How Do We Run Our Economy?

Sooner or later, both socialism and laissez-faire capitalism self-destruct, and for the same reason—human nature.

Socialism assumes that if we have a system in which everything is regulated for the common good, we all will pitch in and work for the common good. But it doesn’t’ happen. The reason it doesn’t happen, our selfishness, is nothing to write home about, but nevertheless, there it is.

“From each according to his ability; to each according to his need” sounds good, but overlooks a basic fact that anyone on Madison Avenue can tell you about—human needs are infinitely expansible. I need a Porsche Boxter and you need a diamond ring. Okay, so maybe the reason is selfishness again.

But selfishness is also the reason laissez-faire capitalism fails. In unregulated markets and enterprises, fortunes build up at the top, but again, there is no control—self- or otherwise. Each exec wants to make more than his competitors, and apparently, compliant boards of directors grant his wish. After getting so many million a year in income, it’s no longer a matter of money, but prestige. It’s not only the exec himself, but the board, which equates human worth with the amount of income.

The market itself is amoral. It is a mechanism based on perceived supply and demand. The fact that it is only perceived means that a commodity can shoot skyward, or lose all its worth in a matter of days. Mob psychology takes over. Often, common sense goes outs the window, as with the subprime mortgages, which were based on money lent by lenders who should have known better.

Why did they do this? The promise of short-term gain—commissions, etc. The quick buck. And thus they killed the goose that lays the golden eggs. Human nature again.

So what can be done? I dunno, but one model might be public utilities. When an enterprise gets so big and necessary—like water, electricity, and gas—everyone agrees it needs regulation for the common good. That is, the enterprise is still run for private profit, but on lines laid down by the representatives of the people. So price rises must be approved by state boards, etc. .

Would this work in the auto industry, for example? Maybe. There is already some minimal regulation by Congress with regard to fuel-efficiency standards. The argument here is that when an auto company reaches a certain size, it has passed beyond the private, and takes on a public character.

But here’s another thought: most people in this country are either small businesspeople, or employed by them. Consider the difference between carmaking and boatmaking. For many years, carmaking has been dominated by “the big three.” But even though there are fewer boats than cars, there are hundreds of boatmakers, most of them small businesses.

Could we do this with cars? I don’t know, but why not? A medium-sized business employing only a few hundred people could turn out one kind of car. It would need only one assembly line. If there even one-quarter of such carmakers as there are boatmakers, we would get more competition and innovation.

In any case, we might be entering a new phase in our economic history where we will see more of such experimentation.

When we get term limits to every elected office in the nation - many of these things will adjust themselves. Of course, we may never get term limits - we may stay in this muddle for ever.

quote:

Originally posted by OldArmyWOPA:
When we get term limits to every elected office in the nation - many of these things will adjust themselves. Of course, we may never get term limits - we may stay in this muddle for ever.

How would term limits address such issues?

We have had socialism in various things since the turn of the 20th Century.

Gone for good, I hope, are the sweat shops, extensive child labor and the complete exploitation of the worker. This exploitation is coming back though especially in the form of management using illegal workers.

I feel we need a healthy dose of 'socialism' to get this nation back on its feet again.

Tariffs and taxes to protect the price of goods manufactured here for a start. If we can make it here then it should cost just as much to import it as it does to make it here. The government must take steps and lead to rebuild and revitalize our own manufacturing. Everyone cannot grow up, go to college and become a stock broker or other 'service' provider.

UHC. This is a 'got to have' and soon.

I think energy needs to be nationalized. The swings and gouging by international corps is too severe and too blatant.

Transportation needs to be nationalized and run for the good of the nation and the environment. Anyone can look at Europe and industrialized Asia and see the need and benefit of it.

quote:

Originally posted by anoldnotboldrecondo:
We have had socialism in various things since the turn of the 20th Century.

Gone for good, I hope, are the sweat shops, extensive child labor and the complete exploitation of the worker. This exploitation is coming back though especially in the form of management using illegal workers.

I feel we need a healthy dose of 'socialism' to get this nation back on its feet again.

Tariffs and taxes to protect the price of goods manufactured here for a start. If we can make it here then it should cost just as much to import it as it does to make it here. The government must take steps and lead to rebuild and revitalize our own manufacturing. Everyone cannot grow up, go to college and become a stock broker or other 'service' provider.

UHC. This is a 'got to have' and soon.

I think energy needs to be nationalized. The swings and gouging by international corps is too severe and too blatant.

Transportation needs to be nationalized and run for the good of the nation and the environment. Anyone can look at Europe and industrialized Asia and see the need and benefit of it.

I agree that we might need some form of limited socialism. That is, if we can get over the hysteria at the mention of the word.

We don't need "socialism" as an ideology, but as a practical tool for the benefit of the country. Yes, it will mean more regulation of markets, but even most conservatives now admit that some regulation is needed.

And it's been demonstrated that trickle-down economics don't work. TR, a famous Republican, also said they don't.

And the health care in this country is atrocious. Most of its defenders haven't really had to use it much. Or they are ideologues, who believe that the free market is always best.

Our health care system IS good at innovation. That's where we excel. BUT that is more than offset by our lack of an efficient system of health-care delivery. We pay twice as much per capita for health care as do countries like Canada, and get poorer care. People in "socialized" countries outlive us, and their babies do not die at such an alarming rate as ours.

I am a proponent of Universal National Service--two years for everybody after HS. Of course, it will never happen, but Obama has a plan in which if you volunteer for two years of such service (Vista, Peace Corps, etc.) you will have part of your college tuition defrayed. Sounds good to me, particular with the huge debts one must take on to go to college.

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Could we do this with cars? I don’t know, but why not? A medium-sized business employing only a few hundred people could turn out one kind of car. It would need only one assembly line. If there even one-quarter of such carmakers as there are boatmakers, we would get more competition and innovation.

'53 Stude' coupe

There was once many small, independent auto makers such as Studebaker, Hudson, Nash, and Packard. Just to name four. They simply could not compete with the "Big Three" of GM, Ford, and Chrysler. And they wer't even facing imports such as Toyota, VW, or Nissan in any numbers.
The larger companies are more efficient. It costs a small company just as much to run a tv commercial or purchase an ad in the paper as it does a big company. But the big company can spread that cost out over many more cars (sales) resulting in lower costs for the consumer. Same thing with developing a new engine or restyling current models.
Now companies are forced to invest in new technology to improve safety, economy and reduce exhaust emmisions. Ultimatly, I predict only a handful of companies world wide will survive. The smaller will either be bought out, merged into other companies, or fail.

As far as the economy goes, government should not do what the private sector can do. There must be oversights but government operations such as TVA should be privatized.
Reduce the size of government. National security must be a priority but I do not believe that it was necessary to create another burocracy such as Homeland Security. Expand and or overhaul existing organizations such as the FBI and CIA would have been my recomendation.

quote:

Originally posted by s******_mech:

quote:

Could we do this with cars? I don’t know, but why not? A medium-sized business employing only a few hundred people could turn out one kind of car. It would need only one assembly line. If there even one-quarter of such carmakers as there are boatmakers, we would get more competition and innovation.

'53 Stude' coupe

There was once many small, independent auto makers such as Studebaker, Hudson, Nash, and Packard. Just to name four. They simply could not compete with the "Big Three" of GM, Ford, and Chrysler. And they wer't even facing imports such as Toyota, VW, or Nissan in any numbers.
The larger companies are more efficient. It costs a small company just as much to run a tv commercial or purchase an ad in the paper as it does a big company. But the big company can spread that cost out over many more cars (sales) resulting in lower costs for the consumer. Same thing with developing a new engine or restyling current models.
Now companies are forced to invest in new technology to improve safety, economy and reduce exhaust emmisions. Ultimatly, I predict only a handful of companies world wide will survive. The smaller will either be bought out, merged into other companies, or fail.

As far as the economy goes, government should not do what the private sector can do. There must be oversights but government operations such as TVA should be privatized.
Reduce the size of government. National security must be a priority but I do not believe that it was necessary to create another burocracy such as Homeland Security. Expand and or overhaul existing organizations such as the FBI and CIA would have been my recomendation.

I agree with your last point.

You mention of Studebaker is nostalgic for me. At one time, I was the proud owner of 1947 Studebaker Champion. Good car.

I remember the movement to merge Studebaker with Packard. It didn't happen. Hudson (of which I also owned one--another good car) did, I think merge with Nash. Didn't save either.

The efficiencies of scale you mention are certainly true. But I would still like to think there's a place for the small carmaker. How come they can do it with boats?

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Originally posted by Jeannot23: How come they can do it with boats?

When I was about 11 to 12 we would wonder through a fiberglass shop in Flippin, Arkansas on the way back and forth from baseball practice. We would stop, smell the smells, ask what they were making today etc.

The owner, a guy named Forest Woods was willing to make anything you wanted out of fiberglass in those days. Today he is worth millions after the sale of his company, Ranger Boats.

I don't know squat about making boats but I must point out that the power plants are all add on's, as are the trailers that haul them.

That is a big difference from assembling the whole thing piece by piece.

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Originally posted by anoldnotboldrecondo:

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Originally posted by Jeannot23: How come they can do it with boats?

When I was about 11 to 12 we would wonder through a fiberglass shop in Flippin, Arkansas on the way back and forth from baseball practice. We would stop, smell the smells, ask what they were making today etc.

The owner, a guy named Forest Woods was willing to make anything you wanted out of fiberglass in those days. Today he is worth millions after the sale of his company, Ranger Boats.

I don't know squat about making boats but I must point out that the power plants are all add on's, as are the trailers that haul them.

That is a big difference from assembling the whole thing piece by piece.

I'm not sure that would be a problem. All kinds of parts for cars are now outsourced. So a boat company would keep a supply of Mercury or Volvo engines on hand (if they're outboards or I/Os) or Detroit Diesels, Crusader, etc. if they're inboards.

In the case of a car company, they could either design their own engine or buy one from Chevy, etc.

The boat model won't work because of the level of government interference in the market.

Compare the number of regulation on automobiles and those on boats. The less regulated the industry is the more competition there is.

Look at what Tesla has gone through trying to bring their car to market. All the governmental mandated "features" and environmental regulations present a very high barrier to entry.

You cannot just put a body on a rolling chassis with a power train and sell it. You have to spend millions of dollars in testing and certification before you can offer the first one for sale.

That means you need millions of dollars up front and then have to make and sell enough to repay the investors before you can even hope to be a profitable company.

No way someone could sell less than 1000 cars a year and survive. You'd never get the capital needed to start.

Meanwhile, one could easily have a small, 100 boats a year, type of operation and make money.

quote:

Originally posted by STDog:
The boat model won't work because of the level of government interference in the market.

Compare the number of regulation on automobiles and those on boats. The less regulated the industry is the more competition there is.

Look at what Tesla has gone through trying to bring their car to market. All the governmental mandated "features" and environmental regulations present a very high barrier to entry.

You cannot just put a body on a rolling chassis with a power train and sell it. You have to spend millions of dollars in testing and certification before you can offer the first one for sale.

That means you need millions of dollars up front and then have to make and sell enough to repay the investors before you can even hope to be a profitable company.

No way someone could sell less than 1000 cars a year and survive. You'd never get the capital needed to start.

Meanwhile, one could easily have a small, 100 boats a year, type of operation and make money.

Largely true. But boat engines also have to meet emission requirements.

And a car company would buy engines with emissions requirements in place. So I don't see those huge startup costs.

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Originally posted by Jeannot23:

Largely true. But boat engines also have to meet emission requirements.

No they don't. At least not in any of the states I've ever lived in.

I had a 30' cabin cruiser with a 350 Mercruiser (just a Chevy 350). It didn't have to meet any emissions requirements. Neither does my motorcycle. There aren't enough personal watercraft in the water or bikes on the road for the government to get involved in regulating them for emissions.

HI GUYS!!

I built boats for sixteen years, and it is relatively easy to get into the business. The problem is STAYING in the business!!

Some one said or mentioned add ons and was right.

We built hulls and bought hulls built elsewhere and sub contracted our own designs as well to a place here on the Cape,( Cape Cod )

All of the other components are purchased from various marine suppliers, of which there are many, and this is mostly chosen to meet the degree of fit and finish the prospective owner wants.

For spec. boats we used to go for a middle of the road level of finish. Durable, reliable, but not having all the bells and whistles or extra plating etc. .etc.

ALL of our hulls were of the very highest quality and were designed for seakeeping ability not necessarily beauty. Performance (speed) sometimes was a consideration but actually very seldom.

The Name of the Company is Crosby yacht Building and Storage Co. In Osterville Ma.

I was service Manager there for six years, before going into business for myself. I sold out in 89 because the damned 10% luxury tax virtually wiped out the small builders, and I wanted to go to Maine!! The light aircraft industry also got nearly killed this way!!

I still dream up sailing hulls and carve them out, ( models ) but have not built anything in the last seven years...but I'm still dreaming!! It never leaves your blood I guess.

T

quote:

Originally posted by The_Bonesaw:

quote:

Originally posted by Jeannot23:

Largely true. But boat engines also have to meet emission requirements.

No they don't. At least not in any of the states I've ever lived in.

I had a 30' cabin cruiser with a 350 Mercruiser (just a Chevy 350). It didn't have to meet any emissions requirements. Neither does my motorcycle. There aren't enough personal watercraft in the water or bikes on the road for the government to get involved in regulating them for emissions.

This is from Volvo-Penta literature:

"Meets existing and future emission requirements
Increasingly stringent emission requirements constitute a major challenge for engine designers. With the TAMD 165, Volvo Penta’s engineers have produced a marine diesel with a traditional mechanical regulator that meets all current emission requirements. The engine for displacement craft, the TAMD 165 A, also meets IMO requirements and the tougher local regulations established for cargo traffic on the Rhine in Europe, as well as the upcoming and highly extensive requirements of the EPA in the United States."

Outboards are trending from 2-cycle to 4-cycle because of lower emissions.

quote:

Originally posted by Jeannot23:

I remember the movement to merge Studebaker with Packard. It didn't happen. Hudson (of which I also owned one--another good car) did, I think merge with Nash. Didn't save either.

Studebaker/ Packard merged in 1956, produced the Packard Hawk, a spin-off of the Studebaker Hawk. It was met with apathy by the consumers. S/P disappeared soon thereafter.

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Originally posted by NM11AZ:

quote:

Originally posted by Jeannot23:

I remember the movement to merge Studebaker with Packard. It didn't happen. Hudson (of which I also owned one--another good car) did, I think merge with Nash. Didn't save either.

Studebaker/ Packard merged in 1956, produced the Packard Hawk, a spin-off of the Studebaker Hawk. It was met with apathy by the consumers. S/P disappeared soon thereafter.

I stand corrected. Credit it to early Alzheimers (of course, I'm 80).

I was in South Bend in 1952 and briefly covered the local opinion of the merger for a small local paper. (SB was the home of Studebaker). I then left SB, and I guess lost touch with the merger question.

Let me repeat: Is there any reason a medium-sized business of a few hundred employees cannot make a car that people would buy?

The big 3 don't seem to be doing that well.

quote:

Originally posted by Jeannot23:
Let me repeat: Is there any reason a medium-sized business of a few hundred employees cannot make a car that people would buy?

The big 3 don't seem to be doing that well.

Off the top ... would you like to buy a car made in AL that you couldn't get "factory serviced" in CA? or MI? or NY? Part of that corporate overhead is a service and warranty network ... not to mention the dealerships. You also, of course, have an issue with repair parts ... and the economies that accrue by being able to use some/many parts across a range of models.

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Originally posted by I_M_Qwerty:

quote:

Originally posted by Jeannot23:
Let me repeat: Is there any reason a medium-sized business of a few hundred employees cannot make a car that people would buy?

The big 3 don't seem to be doing that well.

Off the top ... would you like to buy a car made in AL that you couldn't get "factory serviced" in CA? or MI? or NY? Part of that corporate overhead is a service and warranty network ... not to mention the dealerships. You also, of course, have an issue with repair parts ... and the economies that accrue by being able to use some/many parts across a range of models.

Granted. But the cars I envision would be able to be repaired in any garage, and as many parts as possible would be interchageable.

We don't go to the dealer to have our car serviced.

ALL
I captured the Stude pic. Used to have a 1950 Convertible. Best car I ever owned.
My Opine Re how we should govern and run a USA economy.
1. Maintain the Safety and Security regs that govern our ports, highways and transportation systems.
2. Maintain and provide USDA and OSHA inspections far more broadly than now. Safety in the food industry and safety in the work place should be a Government function.
3. Allow Small Business entreprenuers more Freedom of Creativity, Fiscal access, Less Restrictive regs and more access to University knowledge. Basically, let the risk takers do thier thing.
I adhere to Freedom of expression, Freedom of Risk taking and Freedom to succeed or fail. None of these should have on iota of Government regulation.
Specfics to be sure are required at all levels. But no heavy hand of Government is needed.
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