Xfinity News (AP): Davos elite: Capitalism has widened income gap

Since economics seem to imbed in almost every political thread (understandably) as well as ones so dedicated, here's another bright and rosy story on the matter.

http://xfinity.comcast.net/articles/news-general/20120125/EU.Davos.Forum.Capitalism/

DAVOS, Switzerland — A four-year economic crisis has left societies battered and widened the gap between the haves and have-nots, financial leaders conceded Wednesday — with one suggesting that Western-style capitalism itself may be endangered.

As Europe struggles with its debt crisis and the global economic outlook remains gloomy at best, there's a sense at the heavily guarded World Economic Forum that free markets are on trial.

Many at the elite economic gathering in the Swiss Alps accept that more must be done to convince critics that Western capitalism has a future and that it can learn from its massive failures.

For David Rubenstein, the co-founder and managing director of asset management firm Carlyle Group, leaders must work fast to overcome the current crisis or else different models of capitalism, such as the form practiced in China, may win the day.

"As a result of this recession, that's lasted longer than anyone predicted and will probably go on for a number more years ... we're going to have a lot of economic disparities," Rubenstein said. "We've got to work through these problems. If we don't do in three or four years ... the game will be over for the type of capitalism that many of us have lived through and thought was the best type."

And some of the problems may stem from the economists themselves being captured by the haves.

At its annual meeting this week, the American Economic Association adopted a new set of ethical guidelines requiring economists to disclose funding sources and other potential conflicts of interest when they publish papers, and urging them to do the same when they make public comments. The aim: Combat the perception that academic economists have been captured by the industries they study.

Judging from a presentation by Luigi Zingales, a professor at the University of Chicago's Booth School of Business, the economics profession has its work cut out for it. Economists, he notes, face pressures similar to those that have led to capture of regulators by the industries they're supposed to regulate. Academics often depend on the business community for the data they need to do their research, for the consulting gigs and board appointments that pad their salaries and for the contributions that keep their departments running. Also, in order to publish the papers that make their careers, they commonly face the scrutiny of editors who themselves are positively disposed toward the interests of business.

As a small test, Zingales looked at the 150 most-downloaded papers that had been done on executive pay. He found that papers supporting high pay for top executives were 55 percent more likely to be published in prestigious economic journals. They were also much more likely to be cited in other papers.

http://www.bloomberg.com/news/2012-01-07/on-the-capture-of-economists-the-ticker.html

Good addition to these matters, P. Influence from invested parties can (do) impact on more than just those holding political positions.

Haven't read the article, yet. (Headed that way.) But this comment you quoted caught my eye:

"As a result of this recession, that's lasted longer than anyone predicted and will probably go on for a number more years ... we're going to have a lot of economic disparities," Rubenstein said. "We've got to work through these problems. If we don't do in three or four years ... the game will be over for the type of capitalism that many of us have lived through and thought was the best type."

"If we're not careful, we're all going to be taken over by communist capitalism."

"If we're not careful, we're all going to be taken over by communist capitalism."

Laugh it up, but along with secular Christianity, that's the greatest danger to this country. Well, and the gays ruining the sanctity of marriage.

As a small test, Zingales looked at the 150 most-downloaded papers that had been done on executive pay. He found that papers supporting high pay for top executives were 55 percent more likely to be published in prestigious economic journals. They were also much more likely to be cited in other papers.

But, does that mean that the system is biased? Or that the papers supporting high pay for top executives are considered to be right?

Haven't read the article, yet. (Headed that way.) But this comment you quoted caught my eye:

"If we're not careful, we're all going to be taken over by communist capitalism."

This was the cover story in this week's Economist:

http://www.economist.com/node/21542931

THE HEADQUARTERS OF China Central Television, designed by Rem Koolhaas and Ole Scheeren, looks like a monstrous space invader striding across Beijing. The headquarters of the China National Offshore Oil Corporation resembles an oil tanker emerging from a shimmering sea. It was designed by Kohn Pedersen Fox, an international firm of architects, and sits directly opposite China’s ministry of foreign affairs. All over central Beijing you see state companies erecting giant monuments to themselves, reflecting their huge power and their vision of themselves as agents of modernisation.

That vision is not confined to Beijing. Petronas, Malaysia’s state-owned oil company, has built 88-storey twin towers in the heart of Kuala Lumpur. In Moscow, VTB, Russia's second-largest state bank, has its headquarters in a sleek glass skyscraper in the spanking new Moskva City Business Complex.

The most striking thing about state-owned enterprises (SOEs) is their sheer collective might in the emerging world. They make up most of the market capitalisation of China’s and Russia’s stockmarkets and account for 28 of the emerging world’s 100 biggest companies.

http://www.economist.com/node/21542925

Laugh it up, but along with secular Christianity, that's the greatest danger to this country. Well, and the gays ruining the sanctity of marriage.

...and Christian white males being held back.

Ultimately, capitalism is flawed. We know that. We've always known that. By it's very definition you're going to have "haves" and "have nots." But by the same token, let's ask the USSR how communism is working out for them. My Encyclopedia Brittanicas make it sound pretty good.

Haven't read the article, yet. (Headed that way.) But this comment you quoted caught my eye: "If we're not careful, we're all going to be taken over by communist capitalism."

It's working for China.

Ultimately, capitalism is flawed. We know that. We've always known that. By it's very definition you're going to have "haves" and "have nots." But by the same token, let's ask the USSR how communism is working out for them. My Encyclopedia Brittanicas make it sound pretty good.

It's not a simple question of communism vs. capitalism. It is now state capitalism vs. liberal capitalism.

In Russia the past decade has seen a remarkable strengthening of the power of the state, which during Boris Yeltsin’s period of “wild privatisation” looked as if it might crumble. The Kremlin has turned scattered companies into national champions. Aeroflot reabsorbed regional airlines spun off in the 1990s. Russian Technologies rolled up hundreds of state companies, many of which had little to do with technology, into a vast conglomerate. The government has also renationalised industries that were privatised in the 1990s. Rosneft, an oil company, took over most of Yukos from Mikhail Khodorkovsky, once Russia’s richest man, and Gazprom bought Sibneft from Roman Abramovich.

As a result the Russian state once again controls the commanding heights of the economy—only this time through share ownership rather than directly. The state holds huge chunks of the shares of the country’s biggest and most strategic companies, including Transneft, a pipeline company; Sukhoi, an aircraft-maker; Rosneft; Sberbank; Unified Energy Systems, an electricity giant; Aeroflot; and Gazprom.

http://www.economist.com/node/21542924

Cheese eating surrender monkeys

...and Christian white males being held back.

Ultimately, capitalism is flawed. We know that. We've always known that. By it's very definition you're going to have "haves" and "have nots." But by the same token, let's ask the USSR how communism is working out for them. My Encyclopedia Brittanicas make it sound pretty good.

It's amazing how humans can take a variety of constructs that have some great aspects and some serious flaws, and increasingly choose devotion to the flaws until their group eventually collapses as a result.

I usually prefer the cherry-picking approach versus an "all-in" model. You know, applying reason and objectivity to noting what seems to just work well in the largest scope that most satisfies a balance of desirable goals appropriate to a given society without slavish devotion on the whole to whatever ideological base from which the specific mechanism(s) originated. Give me that or a really good happy hour (and then anything goes).

I see what you did there. Cute using "liberal" and "capitalism" together.

I guess what concerns me is this. Is there anything that was private at one point, that the federal government has taken over and run better?

---------- Post added January-25th-2012 at 02:51 PM ----------

It's amazing how humans can take a variety of constructs that have some great aspects and some serious flaws, and increasingly choose devotion to the flaws until their group eventually collapses as a result.

I usually prefer the cherry-picking approach versus an "all-in" model. You know, applying reason and objectivity to noting what seems to just work well in the largest scope that most satisfies a balance of desirable goals appropriate to a given society without slavish devotion on the whole to whatever ideological base from which the specific mechanism(s) originated. Give me that or a really good happy hour (and then anything goes).

I'm a "let the market do it's job, and keep gov't out of it" kind of guy. But even I'm smart enough to know that pure capitalism doesn't work. If you'd let companies do whatever they want, we'd have already polluted ourselves into extinction. There has to be some regulation. There has to be some adaptation to get you from the theoretically-wonderful idea of true capitalism, to something that is actually sustainable. It's determining what exactly those things should be that lead to a majority of our (collectively) quarrelling around here.

I see what you did there. Cute using "liberal" and "capitalism" together.

hey, I was impressed.

It's the first time the left may get the right to take their side... but it would have to be based on our stance in the global economy, rather than the local economy.

I see what you did there. Cute using "liberal" and "capitalism" together.

Those are the terms that the Economist uses, but the term "liberal" may have a different connotation in British politics than it does in American politics.

http://www.economist.com/debate/debates/overview/221

I guess what concerns me is this. Is there anything that was private at one point, that the federal government has taken over and run better?

Well, again, you are thinking of things in black-and-white terms that are not really relevant to this discussion. The most successful companies in the developing world are partially owned by the government and run by private managers at arms length. It is more like, say, the government's takeover of GM or AIG than it is a pure government program, like Social Security.

The hard core of the state-owned sector are the national oil companies: the 13 giants that control more than three-quarters of the world’s oil supplies. Governments continue to keep a heavy hand on this industry. The Chinese state owns 90% of the shares in PetroChina and 80% of those in Sinopec. Even so, the national oil companies are being transformed by the same forces that are transforming the state-owned sector in general.

* * *

State capitalism also has a collection of companies that sit at the opposite end of the ownership scale from national energy companies: national champions that formally are privately owned but enjoy a huge amount of either overt or covert support from their respective governments. Sometimes such governments prefer to exercise their patronage at arm’s length because they have little experience of the sector; this is often true of the IT industry in China. Sometimes they offer their patronage to a private company after it has become a winner. Either way the end result is the creation of a new class of state companies: national champions that may not be owned by governments but are nevertheless closely linked to them.

China’s Lenovo likes to think of itself as a private-sector computer company, but the Chinese Academy of Sciences provided it with seed money (and still owns lots of shares), and the government has repeatedly stepped in to smooth its growth, not least when it acquired IBM’s personal-computer division for $1.25 billion in 2004. Brazil’s Vale also considers itself a private-sector mining company, but the government treats it as a national champion and recently forced its boss, Roger Agnelli, to step aside because it did not like his plans to sack workers. There is a long list of national champions that operate in the shadow of the state, including China’s Geely in cars, Huawei in telecoms equipment and Haier in white goods.

http://www.economist.com/node/21542925

The big question among economists is whether a nation can be more successful when it works in partnership with its corporations, as China, Russia, and Brazil are doing. And whether the western liberal nations are making a mistake letting our companies seek profits without regard for national interests.

We are already having this debate in America when we complain about our companies offshoring our work, when we advocate for aggressive responses to foreign copyright infringement, or when we debate the proper level of corporation taxation. There is a whole spectrum of policies between the relatively laissez-faire capitalism of the United States and the authoritarian capitalist system in China, and looking at current trends, it's not clear which system is going to win the 21st century.

We have so many regular-posting models of more the opposite, that I always enjoy (as zoony often echoes too) when DjTj brings his intelligent, informed, and behaviorally admirable participation to a thread.

Our government of course has significant forms on subsidy and involvement with private corporations already.The question (for me) is if we're more productive on the world stage these days using an intervention model arguably based much more on self-gain for the individual companies and individual beneficiaries (like the politicians involved via lobbying) versus a model based more on a clear and openly acknowledged/identified-as-such government support with an overall national/social gain as the main intent (even while individuals after their own self-interests are a reality in those "commie"outfits too). It's about to which end of that line the pendulum is poised now for us and how far should it swing in the other direction.

I would say that the people gaming the system have shifted pure capitalism into a more elitist form and that has widened the gap. Pure capitalism is dependent on equal access, so there actually does have to be some regulation to ensure equal access. That's not socialism, it's ensuring fair play in a competition-based economical system.

For example, in a poker game everyone stands a fair chance based on their knowledge and skills, but only a couple will actually stand a chance if they're getting away with cheating.

The right type of regulations can protect capitalism.

Or that the papers supporting high pay for top executives are considered to be right?

....by the people who have the money to publish those papers....i.e. the top execs who benefit the most from those papers being published.

I think a big part of the growing income gap is the global economy. It used to be you come make good money standing in an assembly line putting things together. With people in other countries willing to do it for much less and a steady flow of unskilled labor coming across our border, that decent paying job no longer exists.

I think a big part of the growing income gap is the global economy. It used to be you come make good money standing in an assembly line putting things together. With people in other countries willing to do it for much less and a steady flow of unskilled labor coming across our border who pick our vegetables, that decent paying job no longer exists.

Out sourcing US jobs has an infinitely greater impact on the gap and lack of good jobs in the US than those dirty Mexican'ts.

I'd like to think the framers didn't envision American Corporate Capitalism. With limited government, you'd have less chance a "speculator" would be able to influence policy simply because that policy didn't exist.

It's obvious that Washington is only working for those that can afford them. Obviously the have nots cannot afford representation on the hill. Heck, even the haves (middle class can be a have) can't afford representation on the hill. Only these companies that can afford an army of lobbyists get representation. Of course, legislation ultimately favors them. And you get what we have today. American Corporate Capitalism.

This ain't your great great great grandfathers capitalism.

I am in favor increasing capital gains rates by 30% for 1,000,000 earned. I believe that if you have income or gains of over 1 mil, you must pay 30% at a minimum. I'm sorry to those that think putting a governor on the "job makers" will make them contract. It might. But we are in serious debt and someone's going to have to get us out of it. So what if you can only by 7 Ferrari's instead of 10. Suck it up.

I'd like to think the framers didn't envision American Corporate Capitalism. <edit>

I am in favor increasing capital gains rates by 30% for 1,000,000 earned. I believe that if you have income or gains of over 1 mil, you must pay 30% at a minimum. I'm sorry to those that think putting a governor on the "job makers" will make them contract. It might. But we are in serious debt and someone's going to have to get us out of it. So what if you can only by 7 Ferrari's instead of 10. Suck it up.

A lot I agree with in that entire post, and per "Obviously the have nots cannot afford representation on the hill", I liked Stewart's line last night, "poor people have really ****ty lobbyists." Like you, I would so do the middle class.

I'd like to think the framers didn't envision American Corporate Capitalism. With limited government, you'd have less chance a "speculator" would be able to influence policy simply because that policy didn't exist.

It's obvious that Washington is only working for those that can afford them. Obviously the have nots cannot afford representation on the hill. Heck, even the haves (middle class can be a have) can't afford representation on the hill. Only these companies that can afford an army of lobbyists get representation. Of course, legislation ultimately favors them. And you get what we have today. American Corporate Capitalism.

This ain't your great great great grandfathers capitalism.

I am in favor increasing capital gains rates by 30% for 1,000,000 earned. I believe that if you have income or gains of over 1 mil, you must pay 30% at a minimum. I'm sorry to those that think putting a governor on the "job makers" will make them contract. It might. But we are in serious debt and someone's going to have to get us out of it. So what if you can only by 7 Ferrari's instead of 10. Suck it up.

Who are you and what did you do with Gibbsfactor?

http://xfinity.comcast.net/articles/news-general/20120125/EU.Davos.Forum.Capitalism/

YOur blurb says << bla bla this slowdown has lasted longer than economists had predicted bla bla>>>

it seems to me that MOST economists were parrotting the empirical observation that historically it has taken economies 10ish years to recover from a financial crisis that has a housing component. Furthermore those analyses of historical crises focused on relatively small economies (sweden, Finland, Thailand... etc... ) that could rely on demand from teh rest of the world to continue to pull the econmies along. Since this was a housing induced meltdown in THE engine for world demand (the USA) we can only assume that the base case scenario is even longer.

so... optimistically speaking... if we get back to "long run trend" around 2017, we are ahead of the curve.

We have so many regular-posting models of more the opposite, that I always enjoy (as zoony often echoes too) when DjTj brings his intelligent, informed, and behaviorally admirable participation to a thread.

I still hold the naive belief that I can actually learn something from intelligent discussion in this forum.

Our government of course has significant forms on subsidy and involvement with private corporations already.The question (for me) is if we're more productive on the world stage these days using an intervention model arguably based much more on self-gain for the individual companies and individual beneficiaries (like the politicians involved via lobbying) versus a model based more on a clear and openly acknowledged/identified-as-such government support with an overall national/social gain as the main intent (even while individuals after their own self-interests are a reality in those "commie"outfits too). It's about to which end of that line the pendulum is poised now for us and how far should it swing in the other direction.

There is no simple answer to this question because the government is unquestionably in a better position than private industry to pursue long-term goals that may be critically important but don't produce immediate profits e.g. the space program (eventually paving the way for satellites that are an essential part of the modern world) or the Manhattan Project (eventually paving the way for nuclear power). But whether a particular goal or project (e.g. clean energy, Humane Genome Project, Superconducting Super Collider, space shuttle) falls within that category is unclear.

And of course other nations take a different view where building electronics, drilling for oil, or investment banking takes on a public interest rather than a private one. What's troubling for us, as we try to get corporations out of our government, is when our corporations appear to be losing to their foreign counterparts who are only more entwined with their governments. It's not hard for American corporations asking for favors to point to their foreign competitors and say that they can't compete without some bending of the rules.

I'd like to think the framers didn't envision American Corporate Capitalism. With limited government, you'd have less chance a "speculator" would be able to influence policy simply because that policy didn't exist.

They also didn't really envision American corporations growing to be the largest in the world, or the kind of large-scale global trade we have today.

We started this country by throwing big corporate (East India Company) tea in to Boston Harbor, but now we are the home of the modern East India Companies (Walmart, Exxon, Microsoft, Apple, JP Morgan, Bank of America). Mo' money mo' problems.