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On being the right size (1928)

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Re: On being the right size (1928)

#41
post #27

Earlier quoted context omitted.

I think the point on outsourcing is hinted at I the other story trending highly today about the man living without money. If you had to look a 9 year old child labourer in the eye each time you were buying your cheaply made T-shirt, or a worker how has just completed a 14hour day making component for your phone, would you still feel as happy with your purchase. Yes not all outsourcing is negative and not all worker a…

Perhaps the 9 year old child laborer would otherwise starve. I'll gladly buy the T-shirt every time. Or think of it like this. If all T-Shirts were required to be made in the US by union laborers working 30 hours per week and each one cost $50, I'd probably buy a heck of a lot less T shirts.

True, but maybe we don't need what we are currently buying, but are because the costs are hidden. How much of the stuff we own do we really need?

Re: On being the right size (1928)

#42
post #2

Relate this to Dunbar's Number and an effective small business. Dunbar says 150 total for a social group. But we operate across multiple social groups, across all realms of life, not just your job. If you wanted to put together an elite group of excellent professionals, how big do you suspect that could be? In other words, how large should you let your company get before you spit it down the middle into two subsidiar…

Dunbar's number is the number of people in a group in which every individual knows every other individual personally. This is not the same as the number of people an individual can know personally.

The way you can split a company in two is identical to the way our brains already distinguish between social groups. I don't need to remember that John from work doesn't know Mary from the bridge club, only that there is no overlap between the two groups.

Another problem with the maximum company size that you propose is that Dunbar's number is not a hard limit of 150, it depends on the conditions under which such a group forms and operates. The Wikipedia article on it is, as so often, a good primer.

Re: On being the right size (1928)

#43

This is really an argument against socialism as the communists tried to implement it. Where the state nationalizes every industry and all workers become employed by the state which plans everything centrally. Most socialists have moved beyond that model and would instead prefer to see a system of enterprise that uses co-op's instead of privately or publicly owned business. Some industries would probably be nationaliz…

Jobs would still move, it's just that an industry in another country owned by someone else would eventually take the business. That is unless the local industry was somehow able to ban foreign competition. The beauty of capitalism is that it roots out inefficiency. If you take a look at history, state controlled enterprises are the most polluting.

You don't have to ban foreign competition, it just has to be an informed choice.

Why is company x cheaper, what can we do to emulate them (do we want to?). Although we might have higher costs buying locally what other benefits do we have?

Re: On being the right size (1928)

#44
post #41

Earlier quoted context omitted.

Perhaps the 9 year old child laborer would otherwise starve. I'll gladly buy the T-shirt every time. Or think of it like this. If all T-Shirts were required to be made in the US by union laborers working 30 hours per week and each one cost $50, I'd probably buy a heck of a lot less T shirts.

True, but maybe we don't need what we are currently buying, but are because the costs are hidden. How much of the stuff we own do we really need?

I don't understand why necessity even comes into this. We don't need a lot of things. We don't need freedom of speech. We don't need more than 2 pairs of underwear or a car either. I don't need more than 2500 calories but I like being able to go eat a big juicy $50 steak sometimes. In the US it's actually illegal to go faster than 65 mph (75 in some awesome places) so why should we make cars that go faster than that if you obviously don't need it.

If you don't need the stuff you are currently buying there's nothing stopping you from living in a 4ft high hole in the dirt and eating cereal with water instead of milk and only buying locally produced goods.

Forcing someone else to live up to your definition of necessity is a pretty shitty thing to do though IMO.

Re: On being the right size (1928)

#45
post #33

This is really an argument against socialism as the communists tried to implement it. Where the state nationalizes every industry and all workers become employed by the state which plans everything centrally. Most socialists have moved beyond that model and would instead prefer to see a system of enterprise that uses co-op's instead of privately or publicly owned business. Some industries would probably be nationaliz…

> If the workers decided these things they would never vote to outsource their own jobs This implies they would be making the wrong decisions then, no? There needs to be some mechanism to decide who does what, or otherwise some goods and services will be produced in proportions well exceeding any possible demand. > The main idea is to make the enterprises benefit those who do the actual work and also make them accoun…

The idea is to retain the good qualities of capitalism which is self-optimization and market-based decision making. The bootmaker and the nailmakers would be autonomous agents making decisions in their best interests. The bootmakers can buy nails from whoever they want, but if the market then rejects their boots because of shoddy nails, they will have to adapt.

Also worth pointing out that in a specialized economy, most companies cooperate instead of competing with each other. The bootmakers likely need nails specifically designed for their boots so buying generic ones from China isn't an option. Instead they need to source a local supplier and tell them how the nails for their boots models need to be made. They enter a symbiotic relationship in which both benefit.

Liberals like to see capitalism as a marathon where the runners compete with each other and the best ones win. But the system works more like the cells in a human body. Companies need to specialize and work together to be successful.

Re: On being the right size (1928)

#46

This is really an argument against socialism as the communists tried to implement it. Where the state nationalizes every industry and all workers become employed by the state which plans everything centrally. Most socialists have moved beyond that model and would instead prefer to see a system of enterprise that uses co-op's instead of privately or publicly owned business. Some industries would probably be nationaliz…

If the workers decided these things they would never vote to outsource their own jobs and would rarely choose to pollute their own communities.

In Communist Yugoslavia we had something like that. There were companies that were managed by their employees, each having one vote. A proposal that would obtain a majority of votes would get to be implemented.

But it turned out that people would rather vote to use surpluses to pay everyone bonuses than to invest back in production and modernization. Many companies got themselves outcompeted this way, especially compared to their Western counterparts.

It is not a bad idea, but for that system to work you need workers that:

1) are educated in at least basics of economics and management, 2) are ready to take advice of someone with more expertise than them in these subjects, 3) are well off enough that they can sacrifice immediate additional income to enhance company's prospects for the future and 4) care enough.

Re: On being the right size (1928)

#47
post #43

Earlier quoted context omitted.

Jobs would still move, it's just that an industry in another country owned by someone else would eventually take the business. That is unless the local industry was somehow able to ban foreign competition. The beauty of capitalism is that it roots out inefficiency. If you take a look at history, state controlled enterprises are the most polluting.

You don't have to ban foreign competition, it just has to be an informed choice. Why is company x cheaper, what can we do to emulate them (do we want to?). Although we might have higher costs buying locally what other benefits do we have?

you as a consumer are free to make this decision yourself. This is why "Alaska Grown" farmers are still popular and competitive up here.

Re: On being the right size (1928)

#48

This is really an argument against socialism as the communists tried to implement it. Where the state nationalizes every industry and all workers become employed by the state which plans everything centrally. Most socialists have moved beyond that model and would instead prefer to see a system of enterprise that uses co-op's instead of privately or publicly owned business. Some industries would probably be nationaliz…

"Most socialists have moved beyond that model and would instead prefer to see a system of enterprise that uses co-op's instead of privately or publicly owned business. Some industries would probably be nationalized or socialized..."

One of the earliest (and now largely forgotten) criticisms of Marx came from the American philosopher Benjamin Tucker, who facilely forsaw the rise of the communist implementations as an unavoidable consequence of Marxist socialism. So Tucker might argue that even a socialism as "modern socialists" would inevitably result in the same. Although this argument takes off further along that a partial state socialism, the crux of the idea of state expansionism and its effect on individual rights is salient:

First, then, State Socialism, which may be described as the doctrine that all the affairs of men should be managed by the government, regardless of individual choice. Marx, its founder, concluded that the only way to abolish the class monopolies was to centralize and consolidate all industrial and commercial interests, all productive and distributive agencies, in one vast monopoly in the hands of the State. The government must become banker, manufacturer, farmer, carrier, and merchant, and in these capacities must suffer no competition. Land, tools, and all instruments of production must be wrested from individual hands, and made the property of the collectivity. To the individual can belong only the products to be consumed, not the means of producing them. A man may own his clothes and his food, but not the sewing-machine which makes his shirts or the spade which digs his potatoes. Product and capital are essentially different things; the former belongs to individuals, the latter to society. Society must seize the capital which belongs to it, by the ballot if it can, by revolution if it must. Once in possession of it, it must administer it on the majority principle, though its organ, the State, utilize it in production and distribution, fix all prices by the amount of labor involved, and employ the whole people in its workshops, farms, stores, etc. The nation must be transformed into a vast bureaucracy, and every individual into a State official. Everything must be done on the cost principle, the people having no motive to make a profit out of themselves. Individuals not being allowed to own capital, no one can employ another, or even himself. Every man will be a wage-receiver, and the State the only wage-payer. He who will not work for the State must starve, or, more likely, go to prison. All freedom of trade must disappear. Competition must be utterly wiped out. All industrial and commercial activity must be centered in one vast, enormous, all-inclusive monopoly. The remedy for monopolies is monopoly. Such is the economic programme of State Socialism as adopted from Karl Marx.

He was writing this a full 20 years before the communist states came into existence.

Re: On being the right size (1928)

#49
post #45
post #33

Earlier quoted context omitted.

> If the workers decided these things they would never vote to outsource their own jobs This implies they would be making the wrong decisions then, no? There needs to be some mechanism to decide who does what, or otherwise some goods and services will be produced in proportions well exceeding any possible demand. > The main idea is to make the enterprises benefit those who do the actual work and also make them accoun…

The idea is to retain the good qualities of capitalism which is self-optimization and market-based decision making. The bootmaker and the nailmakers would be autonomous agents making decisions in their best interests. The bootmakers can buy nails from whoever they want, but if the market then rejects their boots because of shoddy nails, they will have to adapt. Also worth pointing out that in a specialized economy, m…

"Liberals like to see capitalism as a marathon where the runners compete with each other and the best ones win. But the system works more like the cells in a human body. Companies need to specialize and work together to be successful."

Be careful of painting with too broad a brush. Different industries operate in vastly different ways to very different outcomes in the long term.

Compare http://en.wikipedia.org/wiki/Natural_monopoly to http://en.wikipedia.org/wiki/Perfect_competition

Re: On being the right size (1928)

#50
post #46

This is really an argument against socialism as the communists tried to implement it. Where the state nationalizes every industry and all workers become employed by the state which plans everything centrally. Most socialists have moved beyond that model and would instead prefer to see a system of enterprise that uses co-op's instead of privately or publicly owned business. Some industries would probably be nationaliz…

If the workers decided these things they would never vote to outsource their own jobs and would rarely choose to pollute their own communities. In Communist Yugoslavia we had something like that. There were companies that were managed by their employees, each having one vote. A proposal that would obtain a majority of votes would get to be implemented. But it turned out that people would rather vote to use surpluses…

That's not very different from having a company with an incompetent board of directors. In fact, it is exactly the same thing except in the Yugoslavia scenario every worker in the company would have a seat at the board. While it is true that some people could screw up their workplace for short term gains, is it more or less likely than an "investor" milking the company for profits and running the business to the ground?
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