Why would companies like Wal-Mart build an entire business around despoiling American companies and shipping billions of dollars to America's only serious economic and military threat?
Capitalism is the theory that the worst people, acting from their worst motives, will somehow produce the most good. --Blum
You seem to be operating under the mistaken belief that in an economic exchange, one party is a winner, while the other is a loser.
Nothing could be further from the truth. In any voluntary transaction, both parties will improve their situation -- else they would not have entered into the transaction voluntarily.
Aggregate that from the micro scale to whole nations, and you'll see that it's perfectly possible -- in fact, if the market is free, a certainty -- that both nations will be better off. It's not a zero-sum game.
And if you're worried about the military, consider the words of Frederic Bastiat, who said, "When goods don't cross borders, soldiers will."
"In any voluntary transaction, both parties will improve their situation -- else they would not have entered into the transaction voluntarily."
Ah, the idealist argument. "Fred is doing it, so it must be good for Fred." I proses that instead: In any voluntary transaction, both parties BELIEVE they will improve their situation -- else they would not have entered into the transaction voluntarily.
In the case where the parties to a transaction are organizations of individuals, the circumstances are murkier still: In any voluntary transaction conducted by individuals on behalf of a group, both individuals believe they will improve their personal situation -- else they would not have entered their group into the transaction voluntarily.
This is why you have HP's CEO voluntarily defrauding HP. I doubt you'd argue that HP entered into a transaction with his mistress because both HP and the mistress improved their situation?
This is why you have HP's CEO voluntarily defrauding HP.
Your example is fatally flawed. The transactions I assume you're referring to -- the misrepresented dining expenses -- are transactions between HP and the restaurant, with Hurd acting as HP's agent. Since Hurd acted fraudulently, it was -- by definition -- not a voluntary transaction. Fraud is the commission of force, and thus cannot be voluntary.
both parties BELIEVE they will improve their situation
Of course. And that's the best that we can do. I'd urge you to read Human Action, by Mises, where this problem is addressed quite completely.
The thing is, only the participants themselves can truly know what their goals are, so there is no one in a position to gainsay. Indeed, sometimes the real motivation isn't even known to the individual himself. The best that we can do is to assume that each person is acting in his own self interest.
The only alternative is to have some sort of Big Brother vetting every transaction, but there's no reason to believe that BB would do any better, and there's every reason to believe that it would be far worse.
The thing is, only the participants themselves can truly know what their goals are, so there is no one in a position to gainsay
In that case, your entire argument is tautological. Two parties entering into a transaction both benefit. How do we know? Because they entered into it, so it must be good for them. How do we test this supposition? We can't, because there is no way to accumulate a list of voluntary transactions and see whether the parties benefitted or not.
By the same token, we can argue that anyone taking a decision benefits. How do we know? because they took a decision. Junkies benefit from heroin. Consumers benefit from sub-prime debt. Lending institutions benefitted from investing in junk bonds. I benefit from spending time at work arguing this point with you.
I am going to go my way and leave you to go yours. If you believe that anything two nations do voluntarily is automatically good for both of them, who am I to undermine your faith?
To answer the question, while most nations are better off, and yes, trade is a positive sum, the geopolitical fact that China is a competitor with the US makes them an 'economic threat'. Rather, they're a political threat, and can wield any of the many tools a nation has to interact with one another, from military might, economic might, political influence, etc.
That said, both nations are still better off working together.
You say that as if Wal-Mart foisted this upon an unsuspecting and unconsenting American public. This cannot be further from the truth.
Wal-Mart shipped billions to America's greatest economic and military threat because - drumroll - people demanded it! The Wal-Mart-ification of America can squarely be blamed on Americans. Wal-Mart is giving the general public what it wants, and the general public wants more cheap crap made in other countries.
Except that they were still buying from China then. Even some of their "made in America" products were mostly made in China. They got busted for this and that's why they stopped, not because people didn't like the idea [1].
[1] Though to be fair, people not only wouldn't like but wouldn't accept paying what it would cost to make the goods in america.
1) Wal-Mart offers huge benefits to consumers, who can make ends meet (or work less hours) because of the substantial savings. Wal Mart employees are among the happiest and most satisfied in their economic stratum.
2) How is a trading partner an economic threat? China represents billions of consumers to buy American products and services.
3) If you think China is a military threat, you are paying too much attention to GOP propaganda. China's biggest problem is modernizing China without causing revolution. China has been a loyal and valuable trading partner for the US for decades, and the typical Chinese or American person has no desire for war whatsoever.
4) Capitalism is the accidental synchronization of peoples' needs and wants in a way that results in the most overall freedom and the most overall prosperity (of any system yet discovered by mankind). Are you seriously under the impression that "worst motives" don't exist in other economic systems? Sorry but I don't look at a postal or DMV clerk and admire their lofty motives.
Your response appears to make an assumption I do not hold as true, namely that conditions we observe are a steady economic state. In other words, if we observe people shopping at Wal-Mart and they appear to be healthier and happier today, that this has always been the case and will always be the case.
I believe instead that many economic phenomena offer temporary advantages at the expense of far greater long-term disadvantages. A trivial example would be the recent housing bubble. We had a certain credit environment which led to people buying a lot of homes, which appeared to lead to great prosperity, and all was well until the bubble burst.
In the case of Wal-Mart, my personal and unfounded opinion is that it is a symptom of American (and by this I include Canada) economic decline. It's all very nice now, but as the factories close and the jobs dry up, they are not being replaced. China's billions of consumers might buy iPhones. Maybe. But if they do, how many software designers are needed in California?
That being said, I am not agitating for a change from Capitalism or that we close Wal-Mart. I was responding to a comment asking why Google might do something to disadvantage America. My point was that corporations do things to disadvantage nations all the time. Does this mean we should get rid of Capitalism? I'm not saying that. Does this mean that Capitalism overall is harmful? I'm not saying that either. I think Wal-Mart is an example of something harmful that corporations do, that's all.
I agree that the housing/credit bubble is not an example of capitalism... rather, it's the result of central planning that is heavily influenced by the building trade, realtors, various social planners, etc.
The planners did not anticipate the self-reenforcing nature of the small price increases their machinations were causing, and before long boom, it burst and prices went down a lot.
Surely bubbles existed before central banking and affordable housing policies, but bad planning appears to make them bigger/worse than would otherwise be possible. It may also lead to greater average stability, who knows.
I think it's an interesting thought experiment to consider what would be a capitalist utopia. Literature is full of socialist style utopias, but it's harder to imagine one under capitalism.
If WalMart moves us further from such a utopia, what does the utopia look like? Is it mom 'n pop shops everywhere and extremely expensive search costs and high markup?
I find myself thinking that a capitalist utopia would have a high percentage of workers as freelancers and there would be lots of ongoing learning, and one might decide to change careers far later in life, etc.
To me Wal-Mart helps to usher in that era by freeing up lots of capital that was previously not all that productive (with a lot of fat added to the supply chain) which can now be used for other, higher, more utopian purposes.
>Is it mom 'n pop shops everywhere and extremely expensive search costs and high markup?
You're assuming that having lots of little stores as opposed to one big chain means high markup. It doesn't have to. Walmart has extremely high markup in certain areas.
Personally I think a capitalist "utopia" would indeed consist of countless small companies all competing on equal footing with each other. The enabling factor would be instant communications and robotic production to keep costs down. Big companies damage the market because they move closer to monopolies. Imagine trying to get into the general retail space today!
Toys can be up to 60% for example (probably average 35% to 40%). I think there are examples that go higher than that but toys is the only one I'm certain of.
China would be far more more of a threat if we weren't cheerfully trading with them
It's not just 'shipping billions of dollars'. It's getting tangible things in return. In fact, we're hardly 'shipping' them anything. We mail them slips of paper -- or even more commonly and abstractly, we move some symbols around in a ledger -- and then they're really shipping us real stuff. Who's winning that trade?
Hey, China, we just debased our currency after jump starting your market-based economy, training your next generation of businesspeople and engineers, and taking some of your plastic and lead paint. Have fun with your 2 billion person market, suckers.
Which is why you need government regulations: it would be about time people wake up from their faith for the free market. Even Adam Smith talked of regulation in his work!
Long-term best interest and short-term best interest aren't always the same. If they go back on "don't be evil" they're going to lose a lot of the good will they've built up and that will hurt them a lot in the long term.
Rather, they are obligated to maximise their shareholder's funds, which says nothing about any externality to that market...like, for example, whether producing open software will make their shareholders (and others) more wealthy.
The only obligation a corporation has to its shareholders is to maximize the funds it is given.
Yes, but what about when the shareholders are also mostly Americans? Big corporations tend to operate in their stock's best interest, and this can still cause serious problems for their shareholders.
> Big corporations tend to operate in their stock's best interest, and this can still cause serious problems for their shareholders.
Erm, what? This seems contradictory on its face. The shareholder's only interest in a company is its stock performance, be it stock price or dividend payments. What sort of tendencies are you thinking of, here?
> The shareholder's only interest in a company is its stock performance,
I think this is where you and he differ.
For instance, I'm a Microsoft shareholder. (2 shares, but still...) Many Microsoft decisions since the mid-90s (when I first started holding MSFT) have made life overall worse for me, even if they may have increased the value of the stock I held.
What I meant by my initial comment is in no way contradictory on its face, nor contradicted by any amount of real world data. Allow me to clarify with a simple example:
Consider the case of a shareholder invested in a company behaving in anti-competitive behavior that negatively effects the market as a whole. Now suppose the same shareholder owns many stocks across the market. This is clearly a loss for the shareholder, and a win for the company only. That's what I was trying to express.
Not in a way Wall Street would recognize. China is following the Japanese development model - firm state control of key firms and financing, with protectionist regulation and capital controls to ensure that foreign companies have little access to the domestic market and are unable to pull out what investments they're allowed to make.
Yes, however, sometimes a corporations best interest is to co-operate. This is a classic application of the Nash Equilibrium.
If Google refuses to compromise or negotiate, and acts against the telcos, they are in effect acting against their own interest. If they co-operate with the telcos, everyone wins.
My interpretation of the "deal" with Verizon, is that Verizon can't discriminate against one companies traffic over another, of a similar type.
