt about the anti-free market tendencies of business owners, and their constant pursuit of special treatment by the state. Being a "capitalist" does not always entail being for free markets.

[RideTheDirt]

we could abolish the federal register :rolleyes:

rofl :D

[RideTheDirt]

Brilliant, I figured out where I'm investing soon... air futures.
I think they are called "carbon credits";)

great post btw

[-C-]

The profit motive in a free market is no different than the "invisible hand" in free trade. It is greed. To say a republic should build its economy around "the profit motive" is completely incompetent and provides little for a future.

How efficient is a market that underwrites trillions in CDO, MBS, and all kinds of other sickening derived financial instruments? But then again, I see so many people figure out, and type out, the math thats involved in fractional reserve lending, then deeming it insane.....so humor me...why don't the lot of you all draw out the calculus for a derivative and explain to everyone here on RPF how its a "good, profit motivating" and furthermore, sane.

[BrendenR]

How efficient is a market that underwrites trillions in CDO, MBS, and all kinds of other sickening derived financial instruments? But then again, I see so many people figure out, and type out, the math thats involved in fractional reserve lending, then deeming it insane.....so humor me...why don't the lot of you all draw out the calculus for a derivative and explain to everyone here on RPF how its a "good, profit motivating" and furthermore, sane.

You apparently have severe reading comprehension disability.

No one on here will ever argue that all products are good.
No one on here will ever argue that all products are sold in good faith.

There exists a court system and a system of law to enforce violations of rights and contracts. If you have a problem with a product provided by the private sector, or you think you or someone else is being defrauded, please, by all means, speak up, in an appropriate forum.

To address your point about fractional reserve banking:
Fractional reserve banking wouldn't be a problem if the government didn't outlaw competing currencies.

[erowe1]

To address your point about fractional reserve banking:
Fractional reserve banking wouldn't be a problem if the government didn't outlaw competing currencies.

Or underwrite a lender of last resort.

[DisillusionedPatriot]

The profit motive in a free market is no different than the "invisible hand" in free trade. It is greed. To say a republic should build its economy around "the profit motive" is completely incompetent and provides little for a future.

I disagree. Greed can indeed be very dangerous but can also prove to be an excellent motivator. It is the only just basis for an economy, and also the most efficient.

I get up and go to work because I want to make money. When work sucks I can think about what I will buy with my money or what I will do with it. I already feel that taxes consume an inordinate amount of my income. If I continue to owe the government a greater and greater percentage of money, I experience a diminishing margin of return for the hours I work. At some point I may reasonably conclude that it would be wiser not to work, or at least not to work without retaining what I earn. In fact, millions of people have already made this decision. I have spoken to many people who could and would work, but have decided that it is easier to collect unemployment or social security checks. Entitlement handouts encourage and reward laziness, while punishing those with the desire to work hard. This is not only greedy but parasitic, and is one of our nation's largest injustices.

I think part of the problem comes with defining the word "greed." Is it wrong to wish to keep what one has earned? It is greedy to expect that others will not take from you what is by all rights yours? I believe it is not. I would associate the word greedy with a person, who, having the ability to share with others, does not do so while continuing to indulge all his own pursuits. This is indeed not very empathetic, and according to many faiths, morally wrong. But ethics and religion also enjoin against covetness and theft. Is this not what is happening when money is taken forcibly by taxes? And while it is right to give freely and selflessly from one's own pockets, where is the generosity or purity in demanding that another surrender his money or be imprisoned?

To base one's economy on anything other than the invisible hand and strong property rights is to invite chaos and tyranny. I would call this justice rather than greed, but that's semantics. The point is, the most efficient society will be a voluntary one. Each man may put in no more than he desires and will expect no one to provide him with a safety net. This will be the most efficient method for at least three reasons:

1) It is the most simple. There are two political states which are by nature the simplest: each man governs himself, or one man governs all. In fact, the latter is more complex than the first as it involves the dissemination of law as well as its regulation. The more government there is (men, laws, statutes, policies, positions, etc.) the more time, effort, and resources must be diverted into sustaining the procedural part. These are resources that could be used elsewhere where they not required by the system.

2) As a general rule, each person is liable to act spend more responsibly and efficiently their own money rather than someone else's. We are motivated to do this by the personal investment in our own belongings. We have worked for them; they represent the fruits our time and labor, and we know that to acquire more will require us to do more work. People spending others' money, especially when they know they can always get more, are far less likely to use the money efficiently. Furthermore, they may even be inclined to pursue a different goal altogether - one of self advancement.

3) Forced, coordinated action is automatically less dynamic and fluid that free and voluntary associations. In a true free market, good ideas can replace poor ones quickly with a minimal loss to all involved. When anything is dictated from a large central source to countless numbers of people, new ideas stagnate and creativity is stifled. Those in charge have more incentive to pursue short term crowd pleasing shows than real long term progress, which may involve difficult sacrifices.


How efficient is a market that underwrites trillions in CDO, MBS, and all kinds of other sickening derived financial instruments? But then again, I see so many people figure out, and type out, the math thats involved in fractional reserve lending, then deeming it insane.....so humor me...why don't the lot of you all draw out the calculus for a derivative and explain to everyone here on RPF how its a "good, profit motivating" and furthermore, sane.

Not very efficient at all. That's why the Federal Reserve shouldn't be running monetary policy and Congress shouldn't be allowed to spend money on anything not expressly mentioned in Article 1 Section 8. I feel like those two steps would go a long long way towards solving our economic troubles. So would competing currencies as Brendon mentioned.