"Sin" in western business ?

[Widdekind]

"Pride & Greed"
workers Pride themselves, in the wages that they can command; and are Greedy for higher pay. Reducing wages, during recessions, would be a blow to workers' Pride & Greed:

worker morale is a major reason why wages are not reduced during recessions. Workers would view a wage cut as an indication that the firm does not value their work as much, and they might, therefore, suffer lower morale, with the result being lower effort. When some workers are laid off, those workers suffer from the job loss; but they are no longer at the firm, and thus cannot harm morale & work effort. Only in cases where the very survival of the firm is clearly at stake, do wage cuts appear to be acceptable to workers.

So, wages are "sticky downwards" because this promotes good worker effort, and ensures that workers and firms share the same goals, of efficient production & profit maximization. Rather than keep all workers when demand falls, by paying lower wages to all, it may be better for the firm to lay off some workers, and keep paying the remaining employees the same wage as before

For Pride & Greed, workers demand mandated minimum wages, and higher wages generally (e.g. Unions), even when others in their own "class" suffer there-from:

increases in the legal minimum wage to raise the natural rate of unemployment. When the government mandates that employers pay some workers a higher wage than a freely competitive labor market would pay, fewer workers are employed

Government Greed, for tax revenues, also impedes business:

Income taxes can also affect the natural rate of unemployment. Higher taxes mean that workers keep less of their earned income, and so have less incentive to work

By the time everybody gets done Greedily demanding their "special piece of the pie", it's hard to get much done.



"Sloth"
western workers have voted themselves welfare doles, so that they need not work, even when others in their own "nations" must pay for their welfare:

the more generous the unemployment benefits, the higher the natural rate of unemployment. Increased benefits reduce the cost of being out of work, and allow unemployed workers to take their time finding a new job. For these reasons, we observe higher natural rates of unemployment in European countries, where unemployed workers receive higher benefits.

"Deception"
Logically, wages that pay per hour worked do not reflect employer goals. Rather, employers only want their 'widgets' produced, so that their natural pay incentive-structure would be per 'widget' produced, not per hour bodily present and breathing on premises. Hourly wages motivate "going thru motions", "dragging feet", and otherwise making production take longer than necessary. Thus, hourly wages motivate Deception, in the work-place, between workers & managers. Conversely, pay per product produced would honestly reflect employer goals; would generally require no renegotiation during recessions (although order volumes, and hence total pay, would decline); would motivate workers to produce as fast and efficiently as possible, so that they could take their pay, and move on (to other jobs, or leisure). Why do western businesses willfully invite Deception into their organizations? What would be wrong with, "we can afford to pay you $X per 'widget', that's what the customers will pay for, the more product they buy, the more we all make, let's get the production-run done"? Hourly wages are obvious economic mis-communications, mis-representing economic incentives, and promoting Deception & division, within organizations, between workers & management. How is that good management? (Nominal hourly wages could be easily converted into per-item payments, by adjusting accounted hours, at whatever hourly wage, to yield the appropriate total payment.)



reference:
Boyes & Melvin. Economics, p.349+

 

[georgephillip]

"Sloth" and "Deception" could apply just as easily to investment banks who've bribed government into providing subsidies that are used for big salaries and bonuses, in spite of generating market distortions that fuel crises like the recent subprime-lending disaster.

As of 2009 this particular form of corporate welfare has been estimated to shave 0.8% off large bank borrowing costs which is up from 0.6% in 2007.

Per Bloomberg:

"To estimate the dollar value of the subsidy in the U.S., we multiplied it by the debt and deposits of 18 of the country’s largest banks, including JPMorgan, Bank of America Corp. and Citigroup Inc. The result: about $76 billion a year. The number is roughly equivalent to the banks’ total profits over the past 12 months, or more than the federal government spends every year on education."

Dear Mr. Dimon, Is Your Bank Getting Corporate Welfare? - Bloomberg

How many widgets/year can you produce with $76 billion?

 

[Not2BSubjugated]

The problem with trying to assign deception and -blind- greed (I'm of the mindset that greed, when tempered with intelligence and integrity, isn't a negative, but that's another argument) exclusively to labor, government, or business, is that all three of these groups are inhabited entirely by human beings, who often tend to be deceptive and dishonest in their self interest.

Generally speaking, if you give a group the potential to rig the game in their favor, it's not gonna be long before you find that the game has been rigged.

 

[georgephillip]

I suspect you're correct when you say giving any group the potential to rig the game in their favor will result in corruption. While that's true in "normal" times, what happens in times are anything but normal?

That's to say in time of epoch change when a very old system violently dies...

"The private creation of money at interest is the granddaddy of all pyramid schemes; and like all such schemes, it must eventually collapse, despite a quadrillion dollar derivatives edifice propping it up. Willie and Kirby think that time is upon us. We need to have alternative, public and cooperative systems ready to replace the old system when it comes crashing down."

Why the Senate Won’t Touch Jamie Dimon » Counterpunch: Tells the Facts, Names the Names

 

[Widdekind]

Per Bloomberg:

"as of 2009 the expectation of government support was shaving about 0.8 percentage point off large banks’ borrowing costs. That’s up from 0.6 percentage point in 2007, before the financial crisis prompted a global round of bank bailouts. To estimate the dollar value of the subsidy in the U.S., we multiplied it by the debt and deposits of 18 of the country’s largest banks, including JPMorgan, Bank of America Corp. and Citigroup Inc. The result: about $76 billion a year. The number is roughly equivalent to the banks’ total profits over the past 12 months, or more than the federal government spends every year on education."

Dear Mr. Dimon, Is Your Bank Getting Corporate Welfare? - Bloomberg

How many widgets/year can you produce with $76 billion?

Inexpertly, the public is willing to deposit at banks, and creditors are willing to lend to banks, for 0.8% less in interest, than they otherwise would, in the absence of government bailout insurance. Evidently, the 18 largest US banks have combined assets (deposits + debts) of about $10T, so that they save $80B/year in interest-payments. Note that the actual benefit to the banks, is reduced expenses (they pay out less interest), not any increase in revenues (no tax rebates).

That pseudo "subsidy" of about $80B is about half-a-percent (0.5%) of US yearly GDP. The "easy credit" attracts many more borrowers to banks -- people who borrow to buy houses, businesses who borrow to buy machines & factories. The "easy credit" generates about $500B / year of additional (leveraged borrowing and then) spending per year, boosting GDP by over 3%:

The oversupply of credit ... encourages risky behavior. People buy houses they can’t afford, companies borrow too much for acquisitions, and banks employ excessive leverage to boost the returns they can offer their shareholders. The result is a bloated finance industry: As of 2011, the sector accounted for 8.3 percent of the U.S. economy, compared with 4.9 percent in 1980.

Again, "easy credit" apparently bloats borrowing by an amount equivalent to 3.4% (from 4.9% ---> 8.3% of US GDP), or about 1/30, of US GDP, or about a half trillion dollars per year. That boils down to basic supply & demand, as the "price" of credit becomes cheaper (lower interest-rates), the quantity of credit demanded increases:

 

[Truthmatters]

links?

 

[signelect]

This reflect the current thinking. The president of Chase Banks get called on the carpet when it is announced that the Bank has lot 2 billion or so and he first reply is that he guesses they thay should look into it. About a week later he convinces the stock holders to approve a 23 million dollar annual compensation package. Hell, I would have done the same job for a lot less, a whole lot less and I could have even lost more money if they want to.

 

[Widdekind]

links?

the OP Bloomberg article

 

[EdwardBaiamonte]

"Sloth" and "Deception" could apply just as easily to investment banks who've bribed government into providing subsidies

so then you like Republican capitalism rather than liberal crony capitalism where, for example, BO encourages government business relations like Obamacare or like when he gave 71% of energy money to soviet companies like Solyndra who contributed to his election fund??


Welcome aboard!!

 

[georgephillip]

Republicans AND Democrats get most of their campaign contributions from the same 1% of Americans.
Hence, Hank Paulson's crony capitalism involving Goldman Sachs and AIG was equally corrupt, right?

 

[Not2BSubjugated]

I suspect you're correct when you say giving any group the potential to rig the game in their favor will result in corruption. While that's true in "normal" times, what happens in times are anything but normal?

That's to say in time of epoch change when a very old system violently dies...

"The private creation of money at interest is the granddaddy of all pyramid schemes; and like all such schemes, it must eventually collapse, despite a quadrillion dollar derivatives edifice propping it up. Willie and Kirby think that time is upon us. We need to have alternative, public and cooperative systems ready to replace the old system when it comes crashing down."

Why the Senate Won’t Touch Jamie Dimon » Counterpunch: Tells the Facts, Names the Names

Not sure if I agree with your premises, but I'll bite.

Even in a time of great political and economic change, people given the opportunity to rig the game in their favor will still rig the game in their favor. Even if the occupy movement marks the end of capitalism and individualism, I don't think that recent political sentiment has actually brought about a neurological evolution in the human species. Check history and ask yourself if the mob has changed, much, despite all the political, philosophical, and technological changes we've experienced in a few thousand years of recorded history. I'd argue that the human being is still basically the same creature as it ever was, as far back as people decided to start writing down shit that was going on.

 

[Not2BSubjugated]

"Sloth" and "Deception" could apply just as easily to investment banks who've bribed government into providing subsidies

so then you like Republican capitalism rather than liberal crony capitalism where, for example, BO encourages government business relations like Obamacare or like when he gave 71% of energy money to soviet companies like Solyndra who contributed to his election fund??


Welcome aboard!!

In all fairness, republicans engage in their own crony capitalism all over the place, they just serve a different set of corporate masters than the democrats.

The greatest trick the devil ever pulled was convincing conservatives that he wasn't a statist.

 

[EdwardBaiamonte]

In all fairness, republicans engage in their own crony capitalism all over the place, they just serve a different set of corporate masters than the democrats.

of course thats perfectly stupid and liberal given that Republicans are 100% opposed to BO's take over of 17% of the economy. And this is not to mention that 100% of the energy for capitalism, lower taxes, and limited government is Republican/libertarian which means the government would have less power and money to be crony capitalist faschist liberal socialist like BO who openly embraces it with BOcare, Solyndra, cap'in trade and many others.

Is that really over your head?

 

[EdwardBaiamonte]

people given the opportunity to rig the game in their favor will still rig the game in their favor.

this is why they wrote the Constitution, i.e., to provide for a limited government so the power would never be there to rig the game on a national level.

A liberal will lack the IQ to understand the value of freedom form government! That in fact is why he is a liberal.

 

[EdwardBaiamonte]

Republicans AND Democrats get most of their campaign contributions from the same 1% of Americans.
Hence, Hank Paulson's crony capitalism involving Goldman Sachs and AIG was equally corrupt, right?

of course its really very very stupid to say that saving the financial system and so the entire economy is corrupt.

 

[georgephillip]

I suspect you're correct when you say giving any group the potential to rig the game in their favor will result in corruption. While that's true in "normal" times, what happens in times are anything but normal?

That's to say in time of epoch change when a very old system violently dies...

"The private creation of money at interest is the granddaddy of all pyramid schemes; and like all such schemes, it must eventually collapse, despite a quadrillion dollar derivatives edifice propping it up. Willie and Kirby think that time is upon us. We need to have alternative, public and cooperative systems ready to replace the old system when it comes crashing down."

Why the Senate Won’t Touch Jamie Dimon » Counterpunch: Tells the Facts, Names the Names

Not sure if I agree with your premises, but I'll bite.

Even in a time of great political and economic change, people given the opportunity to rig the game in their favor will still rig the game in their favor. Even if the occupy movement marks the end of capitalism and individualism, I don't think that recent political sentiment has actually brought about a neurological evolution in the human species. Check history and ask yourself if the mob has changed, much, despite all the political, philosophical, and technological changes we've experienced in a few thousand years of recorded history. I'd argue that the human being is still basically the same creature as it ever was, as far back as people decided to start writing down shit that was going on.

I'm unclear about the connection between capitalism and individualism, but I'll keep an open mind.

I think you're absolutely correct to say those who Adam Smith called the "Masters of Mankind" or the "principal architects" of government will rig the game in their favor as long as private wealth controls the levers of state power.

Smith was referring to the merchants and manufacturers of his day who used their influence over government to bring "dreadful misfortune" to those un-people who were subjects of the British Empire.

Today it's "..supranational corporations and financial institutions that dominate the word economy."

Maybe we need to build a wall of separation between private wealth and the state?

Notes of NAFTA: "The Masters of Man", by Noam Chomsky

 

[Moonglow]

UE is not welfare.

 

[georgephillip]

Unlike the "Shareholder Value Myth" which requires corporate welfare to backstop the idea "...that companies should be run for the sole purpose of increasing their stock prices."

"To Lynn A. Stout, however, it amounts to nothing more than a 'shareholder dictatorship.'

"Ms. Stout, a professor at Cornell Law School, has authored a slim and elegant polemic, 'The Shareholder Value Myth" (Berrett-Koehler Publishers) to explain the idea's two problems: It's worked out horribly, and as a matter of law, it's not true.

"The blame lies with economists and business professors who have pushed the idea, with generous enabling from the corporate governance do-gooder movement, Ms. Stout contends.

"Stocks, as a result, have become the playthings of hedge funds, warping corporate motivation and eroding stock market returns."

How Shareholders Are Hurting America - ProPublica

 

[georgephillip]

Republicans AND Democrats get most of their campaign contributions from the same 1% of Americans.
Hence, Hank Paulson's crony capitalism involving Goldman Sachs and AIG was equally corrupt, right?

of course its really very very stupid to say that saving the financial system and so the entire economy is corrupt.

While it's criminally Republican to suggest Hank the Punk was not looking out for hedge fund managers and other rich parasites in July of 2008:

"According to the story, on July 21, 2008, then-Secretary of the Treasury Hank Paulson met with 'a dozen or so hedge- fund managers and other Wall Street executives' and discussed 'a possible scenario for placing Fannie [Mae] and Freddie [Mac] into "conservatorship.’”

"That’s a fancy term for a government seizure that would have allowed the entities to keep operating, but would have caused severe adverse consequences to holders of the Frannies’ equity and, possibly, debt.

"A fund manager told Bloomberg he was 'shocked that Paulson would furnish such specific information -- to his mind, leaving little doubt that the Treasury Department would carry out the plan.'

"After the meeting, this manager consulted a lawyer, who told him to cease trading immediately in the Frannies, lest he later be accused of – here’s the rub – insider trading."

Crony Capitalism? Hank Paulson’s Extraordinary Meeting - ProPublica

Hopefully, you will be slime-ing back under your rich, Republican rock after November 6th?

 

[EdwardBaiamonte]

While it's criminally Republican to suggest Hank the Punk was not looking out for hedge fund managers and other rich parasites in July of 2008:

too stupid!!! He bailed them out to prevent a great depression and they paid the money back!! If that was criminal rather than saintly you would not be so afraid to explain why. What does your fear tell you??

You are like a Nazi, you were taught to hate, and you don't care if you have a reason to hate.