Category Archives: Economics

Economics

Capitalism Redefined

I heard an interview of Roger Martin the other day on Business Daily and he pointed out that the idea that companies are in business in maximize the shareholders short-term profit is just because someone said so. There is no reason that this should be the driving goal of capitalistic businesses.

I suppose that over the years the idea of short-term profits has become the loudest voice in the room.What if we changed that to reward 10-year growth? A company’s executives and board put together long-term goals and drive the company in that direction  and they are rewarded for reaching those goals – in 10 years. Bonuses will be paid to you or your estate whether you are still with the company. And if the 10-years goals are set every year, potential investors can see how well the management is doing and decide if they want to invest or invest more. There are no extraordinary bonuses based on past year’s performance or non-performance.  Profits/dividends can still be distributed annually, but the focus on performance is long-term.

It will require a paradigm shift to get away from immediate gratification ( I hate using that term but I think it actually works here.) I can’t imagine the current crop of business managers will move willingly in this direction. So much easier to game the system in the short-term. I don’t know how we could go about introducing this as a common business practice. Possibly use the SEC to reward the long-term planners? Disincorporate companies that don’t line up? Talk to the states that  incorporate companies and get them to change their rules?

Whatever, let’s put it on the table. I’m sure there are a lot of considerations to include. Maybe 7-year planning rather than ten (let’s not go to 5-year planning).

Economics, Politics

Social Contracts and Will

Elizabeth Warren and liberalism, twisting the ‘social contract’ – The Washington Post.

 

I wonder if George Will is being deliberately obtuse? He has taken Warren’s statement on the social contract and extends it into a collectivist political agenda.

The collectivist agenda is antithetical to America’s premise, which is: Government — including such public goods as roads, schools and police — is instituted to facilitate individual striving, a.k.a. the pursuit of happiness.

The individual striving is enabled by the government infrastructure and it is fair and equitable that any success in the pursuit of happiness provide some payback. And the greater the success the greater the payback should be. Or as Warren refers to it – pay forward.

 

Economics, Politics, Preparing for the worst

Uncertainty

 

 

 

 

 

 

 

 

 

Regulatory uncertainty: A phony explanation for our jobs problem | Economic Policy Institute.

There is some talk about the uncertainty of government regulation slowing down or stopping ‘business’ from investing their several Trillions of  dollars in the growth of the American economy.

So instead of uncertainty, why doesn’t business assume the worst. The government will establish regulations that will prevent American Citizens from being:

  • Poisoned
  • Killed
  • Defrauded
  • Threatened
  • Mistreated
  • Terrorized
  • Disadvantaged

And that will put the public good over the corporate good.

Assume the worst and everything doesn’t come true is gravy for your bottom line.

 

Economics

Econ 101

I am going through a self-teaching guide for Economics (Slavin, 1st edition, 1988).

Very interesting so far, but it is strange to see references to the Soviet Union and the strong Japanese economy.

Economics is the study of the allocation of the scarce means of production toward the satisfaction of human wants.

The basic questions of economics are :

  • What goods shall we produce?
  • How shall we produce the goods?
  • For whom are the goods produced?

The scarce means of production (resources) are: Land, Labor, Capital, and Entrepreneurial Ability.

Note: Labor is work. Capital is not money, it is the infrastructure needed to support the production and distribution of goods. Entrepreneurial Ability is the skill to organize the Land, Labor and Capital into a profit-making endeavor.

Human wants are unlimited relative to the resources available.

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The initial discussion of Adam Smith’s invisible hand explains that  people are more efficient when producing for their self-interests rather than for the public good. If people are allowed to produce for their own selfish interests then by-and-by the public good will be met as well.   I wonder if we will get into a discussion of the Commons?

Up to chapter 5 so far. Looking forward to the rest.

 

Economics, General, Politics

I am Published!

I am a published author! at least a writer…

The Colorado Springs Independent published my response to an earlier letter.

For some reason my WordPress isn’t letting me add the links where they should be.

http://www.csindy.com/colorado/letters/Content?oid=2334442

http://www.csindy.com/colorado/letters/Content?oid=2306503