The cult of the Almighty Dollar aka "S/He who has the gold, makes the rules"

[Le Jacquelope]

The cult of the Almighty Dollar aka "S/He who has the gold, makes the rules"

Are we approaching a day and age where the pursuit of monetary profit is going to always be considered more important than morals and the public general welfare?

I say we are.

We're getting to a point where people believe there isn't any problem that can't be cured by letting people be more greedy and/or stingy. All of society's ills come from attempting to curb greed and stinginess.

This would strongly explain the ongoing war against regulations, welfare programs and even many things that would be essential for national security (like a secure border).

 

[rgraham666]

Are we approaching a day and age where the pursuit of monetary profit is going to always be considered more important than morals and the public general welfare?

I say we are.

We're getting to a point where people believe there isn't any problem that can't be cured by letting people be more greedy and/or stingy. All of society's ills come from attempting to curb greed and stinginess.

This would strongly explain the ongoing war against regulations, welfare programs and even many things that would be essential for national security (like a secure border).

I'm afraid I agree. Sigh.

And about two weeks after everything has been transfered to the private sphere there will be no sphere at all.

Can you say 'The Congo'. I knew you could.

 

[Le Jacquelope]

I'm afraid I agree. Sigh.

And about two weeks after everything has been transfered to the private sphere there will be no sphere at all.

Can you say 'The Congo'. I knew you could.

Go check out the "Ferengi Rules of Acquisition" and start counting which rules, if followed, wouldn't do you well in this day and age, if the right wing economic pundits are to be believed.

 

[rgraham666]

The Ferengi were the best jokes ever played on television.

Ugly, badly and expensively dressed, greedy, usually not that bright and with the morals of your average street pimp.

Sounds like your average network television executive to me.

 

[JAMESBJOHNSON]

The real problem is always restricted competition.

 

[SlickTony]

He who has the gold makes the rules?

It's always been that way.

My mother's always been a SAHM for the greater part of her life, and I remember her worrying about what my dad would say when she bought a $10 hair extension (what they called a "fall" back then).

It's why, even if my husband were to acquire a job that made big bucks, I'd still keep mine.

 

[NoJo]

I once earned good money, but I had no free time. I was miserable. So I quit work, and I had lots of free time, and very quickly, no money. So I was miserable again. Now I have just about enough money and time to be comfortably depressed.

 

[SlickTony]

I once earned good money, but I had no free time. I was miserable. So I quit work, and I had lots of free time, and very quickly, no money. So I was miserable again. Now I have just about enough money and time to be comfortably depressed.

The human condition! The human condition!

 

[flavortang]

Al Pacino as the Devil in the movie "Devil's Advocate" summed it all up best in a monologue during the movie where he said: "Buy futures! Sell futures! When there is no future!"

Everyone running around being concerned only with the superficial nature of short-term monetary glory and in the wake of all that greed the entire culture is devouring itself. Everyone wants to be their own God.

 

[Joe Wordsworth]

I like money. Money is good.

 

[Quiet_Cool]

He who has the gold makes the rules?

It's always been that way.

Breakthrough in philosophical thinking here.

Welcome to capitalism, everyone.

Q_C

 

[JAMESBJOHNSON]

There is no free lunch.

 

[rgraham666]

Breakthrough in philosophical thinking here.

Welcome to capitalism, everyone.

Q_C

To be honest, very little of the economic activity these days can be considered capitalism in my opinion.

Capitalism is about products, markets and risk. It creates products, that is solid objects, that can be sold to the market, that is real people.

And it is risky. Your product may not be any good, your market may be too small, your price may not be competitive. It's more common for capitalists to lose their shirts than to become wealthy.

Much of the economic activity these days is speculating; stocks, arbitrage, debt trading, futures etc. These are all abstract things. Everyone involved are guessing about the value of unreal things in an unreal market. And most of the people making the decisions about it run no risk. They collect fees and commissions unrelated to their success.

The upper management of large corporations are definitely not capitalists. They may make decisions about products and markets, but they run no risk as well. Whether the company succeeds or fails, they get rich.

They also know nothing about products or markets, except in a abstract way. To them a car is a computer is a power drill. It doesn't matter to them what it is, they can all be peddled the same manner. The market to them is a faceless bunch of idiots who can be sold anything no matter how useless or badly designed.

To be honest, I wish there was more capitalism. It's a good economic system, within limits. What we have now is a bunch of courtiers playing courtly games.

 

[Handprints]

Much of the economic activity these days is speculating; stocks, arbitrage, debt trading, futures etc. These are all abstract things. Everyone involved are guessing about the value of unreal things in an unreal market. And most of the people making the decisions about it run no risk. They collect fees and commissions unrelated to their success.

The upper management of large corporations are definitely not capitalists. They may make decisions about products and markets, but they run no risk as well. Whether the company succeeds or fails, they get rich.

I liked this post very much because it made me think, so thanks for that. I think some of what the company I work for does (investing directly in companies it likes) is reasonably concrete but we also trade in futures and risk instruments (pretty good examples of abstract financial stuff) and we short companies we don't like (maybe a halfway house between the two?)

One of the key things we look for in any company is how well management's interests are aligned with shareholders'. A lot of companies will tell you that their bonus and salary arrangements for top management are well-aligned but it's not actually true: typically, senior execs have a package that combines straight salary (fair enough, we've all got running expenses and I have no objection to people being rich), bonuses for hitting specific targets (usually a mix of cash and shares), and bonuses dependent on stock performance (usually shares and options). The last two, companies argue, "guarantee" alignment between management and shareholders by making the managers' future wealth depend on the price of the shares.

The reason that last argument is mostly crap (and, typically, becomes more and more tenuous as company size/capitalisation increases) has to do with the way the bonuses are "earned."

Before I look at that, let's take a moment to explore how compensation works in an industry where capitalism is practiced red in tooth and claw: the hedge fund market (full disclosure: I market hedge funds, among other things.) We tell investors a simple story: I am going to try to beat index X by 20% while holding my risk level (we usually use measurements of volatility as a proxy for risk) below Y. I'm going to charge you 2% a year to cover my trading and administration costs. If I beat the 20% target, I'm going to take 20% of the excess for myself. If I don't, I'm not going to take a penny. (Full disclosure again: we're not idiots. We can manage our business for less than 2% a year. But we can get it, so we ask for it.)

Investing in a hedge fund may be a roller-coaster ride but the performance, fees and bonuses earned from it are perfectly transparent. That's good alignment. If you don't earn, I don't earn.

Now let's go back to, say, a Dow-listed behemoth. Let's say executive X gets a bonus if a particular product line hits the market by August and a tidy package of options if the company's shares go up 10%. He gets paid all of it even if the company's shares rise 12% while the rest of the Dow gains 30% and his shiny new product becomes his industry's Edsel. That's alignment?

In smaller companies, however, particularly smaller companies that itch to be big companies (and, often, where the founder is an industry veteran who still holds a big stake) you can find better practices: executive X in this case faces a tougher task. His new product has to meet sales, market share and profitability targets before he makes his bonus and his options package will depend on the company's stock outperforming either a basket of key competitors' shares or the performance of his industry's sub-index, whichever is harder to beat. That's alignment!

Incidentally, that's one of the reasons that, when you look at a hedge fund's holdings list, you'll find them shorting a lot of Dow companies (betting against them) while going long on small and mid-sized companies (betting with them). The hedge fund industry, generally speaking, prefers companies that want to beat the competition like rented mules, not just get paid to compete.

They also know nothing about products or markets, except in a abstract way. To them a car is a computer is a power drill. It doesn't matter to them what it is, they can all be peddled the same manner. The market to them is a faceless bunch of idiots who can be sold anything no matter how useless or badly designed.

Sad but true. That said, importing marketing techniques used to sell soap and shampoo transformed the fortunes of the magazine industry in the 1980s. Stealing from the magazine industry, in turn, transformed insurance in the 1990s. This kind of cross-fertilisation is disruptive and sometimes leads to disasters but it also revives dormant companies when it works.

To be honest, I wish there was more capitalism. It's a good economic system, within limits. What we have now is a bunch of courtiers playing courtly games.

Maybe, and there's no shortage of examples of it. Generally, I like the mechanisms for risk distribution that have transformed the financial management techniques available to companies and investors. However, there's no doubt that these are far more readily available to large companies than small ones: it's easier to de-risk the management of a big company than a small one.

That said, the average American investor is facing retirement in the next ten years. It's maybe not so surprising that they want less bang and more quiet progress from the companies they invest in. Capitalism depends, to a very great extent, on nerve and naked greed from investors. Pre-retirees - and their proxies, the mutual funds - might not have that kind of appetite to the extent they had it 20 years ago.

Regards and thanks again for the interesting post,
H

 

[Le Jacquelope]

He who has the gold makes the rules?

It's always been that way.

My mother's always been a SAHM for the greater part of her life, and I remember her worrying about what my dad would say when she bought a $10 hair extension (what they called a "fall" back then).

It's why, even if my husband were to acquire a job that made big bucks, I'd still keep mine.

SAHM?

 

[Le Jacquelope]

To be honest, very little of the economic activity these days can be considered capitalism in my opinion.

Capitalism is about products, markets and risk. It creates products, that is solid objects, that can be sold to the market, that is real people.

And it is risky. Your product may not be any good, your market may be too small, your price may not be competitive. It's more common for capitalists to lose their shirts than to become wealthy.

Much of the economic activity these days is speculating; stocks, arbitrage, debt trading, futures etc. These are all abstract things. Everyone involved are guessing about the value of unreal things in an unreal market. And most of the people making the decisions about it run no risk. They collect fees and commissions unrelated to their success.

The upper management of large corporations are definitely not capitalists. They may make decisions about products and markets, but they run no risk as well. Whether the company succeeds or fails, they get rich.

They also know nothing about products or markets, except in a abstract way. To them a car is a computer is a power drill. It doesn't matter to them what it is, they can all be peddled the same manner. The market to them is a faceless bunch of idiots who can be sold anything no matter how useless or badly designed.

To be honest, I wish there was more capitalism. It's a good economic system, within limits. What we have now is a bunch of courtiers playing courtly games.

And there is no compassion in that system at all.

Sharing is evil and no good deed goes unpunished - or, more accurately, unexploited.

 

[rgraham666]

And there is no compassion in that system at all.

Sharing is evil and no good deed goes unpunished - or, more accurately, unexploited.

Yep. Capitalism is a good economic system, but a piss poor ethical one.

 

[Le Jacquelope]

Yep. Capitalism is a good economic system, but a piss poor ethical one.

The scary part is that ethics are not considered a part of economics.

 

[TE999]

Like it or not, the old saying is true:

"Money talks, Bullshit walks."

How many rich philosophers do you know?

 

[Handprints]

Yep. Capitalism is a good economic system, but a piss poor ethical one.

Bit harsh, surely? The fundamental tenets of capitalism were almost entirely laid down by writers (from Smith to Ricardo, as another poster noted somewhere on the board) who were primarily concerned with maximising human liberty - most of what they wrote is as applicable to the other elements of Enlightenment study as it is to markets.

Google Scholar turns up 106,000 recent books and articles which have the words ethics and economics in their titles, so we can't say theoretical advances aren't being made.

Even out here on the bleeding edge of emerging markets, more than half of the companies I speak to stuff a thick handful of glossy slides about their environmental, stakeholder and social responsibility policies in to my hands before we get to talk about the money.

I think the notion that capitalism (or any alternative economic model) either exists in a vacuum or won't work for social rewards is a bit too silly and uninformed to take seriously. Most of the corporate social responsibility programmes I've ever heard about happen in countries where no such thing is required by any law.

Capitalism is, occasionally, a very rough ride but its critics tend to remind me of the old saw about a French civil servant who tours a booming German auto factory and comments: "Nice, but it will never work in theory."

Regards,
H

 

[Le Jacquelope]

Bit harsh, surely? The fundamental tenets of capitalism were almost entirely laid down by writers (from Smith to Ricardo, as another poster noted somewhere on the board) who were primarily concerned with maximising human liberty - most of what they wrote is as applicable to the other elements of Enlightenment study as it is to markets.

Google Scholar turns up 106,000 recent books and articles which have the words ethics and economics in their titles, so we can't say theoretical advances aren't being made.

Even out here on the bleeding edge of emerging markets, more than half of the companies I speak to stuff a thick handful of glossy slides about their environmental, stakeholder and social responsibility policies in to my hands before we get to talk about the money.

Then why is it that China has the most polluted cities in the world, and the worst sweatshops? And which one of these emerging markets is any better?

Exactly what social responsibility do they even talk about?

I think the notion that capitalism (or any alternative economic model) either exists in a vacuum or won't work for social rewards is a bit too silly and uninformed to take seriously. Most of the corporate social responsibility programmes I've ever heard about happen in countries where no such thing is required by any law.

Can you give us an example of these social responsibility programmes? Working conditions in those "emerging markets" - as well as their record on pollution - are not known to be very good.

Capitalism is, occasionally, a very rough ride but its critics tend to remind me of the old saw about a French civil servant who tours a booming German auto factory and comments: "Nice, but it will never work in theory."

That's because the auto factory is already up and running and churning out cars. If he had gone to Bangladesh he would have had a point.

I'm betting Bangladesh is closer to your "emerging markets" area than Germany, right?

 

[Le Jacquelope]

Like it or not, the old saying is true:

"Money talks, Bullshit walks."

How many rich philosophers do you know?

Indeed. I'm glad they did not shape our modern Democratic systems the way our *ahem* "penniless" philosophers did.

I wonder how rich Socrates was.

 

[SlickTony]

SAHM?

SAHM=Stay At Home Mom.

 

[Liar]

SAHM=Stay At Home Mom.

Because "housewife" sounds too 1950's?

 

[SlickTony]

Because "housewife" sounds too 1950's?

Well, there are variations on the SAH theme--the SAHW stay-at-home wife; the SAHD--the stay-at-home-dad (less common) and the SAHM and the SAHD are sometimes lumped as SAHPs (stay-at-home-parents) even though seldom are you going to find them at home at the same time. Sometimes the views of the SAHM and the WOHM (work outside the home mom) will conflict, which conflict is sometimes termed the Mommy Wars.