[sudev]

Those who exploit their countries are always afraid of being overthrown. So safe nest eggs out of reach of local authorities are a must.
Second corruption is deeply ingrained in all large contact purchases but needs to be hidden. Sometimes even after paying taxes elsewhere.

[Samurai]

Here is a very good analysis about US wages and how it declined. Economist Richard Wolff does a great job of analyzing. But his solution that everybody should become a startup is downright silly. This is why economists should stick to analysis and planning.

https://www.youtube.com/watch?v=OcA1v2n7WW4

[Samurai]

Since almost all of us did our economics/finance studies in capitalistic countries, we never really learn about the cons of capitalism as part of the curriculum. Therefore, whenever we see failures in capitalism, like the subprime crisis, we easily blame it on principal-agent problem. The deeper flaw in capitalism generally evades us.

However, I started listening to Dr.Richard Wolff since couple years and he brilliantly explains the cons of capitalism such that even layman can understand. He studied in Harvard, Stanford and Yale, and now teaches in Yale.

As I have mentioned in the previous post from 2015, while his analysis is brilliant, not all his solutions are practical in the current state of affairs. That is probably because he is from academia. But when he explains the history of taxation in US, it is really revealing.

https://www.youtube.com/watch?v=G4gPXvW3DG4

[ashokrajagopal]

Originally Posted by Samurai

As I have mentioned in the previous post from 2015, while his analysis is brilliant, not all his solutions are practical in the current state of affairs. That is probably because he is from academia. But when he explains the history of taxation in US, it is really revealing.

I am a regular listener of Dr. Wolffe too, and completely agree with you. He brings up Worker Cooperatives as a solution to every problem. Somehow he fails to acknowledge the idea of more political accountability, and better politics. Unless this is stressed at a Worker cooperative can also fail miserably.

[drsingh]

https://youtu.be/NStwnOh9AsU

Excellent talk on the economic thought history around the time Hayek wrote The Road to serfdom. A good introduction and the talk provides context in which to approach the ideas in the book.

[AltoLXI]

Quite a few have argued that the ban will affect the livelihood of many. Hence a ban is not warranted.

If Automation and robots take away the jobs of lakhs of people, shouldn't we ban use of automation and robots as well so that many can retain their employment?

[Samurai]

Originally Posted by AltoLXI

If Automation and robots take away the jobs of lakhs of people, shouldn't we ban use of automation and robots as well so that many can retain their employment?

Fortunately, Economics won't let that happen. They can't replace all workers with robots because that will eliminate consumers. When people lose jobs, they won't have money to buy anything that robots make. That feedback loop alone can stop total automation.

[blackasta]

Originally Posted by AltoLXI

Quite a few have argued that the ban will affect the livelihood of many. Hence a ban is not warranted.

If Automation and robots take away the jobs of lakhs of people, shouldn't we ban use of automation and robots as well so that many can retain their employment?

Originally Posted by Samurai

Fortunately, Economics won't let that happen. They can't replace all workers with robots because that will eliminate consumers. When people lose jobs, they won't have money to buy anything that robots make. That feedback loop alone can stop total automation.

And for this precise reason only, states with high HDI have started experimenting with 'universal basic income'

Proponents of universal basic income argue that it can be more efficient and more equitable than traditional welfare systems, and will also protect people better as economies change through automation.

“Credible estimates suggest it will be technically possible to automate between a quarter and a third of all current jobs in the western world within 20 years,” Robert Skidelsky, professor of political economy at the University of Warwick, said in a paper last year.

He said a universal basic income that grew in line with productivity “would ensure the benefits of automation were shared by the many, not just the few.”

https://www.theguardian.com/world/20...for-unemployed

[Samurai]

Originally Posted by blackasta

And for this precise reason only, states with high HDI have started experimenting with 'universal basic income'.

Yes, I have been reading about this concept. I too feel UBI is inevitable as automation proves too efficient compared to human labour.

However, this would be highly opposed in capitalistic societies, where welfare or any socialist programs are highly loathed. Major political/cultural restructuring is necessary before UBI can be implemented.

[blackasta]

Originally Posted by Samurai

Yes, I have been reading about this concept. I too feel UBI is inevitable as automation proves too efficient compared to human labour.

However, this would be highly opposed in capitalistic societies, where welfare or any socialist programs are highly loathed. Major political/cultural restructuring is necessary before UBI can be implemented.

In line with this, what has been mentioned by Narayana Murthy as 'compassionate capitalism' in his open letter.

Capitalism needs to enforce on itself certain checks and balances if it is to survive.

I have always felt that every senior management person of an Indian corporation has to show self restraint in his or her compensation and perquisites. He or she has to fight for maintaining a reasonable ratio between the lowest salary and the highest salary in a corporation in a poor country like India. The board has to create a climate of opinion for such a fairness by their actions.

This is necessary if we have to make compassionate capitalism acceptable to a majority of Indians who are poor. Without compassionate capitalism, this country cannot create jobs and solve the problem of poverty. Experts tell me that capitalism may come to an end in the not-so-distant future if the current corporate leaders do not heed this advice in India.

http://www.firstpost.com/business/in...e-3365546.html


http://www.hindustantimes.com/busine...5WupIZj8I.html

[Samurai]

Yup, this is exactly what Dr.Richard Wolff talks about in the videos I posted earlier in this page.

However, it is very unrealistic in the current financial environment. Unless the government restructures the financial environment, NRN's ideas will remain on the paper.

[Samurai]

When I heard about how the #1 company in my industry domain went bankrupt thanks to a share market trick called LBO, I wanted to understand more about it.

So I read this book. It describes a similar scenario that happened 30 years ago, which killed the golden goose for executive greed.

A successful company that is making big profit has to pay hefty corporate tax. However, if the same company is paying huge interest payment on a debt, that interest payment amount can be treated as expense.

So the company executives working with closely with private equity investors, offer to buy all the public stock by overpaying the shareholders. The purchase is funded with 10% funds from the PE investors, 60% from bank loans, and 30% from high risk junk bonds. That is like a guy who has $1 million, buying a company by paying $10 million, while borrowing $9 million. Who pays the monthly EMI? The company revenue will be used to pay the interest. They will also cut cost royally, sell assets of the company, close down or sell entire divisions of the company to enable paying the interest.

This means R&D usually gets the axe because it is not revenue generating activity. Focus will entirely shift to sales and cost cutting. They will rise prices to milk the customers, and technology won't improve thanks to reduced R&D. What if the revenues dip thanks to competition and shift in technology? Then they can't make interest payments, and they are soon down the slippery slope to bankruptcy.

The winners are shareholders who got overpaid for their shares, and the executives who got massive bonuses for making the deal happen. The losers are customers who have massive investments in the company products, and the employees who soon will be out of job.

Meanwhile, Avaya is still making happy noises hoping to retain the customers who are stuck with major Avaya installations.

[alpha1]

The problem with socialism is that humans are selfish and greedy animals without any limits.
The problem with capitalism is that humans are NOT always selfish and greedy.

There is a thin line that every human learns to walk while growing up ... and that cannot be captured by economic theories.


Talking about which, does anyone have an idea what the ever-growing "capitalism", consumerism, connectivity, increased "efficiency" leading us to?

[Samurai]

Originally Posted by alpha1

There is a thin line that every human learns to walk while growing up ... and that cannot be captured by economic theories.

Who says? Business school may not cover it in their syllabus, but many economists do.

Originally Posted by alpha1

Talking about which, does anyone have an idea what the ever-growing "capitalism", consumerism, connectivity, increased "efficiency" leading us to?

Of course we do. Isn't that the very thing Dr.Richard Wolff keeps talking about?

[alpha1]

Originally Posted by Samurai

Who says? Business school may not cover it in their syllabus, but many economists do.

Not really.
The only "branch" of economics that is trying to come close to understanding irrational human beings and their selfish, greedy actions is Behavioral Economics.

Of course we do. Isn't that the very thing Dr.Richard Wolff keeps talking about?

Is it? Then I must see his video ...
From what I could read, he seems to be anti-capitalism.

I would want the answer to my question from someone who is pro-capitalism. It is for them to think deeply about the virtues that they are extolling.