From: Brian Holtz [brian@holtz.org]
Sent: Thursday, October 24, 2002 8:44 AM
To: Franklin Schmidt; LPSM-Discuss@yahoogroups.com
Subject: RE: [LPSM-Discuss] Re: More comparisons between government and
regular corporations


> Franklin Schmidt [mailto:fschmidt@digdb.com] wrote:

> > > > Could not holding companies be differentiated
> > > > according to how they vote their voting shares, and issue
> > > > non-voting shares that in effect limit liability without
> > > > limiting voting power?
> 
> They profit from company B but they have no control over
> company B, even indirectly.

No, as I indicated above, they put market pressure on the holding 
company to vote its shares in the way they'd want to if they held 
those shares directly.

> In my personal experience, the people that have liked 
> least have made the most money and
> almost all the people I know that have made a lot 
> of money, I dislike.

Sounds like a personal problem.  Why shouldn't we believe you're 
simply so greedy as to be envious of anyone with more money than you? :-)

> I don't have experience with Mafia racketeers, so I 
> don't know how much I would dislike them.

Are you at all concerned that a cop-out answer like this destroys any 
credibility you might have had for your sweeping sociological observations?

> I do know that Mafia racketeers have never directly caused 
> me misery while rich people have repeatedly done so.

My, what an altruistic and non-self-involved perspective you have... :-)

> A word like "bad" or "good" is so fundamental
> that an attempt to define it is pointless. [..]
> I suspect that there is little
> difference in character between Mafia racketeers 
> and successful businessmen.

If this is your "suspicion", then I have no reason to assign any weight 
to your personal opinion that the "worst" people get rich.

> how good or bad rich people are is not a scientific 
> proposition whose
> truth value can be objectively measured.

It can be intelligently evaluated. Are you saying you have no way to 
compare the Americans on the Forbes 400 with, say, antebellum 
slaveowners or medieval aristocrats?

> > The same way economists do: the value of what is produced divided
> > by the cost of producing it, where value and cost are monetary
> > measures of valuations expressed by actual behaviors in the
> > market.  See http://www.econlib.org/library/Enc/Efficiency.html
> > for details.
> 
> Given that definition, I hardly care about economic efficiency.

Right. Like a typical leftist, you assume that your judgement of
what's good for people is better than the people's own
judgement as expressed through actual market behavior.

> eliminating limited liability, and the resulting changes 
> to the capital markets, would improve median wealth.  But 
> this is impossible to prove, so
> don't ask me to.

Economists make a living by offering peer-reviewed arguments attempting 
to prove such things, so it's hardly "impossible" to do so. Indeed, the 
consensus of every economic-history reference I've ever read is that 
limited-liability capital markets were essential for financing the 
capital-intensive technologies of the industrial revolution, without 
which our median wealth would be vastly lower.

> Workers would have small
> shares, say 0.1%, so even with a ten year sentence, 
> they are only risking 4 days in jail.  The workers that 
> I know would accept that risk to gain more
> control over their miserable working conditions.

A 0.1% vote would not yield appreciably "more control" over working 
conditions. The control of any employee over his working conditions 
is inevitably determined by his ability to quit and work somewhere else.

> > If workers "had no
> > say", everyone would be making minimum wage.
> 
> They have the right to leave, which isn't the same 
> thing as having say.

It's precisely "having say" over their pay and other working conditions. 
Again, you make the fundamental leftist mistake of assuming that any 
disparity in the incentives for two parties to associate automatically 
constitutes some kind of oppression or coercion or injustice or lack of 
freedom. My employer can't make me work 80 hrs/week for half my current 
salary.  Does he therefore "have no say" over my conditions of employment?

> This is sort of like living under a dictatorship that allows 
> people to leave.  You wouldn't claim that citizens of such 
> a society have a say, would you?

Your analogy is obviously flawed. Citizens don't choose their dictators 
by free association, and employers don't have the arbitary political 
and economic power of dictators.

> the right to leave is better than nothing, so wages are
> higher than the minimum wage.  But the situation is far 
> from ideal

Only because your notion of "ideal" seems to be that employees get 
whatever they want. Under what possible objective criteria would 
you ever admit that employees' reasonable demands are being satisfied?

By the way, you didn't answer these questions: 1. If the 
minimumwage were reduced overnight to $0.05/day, would most workers be
reduced to Dickensian poverty?  2. If the minimum wage were increased
overnight to $50/hour, would all workers be rich?

> > You are simply making the canonical fundamental mistake of leftism,
> > by assuming that any disparity in the incentives for two parties
> > to associate automatically constitutes some kind of oppression
> > or coercion or injustice or lack of freedom.  That's like saying
> > supermodels oppress me when they decline to have sex with me.
> 
> I never said this.

How is this not the logical conclusion of your position?

> > The linkage between productivity and
> > compensation is undisputed even by liberal economists. see
> > http://www.epf.org/labor98/98inc5f2.htm . 
> 
> Working conditions are clearly not determined by productivity.

Obviously false. Working conditions are a form of compensation, and 
are subject to precisely the same market forces that make monetary 
compensation march in lockstep with productivity.

> Mean compensation would be but median compensation may not be

No, the reason for the linkage is fundamental: if your employer pays 
you significantly less than your productivity, I could hire you away 
for more pay and split the difference with you. Believing employees 
consistently earn less than their productivity is to believe that 
would-be employers leave such easy profits sitting on the table out 
of some kind of altruistic concern for their competitors.

> I haven't read _The
> Capitalist Manifesto_ but given what happened 
> at Enron, it seems like a bad idea.

And given what O.J. Simpson did at Rockingham, knives seem like a bad idea.

> I see no reason why a high negative income 
> couldn't fully address the problem.

It's obvious: you need to (non-coercively) redistribute the capital, 
not just the proceeds from the capital.

> The simplicity of the negative income tax makes it less 
> susceptible to corruption.

There will always be incentives for executives to mis-state earnings 
and commit other forms of fraud. Encouraging capital accumulation by 
employees will not significantly change those incentives.

brian@holtz.org
http://humanknowledge.net