There is no crony capitalism, just capitalism

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There is no crony capitalism, just capitalism

Post  gendoikari87 on Mon Sep 10, 2012 7:41 pm



1. Capitalism Rewards profitability.
2. Profitability leads to more money
3. Money can be used to buy power and influence with the government
4. Power and influence with the government can be used to increase profitability
Conclusion: Capitalism rewards using money to buy power and influence with the government.

Now lets take a deeper look at this inference chain.
First up is the first link. Let us first define profit, here we are speaking directly of net profitability. This is the total gained minus all costs. So how does capitalism reward profitability? Well there are two ways, the first is that increase profitability is often used to pay investors higher dividends. In this manner it behooves the stockholders to invest in companies which are more profitable. The Second way is that CEO’s and other executives which have a record of increased profitability are more desirable and even rarer than others of their kind, and the more profitable the more this effect compounds. Due to supply and demand With a skill set that is now higher in demand due to the aforementioned higher skills, and also lower supply via being more skilled and thus rarer on the bell curve, the CEO or executive demands a higher price in the market for their labor. Not to mention any money pocketed by the CEO via their own shares in the company and dividends paid out to them. So the logical support for the first premise can be laid out as such.
1. With increased profits, stock dividends are likely increased (if the increased profitability is sustainable)
2. With increased dividends the marketability of the CEO’s and other executives increases
3. With increased dividends the CEO’s and other stock holding members involved in the running of the business increase
4. Increased marketability leads to higher salaries via a higher demand and lower supply
5. Increased dividends directly increase take home pay
Conclusion: Increased profitability benefits those in charge of running a business with more money.

The second premise is one that seems obvious at first, more profits mean more money to use, however there are economic implications regarding when and how a company should increase dividends. Traditionally companies are VERY hesitant to do so. The reason for this is that is it a very bad move to lower dividends because that hurts the business or at least the reputation of the business and therefore the stock value. So companies make sure they can keep a sustained level of profit before increasing dividends. So profitability means more money to the shareholders, and if sustainable, to any projects of increasing productivity, which further increase profits. This does not have to be buying government but can also be building new plants, Research and development, public relations moves, ect., ect., ect… So the logical support for this premise would be laid out as such.
1. Dividends to investors/stockholders are cautiously handed out. I.E. increases in dividends are made very cautiously
2. The dividends and shares to be paid out are known
3. A profitable company is more likely to have increasing profits
Conclusion: A profitable company I.E. one that runs its business well, will often have a surplus rather than a deficit, after dividends.
Which leads us to premise three. If there is a surplus there are a few options, Re-investment, rainy day, and increased dividends. Now the decision to do which is a highly complex one and is where CEO’s earn their bacon, after all a company like Wal-Mart or Microsoft doesn’t grow as large as they have by giving ALL of their profits to the stockholders. Not to mention stock holders like to have dividends that grow rather than stagnate. But as I said the decision on which to do is a complex one. In any case politicians in our modern age require large sums to run campaigns and get elected, even ignoring such things as greed and outright being bought off, the political machine requires money to operate smoothly. After all how many people ever heard of Jill Stein, or Rocky Anderson, chances are, most Americans don’t even know that there are people running outside of Barack Obama and Mitt Romney. Now how does a politician get money for his campaign, well we all know the standard asking for funds, dinners, and the like but a lot of campaign financing comes from large single donations. Now which politician is more likely to get funds from wealthy individuals or large corporations, the one that will do their bidding, or the guy who’s in it for everyone? That’s right, the one that will do their bidding. So often times you will see politicians consorting with business interests in order to gain their support. So the logical support for this premise would be laid out as such.
1. Politicians need money to run campaigns
2. A politician can get more money by doing the bidding of a certain organization or person
3. More money means better name recognition and a higher chance of getting elected
Conclusion: Politicians that get elected are more likely to be working for the goals of those that financed their campaign
This last premise is the simplest one, from decreased regulation, CEO’s that move to the fed, or outright government handouts to corporations and lowered taxes or even no taxes, the results are very clear and documented. So the logical support for this basically boils down to
1. Money spent on politics by corporations on average return over a 1000% return
Conclusion: on average giving money to politicians makes much more money than the initial investment.


Now you can make an argument that capitalism is supposed to be regulated, but when you have a system that rewards profits as the sole motive force, and buying influence is so lucrative, you have to expect that those that are buying the politicians are going to have those politicians keep this avenue legal. Also notice there’s no logical support here for an organized cabal of the rich, just individual decisions that are profitable for the rich.

_________________
If I hear "crony" capitalism one more time I'm going to puke. Capitalism is capitalism, dog eats dog and one dog ends up on top, and he defends that place with all the power he's accumulated.
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Re: There is no crony capitalism, just capitalism

Post  Gnigma on Thu Jun 06, 2013 9:57 am

That is certainly the way the system works in the US. And that has been the way of things since before the country was created. In "A People's History of the United States," Howard Zinn points out that it was really of, by, and for the capitalists--- the common people were of no more importance than the slaves. My term for the big money organizations today is "corpo-communists." And I only use that in the sense of the popular misconception of communism as a totalitarian system. Capitalism, if regulated to protect the rest of us, is a good thing for the individual. It can instill a person to do better and achieve more in the simplest, transactional sense--- such as a tradesman, professional, or farmer selling their skills or produce for profit.

Think of the Soviet Union. It failed economically, primarily due to two things. The first was trade isolation--- they were cut off from trade with the western advanced nations, led by the US, and thus could not keep up or compete. The second was the organizational structure. They were socialist in name only--- actually, they were identical in structure to western corporations. They simply replaced the oligarchy with their own people and called themselves "socialists." The country was still run top down, just like major corporations. The producers at the bottom were not allowed to input ideas or controls on the working processes, just as factory workers are not allowed to input ideas in major manufacturing here today. The people were in general not allowed to decide selection or slaries for the leaders, just as those factory or construction workers, or investors cannot decide who runs today's corpo-communistic multinationals, nor do they get to vote on the CEO's salaries. We are in exactly the same situation as the people of the Soviet Union, except our masters are the corporations, and we're even on the YOYOMOFO plan as far as health and education!

Interestingly, some of the fastest growing companies today are those like the Mondragon Corporation in Spain, which, while competing with the capitalists (corpo-communists) are run socialistically--- from the bottom up.In 1900, when J.P. Morgan and Rockefeller merged, their combined profits were $52 billion--- 8 times the US treasury. Last year, Goldman Sachs' total worth was nearly three times the national debt of the US. They were #290 on the list of the world's largest multinationals, meaning, of course, that there are 289 other corporations at least that big. Who do you think really runs the world? Even governments may not be powerful enough to regain control.

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