Cowpuncher said:
Most postings here lament the existence of large multinational corporations. Having worked for many years for one of the largest, I do not agree that the are the bane of our existence.
Some 25 years ago, the US Government was going to lease tracts in the bering sea. To determine if there was a good possibility of finding hydrocarbons. the government let the industry drill a Continental Offshore Stratigraphic Test well. This well was so costly that the government let the industry drill it on a collective basis with each company putting up money beingh entitled to the geology derived from the well. The well cost $1.4 BILLION and was a total failure. They found that there had been oil there at some time - a couple of million years ago - but that it was long gone.
How do you think any small company or individual could take on a task like that.
How about the aircraft business. EADS, the maker of Airbus aircraft spent some 12 BILLION dollars developing their huge new plane - the Airbus 350, I think. EADS is a joint venture of British, French, German (and maybe more) countries because the cost of developing a new plane is just too darn much for one company or even a European country to handle.
Look at our own aircraft industry where only Boeing remains out of the old Lockheed, McDonnel Douglas, Boeing group. Some businesses are so complex and costly that one misstep will wipe our a medium sized company.
Another example is the pharmaceutical industry. The cost of developing a drug and getting it approved by the FDA is in the billions of dollars. Smaller companies cannot fight our huge government (as well as those foreign governments) in order to get drugs improved.
Just think what would have happened with Merck and their Vioxx problem if they had not been a huge company.
Closer to our business, look what happened to farm equipment manufacturers. Deere, New Holland and Agco are what remains of the dozens of companies that used to be in the business.
I agree that there has been an abuse of corporate power and excessive executive compensation. I don't like it either, but it will right itself or some hungry corporate raider will take them over.
And don't forget those millions of people in the country that have investments in these company through pensions, IRA accounts, 401k accounts, mutual funds and, of course, direct investments. The health of our nation parallels the health of our corporations.
By the way, if you were to read the annual reports and news releases of some of these companies, you would find that they all fund various charities, contribute personnel to United Way Campaigns, etc.
Cowpuncher, I do not think that corporations are the bane of our existence. What I do not like is when they game the system. By gaming the system, I mean that they take opportunities away from others by having government bend the rules for them. This does not happen with every company, but when it does, we need to have a strong enough of a system of government to be able to make the necessary corrections. Enron bought off enough politicians (and accountants) to be able to cause the huge problem that occurred. Not all companies explode like Enron. Some get away with things and continue to exist, doing the same thing over and over again.
We need to have a different view of white collar crime. When it occurs, it needs to be corrected with efficient means. Today it is not. You only hear of a few cases where the "crimes" are so egregious that the whole business model fell apart. When this happens, a lot of "innocent" people get caught up in it just as the pensions of people who were working for Enron and the investors experienced. If they are economic crimes against the market, unless there is a Wall Street expose, there is no correction.
The majority of big business operate in an ethical manner. They still have to compete with those who do not. Unfortunately, the honest competitors are the ones who lose out. The process goes on until the market is controlled by a very few companies who can then maximize their profits without the fear of real competition.
I remember a year or so ago a program that had some top executives who saw this trend and spoke out against it. They saw the damage it is doing to our economy and to the opportunities for people who want to get into the game. My own banker, president of the bank, saw this in his industry, and spoke out against it.
Globalization and the trade agreements that have been made have had this effect. Companies most willing to sell out their labor and cash in on their U.S. sales have moved over seas. What are we left with in our country? A service economy. Unfortunately, with only a service economy, we lose out economically in the long run.
Trade is good but only if there is a trade balance, maybe not every year, but on balance. We don't have anything close to that now. Instead, we have our trade balance being balanced with foreign investments in our national debt. Tell me if that helps us in the long run. Government spending without increases in revenue from the economy can not continually fuel a successful economy. It is an Enron model waiting to crash.
If this were the case, and tax cuts are always beneficial, why don't we just go ahead and cut all taxes and borrow all the funds we need to run the government?
What we are doing is spending more wealth than we create and borrowing the rest to maintain all of the semblences of a successful economy.
It is kind of like a couple who makes a lot of money, gets a lot of cheap credit, and borrows all they can to maintain their standard of living. The total debt incurred doesn't much matter to their standard of living even though they are spending more than they make because they are living off of credit. Unless they continue to increase their earnings, they will start to get behind. They still have a mercedes, a big house, swimming pool, go out to eat all the time, take trips on credit, buy all the big toys etc. Eventually it catches up to them. When their income can no longer keep up with their minimum payments they start to get in trouble. When the interest rates increase, the crash is imminent.
I have seen it too many times. It will catch up with the U.S. one way or another. One of the ways the government can get out of the problem is by printing more money. The problem is that it leads to inflation, which as you say, is the hidden enemy of all investors.
Inflation ends up putting the politician's lack of responsibility on everyone. We all end up paying for it.
Trade deficits can sell out our country quietly, one producer at a time.
Too many people get the benefits of trade mixed up with the damages of trade deficits because they just don't understand what is happening.
Our founding fathers made Congress responsible for trade agreements because they were closer to the people who actually bore the costs of bad trade deals. Congress has largely ceded that power to the executive branch so they are not held accountable by their constituents who pay the cost. It seems more and more, the people really making the money on these trade deals are the ones who control the politicians.
Big companies are not necessarily bad but lumping all companies under that umbrella negates the unpaid costs of those who are cheating our system.
:shock: :lol: :lol: