Author Topic: Armchair Economists, Unite!  (Read 12184 times)

Thought

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Re: Armchair Economists, Unite!
« Reply #30 on: April 20, 2010, 03:03:45 pm »
To note, making such gross salaries is, in fact, detrimental to the rich as well.

If one were to make a list of the top 100 wealthiest individuals in human history, adjusting for inflation, the vast majority (upwards of 80 to 90%, if I recall correctly) have been Americans, and they were Americans in the era when the Middle Class was on the rise and the wealth-gap was shrinking. Technological innovations allowed them to become wealthy, but the extent of their wealth was dependent on the extent of the wealth of their consumers. As the gap between the rich and everyone else increases, however, the opportunities for the rich to make money shrink. They'll still be rich, no doubts there, but they won’t be as wealthy as they could be otherwise.

A midget on the shoulders of a giant can see farther than a giant on the shoulders of a midget.

FaustWolf

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Re: Armchair Economists, Unite!
« Reply #31 on: April 20, 2010, 03:15:20 pm »
Yeah, I'd argue that the 2008 recession (and accompanying stock market hemmorhaging) was proof of exactly what Thought's saying. That was a stumbling of the overburdened economic midget as it were. In academic circles everyone's blaming the recession on "risky investment instruments" like mortgage-backed securities. Mortgages probably shouldn't be sliced up and traded, but the big picture is that people were defaulting because they weren't earning enough money to pay their bills. It doesn't take a Master's in Economics to realize this; it merely takes a middle class living experience, which I'm not entirely sure a lot of economists have.

What pisses me off is that the giant's been able to get up seemingly independent of the midget, who continues to struggle in misery unnoticed. It's like Wall Street has inexplicably become this...self-contained bubble completely independent of the fortunes of Mainstreet. True, a lot of upper middle class folks watched their retirement evaporate and haven't recovered it yet, but these ballooning corporate profits amidst 9~10% unemployment are just...mind numbing. I guess it could all be chalked up to cost-cutting among businesses rather than rising revenues, and I have to wonder how long that can last.  Maybe the 2008 recession was just a hiccup compared to what's in store.

Lord J Esq

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Re: Armchair Economists, Unite!
« Reply #32 on: April 21, 2010, 07:25:52 pm »
Speaking of "business models," the thing that gets me is that the pay these executives make is, in part if not in whole, a transfer of value from the workers who made the product to the executive. In classical economic theory, a perfectly functioning economy will ensure that wages are equal to the marginal product of labor. I can't shake the feeling that what we're seeing here is a wage level far below the MPL, with that value being transferred from the worker to the executive.

Those first and last sentences are exactly right. It's what in leftist economics is more commonly called "wealth capture," the redistribution of wealth from the general economy (i.e., most workers) to that narrow segment of society consisting of wealthy, well-connected individuals who exercise effective control over our economy by running large companies, investing in them, and financing them. Most work in America is underpaid, even going by the hand of the market. If you look at it as a question of social justice, it's considerably worse.

At this point I deleted a considerably longer reply, which I simply do not have the time to complete to my standards of rigor. I leave it to you, then, to check my statements.

In my opinion, a superior business model in terms of economic efficiency would revolve around contracts that spread profit among all workers roughly equally.

You're talking about an economic model, not a business model.

If value is to be determined in the market, then I posit that it is essentially impossible to pay workers the marginal product of their labor with an ex ante contract; it's a mere prognostication, and possibly a very poor one at that. I would still favor contracts offering a specific wage so that living standards aren't subject to wild downward fluctuations when business is bad, but if the business is wildly successful and earns tremendous profits, that shouldn't be hoarded at the top levels of a company.

The key polarity that exists between, if I may generalize, the American economic right and the American economic left, is the contention as to how far labor can be treated as a production factor, and how far it must be negotiated with as a free agency. This is such a problem because in competitive capitalism an entrepreneur is strongly discouraged from inefficiencies, and labor is one gigantic bag of potential inefficiencies. In short, it is expensive to a company to treat its workforce like human beings--so expensive that the right generally opposes it as counterproductive. And that's not a caricature, either, as history attests.

I mention this to address an assumption you made in your statement, which is that there is a good reason to impose income floors for workers without regard to the financial health of their employers, as you suggested, even as you went on to suggest that when the employer does well the workers should benefit from that success. The "good reason" that workers should share in a company's success but not its failure (short of losing their jobs if the company makes cuts or goes out of business entirely) is that, to be dramatic about it, workers are human beings. Their primary concern with the company is not its success, which necessarily remains secondary (if it is present at all), but of earning a livable income. If employment cannot first secure for the worker a livable wage, nothing else matters. Income floors are crucial because they stabilize the economy. (And I will forever marvel at the oblivious willingness of the upper classes to advocate for the deplorable social circumstances which foment the very revolutions which periodically see their heads all hoisted up on pikes.)

If I may go on a tangent, imagine how well these executives could serve the economy by organizing private work projects for the unemployed. I see absolutely no reason to tolerate the unemployment of those who are willing to work. Letting these people languish is only degrading the economy's stock of human capital. I solve this problem in my own life by working for free just to maintain and hopefully expand my skillset during periods like this, but very few people have such an option. Plus, I fear the repercussions of mixing unpaid workers with paid workers; the paid workers may be held to near-inhuman standards, and nevermind that the paid workers are probably working for pay because they have people to support and take care of!

I am opposed to forcing private companies to hire workers for the good of the general welfare. That requirement would be particularly burdensome to capitalism (and I am a capitalist, if a socialistic one), and it more properly belongs in the purview of the public sector anyway. Anyone who wants a job and can't get one from the private sector should have a recourse through the government. I would be so happy to see a revival of infrastructure projects. The government could put people to work laying broadband cable, building aqueducts, installing residential electrical power plants--and could provided the necessary training, as required. Infrastructure is worth its weight in gold to the economy, and the heinous expense of its maintenance and improvement is only an illusion to discourage the avaricious from depriving the Earth of foolery.

It seems like it should be a paradox, but in fact a history of unpaid work is becoming more and more critical to scoring paid employment.

That reminds me of the conservative myth of the homemaker. Not only is the premise of "stay-at-home womanhood" a departure from the labor roles imposed upon females throughout history, but it is also the case that that work--homemaking--is payable work. That much was true in the past, and it's true still: Just look at the money to be made from making other people's "homes."

(Ah, this brings me to a philosophical outburst that simply cannot fit in this thread. I must go...)

FaustWolf

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Re: Armchair Economists, Unite!
« Reply #33 on: April 21, 2010, 11:31:22 pm »
I definitely agree with the notion of a return to the old Publics Works projects, though I would have no qualms with today's wealthy barons identifying needs in their own communities and organizing projects on a private basis. I think what I mean to express here is a challenge to fiscal conservatives: "Don't like Big Government and its nasty deficits? Then propose private solutions!" Just telling people to have a strong work ethic is not a solution when there isn't enough money circulating in the economy to create jobs for people who do want to work, and who hold great productive talent. The ability of people to put food on the table has got to come from somewhere, dern it.

I'd be interested in reading your philosophical outburst should you wish to convey it later on, whether here or through another venue. I don't feel the least bit comfortable with the fact that I've worked about as many hours unpaid in my lifetime as I have paid so far, but I can't deny that every successful job interview I've had hinged on the fact that I already worked in the industry before working in the industry. Connections come into play of course, but the more I've reflected on my life so far, the more I've realized that textbook "interview success" -- those "keywords" we hear about so much in the job search advice columns -- depends crucially on experience already accumulated in the target industry.
 
It's a huge and frustrating paradox that gives certain people (namely those with support from wealthy families, and who can thus afford to work for no pay) an incredible strategic advantage over others. It's scary precisely because the practice makes economic sense on a certain level: if you're hiring for a slot in the cogs of national government, do you want the rich grad who's already put in a thousand unpaid hours at a related government agency, or the working class grad -- with the same GPA -- who had to put in a thousand paid hours at McDonald's to help support her or his family while in college, or pay for college when the family couldn't offer such support? This is one factor in our economy that promotes stratification of opportunity on the basis of the employer's rational self interest. I use government as an example, but I would presume the exact same holds for private industry as well.

At least, this is what I've observed in my own experience. There are probably great variations depending on the specific industry one is trying to access, not to mention the hiring culture dominating that industry.

EDIT: Oooh, here's an interesting article on the phenomenon, focusing on internships and a potential model for leveling the playing field. Good stuff there. Here's a New York Times article that also explores the issue.
« Last Edit: April 22, 2010, 02:19:35 am by FaustWolf »

Thought

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Re: Armchair Economists, Unite!
« Reply #34 on: April 22, 2010, 02:36:14 pm »
The "good reason" that workers should share in a company's success but not its failure (short of losing their jobs if the company makes cuts or goes out of business entirely) is that, to be dramatic about it, workers are human beings. Their primary concern with the company is not its success, which necessarily remains secondary (if it is present at all), but of earning a livable income.

These goals need not be separate. At present, due to the practices of business, they are divorced, but they can be married (and aught be married). This gets at the question of why do businesses exist in the first place. Upper management types might claim that a business exist to make money; that, however, is a mistake as businesses must make money to exist, but that is not why they exist (no more than humans exist simply to eat food). There is another answer that such an individual might give: a business exists to survive. Much like an animal, a business is really only concerned with making sure that it continues to exist into the distant future. I would argue that while this is a true statement, it is also an impoverished statement that doesn't capture the full scope of things.

However, before discussing why this is an impoverished statement, allow me to discuss why it is a true statement.

Why do businesses get founded? Usually because someone sees an opportunity for making money and acts on it. But money itself is merely a means of ensuring one's survival. It will buy the necessary ingredients for that. Specifically, most entrepreneurs want to survive in a particularly comfortable manner, but at its heart money is just a means of living another day. As most businesses need employees, why do employees then seek employment? Likewise they see an opportunity to make money and take advantage of it. The money is so that they can survive, and maybe survive in a particular style befitting their senses. Regardless of anything else, if businesses did not provide individuals with a means of accessing money, which is itself necessary for survival, then they could not exist.

But why is saying that a business exists to survive an impoverished statement? For the same reason it is imprudent to say that humans exist merely to survive. That we have to survive is true, but we can define our own reasons for existing and so many exist to do more than just survive. Likewise a business.

The opportunity that the founder of a business sees itself exists because of a demand. I cannot start a business catering to the clothing needs of three toed sloths unless someone wants their three-toed-sloth-clothing-needs fulfilled. Here we get a glimmering of another reason why businesses exist; they exist to provide goods and services that aid the survival (in a particular manner) of individuals who may or may not be outside the body-proper of that business.

A business, then, exists to provide means of survival to those related to it and to society in general (through providing goods and services).

We may conclude, then, that it is against a business's reason for existence for a few individuals within the business to attempt to minimize or eliminate the survivability of their employees and customers.

That is what makes many current business practices so vile; they not only undercut the employee, they not only undercut the customer, they also undercut the business itself by doing so. A business is comprised of these three needs that must be met; attempting to maximize one at the expense of the other two harms all three in the long run.

Now one can make an argument that Upper Management is like the brain, that it needs comparatively extra resources in order to function and help the whole, but this cannot occur at the expense of the rest of the body. The brain needs the rest of the body to survive, and it needs the rest of the body to be in good condition. Indeed, just as it is quite possible for an animal to survive with and underdeveloped nervous system that does not require additional resources, so too can a business survive without the excessively wealthy individuals who try to manage them.

***

As a totally different topic, I am curious as to if people have thoughts regarding the government’s role in the internet as it relates to business. That is, I am coming to the stance that the government (on a city, state, and national level) ought to provide free wireless internet access to its citizens, as a means of promoting business, much in the same way that the government might build roads and various utilities in order to promote social prosperity.

Lord J Esq

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Re: Armchair Economists, Unite!
« Reply #35 on: April 22, 2010, 05:19:31 pm »
These goals need not be separate. At present, due to the practices of business, they are divorced, but they can be married (and aught be married).

(Aside: I was intrigued by your use of "aught." I figured you were taking license with "ought," but I'd never seen that particular usage before, so I spent a few minutes looking at the etymology and standard usages of both words, and it seems as though there's very little support for using "aught" as an auxiliary. Indeed, because of other crossovers between the two words, such a usage would ultimately be obfuscatory.)

Admirable, but misguided. To propose that a worker's own need to earn a livable income should be married with the success of the company for which he or she works but does not own is to require that we place the livelihood of a human being on the same level of importance as the prosperity of a business. Consider the worker's statement: "I want to succeed so that my company can succeed," or even the more pro-labor statement "I want my company to succeed so that I can succeed." Both statements are presented as incentives to (personal) industry, yet both tremble with the implication of an equal prerogative--that the company's success is equal to the worker's life, on the basis that if the worker is to be for themselves they must also be for the company. That's bad enough on its own, but where is the company in all this? If the company is to be for itself, is there also a requirement that it must be for the worker? No. In fact, such an assertion would be a renunciation of capitalism. (And a company, too, must be allowed to look out for itself--or more specifically the leadership of the company must be allowed to look out for the company's continued success, to the extent this does not encroach upon workers rights or ought-to-be-rights.) I think that if you reflect upon your statement you will not be willing to continue to assert it. Workers must place their own livelihood apart from and above the success of their employers. The two concerns can go along together very nicely, but not as a single entity.

(If I may go out on a limb here, I think what you had in mind are reward mechanisms like stock options, bonuses, and meritocratic promotions, and that your thinking was that these types of rewards provide an incentive to the worker for their company to succeed. Such mechanisms are not a justification for marrying the two concerns.)

Moreover, I think the conservative in you would cringe at what steps would be required to complete such "marriages." How would business be structured? How would the marriage be legally enforced (as per "ought")? I see no reliable avenue for it to work without undermining the economic system. I think it'd seize up the system, indenturing workers to their employers and constraining employers to hang on to massive labor inefficiencies. Even more, I worry that any attempt at this unholy fusion would inevitably unravel a century of workers rights victories by the labor movement. To avoid this, what would you have? Would you have private companies reorganized as cooperatives or non-profits, or simply nationalized outright? How would that be capitalistic?

This gets at the question of why do businesses exist in the first place. Upper management types might claim that a business exist to make money; that, however, is a mistake as businesses must make money to exist, but that is not why they exist (no more than humans exist simply to eat food).

Fully wrong, by definition. Now, there is a chance that you're talking about "profit" in the truest sense of the word and not merely the compensation of the executive management or its small-business equivalent, so if that was your meaning then you may disregard this paragraph. But if not, then you would be mistaken not only by the dictionary definition of "business" but by the entrepreneurs who create business. Many of the businesses required to support our civilization are of no interest to anyone, just about. They exist not because entrepreneurs want to uphold our way of life, but because the market wants to uphold our way of life, and thus creates a demand, whence follows business. There are some entrepreneurial exceptions out there, but these people are almost inevitably already affluent enough that their entrepreneurship is not in the support of their own livelihood in particular, but for the more abstract pursuit of their personal satisfaction.

A business exists to make money. If that is not the case, then you're either not looking at a business (but instead at a hobby dressed as a business) or you're not within the paradigm of capitalism. Though you have admirably and fancifully and thoughtfully stepped outside of our current economic worldview and proposed a more ideal solution, some further contemplation is required. Companies have no sentient will. They do not profit to survive; it's the other way around. Business as we know it would not exist if not for that essential economic problem of unlimited demand and limited supply. All of this boils down to livelihood: Our entire civilization is built upon the premise of earning one's material needs by satisfying the demand for value, through industry.

As a totally different topic, I am curious as to if people have thoughts regarding the government’s role in the internet as it relates to business. That is, I am coming to the stance that the government (on a city, state, and national level) ought to provide free wireless internet access to its citizens, as a means of promoting business, much in the same way that the government might build roads and various utilities in order to promote social prosperity.

Ah, I just wrote about this in another thread. As far as I'm concerned, Internet access ought to be a guaranteed civil liberty (and maybe someday it would qualify in my mind for the status of a human right). I don't much care about the "wireless" qualifier, but, not caring, I won't dwell on that either way. Some kind of free Internet access is necessary. You may recall that I am in favor of nationalizing all critical infrastructure and institutions; I include the Internet. There should be no such thing as private ISPs.

Thought

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Re: Armchair Economists, Unite!
« Reply #36 on: April 22, 2010, 07:10:35 pm »
Alas, I don't think I will have a chance to fully reply to you, Josh, until Tuesday at the earliest (I will be traveling). However, to give a quick, one sentence summary: I think you didn't fully understand the concepts I was expressing.

But allow me to give two brief notes regarding your notes

(Aside: I was intrigued by your use of "aught." I figured you were...

Nope, I just like the alternate spelling more. However I am surprised that you've never come across this usage before; I picked it up during college from all the reading I did. But I tend to spell things in either an archaic or non-American way (such as "grey").

I don't much care about the "wireless" qualifier, but, not caring, I won't dwell on that either way.

Oh you should! Wireless is quite necessary as it is an elegant solution to the problem of the Last Mile. Given that you like engineering, I am sure you will enjoy imagining all the difficulties that wired internet connections demand, from labor and parts to structural considerations, city planning, and so forth.

If you aren’t familiar with the term “Last Mile” allow me to provide an example. If you are, please skip this paragraph. Still reading? Well, let us say that our good Zephira wants to access a Chrono fan site in Japan. There needs to be a wire from Japan to America. Then a wire from "America" to each state, a wire from each state to each county, a wire from each county to each city, from each city to each building, and from each building to each terminal. Control that "Last Mile" that the information travels and you can control what Zephira gets to access and what she can't. As that mile is also very expensive, it is hard to upgrade and whoever pays for it has what people often consider to be a reasonable justification for compensation.

Essentially, the Net Neutrality debate is largely the result of internet having been wired; if it had magically started wireless, this wouldn't be such a major problem. The sooner general internet access becomes wireless, the sooner company strangleholds are eliminated.

However, even in a world of government-provided interwebs, I could easily see private ISPs existing. The problem with wireless is that by going everywhere to everyone, it is impossible to fully secure. We can police it, but a secured internet connection (aka, a wired connection) will circumvent a lot of that. It's the basic concept behind Johnny Mnemonic.

Thought

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Re: Armchair Economists, Unite!
« Reply #37 on: April 27, 2010, 06:59:12 pm »
Terribly sorry for the delay in responding. To give a brief justification for my earlier supposition that you didn't fully grasp the concept, Josh, allow me to say that I came to this conclusion because it seemed that your objections were specifically to instances where this system was implemented but then not followed. However, I will now attempt to give a clearer view of what I am talking about.

First, I should give a few words on the fundamental assumption of my approach. I'm fairly sure I've stated this on the forum before, but I often will take the perspective of attempting to establish "how it might be in a perfect world," with the acknowledgement that the world is not perfect and in all likelihood cannot be perfect. But by establishing how things should be, we then obtain a goal towards which to work. I freely admit that this system couldn't reasonably be implemented in its entirety in the current economic world. I believe and would argue that it is more viable than the current systems in the long-term, but is at a disadvantage in the short-term, to the point that reaching the long-term seems unlikely.

Now, as this is of more fundamental importance than the majority of your objections, allow me to return to the nature and "purpose" of a business.

A business exists to make money.

I am rather surprised that you've made such a common error, Josh. You are here assuming that money has value; that its importance lies within it as a thing in itself. This is not true. Money is entirely worthless as the accusative of a sentence; the reason that it is desired is not because what it is but because it is an ablative. That is, if one sees rightly, money is not the object that one aspires to, but rather it is the means that one uses to get to the real object. To desire money for the sake of money is an aberrant desire. Why do you work, Josh? To get paid, certainly, but why do you want to get paid? So you can sit around looking at the money? No, certainly not; you wish to get paid so that you might maintain your residency, so that you might buy onions for use in delicious foods, so that you might maintain the elements necessary to write your fiction, and for many other reasons. To have more money would probably please you, but if you are of a sound mind, more money would please you because of the things that it could obtain for you, not because it is pleasing in its own right.

A business exists to make money, true, but that money is only a means. Such a statement has stopped halfway through the sentence, it isn't a complete thought; the real object has yet to be identified. A business exists to make money in order to do other things. It is these other things that I am dwelling on, it is the value behind the cashy-money that I am concerned with, not the illusion of the clink in your pocket.

This is why a business can exist in a barter-economy. In the mathematical equation of businesses, money is X, a variable, a stand-in for something of real value.

Now we can say that a business exists to obtain profits, insofar as we are careful to state that "profit" is being defined as the general benefit that the interested parties receive from it. If, instead, we define "profit" as a margin on a ledger, then that statement would no longer be true.

A business exists to benefit individuals (and I am here using individuals to also include groups); which individuals? I have argued that there are three individuals that a business must benefit in order for a business to be healthy. This is, admittedly, a little circular in its logic as I also define an unhealthy business as one that does not benefit one of these individuals, but in my defense I do so because if a business continuously does not provide benefit to one of these three individuals, the business itself will collapse. A business needs leadership, a workforce, and a market. Remove even one of those and the whole will fall.

I identify these three individuals by the names "Entrepreneur," "Worker," and "Market." The Entrepreneur may be taken as both the individual (or individuals) who found the company as well as the ones who manage it (this may include upper management). The worker is simply those employed by the business as a whole in exclusion of the Entrepreneur. And the Market is merely those individuals who desire to obtain the goods and services of the business. Each of these groups can be further broken down, but the benefit of doing so is minimal and risks much confusion.

Each of these individuals approaches the Business with a particular "need" or "desire" in mind. I formerly used the word "survival" and that may have been mistaken as "base survival," as in food and water, whereas I meant it in the form of a continuation of a particular state (a worker might desire to continue living at a lifestyle provided by $50,000 a year while an entrepreneur might desire to maintain a certain level of self satisfaction that is provided by running a Fortune 500 company; I used "survival" to define both of these).

Why does the Market buy goods and services from a business? Because the Market wants those goods and services.

Why does a Worker work for a business? Because the Worker desires a paycheck (and possibly various emotional satisfactions), with which they will then be able to turn around and act the part of the Market for goods and services.

Why does an Entrepreneur build/maintain a business? Because they desire a paycheck (in the form of cash or emotional boon or some other things), with which they will either build/maintain other businesses (for the same reasons) or turn around and act the part of the Market.

As the business can provide satisfaction to each of these individuals, each of these individuals can find satisfaction by playing their role in the business. Because each of them benefit from the business, it is in their interest to secure that benefit by acting accordingly.

Now allow me to give a few examples of how this situation might play out:

I, as a worker, want to live a certain lifestyle. To do this I need money. To get money I will work for a company. By working, I begin to satisfy my need, I begin to satisfy the need of the company for employees to do their required tasks, I begin to satisfy the entrepreneur who also wants to live a certain lifestyle, and I begin to satisfy the needs of the market by meeting its demand. It is in my interest to do my best to ensure that the company is healthy, as a healthy company will continue to help me satisfy my needs.

I, as an entrepreneur, want to live a certain lifestyle. To do this I need money (or egotistical support, etc). I observe an opportunity and form a business to obtain money. By forming (and leading) this business, I begin to satisfy my own needs, I begin to satisfy the needs of employees to make money in order to live a lifestyle that they desire, I begin to satisfy the needs of the market by creating and maintain an entity capable of providing desired goods and services, and I begin to satisfy the need of the company for competent leadership. It is in my interest to do my best to ensure that the company is healthy, as a healthy company will continue to help me satisfy my needs.

I, as a market, want to live a certain lifestyle. To do this I need certain goods and services. To get these services I pay a company to provide them. By doing so, I begin to satisfy my own needs, I begin to satisfy the needs of employees in that company by providing the financial resources they need to live the lifestyle that they desire, I begin to satisfy the need of the company for customers, and I begin to satisfy the need of the entrepreneur for money as well. It is in my interest to do my best to ensure that the company is healthy, as a healthy company will continue to help me satisfy my needs.

Please do make special note that it is always in my interest to ensure that a company is healthy; an unhealthy company may not continue to help me satisfy my needs, which would then require that actions be taken to either make the company healthy again or to extract myself from the company.

Now, a problem arises: it comes to pass that there are dead-weight employees who are not helping meet the needs of others.

As an employee myself not in this group, it is in my best interest for the company to jettison those employees as they are hampering the health of the entire company and putting the satisfaction of the needs of everyone else, including my own, at risk in return for the short term satisfaction of their aberrant desires (the desire to be dead-weight).

As an entrepreneur, it is in my best interest for the company to jettison those employees as they are hampering the health of the entire company and putting the satisfaction of the needs of everyone else, including my own, at risk.

As a market, it is in my best interest for the company to jettison those employees as they are hampering the health of the entire company and putting the satisfaction of the needs of everyone else, including my own, at risk.

As those employees who are dead-weight... well crap, I was only looking out for my own needs and not acting in a manner that aided the needs of my fellow employees, the company, the entrepreneur, or the market. I tried to screw them over and now they're going to kick me out. Curse their sudden but inevitable betrayal.


Now a different problem arises: it comes to pass that the entrepreneur controlling the company desired to cut the pay on the employee so as to funnel more of the company resources to his or her self.

As an employee, it is in my best interest for the company to not cut my pay so that the Entrepreneur can receive more pay, as this directly attacks the satisfaction of my own needs. If the company ignores this and proceeds with the pay cut, then it is no longer in my interest to support the company as it is attacking me and, indirectly, the market itself. This entrepreneur is putting the health of the entire company at risk in return for the short term satisfaction of his or her aberrant desire (the desire to make more money at the expense of the employees).

As an entrepreneur who is not  supporting this change, it is in my best interest for the company to not implement these changes as they directly harm the employees which in turn harms the profit generating mechanism of the company. This policy would hamper the health of the entire company at risk.

As a market, it is in my best interest for the company to not implement this policy, as the employees outnumber the entrepreneurs and both parties also exist as part of the market as well; fewer resources sent to the employees results in a smaller market which in turn demands fewer goods and services which starves the company in turn. These entrepreneurs are risking the health of the entire company in order to satisfy their own aberrant desires.

As one of the entrepreneurs who is supporting this change... well crap, I was only looking out for my own needs and not acting in a manner that aided the needs of the company, the employees, or the market. I tried to screw them over and now they're going to kick me out. Curse their sudden but inevitable betrayal.


Josh, you said that you feared that employee rights might be lost in such a system, or that companies would be saddled with inefficiencies. These problems could only arise if one (or more) of the three indentified individuals separated themselves from the company by pursuing goals that satisfied their own needs/desires at the expense of the other groups. It is in the interest of the Entrepreneur and the Market to ensure the rights of employees; if the employees’ rights are violated, the employees (the "profit" generating aspect of the business) will vacate the premises, causing the entire business to crumble, ending the benefits provided to the market and the entrepreneur. If the business is inefficient, then it is in the best interests of all parties involved (the entrepreneur, the workers, and the Market) to see those inefficiencies resolved, as they hamper the general health of the business and in turn the benefits received by each individual.

If you are so interested, my thoughts along these lines were greatly aided by playing the game Civilization 4, for in it was contained the quote attributed to Henry Ford: "There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wage possible."

It is in the interest of the Entrepreneur to keep the Workers happy and fulfilled, as the Workers also are the Market. The more the workers have, the more the market has, and the more the Entrepreneur can have. This is because wealth (as opposed to money) is a potentially infinite resource. Wealth, as I am using it here, is the act of goods and services changing hands (possibly through the medium of money). To give an example, I buy a chocolate bar for $5 (it’s really good chocolate). The Chocolateer turns around and buys raw ingredients (as well as something that s/he wants unrelated to chocolate) for 5$. That same $5 of money has now produced $10 of wealth. If these $5 could travel fast enough, there is no end to the amount of wealth it could generate (well, the end is the total of all available resources).

Which brings me to your objection of managing a limited amount of resources. This system would actually do a better job of this than the current economic system; under the current system, planned obsolescence is a perfectly legitimate mechanism. This burns through resources faster than need be. Under my system, however, the business desires to fulfill the wants and desires of the market and so will do its best job. A light bulb, for example, could then be made that would last for decades. This would preserve the Market's resources, allowing it to buy more and varied things, which will support more businesses, which will support more workers and entrepreneurs who will play the part of the market and buy other things.

A problem does arise, however, in the short term. Let us say the business is Nintendo and the goods and services is the Wii. Let us then say that 500 units can be reasonably produced but the market wants 1000. As an additional 500 units cannot be procured from nothing, the business cannot fully meet the demand of the market. While an unfortunate situation, there is nothing that is inherently a problem here. The business could well raise the price of the units so that the demand shrinks to an appropriate amount. Or, alternately, the business could merely let the market figure it out, so that those with the greatest desire are the ones to receive it (by means of waiting outside for hours, or the sort). I do not see that this would be a drastic problem for such a model.

But the above is why I was careful in choosing my words: "marriage" was not an accidental word choice. The interests of the individual do not magically disappear in a marriage; rather, they change for the betterment of both parties. A marriage in which only one individual’s interests are served is a dysfunctional marriage. A marriage in which one individual's interests must always give way to the interests of the other is also dysfunctional. A marriage, rather, is almost metaphysical in its goals; it strives to turn two individuals into one entity without either individual loosing an ounce of their individuality. A marriage does mean that sometimes one individual sacrifices for the good of the other, but this is because the betterment of the other is also desired, and so the sacrifice is also a fulfillment for the same individual. Perhaps "trinity" might be a good word to define this system of mine; three desires, entirely separate and unique but also entirely singular and indivisible.

I think (but may well be wrong) that I have better explained my system and hopefully you have so understood it and your objections have been addressed. Now onto a few "housekeeping" comments:

(If I may go out on a limb here, I think what you had in mind are reward mechanisms like...

Not really. The success of a company must be felt on all levels, but I did not have specifics in mind. Perhaps salaries of all employees being given as a percentage of income, rather than static numerical figures, would be a worthy course of action, but job security and stability, more desirable work hours, various benefits, etc, could also be used in a similar manner.

Moreover, I think the conservative in you would cringe...

I'm really more of a moderate than conservative and generally dislike much of what is done in the name of capitalism. The individuals of least importance to the continued survival of a company are the fewest in number but also get paid the most, while the individuals of greatest importance are the most numerous and are paid the least. Compensation reflects scarcity but not actual value, which I find quite illogical and frustrating. Encouraging business and free enterprise is good, but I must strongly oppose the oppression that often gets passed off as "capitalism." Far too often that word is merely a substitute for tomfuckery (and I do apologize for the crude language, but I think it gets my disdain for the practices across rather nicely).

Companies have no sentient will.

I grant you that they have no sentient will, but I must maintain that they do have a will. But in this regard I do admit that I am an emergentist (of the ontological variety, if I understand the distinctions properly).

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Re: Armchair Economists, Unite!
« Reply #38 on: April 28, 2010, 04:52:19 am »
A business exists to make money.

I am rather surprised that you've made such a common error, Josh. You are here assuming that money has value; that its importance lies within it as a thing in itself. This is not true. Money is entirely worthless as the accusative of a sentence; the reason that it is desired is not because what it is but because it is an ablative. That is, if one sees rightly, money is not the object that one aspires to, but rather it is the means that one uses to get to the real object. To desire money for the sake of money is an aberrant desire. Why do you work, Josh? To get paid, certainly, but why do you want to get paid? So you can sit around looking at the money? No, certainly not; you wish to get paid so that you might maintain your residency, so that you might buy onions for use in delicious foods, so that you might maintain the elements necessary to write your fiction, and for many other reasons. To have more money would probably please you, but if you are of a sound mind, more money would please you because of the things that it could obtain for you, not because it is pleasing in its own right.

A business exists to make money, true, but that money is only a means. Such a statement has stopped halfway through the sentence, it isn't a complete thought; the real object has yet to be identified. A business exists to make money in order to do other things. It is these other things that I am dwelling on, it is the value behind the cashy-money that I am concerned with, not the illusion of the clink in your pocket.

This is why a business can exist in a barter-economy. In the mathematical equation of businesses, money is X, a variable, a stand-in for something of real value.

Now we can say that a business exists to obtain profits, insofar as we are careful to state that "profit" is being defined as the general benefit that the interested parties receive from it. If, instead, we define "profit" as a margin on a ledger, then that statement would no longer be true.

This section is quoted in its entirety for your amusement. Essentially we are in agreement here and you spent a goodly number of words chiding me for not being excessively literal. Yes, a business exists to make money in order to do other things. But if we should have to complete every premise in that fashion, I would find communication insufferably dense. I'm going to go grocery shopping!...so that I may buy food...which I shall then cook...so as to be able to eat it...in order that I may derive enjoyment and nourishment...so that I might continue living with the comfort and satisfaction thus provided. Yadda yadda yadda! Come on, Thought! I know you like to be contrary, but I'd consider it a great advancement in my own writing if I were able to be more concise. This would lead to verbosity most vast!

A business exists to benefit individuals (and I am here using individuals to also include groups); which individuals?

Here is where you begin to go wrong. A business exists to make a profit (or, by my earlier wording, to make money). That the profit is applied to the benefit of the entrepreneurs is implicit in that premise, but separate. The business itself is concerned only profitability—provided of course that we're talking about a for-profit venture. You can see this by evaluating business structure: Nowhere in the bones of a business is it asked “How does this function benefit the entrepreneur?” No, what is asked is “How does this function contribute to the profitability of the business?” If we were to go along with your idea that a business exists not “to make a profit to benefit the entrepreneurs” but simply “to benefit the entrepreneurs,” we are being extraneous, which in this case is illogical.

I identify these three individuals by the names "Entrepreneur," "Worker," and "Market."

Here is where your mistake completes itself. A business does not exist to benefit its entrepreneurs, its workers, and its market. (You could also have distinguished between its market and its customers.) Businesses do not operate for the sake of employment; though they provide this benefit to the economy, it is incidental. Your theory is well outside the paradigm of capitalism here; we might as well task the government to hire everyone immediately, thus ending unemployment and poverty. This in itself would be no worse than private businesses which exist for the purpose of employing people—in fact it would be better, because there would be no profit motive to get in the way of providing employment. Likewise, businesses do not operate for the sake of their market; though they satisfy market demand, it is incidental. This indeed is a subtle point lost on many people who have no understanding of business: Such a person might say, “Well, there are so many people here who don't have enough access to fast food restaurants! We should go into business to provide them fast food restaurants!” But that's wrong. Humanitarianism or goodwill make for a terrible reason to go into business, at least capitalistically speaking—and businesses like that are more likely to go broke, as I've been able to see here in Seattle in the aftermath of all that tech bubble money. What an experienced businessperson might say is, “Well, there are so many people here who seem to have more demand for fast food than is available, and I see a way to make a profit by satisfying their demand.”

It's all about the profits!

Why does the Market buy goods and services from a business? Because the Market wants those goods and services.

Why does a Worker work for a business? Because the Worker desires a paycheck (and possibly various emotional satisfactions), with which they will then be able to turn around and act the part of the Market for goods and services.

Why does an Entrepreneur build/maintain a business? Because they desire a paycheck (in the form of cash or emotional boon or some other things), with which they will either build/maintain other businesses (for the same reasons) or turn around and act the part of the Market.

Agreed, agreed, and agreed. Much of the remainder of your post is a disquisition on that which is already agreed. But these are not conclusions in support of your premise.

A marriage, rather, is almost metaphysical in its goals; it strives to turn two individuals into one entity without either individual loosing an ounce of their individuality.

I couldn't let this slip by without comment. Clearly you are talking about a very narrow and special category of marriage. In fact, by going to the extra degree of specifying “an ounce,” you have created a vanishingly rare category of marriage, the Ayn Randian marriage, that, when it exists at all, is extremely weak and un-intimate. That's beside the point of our discussion, but, like I said, I couldn't resist comment.

Not really. The success of a company must be felt on all levels, but I did not have specifics in mind. Perhaps salaries of all employees being given as a percentage of income, rather than static numerical figures, would be a worthy course of action...

That's an interesting proposition; one I've heard before. I would find the idea more appealing on the condition that this was given in addition to a base level of guaranteed income. Even then, I would wonder if, if we are going to redistribute a company's profits, this would be the best way to do it. It seems too simplistic. Many roles within an organization are not directly and linearly tied to the overall success of the company. Surprisingly, at least to me, if we tie a worker's income even in part to the success of a company, we have cut out the worker from their own equation. There's something dehumanizing about that, in addition to my economic apprehensions about the idea. Indeed, if I didn't know better, this overall post of yours would strike me as the musings of a well-grounded collectivist.

I grant you that they have no sentient will, but I must maintain that they do have a will. But in this regard I do admit that I am an emergentist (of the ontological variety, if I understand the distinctions properly).

Granted and appreciated.

Now to travel back in time to your earlier post...

(Aside: I was intrigued by your use of "aught." I figured you were...

Nope, I just like the alternate spelling more. However I am surprised that you've never come across this usage before; I picked it up during college from all the reading I did.

Perhaps I'm setting myself up for a fall here, but I dispute your defense. The word as you used it is incorrect; I've never read “ought” as in “ought to do...” spelled as “aught.” The two spellings have overlapped in other usages, but not in that one. As I mentioned in my last post, my consultation with the dictionary was conclusive to my standards. But, since you pressed, I also did a Google War, and the ratios are running at less than one percent—well within the margin of misspellings and special cases. For instance:

“ought to make”: 20.1 million
“aught to make”: 33.2 thousand
Ratio: 605 to 1

“ought to do”: 47.7 million
“aught to do”: 480 thousand
Ratio: 99 to 1

“ought to have”: 149 million
“aught to have”: 89.8 thousand
Ratio: 1659 to 1

“ought to go”: 26.1 million
“aught to go”: 8,970
Ratio: 2910 to 1 (!)

And yours:

“ought to be”: 604 million
“aught to be”: 2.2 million
Ratio: 275 to 1

Or, going by your exact form:

“ought be”: 200 thousand
“aught be”: 28.7 thousand
Ratio: 7 to 1

This last ratio is the most flattering by far, but, because of the lower absolute numbers involved, there is a higher degree of that insidious Internet drift of good English. But I noticed in that final search something which caught my eye: Bible verses! I checked both of them and confirmed what I had suspected: These occurrences are not the same usage that you yourself used upthread. You used “aught” as an auxiliary verb; the Bible used “aught” (of “aught be”) as simply a flowery noun. I remain expectant that your usage is in error.

Now, that said, I wouldn't put it past the Scots to come up with something crazy like that. But it's not in the dictionary, and it's not corroborated by Google.

Essentially, the Net Neutrality debate is largely the result of internet having been wired; if it had magically started wireless, this wouldn't be such a major problem. The sooner general internet access becomes wireless, the sooner company strangleholds are eliminated.

That's an interesting assertion. I hadn't looked at it that way. I think you make a good point here.

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Re: Armchair Economists, Unite!
« Reply #39 on: April 28, 2010, 12:46:24 pm »
It is most amusing that you claim that we are in agreement while you disagree. Allow me to attempt to be brief.

"A business exists to make a profit" is a meaningless phrase by itself, it is flimflam. This is simply illustrated by a thought experiment. Imagine a business that makes a profit but in which the entrepreneur, the workers, and the market receive no boon. Could such a business last even a single week? A day? Certainly not; like Voltron, a business is comprised of several parts and if those parts are not present, the whole does not exist. For the business to make a profit is utterly unimportant to the continued existence of the business. The individual parts must have the profit; if they do, then the whole endures. If they do not, the whole dies.

This is an important distinction -- though one you seem to find onerous -- because it is to the individuals, not the whole, that the whole must then look in order to exist. By serving the individuals, the whole is served, but serving the whole does not necessarily serve the individuals. Thus some actions may seem to be valid if they are considered with only the whole (that is, the business) in mind but which are in opposition to the interests of all the individuals and thus, in reality, in opposition to the business itself.

It is for this reason that I have spent so much time attempting to cure you of your misconception. A flawed assumption taints everything that comes after it. The interests of the individuals cannot be separated from the interests of the business, and the business's very life lies with the individuals.

It's all about the profits!

Almost true.

It's all about profiting the individuals!

A business does not exist to benefit its entrepreneurs, its workers, and its market. (You could also have distinguished between its market and its customers.) Businesses do not operate for the sake of employment; though they provide this benefit to the economy, it is incidental.
...
Likewise, businesses do not operate for the sake of their market; though they satisfy market demand, it is incidental. This indeed is a subtle point lost on many people who have no understanding of business: Such a person might say, “Well, there are so many people here who don't have enough access to fast food restaurants! We should go into business to provide them fast food restaurants!” But that's wrong. Humanitarianism or goodwill make for a terrible reason to go into business, at least capitalistically speaking—and businesses like that are more likely to go broke, as I've been able to see here in Seattle in the aftermath of all that tech bubble money. What an experienced businessperson might say is, “Well, there are so many people here who seem to have more demand for fast food than is available, and I see a way to make a profit by satisfying their demand.”

I quite agree that this is not why individuals found businesses. However, as I stated, I am an emergentist. The intents of the individuals entering into a business are not the same as the intents of the business once formed.

This may on the surface seem to be contrary to much of what I have said; after all, haven't I been arguing in favor of considering the component parts? Well, yes, but this is because the current perceptions of business take no consideration of the component parts. The founders of a business may have no desire to help the market and the workers directly, just as my left hand may have no desire to help my left foot directly. To them, employment and market satisfaction are incidental. But only to them; to the business, employment and market satisfaction are what it is all about (well, among other things).

The health of the whole is dependent on the health of the parts; I can only fully understand a business by recognizing that it is more than its parts, but in the same turn I cannot fully understand a business if I say it is utterly divorced from its parts.

Perhaps I'm setting myself up for a fall here, but I dispute your defense...

Sorry, you misidentified my defense. I like spelling it that way, and so I'll probably continue to do so for quite some time. You have not attacked my like of that spelling. Indeed, the fact that this is uncommon makes me like it a bit more. :P

Indeed, if I didn't know better, this overall post of yours would strike me as the musings of a well-grounded collectivist.

Curses, you're onto me! Why I'll have you know... oh my word, what in the world could that be?! *points behind you*

*runs away*
« Last Edit: April 28, 2010, 06:57:45 pm by Thought »

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Re: Armchair Economists, Unite!
« Reply #40 on: April 28, 2010, 09:47:02 pm »
"A business exists to make a profit" is a meaningless phrase by itself, it is flimflam. This is simply illustrated by a thought experiment. Imagine a business that makes a profit but in which the entrepreneur, the workers, and the market receive no boon. Could such a business last even a single week? A day?

Your use of the words "profit" and "boon" is synonymous, which renders your argument self-contradicting and thereby absurd. Nor is your position salvageable, because to change "boon" to something non-contradictory would inherently add an extraneous variable to the equation, which is a fallacy and would invalidate the new argument. To put it another way, your position requires that "profit" have no internal meaning--that it exists only in context, by specifying the ends to which profit would be applied. This is simply not true; the concept of profit is one of the most basic in economics, and it is fully separable from its applications. Briefly, I'll grant that earlier my use of "to make money" in place of "to make a profit" was metonymically valid but technically inaccurate--that's why I changed my language in my last post, when I realized you were leading us in this direction--so let me proceed with that in mind. "Profit" is an abstract concept which describes business that creates rather than loses value on the seller's side of the equation. The only restriction is that the value must be economic value. (If I sell lemonade on the street for a higher price than the cost of my supplies and time, then I have made a profit--but only if my price is economically valuable; "peace and goodwill" won't usually buy lemons and sugar.) Profit requires a tangible body or a guarantee to serve as a vessel for holding the created value which the profit represents, and this vessel is what proves beyond any theoretical proof the independence of profit as separate from its applications. It may take the form of legal tender, personal checks, commodities, bartered goods (as you mentioned), or a number of other things outside my area of expertise. Whatever the form may be, this is the lowest common denominator of business existence. Nothing further is required; in fact anything further would be extraneous, because we have already reached a whole conclusion. It doesn't matter what a profit is used for, or by whom. A business does not exist to make a profit for the owners so that they can buy yachts. It doesn't even exist to make a profit for the owners. It exists to make a profit, full stop. The owners and their ends are interchangeable, and irrelevant.

For the business to make a profit is utterly unimportant to the continued existence of the business. The individual parts must have the profit; if they do, then the whole endures. If they do not, the whole dies.

I get what you are trying to say, but you are putting the cart before the ox. Yes, the worker must be paid a wage, or a company will not long endure. Yes, the company must find a customer, or it will not long endure. And, yes, the owner(s) must at least break even, or else the company will not long endure. (There are exceptions to these last two, in the form of economic imprudence.) But none of these facts account for the company's existence. It is the other way around: A company's existence accounts for these facts. No private company exists to pay workers, cultivate customers, or profit the entrepreneurs.

Let's drop the whole worker and customer aspect of this, as by now I think even you acknowledge how outside the discussion they are. Let's focus on the difference between "a business exists to make a profit" and "a business exists to make a profit for the owner (i.e., the entrepreneur). Your thesis is that we marry company and entrepreneur, such that the activity of business is for the profit of both company and entrepreneur. This is most easily expressed in the form of a sole proprietorship, where an individual person is quite literally the entire employee force in the company. If there is a profit, both company and entrepreneur see the same one. Right? Wrong! Even in a sole proprietorship, there are all kinds of instruments in place to separate the individual from the enterprise. Separate bank accounts. Separate tax forms. Separate accounting. That last one is especially significant, as it shows how the entrepreneur is paid by the company and any profit comes in the form of income. The company pays that income from its own revenue. Revenue and income, two different concepts--a difference which under your view either does not or should not exist. Furthermore, the company (as executed by the entrepreneur) might not transfer its entire profit to the entrepreneur. It might internally spend some of those profits on capital or savings or whatever else. These instruments, methods, concepts, and practices exist because of the inherently obvious distinction in modern economics between entrepreneur and enterprise.

It is in the nature of free enterprise that a profitable enterprise will profit the entrepreneur, and most entrepreneurs will go into business with the intent of personal financial gain. I would be willing to go as far as to meet you on the more clearly delineated statement that a business exists to make a profit with an expectation on the entrepreneur's part that they too will ultimately profit. But, strictly speaking, it simply isn't necessary to add that extra clause. Recognize that, by your logic, you could assign a specific name to the entrepreneur: "A business exists to make a profit for Shee." That should reveal the fallacy of extraneousness which I have been talking about. No, a business does not exist to make a profit for Shee. Shee probably doesn't even own the business! Indeed, it doesn't matter who the owner is. The reverse is not true: No matter what specific business we are talking about, every single one of them from Starbucks to (local Seattle cafe) Vivace exists to make a profit...and always regardless of who the owner is. Consider that a business could exist or not exist at the same level of profit depending on who the owner is. Suppose Shee would settle for nothing less than a $50 million profit and would even shut down his company if it falls short, whereas Radical_Dreamer, if it were his company, would be content with a $30 million profit. If the company earned a $40 million profit, then under one owner it would shut down while under the other owner it would continue to operate. It's the same company, and the same profit, but with two different outcomes depending on the owner. This disparity, because the business conditions are the same, tells you nothing about the business itself, which in turn tells you something very important about our discussion: It doesn't matter who owns a company, and thus it cannot be true that a business exists to profit the entrepreneur. This example illustrates how it is so much more plausible to justify that a business exists to make a profit than it is to justify that a business exists to make a profit for the owners. If we go by the logic that a business is married to its owner then we have to commit ourselves to the ensuing logic that a business cannot be described solely in economic terms--when in fact business is the fundamental activity of economics! So, for your position to even be credible, let alone defensible, you would have to be proposing an entirely new economic model--one that structurally accommodates your thesis. Economics to date, that I am aware of, does not.

The health of the whole is dependent on the health of the parts...

That is conspicuously not true. Wal-Mart. End of discussion.

I can only fully understand a business by recognizing that it is more than its parts, but in the same turn I cannot fully understand a business if I say it is utterly divorced from its parts.

Here you are committing another kind of fallacy, which is to extent our point of contention farther than is actually in contention. All we've disagreed about is what causes a business to exist. The parts of a business surely are not divorced, let alone "utterly" divorced, from the business as a whole. This is unrelated.

Sorry, you misidentified my defense. I like spelling it that way, and so I'll probably continue to do so for quite some time. You have not attacked my like of that spelling. Indeed, the fact that this is uncommon makes me like it a bit more. :P

A friend of mine zinged me last week for an obscure grammatical uncertainty I had been pondering. Now I can pass along to you what she told me: What you are suggesting is not in the bounds of good English, which is to foster comprehensible communication. It is instead misleading and obfuscatory. Many people already have enough trouble as it is with the usages of "ought" and "aught" and the crossover spellings between these usages. If, because you "like it," you would further erode the proper understanding and use of these two words by applying the "aught" spelling to the auxiliary "ought," all you are doing is collapsing two credibly distinct words into a single term--thus diminishing human civilization with the evil of willful ignorance. I've been able to make peace with the organic nature of our language by insisting upon the requirement that evolution in the language improve the clarity of communication. Spelling conflations are not good candidates for that, generally speaking, and this one is certainly not. The ultimate conclusion of your proposed obfuscation will be to help push the indigenous uses of "aught," which are already archaic, out of the active English language and into obsolescence. That's well and good if nothing is lost with the loss of these senses of the word, but I defy you as a writer and a lover of poetry to make such a claim.

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Re: Armchair Economists, Unite!
« Reply #41 on: April 29, 2010, 01:40:17 pm »
Before I reply, allow me to make something clear that may have been veiled previously.

My model requires no specific physical or structural changes to businesses as they presently exist. My model is concerned entirely with the intent behind actions. That being said…

If there is a profit, both company and entrepreneur see the same one. Right?

Nope. The two will be related, certainly, but they are not the same. Allow me to quote myself:

A marriage, rather, is almost metaphysical in its goals; it strives to turn two individuals into one entity without either individual loosing an ounce of their individuality.

The needs of the individual and the needs of the business will still be quite separate, but it is only by considering the needs of the other that the needs of the same can be best met. The profit to the company and the profit to the individual will be quite different things, as the profits between individuals will also be quite different. Even when these take the same form, there is no reason to assume that one is the same as the other. Homoiousios as opposed to homoousios, as it were.

Revenue and income, two different concepts--a difference which under your view either does not or should not exist.

Allow me to make sure that we are on the same page as to how those two different concepts are defined before I respond.

Income, being defined on a business scale, is the net gain to the business. If it costs me-the-business $5 to complete a transaction that brings in $20, then the income is $15. Is this accurate to your understanding?

Revenue, being defined on a business scale, is the gross gain to the business. If it costs me-the-business $5 to complete a transaction that brings in $20, then the revenue is $20. Is this accurate to your understanding?

If this is correct, then first let me apologize as much of what follows will be of no great general enlightenment to you, as I will merely be saying things which you already know but have not yet applied. Second, let me say that you have the wrong of it. Under my model, these would still be quite separate concepts. The outgoing costs must still be weighed against the incoming resources. Thus, a company with a high revenue but a “negative” income could still exist. It would be quite bad for it to exist, but it could.

Perhaps you see these as the same in my model because the costs that are factored into a business’s income are also the wages and resources paid to the individuals, and if the profit of the individual is of greatest importance, income would be reduced through higher pay, essentially reaching zero. That every dollar brought in above raw cost is a dollar spent on the individuals.

To a degree this is true, but to a degree this is true of all businesses. No business that has ever existed or will ever exist sets money aside that will never be used. In the short term it might appear that a company has an income but over extended periods of time "income" approaches zero. This is simply because, again, money has no value in itself but only when it is spent. The reserve produced from income will be used to expand the business, conduct research and development, buy out other businesses, etc.

Under my model, however, the owner can "profit" by the company making a positive income (is "positive income" repetitive?); that is, the owner can actually benefit by not being given more money in the present. This is because, again, income approaches zero when calculated over extended periods of time. The reserves allowed by income will serve to help the company grow, which will increase its revenues, which often (but not always) increases the short-term income as well, which then also allows it to siphon off some of that income (but again, not all) to benefit the owner.

Though you seem to dislike the inclusion of the worker and the market, allow me to say that this same concept applies to them as well. Both of them benefit, ultimately, from a company with an income.

Which brings me back to the first thing I said up above; that I am sorry as I am sure none of what I just said is a new concept for you. It was merely a connection of what you already know to my model.

The difference, however, is that "profit" by itself can be achieved by reducing the profits to the individual without concern for the individual. Now under my system, it may be that the short-term individual profits may indeed be reduced, but this would only be to increase the health of the whole, which would in turn ensure the long-term profits of the individual. But under the profit-only model, the owner of a company may well attempt to increase revenue by cutting the profits to the individuals (that is, the worker by paying them less and the market by producing shoddy cheap goods). This gives the appearance of helping the company by increasing its income. Again, however, income approaches zero when calculated over the long term. By lowering the profits of the workers, the owner lowers the resource of the market, thereby lowering the resources that the market can funnel back into businesses, eventually decreasing the revenues of the business and eliminating the income gains that such an action allowed.

A "profit only" approach is faulty because it gives the appearance of viable actions since it conducts a "full stop" in the short-term.

A "profit only" approach is the one currently implemented in this country and it is harming the rich and poor alike (well, “alike” in that it is “harming;” it hurts the poor far more than the rich, though it still hurts them). How is it hurting the rich since it appears that the rich are getting richer? Simple; again going back to my earlier example, the rich stand on the shoulders of everyone else. If "everyone else" is a midget and the rich are a giant, they will be comparatively shorter than the alternative. But if "everyone else" is a giant and the rich are a midget, they rich will be higher. Raising up the wealth on the basest individual in society allows for more wealth to be generated, allowing everyone to have a bigger slice.

Indeed, if I might speak as a historian for a moment, I greatly fear the continuation of the “profit only” approach as it seems to be leading back to a medieval economic structure. It is a fact of history that civilizations prosper when the rich take steps to lift up the poor, and that civilizations fail when the rich take steps to push themselves up.

Recognize that, by your logic, you could assign a specific name to the entrepreneur: "A business exists to make a profit for Shee." That should reveal the fallacy of extraneousness which I have been talking about.

I am sorry if my use of the word "individual" has misled you. Individual was being used as a placeholder for positions, not specific people. If Shee owned and managed Sheeeeeinc., then yes, the business would exist to profit Shee, but only because he is in the position that the business exists to profit. He could be replaced without any great trouble, but the position that he occupied could not so be replaced.

To note, my model can be applied to a variety of structures, including “non-profit” charities and the government, as well as to businesses.

It doesn't matter who owns a company, and thus it cannot be true that a business exists to profit the entrepreneur.

It doesn't matter who owns a company if one if one is talking about money rather than profit.
 
Shee would shut it down if it made less than $50 million income (not to be confused with profit) while RD would be fine as long as it made $30 million (again, not to be confused with profit). The underlying concept between the two is the same, however. For Shee, less than $50 million is not profiting him (it is not meeting his needs and desires); thus, he shuts down the company because there isn't profit for him. RD, however, does have his needs and desired met at $40 million, and so he profits, and so the company continues to exist.

Shee doesn't profit, the business dies. RD profits, the business lives. It matters if the entrepreneur is profiting, thus it must be true that a business exists to profit the entrepreneur (among others). The variable in your example is in the specific needs and desires of the owner, not in the money.

The health of the whole is dependent on the health of the parts...

That is conspicuously not true. Wal-Mart. End of discussion.

You are assuming that Wal-Mart is healthy. That is a false assumption.

Allow me to point out WalMart’s new name (they got rid of the hyphen) and logo. They did this in order to attempt to overcome their poor public image (along with other efforts). They are attempting to satisfy the needs of the market (to purchase products from someone the market doesn’t despise), which would help improve the general health of the business.

It is the sick, not the healthy, who take steps to remedy their illness.

Is getting rid of a hyphen and changing a logo definitive proof that the company is (or at least was) diseased? Certainly not. But it is a possible symptom. As I suspect you know more about walmart than I do, I am confident that when you examine what you know about it that you will find it is a business that is struggling to survive into the distant future.

I can only fully understand a business by recognizing that it is more than its parts, but in the same turn I cannot fully understand a business if I say it is utterly divorced from its parts.

Here you are committing another kind of fallacy, which is to extent our point of contention farther than is actually in contention. All we've disagreed about is what causes a business to exist. The parts of a business surely are not divorced, let alone "utterly" divorced, from the business as a whole. This is unrelated.

Allow me to quote you:

This is simply not true; the concept of profit is one of the most basic in economics, and it is fully separable from its applications.

You are saying that profit is fully separable from its applications. Its applications are how it benefits individuals. The individuals are the parts of the company. You are claiming that a business exists to profit, full stop. Therefore, you are cutting out the parts of the company from why a company exists. It is quite legitimate for me to thus discuss the parts and whole of the company as you are claiming that the reason for a company’s existence lies entirely in the whole and whereas I am claiming that its most fundamental reasons for its existence lie primarily in the parts (though to note, I have not claims that all possible reasons for existing lies in the parts, just the most fundamental ones). This seems central.

A friend of mine zinged me last week for an obscure grammatical uncertainty I had been pondering. Now I can pass along to you what she told me: What you are suggesting is not in the bounds of good English, which is to foster comprehensible communication. It is instead misleading and obfuscatory.

Pish posh. "Aught" and "ought" are spellings that are interchangeable in most uses. It requires no special insight for an individual to quickly and easily understand the phrase in its intended manner, even if this particular usage is not standard. If one is mislead by my statement, then that individual is willfully misleading his or her self.

If, because you "like it," you would further erode the proper understanding and use of these two words by applying the "aught" spelling to the auxiliary "ought," all you are doing is collapsing two credibly distinct words into a single term--thus diminishing human civilization with the evil of willful ignorance.

Ah, here you are touching upon something that might be able to convince me. In what way does the use of “aught” in place of “ought” as an auxiliary diminish the distinct meaning of one word or the other?

Perhaps I simply don't yet appreciate the distinction between the two.

Though to note, even as words join into a single spelling, the individual parts maintain, thus your claim of diminishing civilization with willful ignorance is invalid. You would need to argue that the complete joining of aught and ought would eradicate one of the meanings.

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Re: Armchair Economists, Unite!
« Reply #42 on: April 29, 2010, 11:22:08 pm »
Thought, I graciously acknowledge that your predilection for obstinacy has outclassed my powers of elucidation, at least on the time scale available to me. Looking to get agreement out of you, when it would entail deigning to argue to someone of your faculties such things as that WalMart's removal of its hyphen is less indicative of its health as a company than its profits are, is a revelation to me that you are not in this for the edification but simply for the amusement of being contrary (and honestly I have slim patience for that). I would love for you to explain more of your model of economics, if you should like to do so. If indeed your model is internally consistent, then perhaps thereby you can bring me to the point where I might acknowledge that you are not "wrong" but merely speaking an incompatible language using familiar words. Meanwhile, I think the greater profit in this exchange now lies in your misguided attempt at an artistic misuse of the word aught.

Pish posh. "Aught" and "ought" are spellings that are interchangeable in most uses. It requires no special insight for an individual to quickly and easily understand the phrase in its intended manner, even if this particular usage is not standard. If one is mislead by my statement, then that individual is willfully misleading his or her self.

The spellings are interchangeable in some of their usages. You're correct about that, notwithstanding the difference between “some” and “most.” Specifically, aught has two denotations for which it is now within standard usage to use the alternative “ought” spelling. One of these is still fairly common: aught as a noun meaning “zero,” or “nothing.” The other denotation is much less common anymore: aught as a noun meaning “anything (whatsoever)” or an adverb meaning “at all,” etc. I checked two different sources, and it is within standard usage to spell these denotations of aught either way. However, these are the only two uses of either word for which the crossover spelling is within standard usage. There are two other denotations of aught, and one of ought, none of which can be spelled the other way within standard usage.

To see why that is, let's first look at the meanings of these three other denotations. The two remaining denotations of aught are a Scottish adjective for the number 8, and a term having to do with the concept of possessive ownership. We can dismiss the former for its marginal significance, but the latter is a full-fleshed word with forms in each of the three major sentence parts. This denotation is one of the most conspicuous victims of your incorrect usage, as we'll see shortly. Meanwhile, the denotation of ought that cannot be spelled “aught” is the auxiliary verb (and also rarely a noun) which expresses the appropriateness of an action or a subject's obligation to carry out an action. This is the term which you misspelled as “aught.”

I think you can see here that two basic categories are beginning to emerge between these two words: the concept of somethingness and the concept of owedness. But if you can't see that, then look to the etymologies. Etymological consultation is one of the classic tools of the grammarian. Going by Dictionary.com's ordered list of denotations, aughts 1 and 2 and oughts 2 and 3—which are not coincidentally the variant spellings of aughts 1 and 2—derive from a word meaning “thing.” Meanwhile, aught 3 and ought 1 derive from a word meaning “owe.”

Only the former concept (of somethingness) has experienced the spelling diffusion. Your inaccuracy is that you have applied this convention to the other concept (owedness). That inaccuracy would not rise to the level of a mistake as such save for three crucial details:

First, ought 1, the one you misspelled, is by far the most common of any of these denotations. Its relative gravity when compared to the others is dominant. But the other denotations are all still in active use, to some degree or another. If you will permit me an analogy, it's as if you're choosing to change the spelling of the word fat to “vat,” with a V. As you know, these two words fat and vat are cousins, just as ought 1 and aught 3, but you also know that the former (“fat” (i.e., “ought”)) is vastly more active in modern usage than the latter (“vat” (i.e., “aught”)). To write it with the spelling of the latter would apply obfuscatory pressure on the original word vat, enough so that that word might fall out of active use in favor of unambiguous alternatives such as “container,” “pot,” etc. This is what you're doing, and this is why I mentioned that aught 3 is one of the most conspicuous victims of your misspelling: You're using a much more popular word to muscle out a much less popular word from the prevailing vernacular, and not only is there no good reason to do so (not counting that it pleases you), but there is actually a good reason not to do so: specifically, aught 3 is still in active use. By pleasing yourself, you introduce a big ambiguity into English which obfuscates a viable word (to say nothing of the people who would be confused as to the correct spelling of ought 1 anymore) for no return.

Second, ought 1 is not a synonym of any of the aughts. By conflating it with them using the “aught” spelling, you obfuscate the distinction between the concepts of somethingness and owedness which are spread across these two spellings. (Indeed, it goes deeper than that, as you obfuscate each other unique sense of the words.) There's already a lot of ambiguity here, which has almost certainly contributed to the decline in use of some of the less widely used denotations—specifically, aughts 1 and 3. What you're doing here is not piggybacking on the spelling mutation of the “somethingness” words. You're creating an entirely new spelling mutation, this time of one of the “owedness” words. This would confuse things badly enough that, if it caught on, I expect we would eventually see the demise of the concept of “somethingness” in these words. There's no good argument for contributing to that. This is a valid concept, and our language benefits from the availability of multiple word choices for many concepts.

Third, ought 1 is an auxiliary verb. It is structurally incompatible with all of the other denotations here. Auxiliary verbs are not well-accommodated by the English language; they're a gigantic headache of usage asterisks, exotic syntax, and grammatical irregularity. The auxiliary verb ought already confuses many people in its correct usage. Introducing a spelling ambiguity does a disservice to them, and to all those extra people who will be thrown off by the ambiguity.

In short, I do not consider it acceptable logic for alterations to be made to the English language on the tu quoque argument. The spelling variations of aught are confined to a different concept than the one whose word you would be misspelling, they already introduce needless ambiguity (and nothing is gained by adding more ambiguity), and they are none of them auxiliary verbs. Contrary to the inevitable assertions of your pride, there simply is no better description for your incorrect, mistaken usage than the very words misleading and obfuscatory. Perhaps in a sense it is artistic too, and if you want to make the argument that the artistic value of your proposed usage is worth the functional decline in English which would result from your usage, then I'll entertain your argument. But, from a grammatical point of view, at this point you cannot credibly assert that what you are doing is anything other than bad English.

Now, though it isn't necessary, I want to add something about your omission of the infinitive preposition to. Your exact usage was “aught be,” not “aught to be.” In omitting the preposition, you introduced several new layers of ambiguity, leading to some particularly glaring obfuscations. Most particularly, you erased all structural distinctiveness between ought 1 and aught 1. In so doing, you would thereby require all comprehension of either construction to be understood in context alone—always a bad idea when proposing new formulations of the language. In addition, you erase all structural distinctiveness between ought 1 and the verb form of aught 3. Beyond these total obfuscations, you remove some of the structural distinctiveness between ought 1 and all remaining denotations (including the other forms of aught 3).

There's just no good argument within grammar for doing such a thing. It does not foster communication. It does not foster comprehension. It diminishes conceptual interconnectivity in words (including, especially, the robust availability of synonyms for which English is unsurpassed). It misleads those whose grammar is poor. It lacks a populist base. It's just bad English.

A Note: Following this post is a PM I will be sending you, with additional comments in fine print. Do not read the PM until you have put the finishing strokes on your reply here—a reply I formally request in case you should otherwise be inclined not to make one!

Thought

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Re: Armchair Economists, Unite!
« Reply #43 on: April 30, 2010, 12:01:28 pm »
... is a revelation to me that you are not in this for the edification but simply for the amusement of being contrary (and honestly I have slim patience for that).

Alas, I must play the patsy and disagree with your assessment (which, of course, humorously bolsters your supposition that I am being contrary, but in my defense I cannot help but be so when you are wrong). To be sure, if I were going for amusement it would be your position that I would attack and not my position that I would defend. With you I have only intentionally been contrary for amusement once, and even that was primarily a single post with the aim of eliciting a more in-depth discussion on a topic which it was clear from your prior post that you were eager to speak on.

Generally it is true that I gladly welcome a chance to expound on ideas, particularly ones that I seldom get a chance to discuss with others (economics being one such topic), but the amusement in this particular matter ended quite quickly (beginning, actually, with post# 39 in this thread). With that post, and past, my efforts were always in doubt since I was unsure of how much of your misunderstandings were willful. I am still so in doubt and reply now specifically because you asked.

Under different circumstances I would take your invitation to expound on my system more, but in this instance I feel that it was amply covered in post numbers 34 and 37. Like the old vase-face illusion, the image has been presented and the two alternate perspectives have been stated, but it is up to the viewer to allow themselves to make the switch of perspective.


As to your curiously emphatic comments regarding grammar and word usage, I would point out that I never claimed it was proper grammar. I just said that I liked it better and maintained that it isn't as confusing as you seem to make it out to be (perhaps your focus on this is one of the reasons I doubt the sincerity of your misunderstandings about the economic model we were discussing).

If it would make you feel better, I have no problem saying that you are technically correct on the usages. Will I change? Maybe. The problem, of course, is that the usage of "aught" is quite ingrained in my writing style (sort of like my overuse of the word "quite") and my motivation to make a diligent effort to change my style in this manner is low. From my perspective you've failed to show that a joining of "aught" and "ought" would actually eliminate a valuable meaning, rather than the more likely merging of meanings, and you've failed to show that my misusage would actually confuse anyone. My motivation to change, then, is to be technically correct for the sake of technical correctness.

Though for your amusement, I would recommend you do a forum search for the phrase "aught be." Hopefully it won’t pain you too much, but this is not the first time I've used that phrase on the forums.

And as a final note, I am actually a smorgasbord of linguistic anomalies. My usage of “aught” is actually probably one of the more benign offenses.

Now, to read your PM and see how much of this response you predicted.

Lord J Esq

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Re: Armchair Economists, Unite!
« Reply #44 on: May 05, 2010, 11:36:40 pm »
Apologies for this tardy reply. I have had many competing priorities for my time over the past few days. Even now my reply will be briefer than I'd like--although perhaps it's better this way since we're not likely to resolve this impasse.

Alas, I must play the patsy and disagree with your assessment (which, of course, humorously bolsters your supposition that I am being contrary, but in my defense I cannot help but be so when you are wrong).

I think this was the more thoughtful sentiment in your whole reply. I respect what you think you are trying to do. Many a time have I found myself in the position of appearing to be a contrarian when in fact I was only trying to press a point that wasn't getting its due consideration from another party. The difference between us, as I've learned, is that you really are a contrarian, and I don't think that's separable from your argument style. This comes out more clearly when we aren't arguing, as we have had some fine occasions not to do lately. If I could share with you this very meaningful observation--meaningful to me--I would encourage you to be more aware of just how readily you disagree, gainsay, rebute, contradict, and deny most any declarative statement offered in your direction which concerns itself with the contents of your thoughts, positions, and attitudes. In your worry about being misinterpreted or mischaracterized, you could defend yourself just as well as you do by being so contrary if you were instead to take the supposed inaccuracies of others' statements and build upon them with self-revelation and added perspective. And by doing it that way instead of the present way, you would foster goodwill with others rather than isolating your assertions on an island of authoritarian inscrutability. Think about it, and about the fruits of your current style of disagreeing. I often remember back to our discussion about what RPGs are; even though your logic had failed by the end of our debate, you couldn't bring yourself to acknowledge or concede anything. Your last post in that thread stands as a testament to a very highbrow rendition of the sore loser. With your unwillingness to accept my correction of your grammar error here in this thread, on the thin grounds that you're used to doing it the wrong way and that you refuse to acknowledge the long-term instability of ambiguous usages in the same word--just contrast the confusions of aught with the clearly delineated denotations of the word bridge and try maintaining your position with a straight face--I am reminded of just how strongly you project an air of unapproachability in debate. If I can't be suffered to correct your trivial grammar error even after an exhaustive explanation, what hope do I have of being credibly listened to in a substantive argument? I know that I'm far from being the best debater, and I acknowledge that my explanation of your grammatical mistake could have been even more exhaustive, but to me there is a stark disconnect between how intelligent you are and how utterly lost on you these very straightforward trivialities tend to be. In short I deduce shenanigans--the aforementioned deliberate contrarianism. Thus, I also know that your disagreement with almost anything I propose does not reflect those proposals' objective credibility. Can you not see how this undermines our ability to have substantive debate? You are like a negotiator who comes to the bargaining table with their mind made up in advance to strike no deal of any kind. For someone like me to engage with you in debate successfully, so long as this remains your preferred style, I would either have to change my framework of success to be independent of your responses, or I would have to change my own responses to be uncontroversial with respect to your positions. Neither is acceptable, and both serve to foster a dominance on your part which is not warranted. What do you really want?

I'll take a stab at that. All of what I have offered thus far is of no significant doubt to me, regardless of whether you would dispute it. But this last part is pure speculation, albeit educated speculation: I think you do this to avoid having to face defeat. I've noticed how self-effacing you are, and how that attitude is belied by the fact that you seldom admit when you are wrong after defeat is handed to you by someone else. That's an understandable discrepancy, because it is self-empowering to concede that one is wrong on one's own terms, but humiliating to do so on another person's terms. For what it's worth, I can relate to that error of ego. After I read what parts of your Live Journal you had not erased, I gained a new insight into your character. We are similar in wanting to control our own destinies, and we are similar in investing ourselves in the supposed merits of our ideas. For you to be wrong in those ideas is as difficult for you as my being wrong in mine is for me. We differ, however, in our strategy of engagement. My style is more brusque than yours, but I also keep a more open mind. Thus I have the effect of being redoubtable at a distance but reasonable up close. You, instead, appear gentle at a distance and slick up close. I don't know which style is more inviting for whomever debates with us, but I can well imagine that, when it comes to serving our own interests, you do yourself a disservice by not finding the humbleness to make concessions where they are due.

At any rate, I thank you for the opportunity to expatiate. I think this has been nagging at me for a while, and I appreciate your indulging me in reading it. I hope you receive it in the respectfully critical spirit in which it is offered.

As for economics, I am content simply to say that we disagree. I know that my own understanding of the subject is limited enough that I can't offer a decisive argument; neither however do I find any of what you have proposed to be persuasive. Our disagreement seems to be a matter of perspective, though, and not one of substance. I have maintained that businesses exist to make a profit, and you have maintained that they exist to benefit their owners, workers, and customers. These two assertions are not mutually exclusive. I persist in maintaining that your perspective is economically irrelevant except inasmuch as it would lead to unwise business decisions, but I also don't have the degree of understanding of your economic model that you yourself do. So for now our disagreement is both acceptable and not particularly important. I would like to ask of you that you write more about your economic model here in this thread in the future, as your time permits.