My New GM Car

[Gaspar]

Yes, thank you, I know quite a bit about Mellon. 

I appreciate the complement, but you are too kind.  I am nowhere near Mellon's intellectual caliber.

[USRufnex]

Gas-- "Our government has an established minimum wage.  When the government establishes a maximum wage, we can no longer consider ourselves free-market capitalists.  We will have embraced Socialism completely."

Well, the Supreme Court in 1923 did rule the minimum wage as unconstitutional, thus paving the way for the Great Depression....

http://www.geocities.com/CapitolHill/Senate/6854/greatdep.html

While the disposable income per capita rose 9% from 1920 to 1929, those with income within the top 1% enjoyed a stupendous 75% increase in per capita disposable income.

A major reason for this large and growing gap between the rich and the working-class people was the increased manufacturing output throughout this period. From 1923-1929 the average output per worker increased 32% in manufacturing. During that same period of time average wages for manufacturing jobs increased only 8%. Thus wages increased at a rate one fourth as fast as productivity increased. As production costs fell quickly, wages rose slowly, and prices remained constant, the bulk benefit of the increased productivity went into corporate profits. In fact, from 1923-1929 corporate profits rose 62% and dividends rose 65%.

The federal government also contributed to the growing gap between the rich and middle-class. Calvin Coolidge's administration (and the conservative-controlled government) favored business, and as a result the wealthy who invested in these businesses. An example of legislation to this purpose is the Revenue Act of 1926, signed by President Coolidge on February 26, 1926, which reduced federal income and inheritance taxes dramatically. Andrew Mellon, Coolidge's Secretary of the Treasury, was the main force behind these and other tax cuts throughout the 1920's. In effect, he was able to lower federal taxes such that a man with a million-dollar annual income had his federal taxes reduced from $600,000 to $200,000. Even the Supreme Court played a role in expanding the gap between the socioeconomic classes. In the 1923 case Adkins v. Children's Hospital, the Supreme Court ruled minimum-wage legislation unconstitutional.

The large and growing disparity of wealth between the well-to-do and the middle-income citizens made the U.S. economy unstable. For an economy to function properly, total demand must equal total supply. In an economy with such disparate distribution of income it is not assured that demand will always equal supply. Essentially what happened in the 1920's was that there was an oversupply of goods. It was not that the surplus products of industrialized society were not wanted, but rather that those whose needs were not satiated could not afford more, whereas the wealthy were satiated by spending only a small portion of their income.

[Gaspar]

Well, the Supreme Court in 1923 did rule the minimum wage as unconstitutional, thus paving the way for the Great Depression....

Always wondered what caused the great depression.  I thought it was that silly stock market thing, but naaah!  that couldn't have been it. 

You bring me a little joy every day. 

[Red Arrow]

Well, the Supreme Court in 1923 did rule the minimum wage as unconstitutional, thus paving the way for the Great Depression....

I expect it was more complicated than that. Otherwise, all we would have to do to get out of this economic slump is raise the minimum wage significantly.  Let's try $20/hr.

[USRufnex]

guess I couldnt find the appropriate snarkey smiley... I was only responding to gaspar^s ridiculous assertion that equates minimum wage with socialism... besides, minimum wage workers are worthless anyway... they should be paid "as low as the market will bear"...    /snark.

[we vs us]

That's ridiculous.  The risk is far greater.  If market energy at GM and Christler were allowed to run it's course, and workers, shareholders, and the public weren't relying on the US Government to provide a parachute, then the company would die (spawning the birth of perhaps a dozen new innovative brands).  Whatever was left of the companies would be lean and wise, and investors would have a pattern to use as a precedent to a new smarter corporate policy. 

You can't argue this point, because it HAS happened before, a hundreds of times, with a hundred companies.  Failure is sometimes necessary.

Harvesting the organs always beats keeping a brain dead patient on life support.  Sure, It's hard for the family, but it saves lives.


I understand that wealth makes you angry.  Many Americans share your emotion.  To see these CEO's pulling million dollar salaries is disgusting when so many of us are hurting.  To see them mismanage their companies and cause millions of people to lose their jobs hurts. 

Damn the methods!  Damn the shareholders!  Damn the processes!  . . . but don't be so angry that you damn the country in your march for retribution. 

Take away the shareholders' ability to vote on executive compensation?  Really?  Take away an investors choice?  Really?  Give that choice to government?  Really?

Who decides what the company builds?  Who interprets what the consumer wants?

Government?

Great!

You're confusing me with one of your imaginary socialist enemies.  I don't hate wealth, and I don't hate capitalism.  I also don't think democratic government is a panacea, but it ideally provides the best counterweight yet devised to the interests of the few and the powerful.

Our economic system is not an ideology.  It's an expression of human nature, and like human nature it needs to be channeled and guided to be useful.  Otherwise the collective fallout to society and to the earth is just immeasurable.  

I believe in checks and balances, and I believe that extremes of anything -- including individual freedom -- will ultimately tank us.  That's why I believe that if a system like the free markets can't or won't produce a desired result, then it's in our interest to tweak it until it does.    I understand the point that CF makes -- the market theoretically can work through any imbalance.  But I don't believe it's always in our interest to wait for that to happen.  It may be months, years, decades or more before we achieve our desired result.  In the interim, what would the human cost be?  Our economic system exists to serve us, not for us to serve it.

[rwarn17588]

I believe in checks and balances, and I believe that extremes of anything -- including individual freedom -- will ultimately tank us.  That's why I believe that if a system like the free markets can't or won't produce a desired result, then it's in our interest to tweak it until it does.    I understand the point that CF makes -- the market theoretically can work through any imbalance.  But I don't believe it's always in our interest to wait for that to happen.  It may be months, years, decades or more before we achieve our desired result.  In the interim, what would the human cost be?  Our economic system exists to serve us, not for us to serve it.

This is a good thread.

Sure, the Great Depression was essentially a free market correction. But what a lulu of a correction. It's akin to tumbling off the edge of the Grand Canyon.

Let's face it -- we don't want to relive those times. The concept of checks and balances to prevent economic turmoil, or to smooth it out when it occurs, is prudent and humane. The lack of regulation led to 9,000 banks going bust in the 1930s and stupid housing loans during the 21st century. When you have 35 percent unemployment, as we did in the peak of the Great Depression, the human cost to adults and especially their children was immense.

On one hand, you had farmers in my native Illinois who were burning corn in their heating stoves because it was cheaper than coal (yes, that really happened). In the meantime, you had children that starved to death because their parents were dead broke and had no food (this was before food stamps).

Those things are so perverse, it's understandable why millions of Americans joined socialist and communist parties during the 1930s (including a lot of Oklahomans, I might add). Seeing that kind of suffering and anarchy spawned from a roiling free-market system would make many sensible people consider other alternatives in a hurry.

Now, I'm no socialist. But I'm no hardcore free-market capitalist, either. There's got to be a middle somewhere. Maybe it'll take tweaking to get there, and more tweaking in the future to maintain it. But to essentially take an all-or-none extremist position (free markets vs. socialism) ignores that there may be good aspects to both.

The United States Constitution was founded on compromise. There's no reason to believe its economic system can't be a system of compromise, too.

[USRufnex]

Compromise, you say?!?