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I cannot say this any better.

In my career, I have worked for only one massive company, Ericsson. All the rest were startups. Do you know what happened to those startups? Here is a rundown:

Company A: 100 million in sales, 150 employees, bought by Ericsson, no one still works at Ericsson, they absorbed it and in essence the company is gone.
Company B: 30 million in sales, bought by Bay Networks, technology absorbed into silicon, 100 employess, none of them are at Bay. Bay sold to Nortel, Nortel liquidated, no one works there anymore.
Company C: Merger of two other companies, 100 million in sales, 300 employees, sold to company D, none of the employees are there any more.
Company E: 100 million in sales, 220 employees, bought by competitor, 60% rif the day of acquisition, very few still work there.

This is typical.
 

imreallyperplexed

Council Member
As I said, most of my speculation is based on my own experience and observation with just a little grounding in the research. This is interesting. I agree that Amazon Web Services might count as small and immature. Of course, one service that venture capitalists provide - in additon to financing - is "growth management" services and helping to build administrative support capabilities (or - God forbit I use the word - bureaucratic capabilities).

As to the "rhetorical" position of "small business," it is a bit like "family farms." It is an American tradition like Mom and apple pie that is more important as an ideal than as a reality. The reality of small business is poorly understood and more complex than simple stories allow for.

Well it turns out that NOBODY had really researched this until recently. Large and immature COULD be considered companies like Amazon Web Services where basically they are exploding in staffing and business but still are struggling with growth management concerns that fit smaller companies.

http://articles.businessinsider.com/2012-02-16/news/31067676_1_small-businesses-source-of-job-creation-small-companies
The actual papers for this are

http://gcoe.ier.hit-u.ac.jp/CAED/papers/id038_Haltiwanger_Jarmin_Miranda.pdf
and
http://172.218.89.205:8080/pdfs/Haltiwanger (2011) - Job Creation And Firm Dynamics In The US.pdf



So all this yelping by small businesses like those of Doc, CorruptBuddah, Lionel and NCMusicMan are basically from folks WHO DO NOT CREATE JOBS.
 
Most of what we count as small businesses are really just individuals working solo with no employees. I think California has something like 130,000 small businesses, maybe a lot more. Almost all of them are individuals. We have very poor methods of counting these types of statistics.
 

imreallyperplexed

Council Member
This is interesting. I did pick up a flavor of this while I was getting my MBA. It is not something that I focused on.

Sure - from investopedia:
http://www.investopedia.com/terms/e/economicrent.asp#axzz208KfqYbH



More detail on Rents here http://www.economictheories.org/2008/07/ricardos-theory-of-land-rent-model.html

It is intimately tied in with the theory behind the Law of Diminshing Returns and Opportunity Cost . And both are core pillars of economic theory of markets, particularly labor vs. Capital markets.


In a thumbnail, all Capital Rents in the USA compare to Equity and Bond Market returns when adjusted for risk. And a large driver of the most recent economic crash is that the Law of Diminishing Returns and its associated implications for Rents, combined to creation an excess Risk Premium in Equity markets.

IOW the massive amount of concentrated wealth assets (be it sovereign wealth funds or the newly minted wealthy all primarily from APAC) had massively diminished Marginal Utility and thus was willing to charge "sub-market rents" for the capital being invested in return for "safe" Fixed Rate of Return investmnets. This meant money flowing into tranched mortgage assets that otherwise would have been flowing into Stock and Muni/Corp Bond markets. Thus there was an imbalance in risk premiums. And that's what causes bubbles.
 

imreallyperplexed

Council Member
This is definitely a reality and is probably typical. Of course, I have twice "bailed" on companies that I had a role in founding. But there is no doubt that being acquired by a larger organization can be hazardous. In large organizations, restructuring and redeployment are common and an acquired company gets pulled into that environment.

In my career, I have worked for only one massive company, Ericsson. All the rest were startups. Do you know what happened to those startups? Here is a rundown:

Company A: 100 million in sales, 150 employees, bought by Ericsson, no one still works at Ericsson, they absorbed it and in essence the company is gone.
Company B: 30 million in sales, bought by Bay Networks, technology absorbed into silicon, 100 employess, none of them are at Bay. Bay sold to Nortel, Nortel liquidated, no one works there anymore.
Company C: Merger of two other companies, 100 million in sales, 300 employees, sold to company D, none of the employees are there any more.
Company E: 100 million in sales, 220 employees, bought by competitor, 60% rif the day of acquisition, very few still work there.

This is typical.
 

degsme

Council Member
Most of what we count as small businesses are really just individuals working solo with no employees. I think California has something like 130,000 small businesses, maybe a lot more. Almost all of them are individuals. We have very poor methods of counting these types of statistics.
Exactly. When my Ex was running her studio, she counted as a "small business" and we employed 2 workers. But since they weren't full time, they got 1099s. And mostly they were minding the shop while my wife was off doing other things - including working contract hours for the local School District - where - she got a 1099.

And in essence that meant that this one physical business generated the existance of FOUR "small businesses" on the state books.
 

Lukey

Senator
Yes, I went immediately to Marxism because that is what it "felt" like to me. And, as usual, I was exactly correct:

The exploitation theory is the theory, most associated with Marxists, that profit is the result of the exploitation of wage earners by their employers.

It rests on the labor theory of value which claims that value is intrinsic in a product according to the amount of labor that has been spent on producing the product. Thus the value of a product is created by the workers who made that product and reflected in its finished price. The income from this finished price is then divided between labor (wages), capital (profit), and expenses on raw materials. The wages received by workers do not reflect the full value of their work, because some of that value is taken by the employer in the form of profit. Therefore, "making a profit" essentially means taking away from the workers some of the value that results from their labor. This is what is known as capitalist exploitation.


C'est la vie...
 

imreallyperplexed

Council Member
Lukey,

As you know, I think that you would benefit if you had a little more humility. You have a tendency to want to shut down debate and declare yourself the winner. That seems to be your style. C'est la vie.

In any case, I am going to let Woolley (or perhaps degs) address your observation in more depth if they choose to. I will just point out that what the passage you quote is really concerned with is the "labor theory of value." However, the debate is quite a bit more complex and more on-going than you seem to indicate. This is demonstrated by the Wikipedia article on the labor theory of value along with the background discussion of this article.

http://en.wikipedia.org/wiki/Labor_theory_of_value

That said, I will concede that even this article includes a fair amount of discussion of Marx and his use of the classical labor theory of value (as developed by Adam Smith and David Ricardo). It also talks about the neo-classical synthesis and the development of concepts related to marginal utility, marginal cost, and price and how these ideas conflict with the labor theory of value (as held by Marx).

Nonetheless, for my part, all my posts on this thread are built on the conventional neo-classical analysis of marginal utility and marginal cost and not on the labor theory of value. I learned this stuff in my elementary micro class. I would contend that your argument in respect to these discussions was not "exactly" correct. And mine was not "Marxist" because it did not rest on the labor theory of value.

Finally, I will observe that you don't seem to have much interest in the actual underlying concepts. You seem to prefer to use the term "Marxist" to label anything you dislike as evil and to shut down discussion with that one term. That is the strategy of a rogue and not a scholar in my opinion. Take it or leave it as you will.

Yes, I went immediately to Marxism because that is what it "felt" like to me. And, as usual, I was exactly correct:

The exploitation theory is the theory, most associated with Marxists, that profit is the result of the exploitation of wage earners by their employers.

It rests on the labor theory of value which claims that value is intrinsic in a product according to the amount of labor that has been spent on producing the product. Thus the value of a product is created by the workers who made that product and reflected in its finished price. The income from this finished price is then divided between labor (wages), capital (profit), and expenses on raw materials. The wages received by workers do not reflect the full value of their work, because some of that value is taken by the employer in the form of profit. Therefore, "making a profit" essentially means taking away from the workers some of the value that results from their labor. This is what is known as capitalist exploitation.


C'est la vie...
 

Lukey

Senator
Lukey,

As you know, I think that you would benefit if you had a little more humility. You have a tendency to want to shut down debate and declare yourself the winner. That seems to be your style. C'est la vie.

In any case, I am going to let Woolley (or perhaps degs) address your observation in more depth if they choose to. I will just point out that what the passage you quote is really concerned with is the "labor theory of value." However, the debate is quite a bit more complex and more on-going than you seem to indicate. This is demonstrated by the Wikipedia article on the labor theory of value along with the background discussion of this article.

http://en.wikipedia.org/wiki/Labor_theory_of_value

That said, I will concede that even this article includes a fair amount of discussion of Marx and his use of the classical labor theory of value (as developed by Adam Smith and David Ricardo). It also talks about the neo-classical synthesis and the development of concepts related to marginal utility, marginal cost, and price and how these ideas conflict with the labor theory of value (as held by Marx).

Nonetheless, for my part, all my posts on this thread are built on the conventional neo-classical analysis of marginal utility and marginal cost and not on the labor theory of value. I learned this stuff in my elementary micro class. I would contend that your argument in respect to these discussions was not "exactly" correct. And mine was not "Marxist" because it did not rest on the labor theory of value.

Finally, I will observe that you don't seem to have much interest in the actual underlying concepts. You seem to prefer to use the term "Marxist" to label anything you dislike as evil and to shut down discussion with that one term. That is the strategy of a rogue and not a scholar in my opinion. Take it or leave it as you will.
I would suggest people who insist on how "complex" the issue is are also doing so in an attempt to shut down debate ("you just don't get it"). I'm the winner because I am right, not because I shrug off artificial "complexities" designed to de-Marxize liberal economic theory. The fact of the matter is the declaration that "the value of production has to equal wages" is a Marxist concept wholly consistent with the "labor theory of value." Just because you attempt to couch it (erroneously, in my view) in terms of "marginal" costs and prices doesn't make it something it isn't.

And frankly so is this whole "Aggregate Demand" focused Keynesian economic viewpoint you guys share. It is all designed to undermine capitalism by de-legitimizing profits and maligning the private sector, while elevating the role of labor and central planning. You guys just want to hide your Marxist economics, based in unionism, environmentalism, big government and regulated/legislated equality, under the cloak of "capitalism" by mis-appropriating and mis-applying certain economic terms and concepts. Yet all of those are deeply rooted in the modern Marxist movements (both here and abroad). It is what it is...
 

degsme

Council Member
Yes, I went immediately to Marxism because that is what it "felt" like to me. And, as usual, I was exactly correct:
Right your FEELINGS have shown to be such accurate predictors of economic outcomes over the last decade...NOT.

It rests on the labor theory of value which claims that value is intrinsic in a product according to the amount of labor that has been spent on producing the product.
You do realize that VAT taxes consider this to be the case
So does YOUR OWN theory of why companies offshore jobs (namely that you cannot sell the product for price that labor is demanding because the VALUE of that labor is less than the price)

Nor does Wooley's approach - wich is NOT "exploitation theory" (that is your UNSUPPORTED CLAIM) - say that "making a profit" is taking away from workers some of their value

WoolleyBugger said:
A very simple understanding of the macroeconomic requires that you understand that over the long run (the Fed's charter is to stabilize over the short run using monetary policy) the value of production has to equal wages otherwise workers cannot afford to consume what they produce. I
o o o
When this principle of the capitalist money system is breached - if wages paid are too small to buy the results of work - then consumers must be lent the extra money to buy what workers produce.
Note that the VALUE OF PRODUCTION does not include any ROI based on the IP of the product nor of the capital resources involved in the production, nor the Risk Premiym. But fundamentally without the value add of the act of production, all of those priors have no inherent value either.

Where Wolley is a bit overly general is in that a particular worker does not ned to buy a new car every 30 hours http://wiki.answers.com/Q/How_much_does_labor_cost_to_build_a_new_car So for it to be a purely equlibrium economy = say with a new car every 3 years, the worker would need to earm a new car in about 4000 hours. But that same sort of analysis also goes to the Capital and Risk premium assets. Note that NOTHING Wolley has asserted says that these do not deerve compensating value either (yet "Marxist" theory suggests otherwise).

Remember that in Wealth of Nations, Adam Smith looks askance at economic rents, focussing instead on the imprtance of the value of "the labor of each man". He felt that land and capital did deserve an ROI, but an ROI only commesurate with their own productive value.

And that's all that Wooley's comment implies. So since Smith requires a balancing of distribution of value creation between the productivity of the capital assets and labor, you must consider Adam Smith a Marxist based on your "Feeling"... right?

Which of course is nonsense, and only shows how your "feelings" about economics are in deep deep kimchi.
 

degsme

Council Member
I would suggest people who insist on how "complex" the issue is are also doing so in an attempt to shut down debate ("you just don't get it").
RIGHHHT... so Adam Smith was a Marxist.

I'm the winner because I am right, not because I shrug off artificial "complexities" designed to de-Marxize liberal economic theory.
You are the loser because you engage in logical fallacy after logical fallacy. Rather than addressing the issue at hand - economics - you wield the Appeal to Emotion, Guilt By association and Ad hominem fallacies by alwasy invoking the boogeyman Marx. Many solid capitalist economists consider Marx to have been right in many ways. http://blogs.hbr.org/haque/2011/09/was_marx_right.html (HBR isn't exactly a bastion of liberal economics).

Nor have you demonstrated in any way that Marx was wrong. Instead you make the additional logical fallacy of leaping from Marx to the USSR - which had nothing to do with Mrax and was simply a modern incarnation of the Czarist state.

And frankly so is this whole "Aggregate Demand" focused Keynesian economic viewpoint you guys share. It is all designed to undermine capitalism
RIGGHHTT it was all a biigg giant conspiracy That it was actually created as a way of trying to understand the economic changes going on and why nations engaged in deficit spending during downturns were doing better than those that did not Does not matter

That it has been a MUCH BETTER PREDICTOR of economic long term outcomes than Von MIses or the Hayek also doesn't matter.

what matters is NAME CALLING... after all, conspiracies and the evil Marx is what caused the financial crash of 1985-6 and 2005-8 And also why GDP Growth was REDUCED when upper quintile Tax rates were cut in the 80s and why the plateaued at 22% below historic averages for over a decade after the additional cuts to the upper quintile earners in 2002.

RIGHT... its the evil Marx reaching from beyond his grave to screw up the forcasts of the Austrian school economists.....


And that of couse explains why your "theories" and predictions invariably leave out inconvenient data points...Its a conspiracy to create those data points so its ok to ignore them...

RIGGHTT

Yeah Lukey you are SUCH a "winner"...

by de-legitimizing profits and maligning the private sector, while elevating the role of labor and central planning. You guys just want to hide your Marxist economics, based in unionism, environmentalism, big government and regulated/legislated equality, under the cloak of "capitalism" by mis-appropriating and mis-applying certain economic terms and concepts. Yet all of those are deeply rooted in the modern Marxist movements (both here and abroad). It is what it is...[/QUOTE]
 

imreallyperplexed

Council Member
Did you read the Wikipedia article?

BTW, you may subjectively believe that you are the winner. But you are not the winner by any objective standard.

And you know a lot less about mainstream economics than you claim to. Your second paragraph is just plain silly. But it is a free country and you can belief all the silly nonsense that you want.

I do have one question for you though. When you say "private sector," you seem to believe that that is synonymous with what Republicans call "job creators" and OWS might call the 1%. Is that what you mean? I take it that labor is not part of the private sector in your view.

I would suggest people who insist on how "complex" the issue is are also doing so in an attempt to shut down debate ("you just don't get it"). I'm the winner because I am right, not because I shrug off artificial "complexities" designed to de-Marxize liberal economic theory. The fact of the matter is the declaration that "the value of production has to equal wages" is a Marxist concept wholly consistent with the "labor theory of value." Just because you attempt to couch it (erroneously, in my view) in terms of "marginal" costs and prices doesn't make it something it isn't.

And frankly so is this whole "Aggregate Demand" focused Keynesian economic viewpoint you guys share. It is all designed to undermine capitalism by de-legitimizing profits and maligning the private sector, while elevating the role of labor and central planning. You guys just want to hide your Marxist economics, based in unionism, environmentalism, big government and regulated/legislated equality, under the cloak of "capitalism" by mis-appropriating and mis-applying certain economic terms and concepts. Yet all of those are deeply rooted in the modern Marxist movements (both here and abroad). It is what it is...
 

Lukey

Senator
Right your FEELINGS have shown to be such accurate predictors of economic outcomes over the last decade...NOT.


You do realize that VAT taxes consider this to be the case
So does YOUR OWN theory of why companies offshore jobs (namely that you cannot sell the product for price that labor is demanding because the VALUE of that labor is less than the price)

Nor does Wooley's approach - wich is NOT "exploitation theory" (that is your UNSUPPORTED CLAIM) - say that "making a profit" is taking away from workers some of their value



Note that the VALUE OF PRODUCTION does not include any ROI based on the IP of the product nor of the capital resources involved in the production, nor the Risk Premiym. But fundamentally without the value add of the act of production, all of those priors have no inherent value either.

Where Wolley is a bit overly general is in that a particular worker does not ned to buy a new car every 30 hours http://wiki.answers.com/Q/How_much_does_labor_cost_to_build_a_new_car So for it to be a purely equlibrium economy = say with a new car every 3 years, the worker would need to earm a new car in about 4000 hours. But that same sort of analysis also goes to the Capital and Risk premium assets. Note that NOTHING Wolley has asserted says that these do not deerve compensating value either (yet "Marxist" theory suggests otherwise).

Remember that in Wealth of Nations, Adam Smith looks askance at economic rents, focussing instead on the imprtance of the value of "the labor of each man". He felt that land and capital did deserve an ROI, but an ROI only commesurate with their own productive value.

And that's all that Wooley's comment implies. So since Smith requires a balancing of distribution of value creation between the productivity of the capital assets and labor, you must consider Adam Smith a Marxist based on your "Feeling"... right?

Which of course is nonsense, and only shows how your "feelings" about economics are in deep deep kimchi.
No, of course Adam Smith isn't a "Marxist." But simply cherry picking one or two of his concepts and sprinkling them over an aggregate "anti-capitalist" viewpoint doesn't render it magically "capitalist."
 

degsme

Council Member
Did you read the Wikipedia article?

BTW, you may subjectively believe that you are the winner. But you are not the winner by any objective standard.

And you know a lot less about mainstream economics than you claim to.
He knows a lot less about ECONOMICS PERIOD than he claims to. Frankly you, Wooley and I each know more about Austrian School theories than he does. That's precisely why it is so easy to eviscerate his claims and why he has been reduced to ad hominem and guilt by association logical fallacy.
 

Lukey

Senator
Did you read the Wikipedia article?

BTW, you may subjectively believe that you are the winner. But you are not the winner by any objective standard.

And you know a lot less about mainstream economics than you claim to. Your second paragraph is just plain silly. But it is a free country and you can belief all the silly nonsense that you want.

I do have one question for you though. When you say "private sector," you seem to believe that that is synonymous with what Republicans call "job creators" and OWS might call the 1%. Is that what you mean? I take it that labor is not part of the private sector in your view.
If by "mainstream economics" you mean the predominantly lefty academic economics, then perhaps you are correct. i don't waste my time mastering illogical theories. But there is plenty of economic intellectual power that shares my views. And of course you would think that the second paragraph is "silly" but have you seen the recent deconstruction of Krugman's (serial bubble blowing) Keynesian theory by Pedro Schwartz?
Starts at 0:35:25:


[video=youtube;EX55BH97quk]http://www.youtube.com/watch?v=EX55BH97quk&feature=player_embedded[/video]

When I speak of the "private sector" I am speaking (primarily) of the (shrinking) portion of the economy that creates all wealth. It is the privately sustainable private economic activity. The REAL private, for profit sector is GDP less government and not-for-profit spending (budgets). IOW, if the federal government spends a million $ on a road, that's not (really) part of the private sector, even if it uses a private contractor for the repairs. Nor is a non-profit's payroll as it must be funded by taxes or private donations. All money spent by non-profits and governments must be earned in the (private) private sector either in the past, the present, or the future. That's one of the biggest fallacies of economic theory, that such a project is part of the "private sector." It isn't. This is why government cannot grow the economy or jobs, all it can grow is government...
 

Lukey

Senator
He knows a lot less about ECONOMICS PERIOD than he claims to. Frankly you, Wooley and I each know more about Austrian School theories than he does. That's precisely why it is so easy to eviscerate his claims and why he has been reduced to ad hominem and guilt by association logical fallacy.
And why Obama's Keynsian and labor focused economic policies that you champion have been so incredibly ineffective, because you guys understand economics so frigging well. LOL!
 

imreallyperplexed

Council Member
Let me get this straight. The economics that is taught in universities is not mainstream economics? And you are versed in "proper" economics. Is that correct?

Who - besides Pedro Schwartz - do you take seriously as an economic thinker? (I will try to watch the video when I have a little more time.) But honestly, I would prefer it if you brought the ideas of those folks to bear rather than resorting - as degme argues and I concur - resorting to ad hominem attacks and guild by association. It really does seem to be that you are saying that mainstream academic economics is "Marxist."


If by "mainstream economics" you mean the predominantly lefty academic economics, then perhaps you are correct. i don't waste my time mastering illogical theories. But there is plenty of economic intellectual power that shares my views. And of course you would think that the second paragraph is "silly" but have you seen the recent deconstruction of Krugman's (serial bubble blowing) Keynesian theory by Pedro Schwartz?
Starts at 0:35:25:


[video=youtube;EX55BH97quk]http://www.youtube.com/watch?v=EX55BH97quk&feature=player_embedded[/video]

When I speak of the "private sector" I am speaking (primarily) of the (shrinking) portion of the economy that creates all wealth. It is the privately sustainable private economic activity. The REAL private, for profit sector is GDP less government and not-for-profit spending (budgets). IOW, if the federal government spends a million $ on a road, that's not (really) part of the private sector, even if it uses a private contractor for the repairs. Nor is a non-profit's payroll as it must be funded by taxes or private donations. All money spent by non-profits and governments must be earned in the (private) private sector either in the past, the present, or the future. That's one of the biggest fallacies of economic theory, that such a project is part of the "private sector." It isn't. This is why government cannot grow the economy or jobs, all it can grow is government...
 

imreallyperplexed

Council Member
And yet I have seen you claim that your "solutions" are "guaranteed" to work and if they don't work, it is because folks didn't apply your nostrums correctly. You must either run a medicine show or be a consultant. Why aren't you more successful than you are? It must be the government's fault.

And why Obama's Keynsian and labor focused economic policies that you champion have been so incredibly ineffective, because you guys understand economics so frigging well. LOL!
 

degsme

Council Member
And why Obama's Keynsian and labor focused economic policies that you champion have been so incredibly ineffective,
They haven't been.

Name a Keynesian policy of Obama's that has been INEFFECTIVE? The Stimulus predicted it would generate (save/create) between 2.5 and 3.0 million jobs. The MOST CONSERVATIVE independent estimates put it at 3 million jobs and the optimistic ones put it at 3.5-4.00 million jobs

Cash for Clunkers (classic Keynesian intervention) prevented a meltdown of the "Accounts Receiveable Lending" that would have added 10% to the unemployment rate.

Net Net, Obama's Kenesian policies have reduced unemployment by about 14% and turned around the Worst financial crash in human history in the same time it took to develop.



This last is very critical since prior to the use of what EVENTUALLY came to be called "Keynesian Stimulus" (It has been in use IN EVERY crash since 1893, but Keynes only formalized the theories behind it some 50 years later) - the Economic Recovery period for a crash was roughly FOUR TIMES as long as the crash itself. So turning it into a symmetrical curve is a DRAMATIC IMPROVEMENT.


So please - point to an "ineffective" Obama plan that IS IN EFFECT TODAY. Just one.
 

Lukey

Senator
Let me get this straight. The economics that is taught in universities is not mainstream economics? And you are versed in "proper" economics. Is that correct?

Who - besides Pedro Schwartz - do you take seriously as an economic thinker? (I will try to watch the video when I have a little more time.) But honestly, I would prefer it if you brought the ideas of those folks to bear rather than resorting - as degme argues and I concur - resorting to ad hominem attacks and guild by association. It really does seem to be that you are saying that mainstream academic economics is "Marxist."
No, I admit that that is what is commonly referred to as "mainstream" economics. Keyensian economics is "mainstream" economics. That does not make it right. As for the people I respect - mainly it's:

Allen Meltzer, John Taylor, Robert Lucus, David Malpass, and Milton Friedman (of course).
 
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