On Tue, 14 Oct 2003 20:44:23 +0800, Old Nick wrote:
On Mon, 13 Oct 2003 15:42:03 -0400, Gary Coffman
wrote something
......and in reply I say!:

On Mon, 13 Oct 2003 11:06:29 +0800, Old Nick wrote:
Union workers are "pricing themselves out of the market" at least in
part because they need the wages to buy the products they make

But at least in part those products are priced so high because of the
excessive wage demands of the union workers. It is a vicious circle.


That is my point, actually. It's called inflation, caused by profit. I
mean profit as in the workers want to be paid more than they have to
actually work for, and the companies want to get more for the product
than they had to pay for it. I am fighting Carl's contention that
removing one half of the equation will solve the problem. It will not
work for many reasons.

No, that's not called inflation. Inflation is caused by the money supply
increasing faster than the output of goods and services. Higher wage
demands per se don't increase the money supply. They just reallocate
it.

Indeed, there was a time when jingoism overrode good sense. But
the purpose of a corporation is to earn value for its shareholders.
Eventually it has to do that, or it will cease to exist, its shareholders
will have lost their investments, its workers will be unemployed, and
who benefits from that?

hmmmmmmmm....here we really go head to head.

Firstly, I do not describe what I was talking about as jingoism
overriding good sense, although there is an element of this. Companies
believed in their product, saw the long haul, and realised that their
best bet at prosperity and good feeling (which they valued then) was
by making the place (town, state, country) in which they were based,
and in which the huge majority of their "power men" lived, prosper
along with them. The majority of their "power men" were directly tied
up in the processes that the company carried out. They believed in the
product to at least some extent. While not in any way egalitarian, it
also maintained a moderately contented and relatively stable situation
in many places around the world. It was not equality, but resentment
was kept controllable, and many people were more than content to
largely ignore the inequality, on both sides. Others, not so well off,
were envious and more or less resentful, but they saw little enough of
it that it was not important to either side to really worry about it.

What you're describing was once called "robber baron" capitalism.
It is essentially a feudal view of business.

Secondly, unless that corporation is that evil of evils, a straight
out trader in companies and shares, the purpose of a corporation is
_not_ to earn value for its shareholders. The purpose of a corporation
is to carry out its job well. To do its job, it needs to sustain
profit _only_ enough to keep trading _in its product_ healthily. It
could in effect be non profit, still pay lots of people good money,
some a lot more than others, and be a sound, successful company. It
could also profit enough pay shareholders a reasonable rate of return
for their help, in the form of dividends. This rate of return can be
agreed upon before shares are bought, and reviewed as needed or
possible. It should never override the core business of the company.

You're just an old communist at heart aren't you? :-)

I agree with the share system. It has allowed many companies to things
they could not have done otherwise. But I disagree with _trading_ in
shares because:
- a share trade, between parties totally disconnected from the
shares' "owners" (the company) does absolutely nothing for the core
business, or productivity of the company
- in fact, come to think of it, it achieves nothing!

Actually, it achieves liquidity, and an efficient allocation of capital.

Gary