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Ch. 3: Bullnomics: Its Favoritism and Fiction

#60: Jan. - Feb. 2009 (Non-Fiction)
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giselle

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What if the laws governing corporations required them to give a certain percentage of profit as payment, instead of a fixed value?
There may not be laws to this effect but it is certainly a common practice to remunerate executives (and others) using profits or other financial performance measures as the basis. I would think that Bill Gates is a good example of this. This is driven by market based imperatives not laws and can lead to enormous incomes. The corporate income tax system reallocates wealth based on profit based calculations to the point that companies often complain that their success is being capped by an onerous tax burden.

I think many of us agree that we should reward, not penalize, success because we can all gain from this but sometimes success can become unbridled greed and this can bring some nasty consequences.
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President Camacho

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Yeah, the reward/success thing is where I split from most people.

I think that success should definitely be rewarded. I just want to know - for most people - where does the motivation for $uccess end?

What is the amount of money that Bill Gates is willing to work for? Would he stop producing if he made a dollar less per day? Two dollars less? Would he even notice it? What amount would he start to take notice and what amount would he consider stop being productive?

Once this amount is known, it would be easy to tax Bill Gates accordingly. Leaving him with enough money to be successful, happy, and with enough motivation to continue to be productive.

I know that if I had 100 million dollars, I would produce absolutely nothing and be far less productive than I am today; I'd have no incentive to produce.

The flip side of that coin is - if I had some more time and made a little more money, I could tinker around with a lot of different projects, find out what I'm good at, and have the potential of making the world a better place. .... and, at the least, I'd have the time and means to invest into my own family.
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Grim

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"Fantastic misgovernment of the kind we have seen is not an accident, nor is it the work of a few bad individuals. It is the consequence of triumph by a particular philosophy of government, by a movement that understands the liberal state as a perversion and considers the market the ideal nexus of human society. This movement is friendly to industry not just by force of campaign contributions but by conviction; it believes in entrepreneurship not merely in commerce but in politics; and the inevitable results of its ascendancy are, first, the capture of the state by business and, second, all that follows: incompetence, graft, and all other wretched flotsam that we've come to expect from Washington."

"...we shall begin to glimpse something much greater than single acts of incompetence or obstruction. We shall see a vast machinery built for our protection re-engineered into a device for our exploitation. We shall behold the majestic workings of the free market its self, boring ever deeper into the tissues of the state. Ultimately, we shall gaze upon one of the true marvels of history: democracy buried beneath an avalanche of money."

- Thomas Frank, The Wrecking Crew: How Conservatives Rule
:book:
Last edited by Grim on Sat Jan 24, 2009 10:24 pm, edited 1 time in total.
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DWill

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There were two ways that relgion worked into this chapter, one minor and one major. Phillips speaks of the free market true believers as religiously devoted; he talks about their "deities" and cites books like "The Market As God" (or something like that). A while back, we were having a heated discussion about (what else) religion, and some people objected strongly to labelling anything that people show belief in or like a great deal as "just like a religion." That is just obfuscation, they said, an attempt to say that religion can't be any different than economics or following sports teams. I guess they had a point, but I also don't think it's that far-fetched to say that for some of these finance people, the market is/was a belief system.

Phillips recycles some of his ideas from American Theocracy in the chapter. He says that evangelicals and the religious right in general were friendly to finance and all too willing to incorporate new ways to wealth in their theology; whereas in a previous age, this segment of the citizenry would have been distrustful of any financial sleight of hand. Prosperity theology gained a lot of ground. The Mormons, also, had no inclination to call creative finance a sin.

Maybe we should encourage the Muslims. They supposedly have rules against usury.
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President Camacho

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I can't remember the movie... but there was a woman that yelled, "Money Changer!!!"

It reminds me of this. The fact is, we're a capitalist society that has let our quest for greater profits lead us into unregulated territory.

It's just a matter of tweaking the system - not of allowing the pendulum to swing to the other side. We went astray and now we should return to normalcy as quickly as possible. The greatest effort needs to be made to teach the American people WHY this has happened. The idea that the market always knows what's best needs to be replaced with something closer to the truth. That fair rules put in place by government protect everyone and promote our mutual growth under a free-market system.

The free-market isn't bad. Competition is awesome! It's what makes America so dynamic. Like every sport there needs to be rules to keep things fair. The shadow banks that were created seem to not share the same rules that normal banks are forced to abide by....

If you're not cheating, you're not trying - that's as good an American motto that I can think of.

Reading on into the next chapter, the author begins to describe how far out of reach these new financial systems were of the federal paddle of justice.
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DWill

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Just off the top of my head, I can't recall Obama making a point of saying he'll use the federal paddle on finance fat cats. Has he specified changing banking rules as part of his reform package? We might now assume that the hedge funds are too wasted to be a threat, but as Arnold would say, "They'll b' back." Phillips stresses the strong ties to finance that the Democratic party now has. Just another point on which Obama needs to buck his own party.
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Nope, I'm reading the current issue of The Economist and it hasn't said anything so far. It appears he's just pumping more money into the system as a whole. I think that's the only thing he can do right now to save the country from plunging into certain doom. It sucks but it would suck more if he didn't do it.

We'll see in the future what other plans he has in store - nothing has been said yet. I've heard he's had some pretty exclusive meetings with his advisers regarding the economy that he hasn't allowed the press in on at all.
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Grim

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I've heard that every measure they are taking is not meant to prevent the country's economy from failing but rather to reduce the likelihood. Before the government $700billion bailout the odds of a complete economic Depression triggered by the failure of finance was like 80%, now the chance of absolute failure of the system, the great reset PC seems to advocate for some reason, is rounded up to an estimated 20% or so which helps many people feel secure that perhaps we will only see a continuation of a drawn out recession, still worrisome odds and options to be sure.

:book:
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Grim

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Here is a quote that I think applies to the topic being discussed of power systems taking control despite their benevolent human conceptual nature.
"To behold, use or perceive any extension of ourselves in technological form is necessarily to embrace it. To listen to radio or read the printed page is to accept these extensions of ourselves into our personal system and to undergo to 'closure' or displacement of perception that follows automatically. It is this continuous embrace of our own technology in daily use that puts us in the Narcissus role of subliminal awareness and numbness in relation to those images of ourselves. By continuously embracing technologies, we relate ourselves to them as servomechanisms. That is why we must, to use them at all, serve these objects, these extensions of ourselves, as gods or minor religions. An Indian is the servomechanism of his canoe, as the cowboy of his horse or the executive of his clock."
-Marshall McLuhan, Understanding Media: The Extensions of Man
We believe the economic systems must work because they are essentially as rational as human extensions can be, what we forget is that because they are merely a reflection of ourselves we have become numbed to their true content. This is explained by McLuhan through the theory of Narcissism, mythologized in the story of Narcissus. Were Narcissus does not recognize the face as anything other than that of another person he is essentially not realizing, to his own personal tragedy (and our own), that he is captivated in a mere extension of himself.

:book:
Last edited by Grim on Mon Jan 26, 2009 11:15 am, edited 1 time in total.
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DWill

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That is a very interesting contribution, kind of a seduction theory regarding our technologies, and a reminder that finance can be seen as a technology. McLuhan was iconic in the 60s, famous for saying (if he indeed did), "the medium is the message." I heard his name often, but he seemed to fade and I never managed to read any of his work as far as I recall. (McLuhan has a cameo apperance in Woody Allen's "Annie Hall.")
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