Re: What's the alternative to capitalism? : Fri Jan 10, 2014 9:25 pm  

Mintball wrote:

The point being that John Lewis and Richer Sounds are highly successful businesses, which is a very nice illustration of how you do not have to shaft your workforce to be successful and highly profitable.

I'm not personally familiar with Richer Sounds, but I am with John Lewis, and a key reason I go there when I need, say, anything for the flat is because the standard of service is so much better than most other places. And that also means a standard of service that includes honesty and not just an intention of flogging you something come what may. Thus they get my return custom – and my recommendation to other people.

In other words, treat people well and value them and give them a stake in the success of the business and you improve the business because you improve the standard of work.

The fortunes of M&S, on the other hand, are declining.

Re: What's the alternative to capitalism? : Sat Jan 11, 2014 12:41 am  

DaveO wrote:

It doesn't mean average across all companies! It's the average cost etc that a company itself incurs over time. It is not a comparison measure that says you can compare companies against each other, just a statistic that tells you if a company is making a super-normal profit or not.

It is a well understood economic statistic and certainly isn't as useless as you want to imply given its used by economists and accountants all over the world. Google super-normal profit and you will see for yourself.

Which companies are making super-normal profits? I have no idea given I don't have access to the data but I am sure we can make an educated guess that companies such as Apple, Google and Amazon fall into this category.

The markets that Apple, Google and Amazon are in are quite dynamic in that although there are only a handful of firms doing the same thing as them, they are producing goods that actually compete with a lot of different things outside their markets because they are essentially providing things to do with finding information, reading, watching videos, taking photographs, listening to music, and there are existing products that do all of these things. So they are involved in quite a competitive market structure.

The reason these firms make large supernormal profits is because they are innovative enough to produce products that are differentiated from what is out there and people want them, so this is driving innovation which is how technology improves and living standards rise.

The traditional market power of advertising is starting to ebb away now because of the proliferation of review sites and blogs etc. In the old days you could produce an average product and clever marketing could increase the value of it: the emperors new clothes effect. But now if you produce something thats a bit crap, it will get ripped to pieces on the internet and its easily accessible to people that want to research the product online.

The internet is good for improving capitalism because it makes information accessible, and when there is more information, firms lose market power and consumers become more powerful. I remember reading something recently about how in the cosmetics industry there has been a big market shift because traditionally cosmetics rode off the back of womens magazines and advertising: if you placed your product there it was one of the few products that the consumers got to hear about. However now a prime chunk of their audience (ie females aged 14-30) are now not influenced by direct advertising they get their information on cosmetics from reviews on fashion and beauty blogs most of which have just been started by some random 18 year old girl who then gets loads of followers. Peer influence and peer reviewing is becoming more significant and it is a threat to the advertising industry.

Re: What's the alternative to capitalism? : Sat Jan 11, 2014 8:30 am  

DaveO wrote:

It doesn't mean average across all companies! It's the average cost etc that a company itself incurs over time. It is not a comparison measure that says you can compare companies against each other, just a statistic that tells you if a company is making a super-normal profit or not.

It is a well understood economic statistic and certainly isn't as useless as you want to imply given its used by economists and accountants all over the world. Google super-normal profit and you will see for yourself.

Which companies are making super-normal profits? I have no idea given I don't have access to the data but I am sure we can make an educated guess that companies such as Apple, Google and Amazon fall into this category.

How are they able to do this? Well in Apple's case no doubt it is their marketing nous that gets people buying iPhone's that has a lot to do with it and there is nothing wring with that. What is wrong is when such companies add to their profit by exploitation such as Apple employing sweat shop labour to assemble the things.

That wouldn't even bring a low paid worker on £12K up to the level of the living wage, you know the figure based on the Minimum Income Standard.

A person earning £12K takes home (after tax and Ni) £11,114.72. £213 a week. Add 14% to that and we end up with £13680.

On that salary they would take home a net wage of £12,257.12. £235 a week.

If we assume they earn the minimum wage to get their £12K which is £6.31 an hour then they will have worked a 36.5 hour week to earn it.

The living wage is £7.65 so were they paid that then they would be on £14450.30, take home £12790.82 or £246 a week for the same number of hours.

Given £246 a week is the recognised figure as a living wage you r idea doesn't reach it and at the same time denies the tax man revenue.

Depending on circumstance social security payments will still be required whether you are on £12K, £13680 or £14450.

So no, I would not say your idea is a solution to low pay.

So what you are saying is I can't show you a company that makes super normal profits through exploiting its staff? The firms you quoted especially Apple and Google will be at the top end of pay and conditions as they need to attract the best people.

So if we gave the 14% directly to the low paid that would indeed be a two way win - the employee would get the money directly and it would closer to the living wage and we would cut out needless bureaucracy redistributing the funds

Re: What's the alternative to capitalism? : Sat Jan 11, 2014 10:02 am  

Sal Paradise wrote:

So if we gave the 14% directly to the low paid that would indeed be a two way win - the employee would get the money directly and it would closer to the living wage and we would cut out needless bureaucracy redistributing the funds

It would be interesting if you, or anyone else could define this.

If you accept the principle of limited accountability, limited or no checks, just trust then "needless bureaucracy" is of course the way to go.

2 observations.

No one, to my knowledge, has defined needless bureaucracy.

When the last great " light touch, don't dig too far system was set free", the entire world economic system nearly went belly up.

Re: What's the alternative to capitalism? : Sat Jan 11, 2014 2:55 pm  

Amazon and how it treats its employees.

Amazon and how it treats its employees.

Re: What's the alternative to capitalism? : Sat Jan 11, 2014 4:42 pm  

Mintball wrote: Amazon and how it treats its employees. Albeit, in that piece she's not an Amazon employee but engaged by Amazon through an agency, and notably doesn't get the same T&Cs as permanent staff.

Mintball wrote: Amazon and how it treats its employees. Albeit, in that piece she's not an Amazon employee but engaged by Amazon through an agency, and notably doesn't get the same T&Cs as permanent staff.

Re: What's the alternative to capitalism? : Sun Jan 12, 2014 9:05 am  

El Barbudo wrote:

All businesses have the potential to be moral/immoral depending on how they are run, there is nothing inherently or automatically moral or immoral in business unless steps are taken to make it so.
Richie mentions one company which has put morality into the way it conducts its business (with which I concur) but many others have not.
Hence we cannot assume that any one company, large or small, will conduct itself morally and we must assume a baseline of amoral ... which is why regulation is necessary and why constant re-examination of that regulation is also necessary..

This argument can be applied for Unions and workers too. Regulation is necessary for all walks of life but over regulation is as bad as under regulation. The EU is an example where over regulation has restricted its development and led to it being uncompetitive.

El Barbudo wrote:

So, you don't think that, for example, the banks were under-regulated?
If so, we disagree.

The banking crisis was not caused by under regulation. But it was certainly assisted by regulators who were not up to the job. In the UK we contrived to create the climate for disaster when Buster Brown (of no more boom and bust notoriety) moved from one regulator to three regulators. "Oh I thought you at the BofE were checking that"....."And I thought you at the FSA had a handle of that...oops!"

Re: What's the alternative to capitalism? : Sun Jan 12, 2014 9:40 am  

The term "Free Market" is misused. I doubt if anyone would want a totally free market with no rules & regulations whatsoever.

Most businesses would argue for a "Free Trade" market where there were no import/export duties and simple, clear and fair regulations that apply market wide and that could be easily enforced, otherwise there will never be a level playing field. This can be achieved within your own borders but is unlikley to gain agreement on a world wide basis.

However Governments and civil servants do not understand business and therefore they are not the best people to make these regulations on their own.

Capitalism is far from perfect but so far all the alernatives have failed. Profit and the private sector should be encouraged and we need a smaller state to reduce the burdon.

Greed is not a product of capitalism - it is a human condition. There will always be greedy businessmen, greedy shareholders (including the pension funds etc), greedy unions and greedy workers.

That said much could be done to target a fairer society. I would like to see the shareholder rules change for public companies so that the employees own a substantial percent of the shares - say 40%. This would curtail some of the greed of the top executives, reward the employees by incentive and prevent unwanted take overs (if say a 75% shareholder vote was required)

Re: What's the alternative to capitalism? : Sun Jan 12, 2014 12:45 pm  

Lord Elpers wrote:

However Governments and civil servants do not understand business and therefore they are not the best people to make these regulations on their own.

This is the classic phrase of businesses that want to lobby for special protections/subsidies/advantages from government.

Let me guess, government doesn't understand business so they need that business to provide advice on how to do it!

Personally I don't think the RFL understands rugby league and I would much rather they asked Simon Moran from Warrington what the rules should be, as at least he's a rugby man and you could be sure that the correct decisions on administering the game would be made.

Re: What's the alternative to capitalism? : Sun Jan 12, 2014 1:18 pm  

sally cinnamon wrote:

This is the classic phrase of businesses that want to lobby for special protections/subsidies/advantages from government.

Let me guess, government doesn't understand business so they need that business to provide advice on how to do it ...

Isn't that why Adrian Beecroft paid a few thousand to the Conservative Party to let him make up some bonkers suggestions for how to make more people depend on legalised loan sharks?