The other day I ran into someone I used to know a long time ago (he said something about it being 20 years). I'll call him N.
This guy is maybe the gentlest soul I know. And he doesn't "got" anything. N. doesn't own a computer, he told me, and I wasn't really surprised. Either he's poor or he's an apostle of the simple life. Maybe both.
How much in contrast with the avarice and acquisitiveness that's prevalent in our society. And those who've got the most (money, possessions, whatever)—how did they get where they are?
Look at British society. Who are their landed gentry? How did they get to be what they are, with their estates and very large houses? Often, by being more rapacious than their fellow man. Chances are, they were on the winning side of some battle and their winning side seized whatever they could: land, livestock, etc.
And in America? I think we're starting to see more clearly that there's a lot of greed in America. For the sake of their personal financial gains, some aggressive, hungry young bucks on "Wall Street" engaged in one or another type of chicanery—and imperiled the entire U.S.-–no, the world—financial order.
Large corporations often focus on their "bottom line" to the degree that they deceive the public, the consumer, maybe withholding information on the dangers of the drugs, toys, baby accessories that they make and sell.
I used to say that "business ethics" was an oxymoron. Well, I no longer would say that every nook and corner of the business world is immoral or amoral. Businesses have now and then been good guys. In particular, I've gained more respect for small business. The typical small business owner works very hard and takes risks—to make a success with selling his ice cream or soup or cupcakes.
And, some people have had a good idea. The right idea at the right time and place, or some useful invention. These people deserve the success that they achieve.
However, look at this: How many big business tycoons have started foundations? From earlier times, there's the Ford Foundation, the Carnegie Foundation. Now we have the Bill and Melinda Gates Foundation, etc. These foundations have enormous sums of money to give away. Also, many wealthy families and individuals give away money and in return get their names on auditoriums, libraries, and so forth--and get more gratitude heaped on them than just bronze plaques.
All the money that these companies and individuals and foundations have—where did it ultimately come from? From you and me, from our pockets. Now, a really revolutionary idea: How about these guys charge less for their products? Let them make less money, let you and me keep more of our money. Rather than Bill Gates having obscene billions of dollars to give away, maybe you and I could have kept some of that money, and then we could decide where it should go.
Copyright © 2010 by Richard Stein
Showing posts with label capitalism. Show all posts
Showing posts with label capitalism. Show all posts
Wednesday, October 20, 2010
Wednesday, February 10, 2010
What Is the Function of Government?
I just read a very interesting article in Smithsonian magazine (Oct. 2009 issue). The title is "A World Too New," and the author is Edmund S. Morgan, an emeritus professor of History at Yale. The article has to do with the knowledge and expectations that Columbus had for "the Indies," which affected the outcome of Europeans' early contacts with Western Hemisphere natives.
The entirety of the article is very interesting, but there were two very subordinate thoughts of Morgan's that struck me as very provocative. I've made my riff on one of those thoughts in the previous posting.
The second quote from Morgan paints a picture of the European society from which Columbus came, and which contrasted itself to that which they considered barbarian:
For me, encountering this thought comes not long after I read some discussion, from different persons, about what the proper or legitimate role (or scope, or extent) of government should be. I think Morgan states it well, and succinctly. We have a Constitution and Bill of Rights that were written as they are to help ensure that the weak are not exploited or otherwise harmed by the strong (or more clever, or more ruthless, etc.) But some extreme conservatives and libertarians would not agree with this. I wonder if, if it were put to them, they would even say that we do not need or want the government to protect investors from a Bernie Madoff; or protect consumers from food manufacturers who might want to make and sell unhealthy food.
Well, actually, I think I know the answer to that one. It's easy to condemn a Madoff. Where it's just one individual, it's easy to condemn him. But, when it's corporations, or an industry—why, in that case some people almost seem to be saying that Business can do no wrong. Anti–big government people like Ronald Reagan and George W. Bush feel that business must not be hamstrung by government oversight. But the interests of a corporation—usually meaning, in one word, its profits—can and often do conflict with the interest of consumers—who are more numerous. In other words, should or should not the government legitimately protect the majority (the public, or "consumers") from a minority—one corporation or one industry? So much seems to hinge on issues like this, of protecting one group from another. And that is precisely, as Morgan says, one of the central functions of government.
Copyright © 2010 by Richard Stein
The entirety of the article is very interesting, but there were two very subordinate thoughts of Morgan's that struck me as very provocative. I've made my riff on one of those thoughts in the previous posting.
The second quote from Morgan paints a picture of the European society from which Columbus came, and which contrasted itself to that which they considered barbarian:
They had strong governments to protect property, to protect good persons from evil ones. . . .
For me, encountering this thought comes not long after I read some discussion, from different persons, about what the proper or legitimate role (or scope, or extent) of government should be. I think Morgan states it well, and succinctly. We have a Constitution and Bill of Rights that were written as they are to help ensure that the weak are not exploited or otherwise harmed by the strong (or more clever, or more ruthless, etc.) But some extreme conservatives and libertarians would not agree with this. I wonder if, if it were put to them, they would even say that we do not need or want the government to protect investors from a Bernie Madoff; or protect consumers from food manufacturers who might want to make and sell unhealthy food.
Well, actually, I think I know the answer to that one. It's easy to condemn a Madoff. Where it's just one individual, it's easy to condemn him. But, when it's corporations, or an industry—why, in that case some people almost seem to be saying that Business can do no wrong. Anti–big government people like Ronald Reagan and George W. Bush feel that business must not be hamstrung by government oversight. But the interests of a corporation—usually meaning, in one word, its profits—can and often do conflict with the interest of consumers—who are more numerous. In other words, should or should not the government legitimately protect the majority (the public, or "consumers") from a minority—one corporation or one industry? So much seems to hinge on issues like this, of protecting one group from another. And that is precisely, as Morgan says, one of the central functions of government.
Copyright © 2010 by Richard Stein
Sunday, October 18, 2009
Why Do Some Things Cost More?
At one time, when buying a car, cloth upholstery on the seats was standard, but for extra cost, you could get vinyl upholstery. At a later period, vinyl was the standard or base choice, and cloth was an extra-cost option.
In the Middle Ages, white bread was more expensive and was perceived as a luxury. Today dark bread costs more than white bread.
In these two cases, the price is not determined by the cost that the manufacturer or provider incurs in producing a product, as the same thing probably is not cheaper to make at one time and more expensive to make at another time. So with some items, at least part of the price is determined by what the buyer will pay (or is expected to be willing to pay).
Why does one bottle of wine cost $7.50 and another $75? There may be greater cost incurred in producing the more expensive wine in that the vintner may pay more for better quality grapes. But most wine experts will acknowledge that price and quality don't have a perfect correlation.
Pricing on the part of a capitalist is to some degree a function of cost of production, but clearly not always. A car, for example, is priced by a major automaker such that, if they make (and sell), say, 100,000 cars, they make a profit. If they sell fewer, they lose money. If they sell more, they make a greater profit. The cost of designing the model, testing it, etc., is amortized over a certain number of units sold. So if a car, or anything else that has design and development costs, stays in production for years, the sale price contains more profit since development costs have already been recouped. Sometimes, even—probably rarely—once the manufacturer's development costs have been recouped, the price may come down, as happened with the Model T Ford.
So is the $75 bottle of wine worth its price, or is it overpriced? Are high-priced items in general worth what they cost?
I can tell you that, as price goes up, the increment in quality is not proportional. For example, what is the difference between a $200 men's suit and a $500 men's suit? You may guess that the more expensive suit is not two and one-half times as "good" in any sense. The latter might have, say, $30 more cost in the cloth and maybe another $20 or so in added labor (more steps or slower and more careful workmanship). So the maker puts in $50 of additional cost and can raise the price $300.
So is that $500 suit a rip-off? Can a $300,000 Ferrari be worth the cost? To some degree you pay for labels and nameplates. Some brands (and stores) have greater profit margin. A Tommy Hilfiger shirt that might cost four times as much as a shirt at Target is still made in Third World countries, with low labor costs. Guess what? It's got greater profit margin. The store that is selling that Hilfiger shirt in an end-of-season sale, at half price, is still not losing money.
In the case of the Ferrari, this is a low-volume car, and largely hand-made. That partly justifies the cost. To the buyer, I'd say: If you can perceive and appreciate the difference between a Ferrari and a Chevrolet, or the subtleties in that premium bottle of wine, and you can afford it, go for it. We need you to keep the economy rolling.
One footnote: I have not attended business school. My information on the suits used as an example comes from very good authority. And I think I'm on solid ground in the rest of what I say here. But if a reader can show me that I am wrong at some point, I hope s/he will tell me so in a comment.
Copyright © 2009 by Richard Stein
In the Middle Ages, white bread was more expensive and was perceived as a luxury. Today dark bread costs more than white bread.
In these two cases, the price is not determined by the cost that the manufacturer or provider incurs in producing a product, as the same thing probably is not cheaper to make at one time and more expensive to make at another time. So with some items, at least part of the price is determined by what the buyer will pay (or is expected to be willing to pay).
Why does one bottle of wine cost $7.50 and another $75? There may be greater cost incurred in producing the more expensive wine in that the vintner may pay more for better quality grapes. But most wine experts will acknowledge that price and quality don't have a perfect correlation.
Pricing on the part of a capitalist is to some degree a function of cost of production, but clearly not always. A car, for example, is priced by a major automaker such that, if they make (and sell), say, 100,000 cars, they make a profit. If they sell fewer, they lose money. If they sell more, they make a greater profit. The cost of designing the model, testing it, etc., is amortized over a certain number of units sold. So if a car, or anything else that has design and development costs, stays in production for years, the sale price contains more profit since development costs have already been recouped. Sometimes, even—probably rarely—once the manufacturer's development costs have been recouped, the price may come down, as happened with the Model T Ford.
So is the $75 bottle of wine worth its price, or is it overpriced? Are high-priced items in general worth what they cost?
I can tell you that, as price goes up, the increment in quality is not proportional. For example, what is the difference between a $200 men's suit and a $500 men's suit? You may guess that the more expensive suit is not two and one-half times as "good" in any sense. The latter might have, say, $30 more cost in the cloth and maybe another $20 or so in added labor (more steps or slower and more careful workmanship). So the maker puts in $50 of additional cost and can raise the price $300.
So is that $500 suit a rip-off? Can a $300,000 Ferrari be worth the cost? To some degree you pay for labels and nameplates. Some brands (and stores) have greater profit margin. A Tommy Hilfiger shirt that might cost four times as much as a shirt at Target is still made in Third World countries, with low labor costs. Guess what? It's got greater profit margin. The store that is selling that Hilfiger shirt in an end-of-season sale, at half price, is still not losing money.
In the case of the Ferrari, this is a low-volume car, and largely hand-made. That partly justifies the cost. To the buyer, I'd say: If you can perceive and appreciate the difference between a Ferrari and a Chevrolet, or the subtleties in that premium bottle of wine, and you can afford it, go for it. We need you to keep the economy rolling.
One footnote: I have not attended business school. My information on the suits used as an example comes from very good authority. And I think I'm on solid ground in the rest of what I say here. But if a reader can show me that I am wrong at some point, I hope s/he will tell me so in a comment.
Copyright © 2009 by Richard Stein
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