I get a copy of Foreign Policy now as a Christmas present from last year (yes, I asked for it). Each issue comes in and some of the stuff is good... some of the other stuff is just intellectually bankrupt. In the May/June issue, for instance, it had a two-page little montage on the disease distribution of the world and where the pharmaceutical companies send their medicines. The conclusion they want you to draw is clear-- the companies do little/nothing about disease in say, Africa and they should.
One problem with that philosophy is who pays for it? Businesses in capitalistic environments have costs that they pass on in the form of prices. Companies can't simply send products to non-paying customers without reimbursement. FP seems to think they should just suck it up and flip the bill themselves. They don't understand simple economics.
1) Companies have limited funds to work with.
2) Companies produce products. Those products have costs, usually defined.
They pass those costs on in their entirety to the consumers of those products. Companies that cannot set their prices to cover costs have a technical name: bankrupt.
3) When artificial costs are imposed on companies they have two choices, cut other costs or increase prices. The easiest cost to cut is obviously payroll.
4) Every tax, every fee, every regulation, every law, and every obligation is passed on and on and on to the only entity not able to pass on costs--the consumer, specifically the middle-class to poor consumer.
If a business just sucks up a cost, the result will be either layoffs, increased prices (with an attendant increase cost of living), or more likely both. In the pharmaceutical industry, this does nothing but raise the cost of medical care on everyone.
In the July/August issue, there is a debate on the best way to move forward with environmental policy between Carl Pope and Bjorn Lomborg. Bjorn takes a more priority-based pragmatic approach, and Carl Pope seems to say businesses and governments are stupid and should wise up.
Article comments
— go to most recent comments1 - Dave Nalle
Carbon tax? Just tax petroleum imports. Bingo, carbon tax. Good for the economy and technological development too. But, of course, it doesn't shut down businesses liberals don't like the way an arbitrary carbon tax would do.
Dave
2 - Bryan McKay
When articifcal costs are imposed on companies they have two choices, cut other costs or increase prices. The easiest cost to cut is obviously payroll.
This is only a bad thing when the already-underpaid workers are the ones hit with the salary cuts. You never here of the corporate fat cats cutting anything out of their six-figure incomes in order to pass any benefits onto the consumers.
3 - Dave Nalle
If the head of the corporation is only taking a six-figure salary then he's one of the good guys, not one of the really exploitive fat-cats. The six-figure CEOs are the ones who probably WOULD take a pay cut if the workers had to.
Dave
4 - Bryan McKay
You're right, Dave. Most major CEOs are pulling down much larger salaries. Sadly, the majority of big business owners aren't the six-figure CEOs who are willing to take those pay cuts.
5 - Steve S
Carl's first sign of silliness came with this comment:
Instead of pursuing new solutions such as hybrid cars, the Unisted States invades Iraq, bullies Venexuela, and rattles its sabers at Iran.
first, are the misspelled nations intentional? (rhetorical)
second, I don't know the context of which he is speaking, but from this sentence alone, it's clear he's talking about oil. With that in mind, he's not talking silliness but perfect sense.
Your rationale that the U.S. big 5 auto makers are playing 'catch up' with hybrids and that there are waiting lists, is laughable.
There aren't more hybrids because it isn't profitable for the oil industry for there to be hybrids. If the market REALLY called for hybrids, trust me, there would be hybrids all over the place. They aren't that hard for American capitalists to create. We can put a man on the moon, you know, we can build a motor that runs on something besides gasoline if we really wanted to.
6 - Dave Nalle
>>Your rationale that the U.S. big 5 auto makers are playing 'catch up' with hybrids and that there are waiting lists, is laughable.<<
Except that he's actually correct on this. US car makers are all introducing hybrids in the next two years, and some of them are expected to be huge hits. I know I'm planning to get on the waiting list for the new Dodge RAM Hybrid. It's absolutely awesome. I would expect virtually all cars to be hybrids or alternative fuel by 2010. There's not going to be any reason to buy anything else.
Dave
7 - Steve S
They are putting them out now, because there's starting to be money behind it now, not because they are catching up. That's what I'm saying.
8 - Dave Nalle
Well sure, because that's the way the economy works. Money drives change.
Dave
9 - michael
Carbon taxes in the form of tradable emissions allotments are an innovation first adopted by a Republican President: GHW Bush. They are an efficient means of price signaling, recovering into the price function what would otherwise be turned into an externality that governement, using taxes having little or nothing to do with the source points of the pollution and thus inherently unfair and politically unpopular, would have to clean up. What you call an uneconomic and destructive tax on business, more sophisticated economic thinkers (who got beyond undergraduate introductory macroeconomics and Ayn Rand) call an efficient means of placing environmental burdens where they belong in rationalized terms; upon the pockbooks of consummers who wish to buy products which use carbon emmissions inefficiently and consequently on those who produce them. That is what markets do best - punish inefficiency.
10 - Margaret Romao Toigo
Yes, Economics 101 is a pretty easy subject to understand, its all numbers, balance sheets and arithmetic, very dry, dull and boring.
So let's talk about economic morality and how it is immoral to leave your fellow man by the wayside, cold, hungry and sick, even if helping him might cut into some profits.
Free market capitalism is the only economic system that can work in a free nation, but all of that greed and coveting that is part of our nature as human beings and our rights as Americans must be tempered with our prudence and charity so that we do not lose our souls as we go about the very natural business of building our wealth.
It is intellectually dishonest and morally bankrupt to deny the responsibilities that come with wealth.
11 - Nancy
Margaret, do you seriously think the overcompensated, greedy-gut corporate CEOs of megaconglomerates give a rat's ass about anybody except themselves? Most of these guys would even sell their own wives & kids if they thought they could get something out of it. Interesting study recently - reported in the W. Post - reflects that the majority of CEOs of big corporations are in fact "successful" psychopaths. I.e., they don't actually kill anybody - except economically - but they have no empathy, no pity, no concern, no feelings, for any one except themselves. They are as conscienceless & soulless as Stalin or the BTK killer, they just act out in a different sphere. And they are killers, in a way - in fact, mass murderers - because they have no concern how many people's lives they destroy in the process of making profits, mainly for themselves, & if the corporation they're supposedly working for also does well, that's a bonus, but not the core issue. They generally regard themselves as outside the law - not above, but not applicable to themselves, which is why B. Ebbers, K. Lay, and so many of these fiscal rapists refuse or fail to issue any kind of statements of regret: they can't, because they don't feel any. To them, financial devastation of millions of employees, stockholders, or (in the case of pharmaceutical companies) literal devastation of millions of dying persons is a non-issue. You'd as soon expect compassion or decency from a block of wood, because they're not capable of it.
The bottom line of the article was both horrifying & amusing: the developers of the test are not wanting to market it, not because it will ensure psychopathic CEOs are fired, but because they are fairly certain from inquiries already received that on the contrary, it would HELP corporations find such psychopathic personalities - and HIRE them to increase their profits!
12 - Bryan McKay
Here's the link to the article Nancy is talking about.
(You can get a login to the site from BugMeNot.com if you don't feel like registering.)
Margaret: What precisely do you mean when you say "Free market capitalism is the only economic system that can work in a free nation"? Do you mean a market that is enencumbered by government regulations (i.e. laissez-faire capitalism, free trade, etc.) or are you referring to the form of capitalism currently practiced in this country? If it's the former, I think you're terribly wrong. If it's the latter, I think you should reconsider your phrasing.
It may be dishonest to deny the responsibilities that come with wealth, but people are going to do it anyway, whether we like it or not. Does that mean we shouldn't put restrictions in place that prevent them from doing this to the best of our abilities?
13 - Dave Nalle
"It may be dishonest to deny the responsibilities that come with wealth, but people are going to do it anyway, whether we like it or not. Does that mean we shouldn't put restrictions in place that prevent them from doing this to the best of our abilities?"
Some people may ignore their responsibilities, but the vast majority do not. And truthfully the main responsibility that comes with wealth is to spend more money, and the rich are quite good at doing that.
The concept of government restrictions which prevent people from accumulating wealth is truly frightening. I can't think of a better way to destroy our economic system.
Dave
14 - Bryan McKay
I'm not suggesting that the government place restrictions on an individual's accumulation of wealth. If you want to have more money than God, then be my guest. The government should, however, place restrictions on how corporations can function within our economy. Corporate responsibility often feels like an oxymoron, and I do think it is up to the government to regulate that. The corporate fat cats certainly aren't looking out for the working class, so shouldn't somebody?
15 - Dave Nalle
Yes, the working class should look out for the working class, by working hard, educating themselves, advancing in their chosen field and accumulating wealth. No government program can ever do all of that for them.
Dave
16 - Bryan McKay
You're right, the government can't do that for them, but it can provide regulations that provide for fair treatment and wages for laborers. Just shrugging it off and saying that they should look out for themselves is denying any sort of social responsibility you might have towards your fellow citizens.
17 - Dave Nalle
Last I checked we already had more than enough regulations protecting workers in every conceivable area they might need it.
The main social responsibility of the wealthy is to start and run businesses, employ people and spend money. That generates more jobs, economic growth, opportunity for advancement and all the things the rest of the population needs.
Dave
18 - Dave Nalle
"'In our industrial and social system, the interests of all men are so closely intertwined that in the
immense majority of cases a straight dealing man who by his efficiency, by his ingenuity and industry, benefits himself, must also benefit others." - Theodore Roosevelt
19 - Bryan McKay
I agree that we have a lot of regulations protecting workers. My comments were a response to Margaret saying that "free market capitalism" was the only economic system that works in a free nation. In my experience, a "free market" generally means the government is entirely hands-off when it comes to business. I'm not arguing that we don't have good regulations in place, just defending their existence. To say that the regulations couldn't get better is just wrong, however. Perhaps workers in America might have good protection (although in many cases they don't), but we do next-to-nothing to protect workers overseas who do a large portion of our labor. Free trade, for example, while it may sounds like a good idea to help build a "global society" or "nation without borders" or some bullshit, just ends up exploiting the poor laborers in third-world countries.
20 - Dave Nalle
One might argue that if you asked those third world workers if they were being exploited by being paid a decent salary and actually having a job in a society where others are paid less or have no work at all, they wouldn't think of that as exploitation. They'd think of it as earning a good living.
dave
21 - Nancy
Thanks, Bryan! I don't know how to do those links, & have a memory like Swiss Cheese anyway.
My point, and that of most others who advocate some sort of controls, is that it is insane to treat corporations as legal individuals, when prosecution and/or control of them is not even par. Furthermore, to quote the bible, "what avails it if you say to your brother, 'eat well & keep warm, take care of yourself', yet do nothing to help him do so?" Failing to mandate some spark of 'humanity' for these soulless corporate entities, as well as the equally soulless monsters who run them, is a farce as well as an insult to the employees being deprived of just wages & benefits while the CEOs at the top roll in obscene levels of overcompensation, and make a mockery of the concept of justice and/or humanity. No, no one is arguing they should give away their products for free; but I AM arguing that their lust for profits should be held in check against standards of basic decency if they themselves are not willing to implement same. Letting corporations & psycho CEOs run riot and do what they will w/people's lives and with national resources - which belong to the public, NOT to private, profit-making businesses - is not the same as encouraging free enterprise. That is encouraging free piracy & total lack of responsibility, either moral or fiscal, something, Mr. Nalle, you seem to be unable to comprehend in favor of the tactics of your obvious heroes, Jay Gould & his band of merry corporate criminals. Doubtless you regret mightily that Enron, MCI, and the others were subjected to law instead of being allowed to continue lying, stealing, and generally doing what corporations do best in the name of the great American tradition of free enterprise?
22 - Margaret Romao Toigo
Nancy asked, "...do you seriously think the overcompensated, greedy-gut corporate CEOs of megaconglomerates give a rat's ass about anybody except themselves?"
Probably not, but Mr. Bambenek, the author of the article in question often writes about American morality and I was curious about the moral implications of his assertions with regard to economics.
Corporations are only one aspect of economics. The purpose and responsibility of corporations is to make a profit for the benefit of their shareholders.
The human factor is a separate issue because corporations are ultimately made up of a lot of people from the boards of directors to the executives to the managers to the supervisors to the IT departments to the clerical and accounting staff to the mail room to the forepersons and factory workers to the janitorial and landscaping departments. All of whom will be out of work if the corporation fails to make a profit.
But Mr. Bambenek was not discussing domestic business practices, but rather our foreign policies with regard to the poorer nations on this planet we all share. And, as a nation, unlike a corporation, we have a moral responsibility that goes way beyond the seeking of profits for shareholders.
Free market capitalism is not a black and white issue of regulations or no regulations, a balance that protects our civil and human rights and our environment as well as the profitability of our businesses and investments must be carefully struck because the right to conduct business and make a profit can sometimes conflict with the rights of workers (to be treated fairly in matters of pay, hours, responsibility and safety) as well as the right to clean air and water, which belongs to all of us.
23 - Bryan McKay
Dave: What you described is exploitation. We take advantage of the fact that many of these poor farmers, factory workers, etc. can't get work anywhere else and use this as an excuse to pay them piss-poor wages. If the only way to earn a living is working long hours at low pay for an American corporation, we can leverage the situation to our benefit. It's like some twisted theory of supply and demand, except here it's human worth that's the commodity being traded.
Margaret: Free market capitalism is (at least, in theory) a laissez-faire system with (ideally) no tariffs, subsides, regulations, etc. That being said, in practice, a free market is generally more like what you described. I don't mean to pick at words here, I just wanted to be clear as to what exactly we were discussing.
24 - Paul Herrington
Frankly neoclassical economics need to be kicked to the curb.
25 - Margaret Romao Toigo
Bryan, "a laissez-faire system with (ideally) no tariffs, subsides, regulations, etc." is not free market capitalism, its anarchy.
Our government exists to protect and defend our rights, which includes the right to make a profit. But the right to make a profit does not include the right to engage in business practices that deny and/or violate civil and human rights, either of workers or the whole of the people who drink water and breathe air.