Jobless Rate: The Truth Bubble?

[Chris Coles]

Re: Jobless Rate: The Truth Bubble?

I generally agree with you.

However, I would add one thing: where does capital come from? It's retained earnings, right? So one must earn before one has capital. You can't borrow capital. Once you've earned it, you should then be free to invest it as you see fit--perhaps in your own business, or perhaps in another.



I think I see what you're saying, but I see the problem somewhat differently. The issue isn't so much a lack of reinvestment back into the freedom of the industrious as it is too much involvement of government in the affairs of business. Rather than allowing companies to compete in an open and free market, some looters conspire with government to enact penalties or barriers against their competitors, or to create coersive monopolies, or to distort the market through manipulated interest rates, or to grant them special favors, to unfairly leverage the force of government through taxation, etc, etc. Those actions, in turn, distort the flow of capital; we get horrible malinvestments and the inevitable (and increasingly extreme) business cycles. Such a system also feeds corruption; the looters become protected by government instead of prosecuted by it.

The solution is to break the tie between business and the state, in the same way and for same reasons that we have a separation of church and state.

Thank you Raz for taking the discussion around and back to my earlier comment.

I have come to the same conclusion as Sharky's that I highlight above; but have to add, that in today's economic climate, the question is - has anyone involved with regulation any incentive at all to set that into motion? My interest is very real as I am getting very significant support from The Times, here in London, with regard to my ongoing campaign to introduce the idea of creating a new savings institution I call The capital Spillway Trust. By chance, it would seem I am a direct competitor of NEST, a new system being set up to take savings from the lower paid. NEST is in the process of spending nigh on £50 million and I have spent less than £1,000. They are being set up to take the savings, (less a 2% management fee to repay the set up costs), and to transfer the savings into Government Gilts, and thus to give to the government to spend, while I am aiming to take the savings of the people and reinvest the savings, as free enterprise equity capital, back into the local savers communities.

From The Times Wednesday March 17, 2010

Low earners to lose chunk of pension savings from word go

Experts say that Nest could be an expensive way of saving for some and that many will be deterred by upfront charges

Patrick Hosking, Financial Editor

http://business.timesonline.co.uk/to...cle7064689.ece

scroll down the page to read my own comments.

Also see this comment same day: http://business.timesonline.co.uk/to...cle7064717.ece

And yesterday, they let me place the first page of The Capital Spillway Trust Proposal up as a comment: http://www.timesonline.co.uk/tol/com...cle7066162.ece

But the underlying point is that, while The Capital Spillway Trust, (I must add that I have given the whole concept to the people and anyone, from any nation may create their own "Local" Capital Spillway Trust fund to invest under the rules I have already set out), is a direct competitor to NEST, indeed, any existing savings institution; I do wonder if the concept will be permitted to continue as the regulations for taking in savings into funds is closely regulated and immensely complex.

The point being that the involvement of government is driven by the businesses that feed off the present FIRE economy. They both feed off each other. So you cannot separate government from business because they are both in the same game. The game being suppression of competition. On one side, to keep the government grant system in place that employs so many public servants and on the other hand to keep the borrowing by government in place as the FIRE economy has a very considerable vested interest in what is the same thing. To keep all that in place has required very complex rules, on the same theme of fear as terrorism laws, using fear, this time of loss of savings, to prevent competition from any outside influence, such as a new way to use savings.

[Sharky]

Re: Jobless Rate: The Truth Bubble?

I have come to the same conclusion as Sharky's that I highlight above; but have to add, that in today's economic climate, the question is - has anyone involved with regulation any incentive at all to set that into motion?

My view is that for almost every regulation, there are some who win, and some who lose. If you're looking for support along the lines I suggested, then simply look for the losers.

For example:

Sarbanes-Oxley benefited accounting and consultancy companies; it hurt businesses of all size
Minimum Wage helps employees at the margin, but harms employers and puts those who are below the margin out of work
Many medical regulations help big pharma, but hurt doctors and their patients
Food and drug regulation helps big pharma and big food, but hurts doctors and their patients
Anti-drug laws help police, prisons and courts, while hurting the poor and disadvantaged (among others)

I should also add that government is always helped by more regulation, because they're in the middle of it; they are the gate-keepers that others must come to.

[santafe2]

Re: Jobless Rate: The Truth Bubble?

Lucky me. I'm underwhelmed by your kindness.
You'd need a Nanometer to measure how little respect I have for you.
You "suspect" I've never run a successful business? :rolleyes: You're a real piece of work.

Excellent support of your argument.

[santafe2]

Re: Jobless Rate: The Truth Bubble?

I think the "I"m a businessman and you're not" argument doesn't tell enough - experience isn't everything in this argument because every business has different profit margins, is subjected to different external gov't costs, and employs people with different backgrounds (college, trade, union, semi-skilled, unskilled) to accomplish their business goals.
Our employees are semi-skilled. We pay them about $1.75 above the minimum wage, less so above that wage as the minimum wage is slowly increased (ie, the average employee makes about $9/hr). We pay the market rate.

Not everything quoted here but I read nothing in your post I don't agree with. But I think you also make my point. As a traditional American business person, you're not making a killing and leaving your employees behind. We act the same way in our business. If our profits increase we distribute a portion to everyone because we wouldn't be the company we are without everyone who works there.

My point on this thread is that the folks on iTulip who think employees should just take whatever then can get for their time are calling for slavery. They ask for a world without morals or regulation, a "free market" which pits the strong against the weak. As I've said, that idea disgusts me.

Business people have a responsibility to create jobs that pay a wage on which a person can reasonably live. As we build our businesses and prosper, we have a responsibility to create better jobs and share our success with the people who have helped us succeed. It seems like a simple, moral thing to do and is a basic Judeo-Christian, (and many other philosophies), idea.

[Chris Coles]

Re: Jobless Rate: The Truth Bubble?

Business people have a responsibility to create jobs that pay a wage on which a person can reasonably live. As we build our businesses and prosper, we have a responsibility to create better jobs and share our success with the people who have helped us succeed. It seems like a simple, moral thing to do and is a basic Judeo-Christian, (and many other philosophies), idea.

santafe2 is describing the difference between a feudal attitude that says take it, because no one else is going to break ranks and pay you more and what I call a free enterprise attitude that says to the employee, if I do not pay you what you need to live a full life, I lose your services.

Some people do not understand why anyone would pay a cent, (or in my case, a penny), more than necessary. Others take a more enlightened viewpoint.

As an aside, one of the most successful retail businesses we have here in the UK is the John Lewis Partnership http://www.johnlewispartnership.co.uk/ which is owned by the employees. This year they have paid out an increased dividend to their employees. http://www.guardian.co.uk/business/2.../16/john-lewis

It behoves me to finish this comment by pointing out that the business was set up by a single individual who, instead of selling the business to the likes of a hedge Fund when he retired, he instead, gave it to the employees.

In the US there is another example, Thomson-Shore http://www.thomsonshore.com/ which again, was founded by an individual who later gave the business to the employees and now runs on exactly the same principles as John Lewis.

It is inevitable, in such a diverse group as business encompasses; that there will be differences of opinion about the relative merits of another's point of view. But that does not stop us from remaining respectful of each other.

[c1ue]

Re: Jobless Rate: The Truth Bubble?

As an aside, one of the most successful retail businesses we have here in the UK is the John Lewis Partnership http://www.johnlewispartnership.co.uk/ which is owned by the employees. This year they have paid out an increased dividend to their employees. http://www.guardian.co.uk/business/2.../16/john-lewis

It behoves me to finish this comment by pointing out that the business was set up by a single individual who, instead of selling the business to the likes of a hedge Fund when he retired, he instead, gave it to the employees.

In the US there is another example, Thomson-Shore http://www.thomsonshore.com/ which again, was founded by an individual who later gave the business to the employees and now runs on exactly the same principles as John Lewis.

Chris,

Your goals are laudable, but I am not convinced that simply giving employees ownership is itself a panacea.

The experience of United Airlines is a counter-example. Starting in 1995, United was 55% employee owned including 3 seats on United's board.

By 2000, this experiment was over and United clearly had not benefitted.

The early years were great, but the later years clearly were not.

Certainly some people dispute the true cause of what happened there.

I do believe that having a mature discussion of labor vs. capital vs. management division of a company's profits leads to better long term behavior, but then you come up against the willingness of each of these groups to give up potential additional income - always a touchy subject.

[Sharky]

Re: Jobless Rate: The Truth Bubble?

My point on this thread is that the folks on iTulip who think employees should just take whatever then can get for their time are calling for slavery. They ask for a world without morals or regulation, a "free market" which pits the strong against the weak. As I've said, that idea disgusts me.

Why do you think employees are weak?

Business people have a responsibility to create jobs that pay a wage on which a person can reasonably live. As we build our businesses and prosper, we have a responsibility to create better jobs and share our success with the people who have helped us succeed. It seems like a simple, moral thing to do and is a basic Judeo-Christian, (and many other philosophies), idea.

Let me make sure I understand. So it's a business person's responsibility to create jobs (which entails risk) and to make sure that the those jobs pay a livable wage. Right? So if a potential business person can only create jobs that pay below a livable wage, then they just shouldn't bother, because it wouldn't be "responsible" or moral. Is that what you're saying?

Can you please explain how that fits with a Judeo-Christian ethic?

[Raz]

Re: Jobless Rate: The Truth Bubble?

Excellent support of your argument.

Your first post to me was a foaming, raging insult that displayed your near total ignorance concerning ecclesiastical history,
for which you have NEVER apologized. We all utter words we wish we could take back - except you.

In regard to your posts on this thread: you use profanity to descibe me, then drop "soft" insults ("I suspect that you've never run a successful business") and when I don't take it lying down, you offer another insult.
I suppose you didn't address anything else I said because it would mean you would need to retract or apologize.

You are simply not worth the effort, and whatever I might learn from your posts isn't worth the irritation to my digestive tract.
It's Ignore Time for you.

[Chris Coles]

Re: Jobless Rate: The Truth Bubble?

Chris,

Your goals are laudable, but I am not convinced that simply giving employees ownership is itself a panacea.

The experience of United Airlines is a counter-example. Starting in 1995, United was 55% employee owned including 3 seats on United's board.

By 2000, this experiment was over and United clearly had not benefitted.

The early years were great, but the later years clearly were not.

Certainly some people dispute the true cause of what happened there.

I do believe that having a mature discussion of labor vs. capital vs. management division of a company's profits leads to better long term behavior, but then you come up against the willingness of each of these groups to give up potential additional income - always a touchy subject.

C1ue,

First of all John Lewis and Thomson-Shore are both 100% owned by their employees. In neither case is there any outside influence. Both provide excellent service to their customers and both have very happy employees.

But there is a much wider point than employee ownership.

What I am trying to get across is that, in general, savers place their savings into what are very large funds. But surely the saver does not save their money for the financial institution to prosper at their expense?

Again, on the same theme, local community prosperity is much more than the local business owners making a profit; again, on the basis that the savers do not provide their savings simply for the recipient of those savings as new capital, (the new business owner), to prosper at their expense.

That prosperity of the entire community is the primary aiming point and that requires competition.

Yes, we see, in present times, that competition is driven by the idea that as such it keeps prices down.

But there is another function that is not being recognised and that is competition for the employee.

When the financial services industry restricts access to the capital to compete, it also prevents a potential new employer to both undercut the final sale price, but also to drive further prosperity by providing access to the employees.

In which case, the existing employer can and does, both raise prices as well as refusing to permit the employees to prosper.

In the long run, over many decades, what has occurred is that the FIRE economy has restricted access to capital and created a feudal mercantile economy. In so doing, they have drained out of the local communities all the hidden prosperity. Now, most communities are drained of prosperity. Wages are low, insufficient to pay the costs of borrowing the money required to purchase now heavily inflated assets such as a home for their families.

IMHO this is all a result of insufficient competition driven by a lack of access to the capital required to permit anyone new from entering the local marketplace to compete against local employers and thus drive up the local income to attract new employees.

That real prosperity comes from competition, not just on price of product, but of even more importance, competition to drive up the incomes of the employees; in turn driven by a much higher level of access to the capital required to enable that competition.

The best example being industrialisation of rural farming communities.

Where it goes wrong is when the incumbents of the local industry combine to prevent new competition, by then restricting access to the capital for new comers to compete against them

And that in turn brings me around in a circle to argue that it is the responsibility of the larger financial institutions, what I call savings institutions, to promote competition, even against their own existing investments.

That to fulfil that responsibility; they have to have well thought out rules for such investment and a clear duty accepted by all parties.

I might add that I do feel that my argument is gaining ground here in the UK and I suspect that in today's world of the internet, the debate is widening to include many others around the world of finance. A good example being able to speak directly to Lord Mandelson, Business Secretary today in The Times. http://business.timesonline.co.uk/to...cle7069278.ece

[c1ue]

Re: Jobless Rate: The Truth Bubble?

IMHO this is all a result of insufficient competition driven by a lack of access to the capital required to permit anyone new from entering the local marketplace to compete against local employers and thus drive up the local income to attract new employees.

Chris,

Again, I laud you for your effort and hope that the ethic you describe can grow.

However, my own point of view is that assumption of altruism/long term good/fairness is unrealistic.

Communism, for example, might work fine if human beings were truly altruistic. But whatever its egalitarian beginnings, over time the system was corrupted by those within it who used its foibles to increase their own power and position.

Your desire for financial institutions to act in such a way as to maximize both the common good and the long term sustainability of business is predicated upon these institutions acting in a responsible manner.

Historically this is not a phenomenon which has persisted - indeed the present situation in the world shows quite clearly that short term, selfish, and destructive methods can and do prevail in the real world.

Hence the role of regulation by government.

[Chris Coles]

Re: Jobless Rate: The Truth Bubble?

Chris,

Again, I laud you for your effort and hope that the ethic you describe can grow.

However, my own point of view is that assumption of altruism/long term good/fairness is unrealistic.

Communism, for example, might work fine if human beings were truly altruistic. But whatever its egalitarian beginnings, over time the system was corrupted by those within it who used its foibles to increase their own power and position.

Your desire for financial institutions to act in such a way as to maximize both the common good and the long term sustainability of business is predicated upon these institutions acting in a responsible manner.

Historically this is not a phenomenon which has persisted - indeed the present situation in the world shows quite clearly that short term, selfish, and destructive methods can and do prevail in the real world.

Hence the role of regulation by government.

C1ue,

We beg to differ. The time has arrived for a new beginning. This is not about government regulation, it is about taking the trouble to look after ones own money, savings, rather than leaving them for others to trouser your treasure. But the question remains unanswered until we see a true free market replacing what we have in place today. Then we will know who is correct. My optimism tells me we will succeed to change the rules to suite the better future.

[c1ue]

Re: Jobless Rate: The Truth Bubble?

the question remains unanswered until we see a true free market replacing what we have in place today. Then we will know who is correct. My optimism tells me we will succeed to change the rules to suite the better future.

I hope you are right, but I fear you are not.

I also note that your ideal of the 'true free market' is in many ways identical to the 'real capitalism' of the libertarians.

And in much the same way, may never appear. A 'true free market' may in fact never achieve more than hypothetical status.

The economies of today are trending in exactly the opposite direction: whatever supposed 'freedom' there was in the economies of the world is being replaced with more and more government subsidies, government owned companies, government sponsored financing, etc etc.

[Chris Coles]

Re: Jobless Rate: The Truth Bubble?

I hope you are right, but I fear you are not.

I also note that your ideal of the 'true free market' is in many ways identical to the 'real capitalism' of the libertarians.

And in much the same way, may never appear. A 'true free market' may in fact never achieve more than hypothetical status.

The economies of today are trending in exactly the opposite direction: whatever supposed 'freedom' there was in the economies of the world is being replaced with more and more government subsidies, government owned companies, government sponsored financing, etc etc.

You have missed one small technicality; their more and more government subsidies, government owned companies, government sponsored financing, etc etc economy does not work. In the end it is success that drives the economy. Always the most successful succeeds. I truly believe that my ideas are going to bring more success than the existing model will ever.

Even governments want to succeed.

That is my Ace in the Hole.

[santafe2]

Re: Jobless Rate: The Truth Bubble?

It's Ignore Time for you.

Excellent solution.

[santafe2]

Re: Jobless Rate: The Truth Bubble?

Why do you think employees are weak?

Two separate ideas but related. One is specific. Employees should be paid a living wage. The second idea is more broad philosophical concept. The strong will prey on the weak. In the financial relationship between business owners/managers and employees, the owners generally have the upper hand unless the employee is the "talent". If you don't think so, possibly you could explain how a checker at Walmart is not weak in comparison to the store manager, much less the major share holders. As a business owner, I try to be aware that the structure is not equal so we have to incorporate a structure that rewards everyone fairly. Without it, business, especially business which requires little talent, devolves easily into a feudal structure.

Let me make sure I understand. So it's a business person's responsibility to create jobs (which entails risk) and to make sure that the those jobs pay a livable wage. Right? So if a potential business person can only create jobs that pay below a livable wage, then they just shouldn't bother, because it wouldn't be "responsible" or moral. Is that what you're saying?

Let's assume you're correct and a person was, to the best of their ability, creating a business which would only be viable if they under-pay their employees. The classic example is slavery - You don't pay your employees at all. Your defense is that not paying employees is the only way you can make a decent living at the business you've started. In your unregulated free market world, this is a reasonable course of action. I can only assume you missed your calling by about 200 years.

Can you please explain how that fits with a Judeo-Christian ethic?

That is not a great question. Maybe you can read the Jefferson Bible. That might help.