(November 5, 2012 at 4:19 pm)Tiberius Wrote: It depends on how you view government. If you want government to be a mother-figure and constantly interfere with people's lives, then you would want a close relationship between the state and the market. However, in my opinion, this does more damage than it does good. Firstly, it rewards failure...a corner shop that can't afford to keep going will close down, and that seems logical, but why isn't the same for a big business that has clearly made bad decisions?
Because a big buisness employes thousand of people, who if unemployed risk regressing into poverty, which would be a negative effect on sociaty.
Buisnesses which cannot survive because of market competition and outdated products or sales methods such as Schlecker cannot be saved:
http://en.wikipedia.org/wiki/Schlecker
and in such a case as Schlecker the companies which provide the drugstore with products will not go bankrupt because they can simply sell and deliver to other buisnesses which were in competition.
But a buisness such as GM, Volkswagen or chemical industries such as BASF or Bayer, have small buisnesses which have totaly specialised on producing buildingparts, chemicals and other for these buisnesses.
If such a buisness get`s into trouble because of ill-management or the managers gusto for hungarian prostetutes - why should such bring not only the big buisness but also the smaller buisnesses which depend on the big buisness into trouble if they could continue to work properly if the big buisness was simply managed better.
(November 5, 2012 at 4:19 pm)Tiberius Wrote: Secondly, if the government doesn't have total control over the market it is trying to interfere with, things get even more out of hand. How much of the bailout money went directly into bankers' bonuses? Quite a lot: http://www.nytimes.com/2009/07/31/business/31pay.html
The banks are sometimes not the only buisnesses which are in need for a bailout. And in these cases a bailout can prvent the regression into poverty. In germany if a buisness get`s a goverment bailout a comission of economist supervisors overviews how this money is used and if it`s used productively.
The bonuses payed out to banks give to me a perfect example of how "non regulation" distorts ethics in a economy, if the banks would have been supervised and were required to use the money efficiantly just like theres a work requirement for unemployment benefits these problems wouldnt have occured.
[quote='Tiberius' pid='359020' dateline='1352146778']
True, GM would have gone, and so would its jobs, but when a company cannot afford to keep paying its employees...it is a failed company. It does not deserve to be propped up by the government. The whole point of the free market is free competition. If there is an influx of new employees into the market (from a big corporation failure), and there is still a demand for their trade, other companies will either take them on board or form out of those that are left.
Free competition can not exist in a economic climate which furthers monopoly power, which easely comes to be under eigther to much goverment or to less regulation. but that`s something else.
True GM was drawn into crisi because it didn`t adapt towards the markets needs, rising petrol prices and no one seemed to notice that because of that: maybe people no longer want to by cars which eat fuel like ... whatever. But that was defenatly a merketing and management mistake, there are not that many carcompanies out there, therefor there isn`t that much competition to employ the jobless, and as i mentioned before: several smaler buisnesses which are specialised will collapse.
(November 5, 2012 at 4:19 pm)Tiberius Wrote: To posit another scenario; there are thousands, and possibly millions of people who work in the printing industry, whether it be for newspapers or books. Now imagine (in a very likely near-future scenario) that the market for printed newspapers and books is either drastically reduced, or wiped out completely. Should the government step in to save the jobs of a now effectively useless sector of the market? No. That would be absurd; a complete waste of money. The world changes, and people have to change with it, whether that means learning new skills, or adapting the ones they already have.
No. Every single paper currently has one or two pages on the net, papers aswell as publishers will have to adapt to new media landscape and are currently doing so.
As to paper production, i dought that it will become overdue in the future, and even if publishers and papers will no longer need paper other companies will. But should it ever be the case that paper is put into a corner like the steam engine were inovation and product renewal doesnt help, it will die.
The car industry still has the potential to provide a inovative product and therefor has much potential for groath and is therefor worth saving until a company produces petrol cars while others produce flying green enegy cars.
(November 5, 2012 at 4:19 pm)Tiberius Wrote: I'm not denying the market can be a cruel place, but it works for the simple reason that supply and demand works. It is the most natural of systems, and without knowing the future, it is the best system we have.
I never stressed that the market must be a "nice place".
I would like a further explaination for the claim that the market is a "natural system" unless i understand it correctly that you mean it is a "social darwinistic" system. In which case I have to agree, but ask what the benefits of such should be?
Baine Capital style vulture takeovers and guttings can ruin a perfectly functioning buisness aswell as speculation and "unreal - product economics". If i could use a metaphore or picture to discribe my view of how the merket should work, it would be the one of a cattle farmer, i want my cows to be healthy and develope strong musclefiber for good meat which is why i will leave them running on medows, but i will prevent them from eating weaker cattles food by assuring that one does not discriminate the other.
(November 5, 2012 at 4:19 pm)Tiberius Wrote: The case of banks is a little different. People operate under the delusion that banks are a free and risk-free place to store money. They are not. Banks make the profit through investments, and they use the money of their customers to make these investments. It is the customer who risks their money putting it in a bank. They do not need to; they can store it in a safe if they so wish. The benefit of storing it in a bank often outweighs storing it in a safe of course; you get additional physical security, and can accumulate interest. However, you do so at the risk of losing it if the bank goes bust.
The entire risk thing wouldn`t be that much of an issue if investments had to be safe, and savings used by banks for risky investments could only be used for such when the customer and owner of that capital agrees.
It is a wide spread myth that investments are unsafe risky things. most are not and those which are, are a minority and dont produce within the "real economy" and can only create a short term big profit.
If taxes or regulations were imposed on such risky transaction the number of these would go down aswell as the risk resulting out of such transactions.
