From: Lee Corbin (lcorbin@tsoft.com)
Date: Sat Aug 09 2003 - 18:57:14 MDT
Mitch writes
> Lee:
> > C'mon, if you think that any CEOs are going to the cellar
> > to be shot, or marched up to guillotines, then you are
> > too far from reality. Even if you are right about overpaid
> > top executives, then the worst that will happen is that
> > they'll be replaced by cheaper and more effective CEOs from
> > within the ranks, as the fad of outside celebrity wears off.
> No, I am sure that most of these selfish bastards will get off
> scott-free, no matter how crooked or conniving they have been,
> and how they, through their actions, have cheated the stockholders,
> and are drying up the middle class. My point is that it is
> destructive to US survival.
Listen, they are NOWHERE near as bad as Jay Gould, Fisk, and
the rest of the 19th century swindlers. Yet we survived that,
and even prospered. Why? Because for every one of them,
there was also a Commodore Vanderbilt and a Morgan. The
bad guys do destroy wealth, and the Exxon types did too, but
it's not a big fraction of GNP.
> Rafal seems devoted to the nth degree in favor of free market
> economics. Though, I wonder what Milton Friedman looking at
> what is happening to Americans would concur with Rafal's zeal?
My guess would be "yes".
> Lee:
> > Right here, even the US is not really hurt by sending jobs
> > oversees where they can be done more cheaply and efficiently
> > because the American consumer is then so much better off.
I wish to amend that statement to add the qualification
"so long as Americans are willing to work rather than starve,
and so long as they're not voting themselves a dole."
> There is an inevitable cause and effect here, and if not
> Newtonian, is mighty close. When goods and services by
> American companies, or foreign imports become depressed;
> because more and more Americans are out of work, this
> produces a deflationary economy, also known as a recession.
Yes, but the unemployment rate was 25% in the Depression.
It's like 6% now, and a lot of those people have little
incentive to look for a job since they are on unemployment.
If you wish to understand economics, as so many people before
me have pointed out, look to people's incentives.
> If capital goes overseas, during a recession,
This has been the mildest recession since WWII
> so that few jobs are produced, the economy stays moribund.
> This hurts even people overseas, as demand they are dependent
> on, becomes so much less. I may purchase a Korean auto because
> it is cheaper;
And if you have the money to spend, this increases your
wealth compared to paying for an overpriced one turned
out by unionized outmoded American shops...
> but if I am broke and have to buy a used car, for example,
> I will buy a clunker junker of any kind, to look for work.
> Far less people benefit from my purchase.
The problem is not with your rational purchase, which
was selfish and commendable; the problem is with being
broke. Why is one broke? Either one is living beyond
one's means, or one refusing low paying jobs in the hopes
that the outlook for his profession will improve. I can
talk: I lived a whole year in my car when I was not
employable, and six years in a tiny van, all the time
saving money.
> 1) I disagree the American economy is doing just fine.
It could be better, but we must not wish for it to go
back to the late nineties when everyone merely *thought*
things were great. In truth, wealth was being destroyed
at a colossal rate. Bubbles are bad, and I bet the U.S.
gradually improves from where it is, but not a lot.
> 2) If the middle class shrinks our economy will resemble
> Argentina's which was going great-guns from the 19th century
> to the Great Depression, but disintegrated along with its
> middle class.
I can tell you in two words what happened to Argentina, why
it was the 10th biggest economy in the *world* in 1900 and
how it became a basket case: Juan Peron
'Twas authoritarian socialism what killed the beast.
Lee
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