Economics

[ryzno]

The US pays far more for both of these than European nations do because it’s based on free market concepts, rather than providing a service.

Last time I checked the medical industry isn't a free market. Joey gave good reasons why prices are ridiculous here. I even explained here before how cash can be cheaper.
They price gouge insurance companies!

 

[Danoff]

They price gouge insurance companies!

Every once in a while it pays off. I caught my insurance company accidentally paying out $10,000 for a $500 procedure. It was coded incorrectly as a major surgery instead of an outpatient exam. I contacted them to tell them that they had mistakenly paid it, and they basically told me to buzz off and that they didn't care. It was never corrected.

 

[Exorcet]

For myself I agree in a mostly free market, but the government has to exist in order to regulate and maintain it. A free market can not regulate itself (as has been shown), on top of that, advanced free markets do not create fair environments for competition (think of a how much power Coke has over new drinks companies/start-ups, or Intel and it's anti-competition antics).

The presence of an established business like Coke can be beneficial to a new business. If the start up if able to produce something of sufficient value that Coke wants to acquire them, that's potentially a win for both.

On the idea of needing government to maintain the market, I disagree. If you have a goal for the market it's better to be able to influence it rather than not, but government isn't the only way of having influence. Nor is "voting with your dollars". Consumers and those concerned with the state of the economy and how leveling the playing field is should organize to make it easier for them to push the market in their desired direction. Unfortunately most societies aren't really set up this way. Governments are convenient because they already exist and they make it "easy" to force those you disagree with (monopolies) into submission. I don't think it should work that way, but it's a bit of an uphill battle to change things because it requires changing hoe society operates. It will be a long process, but I don't see why it wouldn't work out any worse than what we have now.

 

[baldgye]

The presence of an established business like Coke can be beneficial to a new business. If the start up if able to produce something of sufficient value that Coke wants to acquire them, that's potentially a win for both.

On the idea of needing government to maintain the market, I disagree. If you have a goal for the market it's better to be able to influence it rather than not, but government isn't the only way of having influence. Nor is "voting with your dollars". Consumers and those concerned with the state of the economy and how leveling the playing field is should organize to make it easier for them to push the market in their desired direction. Unfortunately most societies aren't really set up this way. Governments are convenient because they already exist and they make it "easy" to force those you disagree with (monopolies) into submission. I don't think it should work that way, but it's a bit of an uphill battle to change things because it requires changing hoe society operates. It will be a long process, but I don't see why it wouldn't work out any worse than what we have now.

The free market in of its self cannot full-fill all of society's requirements, which is largely why we have governments. I'm not sure how else you could influence or force the market to operate in a way that was beneficial (and conducive to a stable and healthy economy).
The free market, free of many regulations and over-cite created the financial crisis of 2008, without bailouts it would have resulted in large-scale economic hardships (and for some it did even with those bailouts). How could you prevent another such crash happening, without any governmental body in place?

Further to that, without any democratic process, how would anyone have any say in anything? Companies spend billions and billions of dollars a year in order to influence how people perceive value and influence them. How could they be trusted in running countries?

The presence of an established business like Coke can be beneficial to a new business. If the start up if able to produce something of sufficient value that Coke wants to acquire them, that's potentially a win for both.

Conversely, they could act unfairly and prevent sales of said drink due to their stranglehold on supplies etc... things that happen even in our current global economy.

If you have a goal for the market it's better to be able to influence it rather than not, but government isn't the only way of having influence.

The goal of the free-market is to generate money. You cannot seed other goals or wishes into it.

 

[Rallywagon]

The free market in of its self cannot full-fill all of society's requirements, which is largely why we have governments. I'm not sure how else you could influence or force the market to operate in a way that was beneficial (and conducive to a stable and healthy economy).
The free market, free of many regulations and over-cite created the financial crisis of 2008, without bailouts it would have resulted in large-scale economic hardships (and for some it did even with those bailouts). How could you prevent another such crash happening, without any governmental body in place?

Further to that, without any democratic process, how would anyone have any say in anything? Companies spend billions and billions of dollars a year in order to influence how people perceive value and influence them. How could they be trusted in running countries?


Conversely, they could act unfairly and prevent sales of said drink due to their stranglehold on supplies etc... things that happen even in our current global economy.



The goal of the free-market is to generate money. You cannot seed other goals or wishes into it.

I once was as jaded about capitalism as you. But, I think over time, and having discussions with people like my wife and Danoff, I've reconsidered some of my views.
I also do not trust a corporation further than I can throw it. We can see how far a company will go to protect its interests by looking at the antics of the cigarette and gas companies and how they reacted when the negative health consequences of smoking or leaded gas start being published and pushed into the public space. How much more damage could have been done to the environment and future generations had regulations not been put into place. Absolutely horrific the actions taken by these companies to protect themselves over public health.
However, the sole goal I think, more than money, of a free market is sustainment. It's better to make 1 million annually over the course of 10 years than it is to make 5 million in one year but then the business folds because the product was subpar.
A business doesnt just want to make money, it wants to survive and strive. This is where gov regulations can really mess things up. When the gov starts enacting policies that favor one company over another, this kill competition, that then stagnates innovation and creates a situation where a small few, or even one company controls they particular part of the market and can set prices however they want. Pharmaceuticals, power and ISP companies in the US are great examples of how poorly that can turn out. We are in an era where we should have 1Gbps fiber ran to most house, and yet dual line DSL is still a thing because AT&T or Comcast have very little competition, so there is no incentive to modernize their systems beyond what they have. Lobbying needs to be pulled out of governement, but, the governement needs to also be pulled out of the market space in so far as they should only be worried about public health.

 

[Exorcet]

The free market in of its self cannot full-fill all of society's requirements, which is largely why we have governments. I'm not sure how else you could influence or force the market to operate in a way that was beneficial (and conducive to a stable and healthy economy).
The free market, free of many regulations and over-cite created the financial crisis of 2008, without bailouts it would have resulted in large-scale economic hardships (and for some it did even with those bailouts). How could you prevent another such crash happening, without any governmental body in place?

I'm not anti-government, governments should exist in any society. What I oppose is being forced into compliance with government. Something like a consumer's union can act like government regulation in pressuring businesses to act a certain way. Please the union or you don't get income from them, which is bad for your business. The union can decide on what it deems acceptable business practices and only endorse businesses that it likes. If the union has a large enough membership, it would be unwise for a business to operate against it. but still possible. Current governments could shift into a role like this, effectively making an entire nation's population part of the union.

Further to that, without any democratic process, how would anyone have any say in anything? Companies spend billions and billions of dollars a year in order to influence how people perceive value and influence them. How could they be trusted in running countries?

Business shouldn't run countries. That's part of the problem we currently have with them lobbying for control. Government shouldn't try to run society, and if it didn't, companies couldn't use it to gain power.

There are also downsides to a democratic process. If you don't have majority support your idea flounders. I put forth the idea of voluntary UBI earlier in this thread party because it avoid the democratic gridlock. If it was voluntary you no longer need to win over the opposition and can implement UBI right away. Perhaps it wouldn't be as effective as having the entire nation support it, but it's better than it not existing (if you're pro UBI). Additionally having it exist in some form and working is probably a good way to gain more support.

Conversely, they could act unfairly and prevent sales of said drink due to their stranglehold on supplies etc... things that happen even in our current global economy.

This is also possible. It's also possible that Pepsi sees the start up as a means to gain market share over Coke and buys them out, making it harder for Coke to interfere. There are many possible outcomes.

The goal of the free-market is to generate money. You cannot seed other goals or wishes into it.

The market has no goal, the people participating in it do. Their goals can range from making money to improving lives. In any case, you can influence the market. A free market merely means no government regulation, but that doesn't stop people from applying pressure through other means.

 

[Danoff]

improving lives.

In fact, I think a lot of companies start with this in mind. Not all of them certainly, but some of them.

 

[Exorcet]

In fact, I think a lot of companies start with this in mind. Not all of them certainly, but some of them.

I agree. From my own experience, providing for others through your work seems to be fairly common concern among people. Money is absolutely on the mind of people running a business, but it's not the only thing.

 

[baldgye]

I once was as jaded about capitalism as you.

I'm not jaded and I'm pro-capitalism. But. in my own opinion and understanding of economics... extreme economic policies (be socialism or free market) do not work, you need (as with all things), a balance. I think Europe, generally has that balance worked out the best. It's a huge economy, spread across country, language, historical, cultural and political differences.

A business doesnt just want to make money, it wants to survive and strive.

Are these not one-in-the-same?
The rest of your post, seems to be a vastly oversimplification of a variety of things. While the government and its regulations wont get it right all the time, they need to exist (in my opinion) and they themselves are a function of democracy.

What I oppose is being forced into compliance with government.

Wouldn't that mean anarchy? If the government couldn't force the people it rules over into complying with rules? That seems like poor economic policy, zero rules and zero enforcement would only sharply increase the wealth gap of a nation.

There are also downsides to a democratic process. If you don't have majority support your idea flounders.

Isn't that a benefit of the democratic process?

This is also possible. It's also possible that Pepsi sees the start up as a means to gain market share over Coke and buys them out, making it harder for Coke to interfere. There are many possible outcomes.

That's the same outcome you posted earlier dressed up differently. Why does this smaller company have either be bought out, or face unfair competition in the market due to the incumbent? Shouldn't the two be able to compete fairly and equally? Anti-competition rules allow for this to take place and enforce it when they aren't followed (the EU is a good example of them picking fights with anyone not following these rules).

The market has no goal, the people participating in it do. Their goals can range from making money to improving lives. In any case, you can influence the market. A free market merely means no government regulation, but that doesn't stop people from applying pressure through other means.

I don't agree with this. The market as an entity itself might not have a 'goal' but the components that make it up do, and that is to generate money. A company only exists to make money. I also don't think that consumers and people marketed to/at with billions of dollars and the support of doctors etc means that people can be fair and objective and then band together in order to influence the market in a positive way.
Think of all the nasty **** Nestle does all over the world, yet they're huge and will continue to be. Petrol and oil companies knew about global warming decades ago and yet they're only now just publicly coming round to the idea...

One of the links posted earlier cited renewables as bad for the economy, ignoring the fact that this was opening up a brand new sector and would help make the environment (for the economy to exist in), healthier.

I put forth the idea of voluntary UBI earlier in this thread party because it avoid the democratic gridlock. If it was voluntary you no longer need to win over the opposition and can implement UBI right away. Perhaps it wouldn't be as effective as having the entire nation support it, but it's better than it not existing (if you're pro UBI). Additionally having it exist in some form and working is probably a good way to gain more support.

What do you mean by voluntary?

 

[Exorcet]

Wouldn't that mean anarchy? If the government couldn't force the people it rules over into complying with rules? That seems like poor economic policy, zero rules and zero enforcement would only sharply increase the wealth gap of a nation.

It wouldn't be anarchy because people would be able to make agreements with each other, which the government would enforce. Instead of banning a certain industrial process on environmental grounds, people could come together and decide and not to purchase from businesses that use that process. The business is pressured to move away from the process (possibly even signing not to use it, which would act like regulation and be enforced as such), show that it's not as bad as people think, or improve it if they think they can and that it's the best process to use.

Isn't that a benefit of the democratic process?

I don't see it that way, requiring majority support makes it harder to get something done and the result can be unpopular with quite a few people. 70% satisfied is 30% dissatisfied. We could instead let each group go their separate ways, with both possibly benefiting.

I guess there are some situations where homogeneity might be preferred, like roads. It's nice having them the same everywhere, but it's not like people can't tolerate some variation. Road laws (among a bunch of other laws) in the US vary from state to state but it doesn't keep the roads from being usable.

That's the same outcome you posted earlier dressed up differently. Why does this smaller company have either be bought out, or face unfair competition in the market due to the incumbent? Shouldn't the two be able to compete fairly and equally? Anti-competition rules allow for this to take place and enforce it when they aren't followed (the EU is a good example of them picking fights with anyone not following these rules).

The smaller company doesn't have only those options. I only brought up my example initially as a way that the small business and Coke might find each other mutually beneficial. If people are concerned over how Coke would treat the startup, they should have the ability to support startups over Coke. Let them fund the smaller business directly, or let them negotiate with vendors, restaurants, etc to make their stance with Coke known and provide a way for the startup to get a fair shot.

I don't agree with this. The market as an entity itself might not have a 'goal' but the components that make it up do, and that is to generate money.

The only goal of people in the market is to make money for themselves?

A company only exists to make money.

They make money to exist, why they exist can be a long list of reasons. It can include making money, it exclude all things but making money, but to claim that is the only reason they exist is ridiculous.

I also don't think that consumers and people marketed to/at with billions of dollars and the support of doctors etc means that people can be fair and objective and then band together in order to influence the market in a positive way.

Why is marketing all they have to go on? They can do their own research, especially if they come together to fund it. This isn't all that different conceptually from something like the FDA approving drugs through public funding.

Think of all the nasty **** Nestle does all over the world, yet they're huge and will continue to be. Petrol and oil companies knew about global warming decades ago and yet they're only now just publicly coming round to the idea...

This is why I'm not advocating for letting them go unchecked. At the same time we don't have to tell them how to act or put laws in place to prevent other companies that have done nothing wrong from growing as large. I think informed and concerned consumers would make it very difficult for businesses to act selfishly, far more effectively than regulation that can be bought out and changed to a company's favor. That says nothing about how easy it would be to accomplish though. As much as I'm a proponent of it, I see it as a challenge.

One of the links posted earlier cited renewables as bad for the economy, ignoring the fact that this was opening up a brand new sector and would help make the environment (for the economy to exist in), healthier.

People can make the claims they want, but these claims shouldn't go unchallenged. I don't even have a problem with ridiculous claims and they mark the one spouting them as ignorant, dishonest, or both.

What do you mean by voluntary?

The system would be funded by those who support it instead of using a nationwide tax that takes money from all people.

 

[baldgye]

@Exorcet Sorry I don't want to continue chopping up our quotes so I'll use broader strokes if your alright with that, just makes it easier for me to read

This is my understanding of companies and why they exist;

What Is the Theory of the Firm
The theory of the firm is the microeconomic concept founded in neoclassical economics that states that a firm exists and make decisions to maximize profits. The theory holds that the overall nature of companies is to maximize profits meaning to create as much of a gap between revenue and costs. The firm's goal is to determine pricing and demand within the market and allocate resources to maximize net profits.

via

This is the basis for my rejection of your notion that they exist for any other reason. I'd also piggy back onto this the economic concept that human wants are infinite and so generally I think it's fair to say people exist in the market to generate money. This can be for various reasons, selfish/philanthropic etc... it's not important, what's important is that its a mechanic of the economy. And you can see this generally happens. People work, to get money. If this wasn't the case then I think you'd have more people living in communes and monasteries.

I also think that marketing is monumentally powerful and something most people are not equipped the deal with fully. Yes, people can go away and read up on the realities and make decisions, but people don't. We can see this in how they spend money (supporting fundamentally bad entities in the market) and how they vote (Brexit/Trump sold people on false information, regardless of your political stance). So I don't think it's reasonable to put the onus on the population to individually challenge multi-billion dollar companies.

I'm still not sure on how you're version of UBI would work though. If only 15% of the population supported it, it wouldn't (for arguments sake) have enough income to then be dished out to the people who required/qualified for it, so what would happen then? Would those people get their money back? Why should the onus be limited to a handful of people to help boost the economy when it'll benefit all sectors over time and those that contributed nothing will still benefit?

 

[Danoff]

@Exorcet Sorry I don't want to continue chopping up our quotes so I'll use broader strokes if your alright with that, just makes it easier for me to read

This is my understanding of companies and why they exist;

via

This is the basis for my rejection of your notion that they exist for any other reason. I'd also piggy back onto this the economic concept that human wants are infinite and so generally I think it's fair to say people exist in the market to generate money. This can be for various reasons, selfish/philanthropic etc... it's not important, what's important is that its a mechanic of the economy. And you can see this generally happens. People work, to get money. If this wasn't the case then I think you'd have more people living in communes and monasteries.

I also think that marketing is monumentally powerful and something most people are not equipped the deal with fully. Yes, people can go away and read up on the realities and make decisions, but people don't. We can see this in how they spend money (supporting fundamentally bad entities in the market) and how they vote (Brexit/Trump sold people on false information, regardless of your political stance). So I don't think it's reasonable to put the onus on the population to individually challenge multi-billion dollar companies.

I'm still not sure on how you're version of UBI would work though. If only 15% of the population supported it, it wouldn't (for arguments sake) have enough income to then be dished out to the people who required/qualified for it, so what would happen then? Would those people get their money back? Why should the onus be limited to a handful of people to help boost the economy when it'll benefit all sectors over time and those that contributed nothing will still benefit?

It's shorthand.

It's used in math all the time to simplify variables (A<<B, A is approx. 1, etc.). Economic theory uses it to roughly estimate how a company is going to behave in the market. It's simplifying, not an axiom that you can take and run with.

Companies do not always maximize profits. But sometimes, when they do behave in a way that doesn't maximize profits, it wouldn't look mathematically much different from maximizing profits. For example, divesting a profitable branch of your company. If you listen to leadership in some of these companies, for example medical device companies, they might say something like "yea, this arm of our company is profitable, but we're not really in the business of providing consumables, our company is more about developing devices that save lives. This is just not our business model. We should shed this branch and let someone else do it better than us. The patient will benefit", and don't think for a second here that I'm talking out of my rear, this is personal experience. Companies do this all the time.

Check out the mission statement for Medtronic, the world's largest medical device company.

THE MEDTRONIC MISSION

To contribute to human welfare by application of biomedical engineering in the research, design, manufacture, and sale of instruments or appliances that alleviate pain, restore health, and extend life.

To direct our growth in the areas of biomedical engineering where we display maximum strength and ability; to gather people and facilities that tend to augment these areas; to continuously build on these areas through education and knowledge assimilation; to avoid participation in areas where we cannot make unique and worthy contributions.

To strive without reserve for the greatest possible reliability and quality in our products; to be the unsurpassed standard of comparison and to be recognized as a company of dedication, honesty, integrity, and service.

To make a fair profit on current operations to meet our obligations, sustain our growth, and reach our goals.

To recognize the personal worth of all employees by providing an employment framework that allows personal satisfaction in work accomplished, security, advancement opportunity, and means to share in the company's success.

To maintain good citizenship as a company.

The CEO stresses the "fair profit" point (point 4) as being quite distinct from "maximum profit" when he speaks.

So what happens is the company divests a branch of their business (sometimes to a competitor) and gets paid for it. You might think this is maximizing profits, but in many cases maximizing profits would have meant growing that business, not getting a short-term payout and shedding it.

Companies also engage in philanthropy regularly. And you might cynically think that philanthropic endeavors for corporations are entirely about making the brand look better, and growing business. But I've seen too much philanthropic spending fly under the radar to think that this could possibly be the case. I don't know of any companies that turn an overall profit on their charitable giving. I'm sure there are some, but I can't think of them. You might see companies advertise that they're good stewards of the community, and talk about some of their programs, but it's just an ad. Here's how it works.

Large company has a group in it that wants to do a philanthropic effort. They look for budget in the company's charitable program department, and scrape some together. They perform the charity function, and move on. Later, a completely different group of people (marketing) within the company is sitting around trying to come up with good advertising. They realize that their brand could use a boost, and they start combing through the charitable programs to see which one might make a good ad. Now if the first group hadn't performed the charity, the marketing group would have used something else to make a good ad. They just looked for the material they thought was best and used it.

Certainly it could go the other way. A company might perform a charity to intentionally correct a brand problem. And you could see that as maximizing profits. But the former definitely exists, and clearly it is not maximizing profits.

Last point, non-profits.

 

[MatskiMonk]

For example, divesting a profitable branch of your company. If you listen to leadership in some of these companies, for example medical device companies, they might say something like "yea, this arm of our company is profitable, but we're not really in the business of providing consumables, our company is more about developing devices that save lives. This is just not our business model. We should shed this branch and let someone else do it better than us. The patient will benefit", and don't think for a second here that I'm talking out of my rear, this is personal experience. Companies do this all the time

Yeah, I mean, I'm not saying that scenario couldn't exist, but specifically consumables are generally under greater price pressure, than R & D budgets. The decision to exist more in one field may be directly attributable to patient care as a mission statement, but I'm not sure it happens that often if it doesn't also improve overall profitability.

 

[Danoff]

Yeah, I mean, I'm not saying that scenario couldn't exist, but specifically consumables are generally under greater price pressure, than R & D budgets. The decision to exist more in one field may be directly attributable to patient care as a mission statement, but I'm not sure it happens that often if it doesn't also improve overall profitability.

It definitely happens. Companies pick and choose where they want to participate in the market. They don't just grow for growth's sake. Some do, probably Amazon does. But not all of them. Many companies exist because they believe in the service they perform.

Edit:

Whatever deviation that is from purely pursuing profits though is in the noise for economic modeling. It still works out to model companies as acting consistently with maximizing profits. What it really means as that they're not going to behave in a way that blatantly wastes money (at least not for long). They absolutely do that too, of course, but it happens infrequently enough that I don't think economists worry about modeling it.


Edit:

Another example of a company that doesn't seem to give much thought to what is always profitable, and instead chases larger goals, would be Tesla.

 

[MatskiMonk]

It definitely happens. Companies pick and choose where they want to participate in the market. They don't just grow for growth's sake. Some do, probably Amazon does. But not all of them. Many companies exist because they believe in the service they perform.

Fair enough, I'm sure some do. As a supplier to medical device companies on both the consumables front and the development front, growth through acquisition then spinning off/shutting down less profitable aspects in order to increase revenue and at least maintain profitability is very much the order of the day in my experience, I'll probably be out of a job in 6 months because of it (well.. that and Brexit).

 

[Danoff]

Fair enough, I'm sure some do. As a supplier to medical device companies on both the consumables front and the development front, growth through acquisition then spinning off/shutting down less profitable aspects in order to increase revenue and at least maintain profitability is very much the order of the day in my experience, I'll probably be out of a job in 6 months because of it (well.. that and Brexit).

Sorry to hear that. I hope you find a new gig that offers you more stability.

It's hard to spin off an arm of your company that is not profitable. Trying to sell a business that's losing money is not easy (although not impossible). I've also heard CEOs say that they'll keep certain projects going no matter the loss, because they believe that the project is too important to the consumer.

I didn't pick medicine accidentally, it's one of the areas where founders, employees, and management really get into the mission - helping people. It's harder to see that when your business model is offering low prices, or bulk discounts.

It happens in other areas too though. Like law, for example. Public defender is a pretty crappy gig, where helping people has to be one of your primary motivations. Attorneys also devote themselves (in whole or in part) to pro bono work to help people. I pick law here in part because somewhere in every attorney is a recognition that they're somewhat self-employed. It's one job where you can literally take it on the road by yourself and work as a company of one.

Charity is everywhere, in the biggest companies and the smallest.

I've said it before but I think it bears repeating. When you're rich, the value of money gets lower, and a lot of times people start looking to other ways to give their lives meaning. It's why the Gates Foundation, and other similar enterprises exist. I don't think for a second the Elon Musk is motivated entirely by profits.

 

[MatskiMonk]

Sorry to hear that. I hope you find a new gig that offers you more stability.

Thanks, I'm not sure I'll be that sorry! I'm no longer a slave to personal debt so can now afford to take a job with far less pressure attached, which would be a welcome change, and certainly a health benefit.

It's hard to spin off an arm of your company that is not profitable. Trying to sell a business that's losing money is not easy (although not impossible).

In my experience it's more about brands or product lines, rather than entire companies. Company A buys company B to get access to a brand, product line, patient list, health authority contract, process or even sometimes just an idea, then takes what's left and sells it on to someone who can make sense of the remnants.

I'm not suggesting every company is purely about profits, and I'm sure they don't start out that way, but it seems to be a key driver once they reach a certain size. From my perspective, I find it corporate, "board room", ruthless, and cut throat. I don't perceive it to be about saving or improving lives. Other perspectives I'm sure are just as valid.

 

[Danoff]

I'm not suggesting every company is purely about profits, and I'm sure they don't start out that way, but it seems to be a key driver once they reach a certain size. From my perspective, I find it corporate, "board room", ruthless, and cut throat. I don't perceive it to be about saving or improving lives. Other perspectives I'm sure are just as valid.

Size is a major issue. The larger a company is, the more difficult it is for that company to be influenced by the personal goals of any one member, and it gravitates toward the common denominator, profit. Large companies kinda suck at most things. The thing they're best at is having resources to make something happen smoothly and at scale.

 

[Exorcet]

@Exorcet Sorry I don't want to continue chopping up our quotes so I'll use broader strokes if your alright with that, just makes it easier for me to read

That's fine, I'll do the same.

This is my understanding of companies and why they exist;

via

That source does itself mention that a profit only motive isn't the only possibility. It even highlights risks from following such a path.

From the section you quoted, I agree with a few things. A company will try to maximize the gap between revenue and cost. To not do so would be to increase the risk of collapsing. This is a problem for the selfish and philanthropic alike. The difference is that for the selfish, it's the only goal. Not every business will operate like that.

https://en.wikipedia.org/wiki/Jack_Northrop

He founded his company because he believed he could build a better plane and he outright left the industry rather than merge with another company to give up his dream. That's not profit chasing. I can't give you a percentage for how many businesses are founded under these conditions, but it's pretty clear that if you have the skill, the drive, and the opportunity that creating a business to better society is a realistic form of philanthropy.

Even selfish entities can benefit society. You mentioned Intel before, and as much as they try to rig things in their favor they still produce good products. That doesn't excuse their behavior but I think it shows that at least some part of their organization is trying to make electronics that people want or need. It's kind of complicated to label a business as totally selfish or not in the first place since they don't tend to be completely homogeneous entities. I know that in the company I work for, managers like to think about profit. I don't so much. I think more about product and providing value through my work.

Moving on a bit, you also mentioned that human want is infinite. Kind of. Maybe. I know in my own case as I make more money I like to have a bigger safety net, though I'm hardly a billionaire and I'm not sure how things would work out if I were. On the other hand, my charitable donations have increased with my wealth. I do tend to share my own financial good fortune when it occurs. Benefiting others is one of my wants as is amassing wealth. They grow together. I feel like the same is true of most people. Billionaires do donate portions of their billions (sometimes billions at a time) after all. I also think it's important to make a distinction between selfish and generous profit. I see people complain about capitalism because they say it allows for selfish behavior while they ignore it just as much allows the opposite. Nothing stops you from becoming a obscenely rich (no, not everyone can be a billionaire, but you can do this on nearly any scale) just to donate it all.

On marketing, if it's so powerful, let people use it to their advantage. The absence of government regulation doesn't leave people to fend for themselves as disconnected individuals. They can still cooperate. Like I said before we could have an equivalent to the FDA, or any similar agency, that is less about controlling businesses and more about informing the populace/giving them a collective voice. The government systems we have now are just the ones that happened to evolve. They aren't necessarily the best or unavoidable results of human cooperation.

A UBI funded voluntarily may not be as influential as one that everyone contributes to, but that doesn't mean it can't work at all. You stated before that in a democracy an unpopular idea floundering is a benefit. Isn't this a similar thing? If only 15% of people support it, would it pass a vote? As for how it would operate at 15% support, perhaps change the criteria on who receives the money. Ultimately a 15% support rate doesn't have to be set in stone, especially if it's not bound by law that's difficult to change. Concentrate that 15% in one city, one where it will make a difference and solve some real problems. There is chance that will spark increased support. And the onus is on the supporters because they're the ones that want change. I'm more concerned with questioning why those opposed should have to support an idea they don't like personally.

 

[baldgye]

@Exorcet
It’s fair to say that there are exceptions to the rules. But I think, on balance, companies work towards being as profitable as they can. This can be seen (for example) by how many companies effectively dodge tax or pay tiny %’s OG tax. Regardless of your opinion of tax, thats probably not correct.


Human wants being infinite is an economic theory/concept that I was taught. It’s pretty generic, but fair. Companies and wealthy individuals donating to charities can be complex however. It’s a subject we can jump into but my understanding is that there are major tax benefits to donating to charities or at least, saying you are, setting up the mechanisms and then never actually donating, or donating significantly less. It’s complex (is my understanding), but it’s interesting to get into!!

I know I kinda poo’pood your UNI concept a little haha but I do like it. I think it’s a smart idea and it could be developed for places that need it.
On the second part, I think that if an idea or a concept (take healthcare) for example was a net benefit for the country and economy it should be mandated and paid for by taxes. Now individually some people won’t want to do that (or need to due to having private cover), but they still benefit from it being there. It means other people in that economic market can be healthier and more productive. So while they might not like it or support it, they still benefit from it. I think projects like that should be enforced.

 

[Exorcet]

@Exorcet
It’s fair to say that there are exceptions to the rules. But I think, on balance, companies work towards being as profitable as they can. This can be seen (for example) by how many companies effectively dodge tax or pay tiny %’s OG tax. Regardless of your opinion of tax, thats probably not correct.

I don't know, I'm sure high profitability is desired by any business, but to say that the majority value profit above all else isn't something I'm convinced of. I don't know for sure though, it's not something I have solid data on. On taxes, if it's done legally it's kind of expected that they would seek to lower their costs. It doesn't necessarily mean the business is opposed to providing for society, it just might not see taxes as the most effective way to do it. On the other hand though I'm sure there are businesses out there that are only looking at how much they can make when it comes to a tax strategy.

Infinite human want doesn't sound unreasonable to me, but I do think that want could include the well being of others. Humans are absolutely social and cooperative by nature. However the group sizes were evolved with were much, much smaller than nations, let alone cities. That probably makes us lean toward cooperating on smaller rather than larger scales which can obviously be a problem for a group the size of an entire nation. You do bring up a good point on donations, there can be selfish incentives behind them, although that doesn't negate that the donations occur. Unless they don't actually occur as you said. That's definitely a problem and it's not something I've looked into much because it hasn't really come up in the discussions that I've had.

You've only asked fair questions on the UBI thing I feel. I've posted my fair share of ideas on the forum but a lot of them are only developed on a basic level. It's not easy working out the best way to point society in the direction you want it to go. As far as enforcing net benefit policies, I find that worrying. I just can't see a way to justify exerting control over someone else who isn't trying to do that to you. Looking at it from the perspective of a single issue, like healthcare, people probably won't miss a small percent of their pay. The loss could even be illusory if a healthier society increases overall productivity and wealth. If this is done repeatedly with many programs, then it might start to impact people more obviously. While again the loss might not actually be as bad as it seems in the end, it could cause people problems initially. If it does, then you also have to consider who is going to shoulder those problems and a lot of the time it's "whoever has more money than me". What I can say is that I have to pay to get something, and someone else benefits from that for nothing, that doesn't necessarily bother me. If I'm paying for it that means the result meant more than the money. To be clear I'm not trying to insinuate that you just don't like paying more than the next person, it's that I don't consider it unfair that not everyone contributes equally.

 

[Danoff]

@baldgye

Unless they don't actually occur as you said.

He's talking (I think) about Donor Advised Funds, where you can donate money in one tax year, to a charitable account. It can be invested and grow tax free, and allocated to charity later. It will eventually get allocated to charity, but it's possible that it won't be for many years (possibly even by a custodian of the account after the donor dies). I posted about this in the financial advice thread in the premium section (which I believe you have access to).

Tax incentives to donate are often misunderstood. It's never financially advantageous to donate. It's just that sometimes donations cost less because they're treated favorably under taxes. The closest I can come to making a donation profitable is what I just did recently, where I donated appreciated shares to charity. So it works like this:

I buy a share of DIS for $100. It rises to $150 in value. I donate 1 share of DIS at $150 to charity. I then take a tax deduction for $150 from my federal income taxes, saving me $50 in taxes. So originally, my DIS share cost me $100, and I donated $150. But in reality my property had appreciated (pre-tax) to $150 in value. It was worth less than that to me, because I'd have to pay capital gains to tap the whole thing. Capital gains is to the tune of 15% of the appreciation (for a total of $7.50 in tax). So my $150 DIS share was actually only worth $142.5 to me in post-tax money. Since I saved $50 on taxes by donating it instead of pulling it out for myself, the net cost of the donation was $92.5.

If the rise in value had been higher, it might have looked more like this:

1 share of DIS at a basis of $10, donated at $150. Cost to me of donating it is $79 (post-tax). Charity gets $150.

It still costs money to donate. Just less if you do it in a tax-advantaged way.

 

[PocketZeven]

Than whose is it?



I agree, but a part of that is other countries helping create a level playing field.



Just because I think taxing them more will hurt the economy, doesn't mean I think lowering them will help.

The company taking advantage of the loophole and the government that allows it are responsible. What is your position on tax?

I don't believe that's strictly a libertarian ideal. I don't believe trickle-down economics work in the way that if you let business owners have more money than it's somehow going to allow employees to have more money. However, I do believe it works in reverse. If you tax business owners more or make them shell out more money, they're going to pass it down the line to the consumer.

That is were I disagree partially. Depending on the product supply and demand will reward the pricing strategy in reaction to Tax increase/decrease.

"Trickle down" is basically tautological in economics. I've heard you say this type of thing before, and pointed out your error before, but you keep repeating it. I get it, you reject the idea that rich people participate in the market. You're wrong. End of story.

I dont reject it. But I pointed out it doesnt contribute to society and the economy as well as taxes do. I am not wrong, I just have a different theory then yours. Only in practice you can determin if I am wong or not. Do you think countries with immense wealth from natural resources participate proportionally enough to benefit the country/economy or society? I personally cannot recall any example of a libertarian country/government/society in history with succes.

The bar for being able to contribute "more" is very low. Does UBI need to be funded by taxes? Why not have an optional contribution (and option to turn down receiving the funds). It seems to me that there is enough support for idea that UBI could be funded without being compulsory.

I can find little reason why someone would voluntary contribute.

 

[Exorcet]

I can find little reason why someone would voluntary contribute.

If the contributor thinks they will be helping people, that's more than enough reason. That alone generates many donations and I feel like it's part of the same drive behind voting for such a system in the first place.

If a person believes that UBI will benefit society as a whole, including them, it becomes even less of a choice. Why would one not donate in that situation?

 

[PocketZeven]

If the contributor thinks they will be helping people, that's more than enough reason. That alone generates many donations and I feel like it's part of the same drive behind voting for such a system in the first place.

If a person believes that UBI will benefit society as a whole, including them, it becomes even less of a choice. Why would one not donate in that situation?

I cannot think of any example in the history of the world where a system of which a society of people voluntary opt into a social program has been succesfull.

 

[Exorcet]

I cannot think of any example in the history of the world where a system of which a society of people voluntary opt into a social program has been succesfull.

What conclusion are you drawing from that?

On the subject of UBI, apparently some based on charity already exist.

https://money.cnn.com/2018/07/09/technology/stockton-california-basic-income-experiment/index.html

https://www.poverty-action.org/study/effects-universal-basic-income-kenya

These are being treated as experiments. There isn't much info on results so far that I've found, the two I linked are on going.

 

[BobK]

I cannot think of any example in the history of the world where a system of which a society of people voluntary opt into a social program has been succesfull.

Do you know of any where they've tried?

 

[PocketZeven]

Do you know of any where they've tried?

Perhaps there are, but I am not aware of any.

But I I ask you a hypothetical when people are asked to voluntary donate 40% of their salary to fund a social program, how many would actuallly do it?

 

[Exorcet]

Why 40%?

 

[PocketZeven]

Why 40%?

It was just an example. In my country income tax starts at around 40%. I dont know anyone who would even donate 25% every month. That is just not realistic.