Billionaires, making the world a better place (for them)

[Alarich II]

3 hours ago, Liffguard said:

So what does a billionaire have that a multi-millionaire doesn’t?

Power.

Power is a huge incentive.

Why do people want to become Senators or President? Is it for the great salary? Certainly not (at least not in Germany, Angela Merkel earns about 300.000 EUR per year).

Power over people and power to actually change things the way you want them to be is a mighty incentive, probably the greatest of all. This is probably true for all of human history and quite possibly the reason why most idealists who win their revolutions end up as tyrants themselves.

[OldGimletEye]

Sounds like a good reason to start jamming wealth into people's utility functions.

[Spring Bass]

6 hours ago, felice said:

And planning a secret mass resignation of a couple of million people would be impossible anyway; anyone showing the slightest sign of even thinking about plotting such a thing would be out the door before they could blink.

Good point. So why didn't it happen when Walmart was a much smaller firm, when it would have all been  much more feasible? Same for all other big firms, mind you. 

I'm not trolling here. This is something has come up before, with attempts by groups of workers in the 19th century US to run their own factories, and in modern day cooperatives. It just doesn't work very well most of the time beyond small groups, which suggests that the type of founders who get these things going actually are quite rare and valuable. 

6 hours ago, felice said:

Oh yes, it's all down to capitalism, nothing to do with the incredible advances in technology we've made in recent centuries.

It's the economic system that drove the adoption of such technology. The Soviets tried to separate such technology from the economic system that created it, and the results were . . . not as good, to put it mildly. 

In fact, it never really worked. You read economic histories of the Soviet Union in the 1930s through 1950s, and the various state firms had to engage in strictly speaking illicit trade and practices with each other to meet their quotas. 

2 hours ago, TrueMetis said:

Nobody competes with Walmart if you think that other stores exist is "competition" than you're deluded. Walmart controls 26% percent of the market share. If you not in that range, you're not competition.

Aside from the big retail companies that do compete nationally with Walmart (Target, Costco, the Kroger Conglomerate), there are regional grocery and retail chains that can basically match them on most prices, the dollar store chains (which Walmart actually considers to be the biggest threat to their bottom line), Amazon, and of course the companies that compete directly on the higher-margin stuff that Walmart sells. It's even tighter if you go abroad and count the foreign chains as well. 

As for 26% . . . so what? That's far, far short of a monopoly, or even a majority. 

3 hours ago, TrueMetis said:

And it's really fucked up when I'm sympathizes with corporations.

Why are you sympathizing with suppliers griping about their profit margins in dealing with Walmart? 

In response to what Khaleesi wrote up-thread, I think it's actually worse than that. The type of folks who don't start off as billionaires but become them (versus the heirs who inherit it) tend to be drawing from a pretty ruthless, ambitious set of folks. If you make it so the only way they can climb the ladder and compete with each other is to bend the government around them to protect themselves and what they control, that's what they're going to do - that's how you get really bad crony capitalism. 

To use Venezuela as an example in the atypical sense, a lot of business folk got screwed over by the regime. But those who did well at forming crony, crooked relationships with high figures in the regime have done quite well economically, and are rich. But they're not rich because their firms are actually competing to provide some type of good or service - they're rich by playing the connections game and corruption. 

 

 

[TrueMetis]

1 hour ago, Spring Bass said:

Good point. So why didn't it happen when Walmart was a much smaller firm, when it would have all been  much more feasible? Same for all other big firms, mind you.

Yes, I wonder what was going on in the 60's that might have made such a communal endeavor less feasible.

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Aside from the big retail companies that do compete nationally with Walmart (Target, Costco, the Kroger Conglomerate), there are regional grocery and retail chains that can basically match them on most prices, the dollar store chains (which Walmart actually considers to be the biggest threat to their bottom line), Amazon, and of course the companies that compete directly on the higher-margin stuff that Walmart sells. It's even tighter if you go abroad and count the foreign chains as well.

Target has 1,844 stores and a revenue of 75.356 billion in 2019, Costco has 770 stores and a revenue of 129.0 billion in 2017, Kroger has 3,017 stores and a revenue of 122.66 billion in 2019. Walmart has 11,348 stores and a revenue of 514.415 billion in 2019. Walmart has 4 times as many stores and make 4 times as much as it's next biggest competitor. Looking at that, you're really going to tell me you don't understand why a brand new store would have trouble competing?

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As for 26% . . . so what? That's far, far short of a monopoly, or even a majority.

So what? A single entity controls a quarter of the market. I can't even believe I need to explain why a single company having control of a quarter of the market is a bad thing and allowing it too much power.

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Why are you sympathizing with suppliers griping about their profit margins in dealing with Walmart?

Because a lot of Walmart's price savings comes out of screwing the worker.

[Spring Bass]

14 minutes ago, TrueMetis said:

Walmart has 11,348 stores and a revenue of 514.415 billion in 2019. Walmart has 4 times as many stores and make 4 times as much as it's next biggest competitor.

That's their global revenue and employee count. The US share of it is smaller. 

 

15 minutes ago, TrueMetis said:

So what? A single entity controls a quarter of the market. I can't even believe I need to explain why a single company having control of a quarter of the market is a bad thing and allowing it too much power.

A single company having a quarter of the market can't even dictate prices in its market, much less monopolize anything. Who cares? 

16 minutes ago, TrueMetis said:

Because a lot of Walmart's price savings comes out of screwing the worker.

It's discount retail. They all drive hard bargains with their suppliers, because the margins are so low. 

[Mlle. Zabzie]

8 hours ago, maarsen said:

However immoral it is to tax the 'creators' of such wealth, is it just as immoral to tax their descendants who have done nothing to create anything? Make your money, play with in but once you die, tax the snot out of the estate. 

A lot of what I would have said has already been said by others, but THIS. No one has ever presented a convincing policy argument to me why a well-functioning government shouldn't have a robust estate tax.  You can't take it with you.

7 hours ago, OldGimletEye said:

I don't have a problem with the general observation that we are all motivated, to some extent, by selfish interest.
But, often, when it gets to the brass tacks of making policy, that general observation isn't particularly helpful. Take something like corporate taxation. What should it be set at?
Well if you believe in the Chamely-Judd model then your answer is that it should be set exactly at 0%.
But, if you don't believe that the assumptions that go into that model are realistic, like it's perfect foresight assumption, or it's assumption of perfectly competitive markets that continually clear, etc. then you might very well conclude something else.
And then of course the people that always remind us how essential the profit motive is for economic growth, often seemingly forget that it can lead people to do stuff that is economically harmful, like rent seeking, or engaging in anti competitive behavior, or the CEO who is looking to line his own pockets at the expense of his share holders and his workers ( a pretty classic principal agent problem).

Surprise!  I don't believe in Chamely-Judd.  

Motivations are really weird and hard, and economic models that assume rational behavior of ANY KIND are....not realistic.  (And though there are really folks trying to quantify and model values of leisure, power, relationships, etc., etc., there isn't just a model you can build).  

 

 

 

[TrueMetis]

16 minutes ago, Spring Bass said:

That's their global revenue and employee count. The US share of it is smaller.

So? Are you under the impression it can't or doesn't use it's international reach domestically?

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A single company having a quarter of the market can't even dictate prices in its market, much less monopolize anything. Who cares?

Except it can and does, as per the article I posted. It dictates prices constantly.

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It's discount retail. They all drive hard bargains with their suppliers, because the margins are so low. 

What Walmart does is far beyond hard bargains.

[Serious Callers Only]

Eh, i'm pretty certain that the so called 'middle' class in america will defend their ideological servility to capital (and racism) until they're literally the next genocide target.

For instance it's not only mexico that will become basically inhabitable with global warming, florida will be gone (assuming a non total melt, in which case the south is underwater). This is not even counting that most of the southern US will be a desert. You think you've got water shortages now with this corrupt EPA and admin, wait until 30 years of Qanon nutjob judges and industrial interests fuck over cities on literal deserts lmao. Speaking of that, Las Vegas should really be abandoned.

 

Basically: migration from the 'flyover' states is going to happen, and the pure stupid that remains will continue voting for pure poison as per EC, the slightly less pure stupid that moves is certain to have a appreciable component of nutjobs with 30 machine guns each, just itching to enact some FPS fantasies at their lowest. Trumpian judges will naturally interfere in the necessary disarmament of these nutjobs because they're their spirit animals. This is not even counting the collapse of most of South America and Africa and Australia and Bangladesh and the resulting mass migration, which will be more of a 'mass genocide'.

 

Also,i wouldn't want to be Canada in this situation, because it's pretty much certain fascist USA is going to invade if they have no nukes and they refuse to get them (because 'alliance' and 'don't provoke them'). I'm glad to see France and Germany collaborating on a nuke cover alliance, Russia basically needs to be checked.

[Rippounet]

3 hours ago, Spring Bass said:

It's the economic system that drove the adoption of such technology. The Soviets tried to separate such technology from the economic system that created it, and the results were . . . not as good, to put it mildly.

Interesting point. Certainly the Soviet system proved poor -to put it mildly- at spreading technological innovation through society, while capitalist societies did great.

However, while capitalism proved its worth at that given moment in time, there are a number of caveats. First, consumerism turns out to not be sustainable in the long-term, throwing doubt on the causality between profit and progress (or between technological progress and social progress). Second, the form of capitalism that proved to be so successful at raising our standards of living wasn't unrestrained capitalism and we are already starting to see how dangerous that can be.

I think if one wants to talk about the merits of capitalism one should be very careful to accurately define what they are thinking about exactly. "Capital" can come from plenty of sources (see: Piketty & Saez), and the consumer society is but one element of a larger whole.

3 hours ago, Spring Bass said:

Good point. So why didn't it happen when Walmart was a much smaller firm, when it would have all been  much more feasible? Same for all other big firms, mind you. 

I'm not trolling here. This is something has come up before, with attempts by groups of workers in the 19th century US to run their own factories, and in modern day cooperatives. It just doesn't work very well most of the time beyond small groups, which suggests that the type of founders who get these things going actually are quite rare and valuable.

Well, part of the answer may have been there up-thread:

19 hours ago, Kalbear said:

Alternately, it suggests that you're not accurate, and that there are significant barriers to entry in creating giant cooperatives. For starters, capitalists don't want giant collective groups, don't invest in them, and actively go after them when they can. They want singular leaders - preferably, they want other billionaires in charge.

17 hours ago, Spring Bass said:

There's no evidence of that.

I'm pretty sure there's tons of evidence of that, but it would require actual research to find it and post it in this thread.

Another element though is that cooperatives require, well, cooperation, in ways that we are seldom tought in school, even though our species is definitely capable of them. In other words, there's something insidious in so far as functioning cooperatives also require significant changes in the way we conceive our education. A different way to put it is that cooperatives don't work because our societies fail at encouraging them and training individuals to think and work that way.
There's no doubt though that many successes we remember as individual ones were actually group endeavors to begin with.

Otoh, though our species is extremely skilled at cooperation, it seems to struggle in the absence of a clear social hierarchy. Here also, I'm pretty sure some actual research has been done on the topic.

Funnily enough, according to google, cooperatives can be incredibly successful in the banking and insurance sectors with some very large banks being classified as cooperatives, including my own. So perhaps it's easier to organize a cooperative around relatively abstract services than around actual production of goods...
https://www.thenews.coop/49090/sector/view-top-300-co-operatives-around-world/

3 hours ago, Spring Bass said:

To use Venezuela as an example in the atypical sense, a lot of business folk got screwed over by the regime. But those who did well at forming crony, crooked relationships with high figures in the regime have done quite well economically, and are rich. But they're not rich because their firms are actually competing to provide some type of good or service - they're rich by playing the connections game and corruption.

Not that different from early capitalism then.

In fact, there's a decent case to be made that to this day, capitalism is still about connections and corruption.

[Spring Bass]

25 minutes ago, Rippounet said:

Second, the form of capitalism that proved to be so successful at raising our standards of living wasn't unrestrained capitalism and we are already starting to see how dangerous that can be.

For sure, and I never called for that in this thread. I actually think we could do a lot more to winnow out the socially negative billionaires (the heirs, those running mostly predatory companies, etc), and I'm in favor of a much stronger safety net, job guarantee, better union protections, and so forth. 

27 minutes ago, Rippounet said:

I think if one wants to talk about the merits of capitalism one should be very careful to accurately define what they are thinking about exactly. "Capital" can come from plenty of sources (see: Piketty & Saez), and the consumer society is but one element of a larger whole.

I take a pretty broad approach. If you have an economy that runs on the price system, that allows for the entrance and exit of privately owned firms in various lines of businesses, and where stuff can bought and sold (and borrowed against), you've got capitalism. It's not a particularly picky system about what it's combined with, and such an economy allows plenty of room for government to meddle around with the baseline rules, offer services publicly, own firms competing in the market, etc. 

31 minutes ago, Rippounet said:

Funnily enough, according to google, cooperatives can be incredibly successful in the banking and insurance sectors with some very large banks being classified as cooperatives, including my own.

It does tend to be a bit of an exception to that rule, although a lot of those are member-owned credit unions rather than worker-owned. There's a history of partnerships in the Financial Sector here in the US too (all of the Big Five Investment Banks were partnerships for decades). 

No idea why that's the case versus other sectors, where large-scale cooperatives don't seem to do so well. 

34 minutes ago, Rippounet said:

In fact, there's a decent case to be made that to this day, capitalism is still about connections and corruption.

I think there's a difference between a system where that kind of stuff can help you get rich, and where it's realistically the only way to get and stay rich. The business folks in Venezuela who didn't do that stuff were at serious risk of expropriation. 

[Spring Bass]

Speaking of competition for Amazon:

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Bloomberg

But there’s a dark cloud in Amazon’s figure. The growth of Amazon’s total merchandise sales slowed considerably last year, according to Bloomberg Opinion calculations based on Bezos’s disclosures. This figure is not the first sign than Amazon’s retail juggernaut may have slipped a bit. 

In 2018, Amazon’s nearly $300 billion in GMV was about a 19 percent jump from the prior year. That was notably slower than the rates of increase of 24 percent and 27 percent, respectively, in 2017 and 2016. 

It’s hard to explain the slowdown in Amazon’s merchandise sales growth. If anything, it seems as if Amazon is grabbing a larger share of e-commerce sales and that the internet is stealing more sales from physical stores, which have accounted for something like 90 percent of all U.S. retail sales. And yet Amazon’s retail sales growth —  although still impressive — is slowing noticeably. 

 

 

[Bennis of the Brown Shield]

On 4/10/2019 at 3:55 PM, OldGimletEye said:

Using a standard von-neuman morgenstern utility function, I think the downside loss would have to rather large, that is not applicable in most these situations, in order for a billion dollars to be what is required to induce these people to take a risk.

Are people really that rational though? I have the impression that many new entrepreneurs really do dream of becoming billionaires. Not just of earning enough money to not have to work any more. 

[OldGimletEye]

8 minutes ago, Khaleesi did nothing wrong said:

Are people really that rational though? I have the impression that many new entrepreneurs really do dream of becoming billionaires. Not just of earning enough money to not have to work any more. 

Probably not. Though I will say that computing an expected mean value (ie doesn't take into account risk preference) of a potential business venture is often done. Let's say somebody invest 1 million dollars in a venture. Are you really telling me that they need to make a billion in order to go through with it? Even if they make say 100 million, that is still one helluva a return.

 

[Bennis of the Brown Shield]

22 minutes ago, OldGimletEye said:

Probably not. Though I will say that computing an expected mean value (ie doesn't take into account risk preference) of a potential business venture is often done. Let's say somebody invest 1 million dollars in a venture. Are you really telling me that they need to make a billion in order to go through with it? Even if they make say 100 million, that is still one helluva a return.

 

Well, I don't know. Capping entrepreneurial net worth like that would lead to bizarre situations, where company owners would be disincentivized to grow beyond a certain (relatively small) size lest they lose control over their businesses. Said control is something I think they do tend to care very much about. 

Again, what is the point exactly? That certain people think that someone being a billionaire feels wrong? I struggle to see what the actual benefit to society would be of this, whereas the potential problems are vast. 

If you want to try to tax billionaires a bit more I am all for it, but that is a very different thing from trying to prevent from existing at all. 

[OldGimletEye]

1 minute ago, Khaleesi did nothing wrong said:

Well, I don't know. Capping entrepreneurial net worth like that would lead to bizarre situations, where company owners would be disincentivized to grow beyond a certain (quite small) size lest they lose control over their businesses. Said control is something I think they do tend to care very much about. 

1. Is it desirable for companies to get big? Typically we like to have lots of companies and competitive markets. Guess maybe this depends on your estimation of how many companies can take advantage of economies of scale and what the range that would be. And stock can be structured in many ways. Not all equity has to be in the form of voting stock.

9 minutes ago, Khaleesi did nothing wrong said:

point exactly? That certain people think that someone being a billionaire feels wrong? I struggle to see what the actual benefit to society would be of this, whereas the potential problems are vast. 

I think a lot of people have problems with billionaires for legitimate reasons. For one there has been a huge concentration of wealth in this country. Not all that wealth is earned from socially desirable conduct. Think of monopoly power, patents, rent seeking and so forth. And there is the aspect that the rich pretty much control political outcomes in this country and set the agenda. People are bit tired of a small segment of the population getting their way.

[Bennis of the Brown Shield]

20 minutes ago, OldGimletEye said:

1. Is it desirable for companies to get big? Typically we like to have lots of companies and competitive markets. Guess maybe this depends on your estimation of how many companies can take advantage of economies of scale and what the range that would be. And stock can be structured in many ways. Not all equity has to be in the form of voting stock.

It is often possible to have both many firms and competitive markets even when they include companies with market caps in the billions though.

Then as you allude to yourself there are many markets that do not have room for more than a few firms in order to function effectively. If you take large passenger jets for example a new model might have to sell enough to cover 25% of the entire world demand just to recoup its development costs. 

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I think a lot of people have problems with billionaires for legitimate reasons. For one there has been a huge concentration of wealth in this country. Not all that wealth is earned from socially desirable conduct. Think of monopoly power, patents, rent seeking and so forth. And there is the aspect that the rich pretty much control political outcomes in this country and set the agenda. People are bit tired of a small segment of the population getting their way.

Sure. But again, the problems you mention seem like they would be alleviated better by more focused reforms than trying to abolish billionaires. 

Such as tighter regulation of shady industries, easing up on patent protection a little bit, creating harsher antitrust laws, etc. 

[OldGimletEye]

1 hour ago, Khaleesi did nothing wrong said:

Sure. But again, the problems you mention seem like they would be alleviated better by more focused reforms than trying to abolish billionaires. 

Such as tighter regulation of shady industries, easing up on patent protection a little bit, creating harsher antitrust laws, etc. 

In truth I'm more inclined to go this route, rather just having some cut off. I think it will alleviate a lot of these problems. And probably we will have a lot less billionaires which would be good thing. But, I'm sure many in the billionaire class will scream bloody murder and claim all this to be "growth killing regulation". You know, the same old horseshit. I'm sure after this all done, there will still plenty of incentives for people to go out and start businesses and make money. The point I'm really trying to make is that it is not the case the economy will fall apart if fewer people can realistically make a billion dollars. We will be fine and better off.

And I would probably think about easing up on patent laws a lot, not just a little. I don't really like them.

And we badly need campaign finance reform in this country. Now only if the Supreme Court would get a clue.

[Bennis of the Brown Shield]

14 minutes ago, OldGimletEye said:

In truth I'm more inclined to go this route, rather just having some cut off. I think it will alleviate a lot of these problems. And probably we will have a lot less billionaires which would be good thing. But, I'm sure many in the billionaire class will scream bloody murder and claim all this to be "growth killing regulation". You know, the same old horseshit. I'm sure after this all done, there will still plenty of incentives for people to go out and start businesses and make money. The point I'm really trying to make is that it is not the case the economy will fall apart if fewer people can realistically make a billion dollars. We will be fine and better off.

And I would probably think about easy up on patent laws a lot, not just a little. I don't really like them.

And we badly need campaign finance reform in this country. Now only if the Supreme Court would get a clue.

I agree with that. As an American you are probably used to dealing with people who are much more hardcore capitalist than I am.

Patent protection in particular is really interesting. Because China has quite little of that but still manages to produce very innovative companies, and one could argue that the country as a whole is actually ahead of much of the West regarding digitalization and AI these days. Not quite what one would expect. 

[OldGimletEye]

1 minute ago, Khaleesi did nothing wrong said:

Patent protection in particular is really interesting. Because China has quite little of that but still manages to produce very innovative companies, and one could argue that the country as a whole is actually ahead of much of the West regarding digitalization and AI these days. Not quite what one would expect. 

While there is an argument that patent protection can foster innovation, there is also an argument to be made that too much can kill innovation and then you get all the little nasty monopoly power with it.

[karaddin]

On 4/10/2019 at 10:52 PM, Liffguard said:

So what does a billion or more buy you? Well, it buys you power over other people. Whether through political influence or control of businesses, it buys you control over other peoples’ lives. It means you can direct the actions of politicians, set the working conditions of thousands of people, use media and tech companies to influence the direction of society.

Absolutely nailed it. They won't openly make the argument that this is right and just but its the only incentive that actually makes sense and it absolutely shouldn't be seen as ok.