[DaveO]

Re: What's the alternative to capitalism? : Fri Jan 10, 2014 1:11 pm  

Mintball wrote: I'm not personally familiar with Richer Sounds..... Oh I think you will like Julian Richer.... "It was no surprise to hear Richer, 54, who still holds 100 per cent of the company he started 35 years ago, explain this week how he has formed a trust for when he dies so that the business becomes a mutual, similar to John Lewis, under which every staff member receives an equal share, with the IT director, Julie Abraham, stepping up to managing director." From here. The fortunes of M&S, on the other hand, are declining. Quite and they treat their staff pretty poorly these days. I have a relative and a neighbour who work for them who can vouch for how things have declined over the years. Do they go the extra mile for their employer these days where they once would? Nope. They do their hours and that is it. I myself have often put in stupid hours and worked weekends when on-site to get IT systems installed but I didn't do it because I was compelled to or out of fear for my job. It was done because I knew my services were valued and not just monetarily e.g. allowing flexibility to deal with child care issues. Why some people and business leaders can't grasp if you treat people right they will be loyal to your company and work hard so your company benefits is beyond me.

Mintball wrote: I'm not personally familiar with Richer Sounds..... Oh I think you will like Julian Richer.... "It was no surprise to hear Richer, 54, who still holds 100 per cent of the company he started 35 years ago, explain this week how he has formed a trust for when he dies so that the business becomes a mutual, similar to John Lewis, under which every staff member receives an equal share, with the IT director, Julie Abraham, stepping up to managing director." From here. The fortunes of M&S, on the other hand, are declining. Quite and they treat their staff pretty poorly these days. I have a relative and a neighbour who work for them who can vouch for how things have declined over the years. Do they go the extra mile for their employer these days where they once would? Nope. They do their hours and that is it. I myself have often put in stupid hours and worked weekends when on-site to get IT systems installed but I didn't do it because I was compelled to or out of fear for my job. It was done because I knew my services were valued and not just monetarily e.g. allowing flexibility to deal with child care issues. Why some people and business leaders can't grasp if you treat people right they will be loyal to your company and work hard so your company benefits is beyond me.

Re: What's the alternative to capitalism? : Fri Jan 10, 2014 1:18 pm  

Richie wrote:

No you haven't

Yes i have.

Why is it wrong?

i explained that to you in the paragraph that said the premise was wrong.

Is our road network, traffic police, not provided by the state then? I guess we should shift food distribution from the likes of Asda and Tesco to the state too.

That doesn’t have anything to do with what I said.

Just take out the "hard working" then

Yeah, because it is irrelevant that they are hard working, just like it was irrelevant that small businesses also exist when we were talking about big business.

Why not? Remember, it's freer market, not free market in your measurements.

Because it doesnt work.

Interesting.....so how do you think the media market exists to make you serve it, and how should it change to serve you instead?
I should read all the books about North Korea? BRB in a mo then.

[/quote]i think the barriers to entry need to be looked at in the media market. I also think that the state interference in terms of our regulation in some ways makes it work better, and I certainly think the BBC (who are a competing comany of ours) makes it work better precisely because its over-riding aim isnt to make profits. I am confident without the BBC's disruptive position within the market we would be far worse served in this country. (i appreciate 'media' is a lot wider than this but i am only commentating on what I am involved in)

Re: What's the alternative to capitalism? : Fri Jan 10, 2014 1:33 pm  

Richie wrote:

The likes of JLP certainly have their place. Whilst they might be the preferred retailer for the likes of you (and we got most of our furniture there) there is also a place in the world for "no-frills low cost" retailer who doesn't give good service but is cheap. Some of those will be succesful, and some won't, just like those at the premium end of the market.

Now I may be misreading this and, if so, I apologise in advance ... but you're suggesting (given the context of the discussion) that there "is a place" for staff to be treated as poorly as possible?

Re: What's the alternative to capitalism? : Fri Jan 10, 2014 3:00 pm  

DaveO wrote:

It's a defined term in economics. Normal profit is when enough profit is made to pay the workers and managers a reasonable wage and for the company to remain in the market. Average Revenue = Average Total Cost.

super-normal profit is when Average Revenue > Average Total Cost and economic theory says this should only ever occur temporarily as it means there will be incentive for others to enter this market as it is clearly very profitable.

It is therefore very easy to tell which and how many businesses are making super-normal profits.

The interesting question is how they are doing this.

That is because Economic theory also assumes the super-normal profit is being made while still paying the workers and managers a reasonable wage.

So if we end up with firms making super-normal profits while not paying the workers and managers a reasonable wage i.e. ending up with Average Revenue > Average Total Cost by exploiting the workforce or relying on in work benefits as a subsidy, then any such firm is making super-normal profits is not doing so because they have cornered the market but are doing so at their workers and the taxpayers expense.

The fact John Lewis and Richer Sounds are more successful than many of of their competitors gives lie to what you say above. They value their staff and for example John Lewis are for more successful than M&S who under successive chairmen have abandoned treating their staff as they once did (in a similar way to John Lewis).

I have no idea what the implications of that would be and neither I suspect do you. Nor do I understand why you mentioned it.

How do you determine what is average - it is impossible each companies sales/cost circumstances are different how do you compare Lloyds to HSBC? So give us an example of firm you believe are making super normal profits and explain how you think they are doing it.

The point about the 14% is simple - you want lower paid workers to have increased incomes. I am merely pointing out that companies do pay well above the minimum wage unfortunately the employee loses out to the tune of 14% which goes directly to the government. Perhaps diverting the monies from the government to worker would be a solution to the issue of low pay. It would also removed the need for the inefficient administration of redistributing the funds via income support.

Re: What's the alternative to capitalism? : Fri Jan 10, 2014 3:10 pm  

Richie wrote:

The likes of JLP certainly have their place. Whilst they might be the preferred retailer for the likes of you (and we got most of our furniture there) there is also a place in the world for "no-frills low cost" retailer who doesn't give good service but is cheap. Some of those will be succesful, and some won't, just like those at the premium end of the market.

You can still give good service and be cheap.

Re: What's the alternative to capitalism? : Fri Jan 10, 2014 4:23 pm  

Mintball wrote:

Now I may be misreading this and, if so, I apologise in advance ... but you're suggesting (given the context of the discussion) that there "is a place" for staff to be treated as poorly as possible?

I am not aware of any business that treats it's staff "as poorly as possible"
Some businesses treat their staff well, and some not so well. Some invest in training and expertese, some don't want that cost. None that I'm aware of treat their staff as poorly as possible.

Re: What's the alternative to capitalism? : Fri Jan 10, 2014 4:27 pm  

SmokeyTA wrote:

Yes i have.

i explained that to you in the paragraph that said the premise was wrong.

That doesn’t have anything to do with what I said.

Yeah, because it is irrelevant that they are hard working, just like it was irrelevant that small businesses also exist when we were talking about big business.

Because it doesnt work.

You've just descended into an "oh no it isn't" panto show now. Do you think this brings me or anyone around to your POV? I don't see any point continuing.

SmokeyTA wrote:

i think the barriers to entry need to be looked at in the media market. I also think that the state interference in terms of our regulation in some ways makes it work better, and I certainly think the BBC (who are a competing comany of ours) makes it work better precisely because its over-riding aim isnt to make profits. I am confident without the BBC's disruptive position within the market we would be far worse served in this country. (i appreciate 'media' is a lot wider than this but i am only commentating on what I am involved in)

I asked what makes you feel you are being forced to serve this market rather than it serve you. We're clearly disconnected, because that isn't what you answered at all.

Re: What's the alternative to capitalism? : Fri Jan 10, 2014 4:29 pm  

Big Graeme wrote:

You can still give good service and be cheap.

Yep, but there are levels of both service and cheap. There is space and a role for Ryanair and BA first class and other inbetween.

[DaveO]

Re: What's the alternative to capitalism? : Fri Jan 10, 2014 4:38 pm  

Sal Paradise wrote:

How do you determine what is average - it is impossible each companies sales/cost circumstances are different how do you compare Lloyds to HSBC? So give us an example of firm you believe are making super normal profits and explain how you think they are doing it.

It doesn't mean average across all companies! It's the average cost etc that a company itself incurs over time. It is not a comparison measure that says you can compare companies against each other, just a statistic that tells you if a company is making a super-normal profit or not.

It is a well understood economic statistic and certainly isn't as useless as you want to imply given its used by economists and accountants all over the world. Google super-normal profit and you will see for yourself.

Which companies are making super-normal profits? I have no idea given I don't have access to the data but I am sure we can make an educated guess that companies such as Apple, Google and Amazon fall into this category.

How are they able to do this? Well in Apple's case no doubt it is their marketing nous that gets people buying iPhone's that has a lot to do with it and there is nothing wring with that. What is wrong is when such companies add to their profit by exploitation such as Apple employing sweat shop labour to assemble the things.

The point about the 14% is simple - you want lower paid workers to have increased incomes. I am merely pointing out that companies do pay well above the minimum wage unfortunately the employee loses out to the tune of 14% which goes directly to the government. Perhaps diverting the monies from the government to worker would be a solution to the issue of low pay. It would also removed the need for the inefficient administration of redistributing the funds via income support.

That wouldn't even bring a low paid worker on £12K up to the level of the living wage, you know the figure based on the Minimum Income Standard.

A person earning £12K takes home (after tax and Ni) £11,114.72. £213 a week. Add 14% to that and we end up with £13680.

On that salary they would take home a net wage of £12,257.12. £235 a week.

If we assume they earn the minimum wage to get their £12K which is £6.31 an hour then they will have worked a 36.5 hour week to earn it.

The living wage is £7.65 so were they paid that then they would be on £14450.30, take home £12790.82 or £246 a week for the same number of hours.

Given £246 a week is the recognised figure as a living wage you r idea doesn't reach it and at the same time denies the tax man revenue.

Depending on circumstance social security payments will still be required whether you are on £12K, £13680 or £14450.

So no, I would not say your idea is a solution to low pay.

Re: What's the alternative to capitalism? : Fri Jan 10, 2014 5:31 pm  

Richie wrote:

You've just descended into an "oh no it isn't" panto show now. Do you think this brings me or anyone around to your POV? I don't see any point continuing.

I answered your question and I explained why. I don’t know what else you would want me to do other than point out this is the case.

I asked what makes you feel you are being forced to serve this market rather than it serve you. We're clearly disconnected, because that isn't what you answered at all.

As I tried to explain, I think we (not necessarily me as an individual, us as a society) allow the market to be our master because the barriers of entry our so high that our choice in some cases are limited, this allows companies within it to offer what is most profitable to them, rather than necessarily what we would want. This is an example of the Market being the master.

I then pointed out a contrast in the BBC acting as a disruptive influence within the market, serving us what we want, with profitability a secondary factor. This then forces the other companies in that market to respond and offer similar wanted, if less profitable things. This is an example of the market being the servant.