Monday, February 6, 2012

The Economy, some thoughts from the left that are still Capitalist in principle

So I understand how the right has this divine reverence for the marketplace, and how it and the corporations that reside within it, must be left to their own devices. But that's ridiculous. Taking rules and regulation out of the marketplace is like taking rules and regulation out of a football game. It only leads to chaos.
Wouldn't a better market be one that was controlled, so that it would not periodically destroy itself. Wouldn't you want rules in place to prevent or even eliminate the chance of cheating, or unfair trade practices? Like all human systems, the market needs periodic upkeep.

And there is the argument on the right the periodic crashes are a good thing, that they weed out the problems, that it is natural selection, but what is so great about a system doesn't work all the time?

What I'm saying is that humans have this great ability to make self-correcting systems. We have thermostats that regulate the temperature of your house. We have refineries that use complex chemical engineering to create fuels. And if any of these systems failed or blew up, we would trash them. So shouldn't an economic system follow the same principles?

We need sound principles in place to prevent economic catastrophe. Because would you let a refinery run itself with no oversight?

I can add more to this point. For example, what if we combined the laws of the so called free market with the laws of nature to determine how things play out. I'm sure we'd come to some interesting conclusions.

How aren't banks that are "too big to fail" any different than dinosaurs? And following this point, if we use the dinosaur idea, what happens when a major catastrophe comes along?

The dinosaurs were large and specialized to the lifestyle of which they best could profit from. So when that disaster hit, they died. However, what survived the catastrophe that took out the dinosaurs? Mammals survived. Why did mammals survive? They were smaller and more responsive to change. They also had the ability to breed quicker. Therefore, small mammals survived because, being smaller, they didn't need to eat as much, they reproduced faster and more plentifully. So if some died off, there were others to replace them. So following this logic, small competitive banks would be more responsive to change than large investment banks. And if some of these smaller banks go under, there are others to replace them, so the hit on the economy is lessened.

Working off of that same vein, a system with smaller businesses, would work across the board for increased survivability during times of economic downturn.
For example, this model is used in Germany where these businesses are known by the name "Mittelstand." These small to medium sized enterprises do a great job weathering economic instabilities because they are more responsive to change. They are smaller, so they have less sprawling supply lines and infrastructures in place. Larger supply lines and infrastructures lead to trouble when trying to change production lines or re-educate the workforce. Consider trying to turn in Galleon around as opposed a small Clipper ship. And also if one of these enterprises goes out of business, there are always others to pick up the hole left in the economy by the business's exit.

Smaller businesses have another advantage. They actually encourage competition amongst one another: leading to lower prices, better quality and more jobs. Smaller businesses also have less of a damaging effect on government, as smaller businesses have less lobbying power.

And though it is only my opinion, I see lobbying power by businesses as a problem, because the voices of the business interests outweigh the voices of the public. However, I think that it is not a problem if the administrators and workers within a business work together to actively lobby, because then it is people that are lobbying not property.

Also, since workers make up the vast majority of the people working for a business, they will most likely only lobby where both the business's interests and the worker's interests are one in the same. It is another way to check the power of business, and theoretically discourages practices unfair to workers. It also encourages consensus between workers and administrators, thus tying their success together.

1 comment:

  1. Thanks for sharing business knowledge, Workers are the most important part of any of business, There should be strong bridge between Administration and workers, Both of them have same interest!Market Research Report Batteries Cells