What most of you forgot is a business’s Reputation, it is not in a business persons interest to mistreat employees or cheat it’s customers if you want to remain in business.Happy employees give much better results than unhappy employees, happy customers remain customers.
There will always be some employers who mistreat employees and cheat customers but they usually won’t stay in business.
The Reputation of a honest business is the best regulator there is and the most important thing to have.
I have run my own business (CNC machine shop) for ten years but I refuse to have employees because of all the regulations we have in California. I make enough to pay the bills and pursue my interests and that’s all I really need.
CNC machines are very much like having employees in the sense that one person can run many of them at the same time.
rmurfster,
Well said. Gov’t preys on peoples fear of being taken advantage of and then regulates as a form of protectionism. Problem is that no one accounts for the cost of that "service". When the service is added to the actual cost of the product I estimate that we increase somewhere around 250%. (that is purely off the cuff. I am going to post some hard facts here soon as regards my own business)
The same thing happens with regard to national security. Look at the freedoms we gave up after 9/11so the gov’t could protect us better with the new "Homeland Security" service. I feel sooooo relieved now that they are there!!!
As you so stated so well : " Use yours to speak out against immoral people who take advantage of others."
There is no substitute for constant vigilance. Where we have failed at that we now have the FED and all the rest of the issues that in hindsight will become "self evident" as to the things we as citizens should not have let happen.
Coop
...The once great and productive middle class has been hollowed out by an ill-considered globalization fad that has made us worse off, not better off.The solution is simple.
Either apply import duties that square up imported goods against the
costs US businesses face for complying with our laws, or begin
dismantling laws.
Globalization is the price we are paying for our consumption-based growth economy. Our economy requires continual growth. This leads to all manner of obnoxious problems, one of which is globalization. Continually growing American consumption requires combinations of debt and available cheap goods. Expensive, well-made products that last a long time do not promote consumption. As regulations required by socially "rising" middle class society increased manufacturing costs, it became necessary to offset those costs. Some of that can be done by preferential tax treatment of businesses or sectors, but not enough. Obviously, many other factors were also involved. However, the net result was that in the name of economic specialization, efficiency and growth, off we go to find the cheapest labor and resource rates we can find. The result was what appeared to be a never-ending line of products, manufactured in China, bought by the US with money lent to us by the Chinese. We, the American consumer, bought into this wholesale. We were able to ignore (and probably encouraged) flat to falling real wages by shopping at Wal*Mart for our constant stream of new toys. When we couldn’t ignore stagnant wages any longer, we leveraged our assets through the roof and kept right on spending. Nirvana? Doesn’t look so great right now.
Regulation isn’t inherently bad. In fact, one can make a strong case that proper regulation is necessary for an advanced society. However, over-regulation and poor regulation are definitely a problem. Still, as pointed out above, there have been plenty of players (businesses, unions, employees, governments, etc.) that have shown that some level of regulation is necessary. Society and markets cannot be left entirely to their own devices.
So, what to do? Well, clearly some regulation could, and should, be reduced or eliminated. But that will not change the basic equation of a consumption driven growth economy. The only way, I think, to correct the problem is to return to a society that actually builds and sells the actual "things" that it needs. That cannot happen within the context of the current form of globalization. Fortunately (although probably painfully) peak oil and general resource depletion are going to render today’s globalization a footnote in history, a sorry experiment that simply greased the skids of our travel along an unsustainable path. The age of the just-in-time supply line of consumer products extending from China to Wal*Mart is coming to an end. High prices, price volatility and the havoc they will wreak on consumer economies will eventually kill the model.
We must move to replace that model with real businesses that build the things people need. Such a new economy will be, by necessity, more local than global in nature. We need to create an economy that is not dependent upon consumption-based growth, an economy that is designed to further the well-being of its participants rather than simply pursue the holy grail of "sustainable growth" of monetary wealth (since this goal is, in the long run, both impossible and destructive).
Brian
TimesAwasting,
I think you have made a good choice !!! My wife and I run our "mom & pop" business. There have been many a night and weekend when we have looked at each other and said "wouldn’t it be nice to go home at 5:00pm and not talk or worry about keeping the business afloat and running smoothly". In your dreams !!!
A while ago my wife came home at about 2:00AM after a long day at the office and was very toasted. Seems she had to get the workers comp audit & paperwork together since they apply a flat rate to your payroll unless you specifically itemize what each person was doing. Turns out she saved a significant amount of money which helped to keep us profitable but as she said "I’m really not interested in doing this except what would our employees do if we closed down". In reality I think that most employees may not choose to stay in a businees either if they had to work the same hours and deal with the policing actions required by the gov’t.
My wife and I are not the highest paid people in our business if you add the total hours spent. That is very often not even on the radar screen of staff nor should it be. Just sometimes adds to the difficulty of keeping your chin up and being willing to enthusiastically pursue that americam dream of exponential expansion!
Coop
Well put, Brian. The problem our society and, for that matter all societies, has with regulations is finding a balance. It seems the pendelum always swings too far in one direction or the other.
In a simpler time, reputation and honor kept things in check minimizing the need for regulations. Once our villages and towns morphed into large cities, we ceased to know our neighbors and unscrupulous people soon realized that they could create shoddy products without fear of consequence. Remember the days of the "snake oil" salesmen? They’re still around only now they are selling tainted milk, lead-filled toys, and cars that don’t work as claimed (I quit buying American made cars years ago because the quality was so bad).
Kinda makes you long for a return to a simpler time, doesn’t it?
Sam…
E,
I’m in absolutely no position to speak for Chris, but i’ll offer up my interpretation of his post there that I think will answer to your concern.
The Free Trade that I think he’s referring to doesn’t mean trade with places like Canada and Australia, IMO. I see it as meaning places like China, Mexico, etc…: countries who are willing to do the work people in America once did, and will do it without all the regulatory employee protection statutes that America holds. I think his argument is something like this:
IF America has laws prohibiting Child Labor, because we find it morally abhorrent,
and IF China allows Child Labor (for whatever reason),
THEN, even in the name of Free Trade, we ought not to trade with them.
I think he’s saying we should just stop outsourcing our "dirty work". Employees in many countries overseas don’t have the same benefits that we’re required to give our employees here. So, Chris says, if they don’t follow/adopt our regulations, we shouldn’t trade with them. And that makes a lot of sense. It’s always going to hurt our workers if we a) impose regulations on their industry that other countries don’t have, and then b) allow, and even encourage, trade with foreign nations producing those very same products without such laws/regulations. This means the domestic product will always be more expensive, and won’t be bought in the home country (much less exported overseas). Free trade is good for America so long as the other country is playing by our rules, too. The way it stands now, Free Trade awards only the biggest multinational corporations - instead of paying a lot more money to value various codes®ulations, to pay employee benefits, these corporations just move to places like China, Mexico, India, etc…, hire the local populace in ways that would never be allowed in America, and then sell those cheaper goods back to us, taking our money and jobs. To me, Chris’s underlying point is that what’s immoral for us to do in America ought not to be encouraged by us Americans overseas. It would be like having a Nation that rids itself of capital punishment, but then exports its criminals to another Nation to impose the death penalty regardless. Clearly it’s just as immoral - just becuase it is a different Nation’s people carrying it out, doesn’t change what’s happening.
Hope this helps clarify things!
-Christopher
Easy…WE DON"T and SHOULDN’T! We were sold the fallacy of the inevitability of globalization and the resulting competition. It is the constant churning and searching of speculative capital which has forced this globally competitive paradigm…IT IS FALSE. We produced this paradigm of global competition by lowering tariffs and allowing large corporate entities to rig the system for their own well-being. Kick out these bums that only line their pockets with the supposed savings from producing overseas. Interesting that the originator of "free marketism" specifically addressed this. Adam Smith’s Wealth of Nations (which has been perverted by neoliberals) suggests only capitalizing on real geographic comparative advantages; poverty, wealth disparities, and the resulting low wage cost does not qualify. Something which is also interesting, Smith advocates for governmental regulation, taxation, and social intervention (welfare services).
Further, most of our "trade" comes through specific corporate networks, not real trade between separate entities/countries. Multi-national corporations need to be reigned in and made to support our economy not destroy it by producing here and paying good wages. Adding value by production 10% of the cost to produce an auto in this country is labor wages. You could double the pay of all workers and only raise the final price by this 10%, BUT there would be a whole hell of a lot of people with much more money to buy these autos and spend in the economy. WAGES drive the real economy. We have let the tail of speculative investment wag this dog for way too long.
Wow…over reaching statement. IF Our Founders knew this and established this, then why were they regulating society from the get go? Did you know that sleeping on one’s stomach is unconstitutional?! Well…it is not specifically addressed in the constitution so it must be.
Part of this misunderstanding may also be people’s view of regulation…many only see the regulation that does not follow their personal ideology of society as problematic and unconstitutional. Many of these pseudo constitutionalist need to stop reenvisioning the intent of the founders and the constitution.
I also find it intereting that we should somehow accept that the price of Freedom is that some "immoral" people will take advantage of others. This is an idiotic concept…and to apply this broadly rediculous statement to all the Founders is even more idiotic. This would mean that we accept a society that allows people to get ahead from immoral and unethical means, becuase in your example, this is not necessarily illegal due to lack of "regulation." So only the crooks who are not afraid to act in immoral and unethical (which is completely subjective) manner will dominate society. How fun.
Well said Oh Captain my Captain!
…Intel, Microsoft, Google, etc… they don’t have to deal with the UAW. I think unions had their purpose and still do to a point. However, their job is to ensure a safe workplace. They now lobby for higher wages (beyond the market rate), health care, and other perks for the workers that really hurts the competitiveness of the auto industry.
I’m playing devils advocate, but take a programmer for MS. They have a certain skill set that takes time to achieve. Now, take an assemply line working doing the same task day in and day out. How long does it take to learn that task and be proficient? I’m going to say not very long. Therefore if the assembly line worker is making $70k a year, and the programmer is making $70k a year there seems to be a major imbalance between the two pay levels if they are to be related to skill level.
Now, the unions are only part of the problem and I’d agree with Chris that our laws, codes, regulations, and taxes are overly complex and very difficult to follow. I’m just trying to deal with personal taxes and it isn’t straightforward. How much time, effort, and expense is wasted due to unnecessary government regulations?
my2cents,
G
And the band marches on…
It’s funny… The Toy Industry Association applauded… they are happy to meet the new standards because it will enable large corporations to legally eliminate the little guys. Personally, I’m a big fan of the unique toys produced by smaller companies. All this will do is continue the homogenization of the world.
Do I blame the those with deep pockets? No, they are doing what is in their best interest. Hey, if I can have laws passed that will help me of course I’m going to try to get them passed. Congratulation for them!!!
However, I do blame the politicians and lawmakers who decided to pass these laws that benefit one group at the expense of another. With every law and regulation there are unintended and unforeseen consequences. Sure there will now be jobs for toy testers, but how many jobs were lost due to this regulation? While the policy makers tout job creation they fail to mention the concurrent job destruction.
-G
Ajparillo, I think that you are misinterpreting what rmurfster has said. He said that regulation by the federal government is unconstitutional, not that the regulations in themselves were bad. And there may be some truth in this. The federal constitution theoretically strictly limits the types of power that the federal government may exercise, and expressly states that the rest is left to the States, where power is much closer to the people. The federal government has largely overstepped the bounds that the constitution originally set for it.
The fact is that when a single federal senator represents millions of people, unless you have lots of money in your pocket you can’t even get an appointment to see them. Your state senator, on the other hand, you can most likely call on the telephone. Large corporations prefer dealing with a strong central government because they are able to effectively direct their lobbying efforts in one place, and more effectively control policy. It is far more difficult for a corporation to attempt to influence policy in 50 separate states. When power is removed to the central government level, it is far more difficult for the people to be involved, and the initiative falls to the corporate interests who are able to send a strong and consistent message at the federal level.
Therefore I think the point rmurfster may have been trying to make (at least the one I would make) is that though regulation is not necessarily bad, it can be when it derives from the wrong places. The federal government does not have the same type of democratic safeguards built into it as do the state governments (i.e., the president is the single person in the federal executive branch who is elected – utterly unheard of at the state level.) and was originally designed to deal only with matters between the states, or affecting more than one state simultaneously.
Therefore while regulation itself may not be bad, the fact that it seems so invincible and unresponsive to the will of the peoplemay have something to do with where it is emanating from: a level of government which was not originally designed to do it, and is as a result now out of control.
cybernytrix wrote: "You cannot take the auto industry as representative.
I don’t know about that. What about those stupid rules (introduced by Reagan?) which allowed SUVs to be taxed at a lower rate than cars if they were built on truck chassis… Wasn’t THAT responsible for the cranking up of the era of the SUV?
Mike
NIcely put jrf. The Feds have overstepped their bounds in large measure and there appears to be no relief in sight.
I don’t think that anyone would disagree that people advocating new regulation or government intervention into the market are well intentioned. I’m sure that most are. But I do believe that the path to hell is paved by good intentions. The fact of the matter is the free market is so awash with laws and regulations and distortions by the government that it is not a free market anymore and it hasn’t been for a long time. It is disheartening to see the vicious cycle of government interference perpetuate itself so overtly and gain speed in the process. I echo the sentiments by a few previous posters that from the looks of many of the comments here that the hill now seems much steeper than I had previously envisaged. For the love of my country and the idea of individual liberty that the US was founded upon, I implore anyone who will listen to look into Austrian economics. Head over to http://fee.org/ or http://mises.org/ to find a priceless mountain of information.
On the specific topic at hand, here is a relevant and eloquently concise article written a few months ago:
http://www.csmonitor.com/2008/1022/p09s01-coop.html
Thanks Chris for an amazing website.
-Tim
I think that Chris is optimistic. In a sustainable society we are not going to be able to even have a thorough set of government rules to say nothing of free trade, because free trade implies the liberal use of energy to exchange physical goods over long distances. Both ideas will become dinosaurs when the sustainable economy becomes an inescapable necessity. It already is a necessity we are just acting as if it were not!
So I suggest that we look again at the Crash Course and hone it for real application.
In 1995 I went to a logger’s OSHA class and gave the instructor, Paul Cyr, the "Death of Common Sense" by Philip Howard and told him that he was the epidemy of the book. He had just fired my crew because it was not safe for me as an employer to have any employees in a marginal but sustainable activity. (I’m sure that there will or should be questions about how logging can be a sustainable activity, but in fact it is one of the most sustainable parts of our society if it is done right, and fortunately in the NE USA we have a lot of latitiude in what is done with and in forests as long as the land remains undeveloped and still have it remain forest that will replace itself.
MA State Building Inspectors have been instructed to sign the inspection certificates for release of amusement rides after looking at the machinery without test equipment for 15 minutes. So it is clear that the regulations which our govt. puts in place have ways of being circumvented. All it takes is funds or connections.
My guidance to those who want to work with me is that there is no requirement for them to work in unsafe conditions. I expect them to understand that when they are uncomfortable with something about their job, they either need to tell me, remove themselves from the situation, or request those who are making them uncomfortable to stop what they are doing. In essence they must use their commonsense or they will not be around me.
I stopped working way back in ~ 1994. I was 42. I owned one of the most successful Photographic Studios in my town, and then moved into an even bigger one with another photographer. Between us, we had the best outfit in a city of ~ 1 million, we could shoot trucks if necessary. Then in 1990, we had a recession. ALL my best clients hit the wall, and closed down, some owing me a lot of money I never recovered.
In the end I was doing three times as much ‘other stuff’ as photography, and making nothing… in fact going broke. None of this was MY doing, it ‘just happened’, just like the current downturn.
The amount of paperwork I had to do, chase debtors, market the business (and I had to do this personally, because in the final analysis the business WAS me, and I had to sell myself) just took all the fun out of being a photographer. It just all became too complicated, too hard. Then of course I read "the Limits to Growth", and that was that, I became a professional greenie…
I had been a photographer for over twenty years.
No way would I recommend anyone start a business. Remember when Chris says in the CC "if you feel as though your life is accelerating out of control, that’s because it is…"?
I finally think I have my life under control. KISS. Keep It Simple Stupid.
All you people chasing money, gold, whatever, have got it all wrong… suckered in by the Matrix. Been there done that.
The best thing that could ever happen is if America didn’t get working again… followed by the rest of the world. Why work for money if you already have everything? Or are we just playing Monopoly and using the Planet as a game board?
Looking forward to 2009…
Mike
A fascinating and interesting input Mike.
Robert Fripp (he of King Crimson) in the 1980s pursued a personal musical journey that he described as a ‘small, independent mobile unit’ (and which produced some very good music!) - surely an apposite paradigm for the moment?
David
I agree. I quit !!!
I’m goint to build my greenhouse now and kick back and enjoy some real work.
Coop
If the average"joe employee" was responsible for making sure their social security tax and FICA and insurance and all that the employer deals with for each emloyee, there would either be a revolt or some would cheat (already do of course) and others just give up and wait for a government handout. I have worked as an employee, a contract worker (I am responsible for those taxes) and a previous business owner. I am considering a self employed business again, but no employees due to the onerous tasks that i either have to farm out and pay more for or spend too much time doing it myself and no time for actual work. Any help I hire will have to be contract workers who will be responsible for much of the tasks at tax time. I personaly have no issue handling some of this myself as a contract worker, but I know many folks its too complicated and are not as disciplined as need to be to accomplish it.
I like tradeing globaly and otherwise. I would like to see us trading with those who hold to similar standards as us, but as long as the "blind majority" of middle class and otherwise want cheap things the lobbying for trade with less than stellar human rights countries/business’ will always be around. I notice a small trend recently but still a minority group looking for long lasting products. Again hard to keep growing and selling new stuff if the old doesn’t wear out. The people in general have grown up and gotten used to having cheap throw away goods and its gonna hurt to have to suck it up delay gratification and sometimes do without, but I think we have to start someday, can only delay it for so long. The people may also have to go back to common sense and realize we cant always regulate to the point of no danger or such. Risk is part of life otherwise wouldn’t even get out of bed.
Unions once were a great idea to control those business owners who were less than scrupulous standards towards their employees. A group effort will accomplish what a indviduals cannot, but nowdays often the individuals is lost within the unions also. I worked for a company that was mostly union and it was almsot a forced joining of the union. The money/dues would be taken out of my check and if I didn’t join the union that money would be then donated by the union to a charity, or join the union. I saw representives vieing for the new hires so they could get money from the unions for signing up new members. I also saw union take due out of paychecks prior to the 90 day probabtion completed and then a newbie get let go during that time and the union did not pay the money back nor represented the person. I see retired members of unions having more voting power than the actual workers. WTF!
The only good changes will occur when society becomes enlightened as whole which is why this site and others are around trying to do just that.