General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region Forumswhat's clearest term to distinguish businesses that actually make things and provide services and...
those that make their money primarily from financial sleight of hand?
It's funny that most of our terms for non-state owned business either emphasize the money manipulators like "capitalism" and "free market" or are vague enough to include finance with businesses that do actually provide a real product or service like "free enterprise."
It's a distinction that could be a big help in convincing others we need to rein in the financial sector further and remove it's sociopathic claws from the levers of power without sounding like Stalinists planning the take over of all business.
There is probably already a perfectly serviceable word, but since I'm not a business major or economists, I don't know it.
What exists or if it doesn't exist, what should the term be?
sinkingfeeling
(51,474 posts)rateyes
(17,438 posts)Vulture capitalist??
yurbud
(39,405 posts)Wounded Bear
(58,717 posts)"Free enterprise" is people figuring out ways to make things and provide services for personal profit.
"Capitalism" is people figuring out how to make money by using other people's money to move bits of paper around. Sometimes it is support of "free enterprise," but not necessarily.
HopeHoops
(47,675 posts)yurbud
(39,405 posts)muddying the water for using it more honestly.
PoliticAverse
(26,366 posts)Why varnish the truth?
Arctic Dave
(13,812 posts)Illusioanary is another term.
Liberal Veteran
(22,239 posts)It certainly was enough to piss Jesus off.
yurbud
(39,405 posts)unblock
(52,328 posts)seriously, though, all for-profit companies make money in two way:
(a) legitimate compensation for providing legitimate goods and services and
(b) illegitimate gravy based on taking advantage of their power to screw and manipulate workers, suppliers, customers, nearby residents, regulators and/or governments.
virtually all for-profit companies do some measure of BOTH of these, even if they're not consciously trying to do (b). they often don't think of it as illegitimate, merely as "industry standard" or whatever.
yurbud
(39,405 posts)schemes.
What they decided was at least the majority of your business had to be from selling products directly to customers not collecting fees from franchisees for motivational tapes, seminars, and products that they never sell.
Amway just barely squeaked through.
There should be a similar rule for Wall Street. If you make the majority of your money from creating and then popping bubbles, your bubble should be popped.
kestrel91316
(51,666 posts)But I never have to feel guilty about having cheated anyone out of their money, so I sleep pretty well in spite of it.
yurbud
(39,405 posts)kestrel91316
(51,666 posts)yurbud
(39,405 posts)and the cats took it.
kestrel91316
(51,666 posts)unblock
(52,328 posts)speaking as a white male, i'm aware that some of the success i've gotten in my career is due to my being a white male. i can't point to any specific incident, but it can't be complete coincidence. just as i'm also aware that i've been at a disadvantage for being short and non-religious (particularly non-christian) being active in my "church" likely would have led to advantageous business connections.
it's entirely possible to do nothing wrong but to be a beneficiary of unfairness, such as when i get a job, did they choose me in some small part because i'm white? because i'm male? i'll never know, but i look around an notice there are few women and fewer blacks at my level.
similarly, it's nearly impossible, at some level, to run any sort of a business without being the beneficiary of some unfairness. nearly any time you negotiate you're likely to argue for, and occassionally successfully get, more than your fair share.
a simple example is volume rebates or discounts from suppliers. you're taking advantage of the fact that you, as business, even if small, might well be placing larger and more frequent orders than the typical retail customer, and therefore can get a better price. the way our system is set up, you'd be crazy not to do this. but in the process, you're taking advantage of your situation and effectively causing smaller purchaser to subsidize your operation (just as you're subsidizing the operations of larger businesses who can get bigger discounts).
yurbud
(39,405 posts)and sell products and services for MORE than they are worth, which makes any profit a bit sketchy.
unblock
(52,328 posts)if all you're doing is trading, then there's some validity to that.
but to whatever extent you add value, it's legitimate to get a profit from that.
though, of course, that's an excuse you can drive a truck through. every ultra-rich person in the world insists that they earned it all by adding crazy value.
the flip side is that if one person end up with gazillions of dollars, that's a pretty compelling argument that they're not sharing reasonably with other constituents, even if they're all paid the "going" rate. it suggests that the one guy is profiteering from the fact that the suppliers and workers haven't yet realized just how valuable they are.
yurbud
(39,405 posts)unblock
(52,328 posts)nearly all ultra-rich people have provided some legitimate value add in the process of accumulating their wealth, but it's very mixed in with the illegitimate profit, and very difficult to disentangle it all because often the very same transaction that is for the value add contains a component of illegitimate profiteering.
BOG PERSON
(2,916 posts)it cannot increase the total sum possessed by both, and therefore cannot augment the sum of the values in circulation .
ProgressiveEconomist
(5,818 posts)yurbud
(39,405 posts)postulater
(5,075 posts)to protect the profits of the stockholders.
Like my BIL who is an insurance company executive and just got a pretty sizeable bonus. It's his company that just increased the premium on my mother's Medicare supplement enough that she is having to drop her subscription to the local newspaper to pay her premium.
She sees his bonus as stealing directly from her. He thinks he earned it and is not responsible for what his company did.
yurbud
(39,405 posts)insurance is probably the clearest example of the difference between taking the "value added" and excessive profits since profits and exec salaries directly steal from the product.
postulater
(5,075 posts)and he is a 'Democrat', but not so much a progressive that he would march around the Capitol in Madison with the rest of us last March. He didn't want to be spotted by anyone from work who would recognize him.
1StrongBlackMan
(31,849 posts)and telling that in our society, Executives earn their bonuses, for doing their job; but the janitor doesn't earn a bonus for keeping the toilets and floors clean?
And corporate Presidents earn their bonuses for making the "right" (or wrong) decision; but the assembly-line worker that ensures that each bolt that she installs is flush to the product does not desire a bonus.
hifiguy
(33,688 posts)of goods and services for a while now. I use it as the antithesis of "financial capitalism" which is the reigning definition of capitalism these days.
1StrongBlackMan
(31,849 posts)Job Creator vs Job Destroy?
PETRUS
(3,678 posts)Populist_Prole
(5,364 posts)Rentiers collect "economic rents" via manipulation/lobbying as a way of fattening the bottom line.
slackmaster
(60,567 posts)My uncle, who used to manage large real businesses, told me that Michael Milken was famous for taking the risk out of risk arbitrage.
BOG PERSON
(2,916 posts)as the two have long been joined at the hip. who hasn't heard the old joke about GE being a bank that happens to make light bulbs, GM being a bank that happens to make cars, etc.?
yurbud
(39,405 posts)i dont think anybody disagree that finance is a drain on actual productive commercial activity. but i think from the point of view of a company like GE there isnt much difference b/w their tv division, their energy division, their banking division and their military division, except in terms of profitability.
Honeycombe8
(37,648 posts)Carl Fox: Stop going for the easy buck and start producing something with your life. Create, instead of living off the buying and selling of others.
(from the movie Wall Street)
DICTIONARY.COM:
leech
1 ? ?[leech] Show IPA
noun
1.
any bloodsucking or carnivorous aquatic or terrestrial worm of the class Hirudinea, certain freshwater species of which were formerly much used in medicine for bloodletting.
2.
a person who clings to another for personal gain, especially without giving anything in return, and usually with the implication or effect of exhausting the other's resources; parasite.
3.
Archaic . an instrument used for drawing blood.
Iris
(15,669 posts)Tom Ripley
(4,945 posts)SoDesuKa
(3,173 posts)Just out of curiosity, where do you draw the white hat black hat distinctions among, say, bankers? Are home mortgage lenders good and commerciali financial institutions bad? Are all commercial financial institutions bad, or are there some exceptions?
A friend who's in investment banking reports that what he does for a living feels suspiciously like work, and says that he wonders what people think he does all day - put his feet up and smoke a cigar? Seriously, who are the good bankers and who are the bad bankers? I want to be able to tell them apart. Which ones are contributing value to the economy and which ones are just parasites?
yurbud
(39,405 posts)if you bet on failure through shorting, inflating bubbles then selling right before they burst, buying functioning if modestly profitable businesses solely to cannibalize them, or help companies like Enron set up a house of mirrors of shell companies to screw not just the IRS but investors, you are a bad banker.
Since all might be some mix of the two, I'd say if your business would collapse without those bad practices, you're on the bad side.