by | BLOG, BUSINESS, ECONOMY, POLITICS
Stakeholder capitalism is all the rage these days, with Elizabeth Warren and Bernie Sanders at the forefront of the movement. Their participation is just another example of their economic ignorance.
The concept of stakeholder capitalism is itself a contradiction in terms; it would be more correct to call it “stakeholderism.” Just like crony capitalism (it is really just “cronyism”) isn’t real, as the terms are opposites of one another, the same with stakeholder capitalism. You cannot have both. It’s like saying libertarian statists. You can put the words together but they lose their meaning.
Stakeholder capitalism is a concept that suggests corporations should balance the needs of all the “stakeholders” who comprise the business, from shareholders to executives to employees to customers to suppliers and even to more nebulous stakeholders such as the environment or community. This is in contrast to traditional capitalism, which earns profit for the company owners and investors, the ones who put forth the risk capital to get and keep the company going. It earns this profit by providing products and/or services that their customers voluntarily pay for.
Stakeholder capitalism sounds good and looks altruistic but in fact are composed of different competing interests and goals. These various factors ultimately take away from the most singular purpose of a business: create a product or service for which another person or company sees value in that product or service and exchanges money (or goods or services) for it. If the finished product is good and has value, it will be consumed by another person or business for amounts in excess of the cost of resources to create the goods (profit). If the finished product is not good, then the cost of resources exceeds the perceived value and there will be a loss. It is only by focusing on this single-minded purpose that one can tell if the product/service has merit and should be continued. A company must be able to return a profit to its investors to induce them to invest more money for the company to increase its production of other valuable products and services.
Stakeholder capitalism seeks to undermine the traditional measure of profit and loss by insisting that various interests all mutually derive benefit. But this is not why a company exists nor should it. It misallocates resources and value and creates competing outside interests (that will not agree on how important each one is), all in the name of being socially beneficial. No company can sustain itself with that end result in mind, which ultimately hurts the very society stakeholder that capitalism would otherwise help.
by | BLOG, ECONOMY, FREEDOM, GOVERNMENT, TAXES
The question of additional taxes on the wealthy is really a liberty and equity issue, impinging on the very entrepreneurial environment that made our country great. At the heart of any monetary decisions should be free will, not a free lunch.
Stop and think about it for a minute. In my adult life, in a free country such as ours, it is entirely my judgment as to whether or not I want to work hard and try to earn a lot of money, and/or risk my money via investments. Such choices are made only after careful deliberation. And one of the factors going into that decision is how much tax I will pay on my winnings, my successes. That is why it is unequivocally immoral that our government – or any government – should feel it has the place and authority to come along after I earned my success and basically declare that because I have done well for myself, I should have to pay more to that government. This is legal plunder.
I have right and the liberty to factor into my decision making process what the government states I must owe under law, and decide whether that amount and calculation would be amenable to my overall situation and goals. The government has no right to retroactively come along and declare that I must detract from my commitment to invest in my self, my education, my career, or anything else because it needs a greater revenue stream. Why should I, who have proven myself to be successful (according to the government) have to give my success over to people who have proven to grossly mismanage our country’s finances?
When people say things such as Exxon makes X so many billions of dollars a year and therefore they can afford to pay more, such a statement only reflects the gross naivete and ignorance of basic financial rules. Without a frame of reference, unless that number is coupled with how much money was invested or needed to be invested in order to earn that earnings figure, such a statement is worthless rhetoric. If a company makes $10 billion, but has $100 billion invested in the company (which is quite typical for major corporations), that would be a 10% return.
When put into that perspective of how much was invested to get that ROI, 10% isn’t quite so much. Would you invest millions or billions for the risk of a 10% return or the risk of losing it all? Most would not. If you have money invested in something like a bank that is a very safe investment, but you also get a pretty low return. If you are investing in something in which you have the chance of losing, you risk everything hoping to get that 10, 15, 20% return. With any investment, be it oil or a bowling alley business, you would not have access to that kind of risk capital unless it was strongly anticipated to get that larger-than-safe-return: you risk losing it all. And yet, many companies and individuals still make the investment. Good for them.
So then with those who were able to make a decent return on investment, Obama’s tax policies are simply a death wish for our country. If we go out in the free market looking at companies and individuals investing millions and billions a year, and the government leaves alone the ones who do poorly on their investments but leeches onto the winners, the successful ones, this is what it essentially tells them: you were so successful, we want and deserve a piece of your success. We are happy, though, to allow you to lose your money alone.
Doesn’t everyone see the lunacy and disingenuousness of going after the oil companies when oil is $100 a barrel but ignoring them when oil is $20 a barrel? Or screaming about their 4% profits yet say nothing about the government’s gas tax of about 18 cents per gallon? This type of targeted hypocrisy only supplies us with 1) more political posturing and talking points and 2) attempts at additional revenue streams.
Having a policy to target the winners with an additional tax after they become winners will eventually destroy those winners because no one will want to invest or earn over a certain threshold. This will stymie and financially ruin our country, founded upon the backs of small businesses, hard work, entrepreneurship, free minds, free society, and free economy.
Those who are prosperous should be given the same liberty to manage their success as any other citizen, not additional tax penalties. How can we honestly and morally take extra money from those taxpayers who have been able to create wealth and employment successfully and give it to the government and politicians who manage to continuously and egregiously squander income?
by | ECONOMY, TAXES
The most irksome thing about the Occupy Wall Street (OWS) movement is the phony crony capitalist fever going on. The truth of the matter is that, if OWS individuals were honestly seeking to engage and change, and really understood how capitalism works, they’d be for capitalism and against Obama.
The very act of bailouts is anti-free market. It is the opposite of capitalism.
Those companies who received bailouts abused their free market capitalist competitors by cozying up to the government and getting politically motivated handouts. These bailouts were substantially shared by the very unions that were substantially responsible for the companies going bankrupt in the first place. The only thing to enable the cronyism was Obama, who decided to not allow capitalism to work by letting the losers lose — which would have been more beneficial for everyone, except those cronyists.
Those Occupiers who are against capitalism and the bailouts simultaneously clearly don’t understand the difference; it shows naivete on the part of the OWS movement. Their fiscal ignorance undermines their cause and promote a crony socialist agenda.
