When Long Term thinking is a problem

http://www.nytimes.com/2011/12/17/business/at-amazon-jeff-bezos-talks-long-term-and-means-it.html?hp

great read on Amazon and very revealing on the problem with what has become American Capitalism. too much focus on the near term while very little on long term. everybody just wants numbers now, get their bonus and screw long term stability. that is what got us into this mess in the first place.
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The right is more virtuous than the left. They have twice as many virtues because they have double the standards.

Fuck I thought this was about drinking....
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Originally posted by: Cummins
I woke up at like 8 am, woke her up and she told me she needed to be honest. She said I fucked both your friends last night. I dont know why I did it. I punched a hole in the wall because I realized how stupid I was. Then I looked outside no sign of any rain.

What got us here was setting up systems and institutions that reward activity not beneficial to the economy, both at the individual and corporate level.

Originally posted by: Pixël
http://www.nytimes.com/2011/12/17/business/at-amazon-jeff-bezos-talks-long-term-and-means-it.html?hp

great read on Amazon and very revealing on the problem with what has become American Capitalism. too much focus on the near term while very little on long term. everybody just wants numbers now, get their bonus and screw long term stability. that is what got us into this mess in the first place.

In true free market there would be no mess. Amazon sells with lower profit margins, so when you want to buy something you buy from them, not the competitors. The competitors then sell even cheaper or go out of business. As they should. The reason we are in this mess is over regulation, govt sponsored monopolies crushing competitors who cant meed the bizarre and expensive regulations and stifling creativity.

Originally posted by: Pixël
http://www.nytimes.com/2011/12/17/business/at-amazon-jeff-bezos-talks-long-term-and-means-it.html?hp

great read on Amazon and very revealing on the problem with what has become American Capitalism. too much focus on the near term while very little on long term. everybody just wants numbers now, get their bonus and screw long term stability. that is what got us into this mess in the first place.

hmmm...that has been the main charge against America for 5 decades now. It bores me. It's more complex than that this time.

What got us into this mess is simple: spending more than what we make, for decades.

Originally posted by: Yeltzer

Originally posted by: Pixël
http://www.nytimes.com/2011/12/17/business/at-amazon-jeff-bezos-talks-long-term-and-means-it.html?hp

great read on Amazon and very revealing on the problem with what has become American Capitalism. too much focus on the near term while very little on long term. everybody just wants numbers now, get their bonus and screw long term stability. that is what got us into this mess in the first place.

hmmm...that has been the main charge against America for 5 decades now. It bores me. It's more complex than that this time.

What got us into this mess is simple: spending more than what we make, for decades.

the major economic crisis that has triggered this mess was brought upon by short term greed vs long term sensible investing and planning. if you think that has nothing to do with it you are being naive.
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The right is more virtuous than the left. They have twice as many virtues because they have double the standards.

Originally posted by: (SF) DirtyRatFink

Originally posted by: Pixël
http://www.nytimes.com/2011/12/17/business/at-amazon-jeff-bezos-talks-long-term-and-means-it.html?hp

great read on Amazon and very revealing on the problem with what has become American Capitalism. too much focus on the near term while very little on long term. everybody just wants numbers now, get their bonus and screw long term stability. that is what got us into this mess in the first place.

In true free market there would be no mess. Amazon sells with lower profit margins, so when you want to buy something you buy from them, not the competitors. The competitors then sell even cheaper or go out of business. As they should. The reason we are in this mess is over regulation, govt sponsored monopolies crushing competitors who cant meed the bizarre and expensive regulations and stifling creativity.

This is hopelessly idealistic.

In reality large retailers can command special deals that don't come from economy of scale, but because of the shear control of distribution they have. Wal-mart blackmails producers to give it better prices. But not just better prices, but 'better than competitors'.

In that case walmart doesn't offer better prices because its a better retailer. Walmart has better prices simply because its using its size to gain an imposed price advantage.

OTOH, on another level you are correct wrt the original post.

The public ownership model (aka the stock market) is horribly flawed. However the government has so heavily regulated the process, we are stuck with a single model. There's only one way to 'go public' essentially. And that model doesn't have to compete with better approaches that reward long term perspectives.

Originally posted by: Pixël

Originally posted by: Yeltzer

Originally posted by: Pixël
http://www.nytimes.com/2011/12/17/business/at-amazon-jeff-bezos-talks-long-term-and-means-it.html?hp

great read on Amazon and very revealing on the problem with what has become American Capitalism. too much focus on the near term while very little on long term. everybody just wants numbers now, get their bonus and screw long term stability. that is what got us into this mess in the first place.

hmmm...that has been the main charge against America for 5 decades now. It bores me. It's more complex than that this time.

What got us into this mess is simple: spending more than what we make, for decades.

the major economic crisis that has triggered this mess was brought upon by short term greed vs long term sensible investing and planning. if you think that has nothing to do with it you are being naive.

This doesn't happen often (or ever)......but Pixel and I agree on something that is an essential core of American economics.

He is spot on in saying that short term thinking, for multiple decades, has primarily landed us in our current economic mess that we sit in today.

This disaster didn't happen overnight. It took years of people burning down our industrial manufacturing, to establish cheaper, far less skilled, sales jobs (ie. service sector employees)........it took years for businesses to cut away their employees for far cheaper, foreign, outsourced, labor.

It took years for CEO's to gut away their employees Pension plans, to replace them with 401(k)'s, and make billions from it.

I sat around and toiled over this idea for a few hours the other day, in my usual drunken, comatose, slumber, and realized that this is perhaps the only way I can possibly justify government seeding proposals (ie. Actual Stimulus).

The government used to spend the big money, on big projects, with big rewards, for everyone, that no single, short term, private company could/would ever be able to raise the revenue or take the risk on.

I congratulated those efforts.......

In comes Apollo......Internet.....SDI......so many other essentially massive public work projects with huge payoffs to everyone (especially in private industry years later).

Sadly, even that is gone now. Now government acquisition models have them paying for private sector companies for their short term thinking, who are typically campaign contributers, or political favorites, who are also near sighted, working on piss poor ideas (see Solyndra), to fuck us all over.......

Everything in the DOE and DOD now goes to contractors with the strongest political connections.....they do absolutely nothing on their own anymore.

This is bullshit......we need more long term solutions and less short term can kicking. We need to get back to one basic and fundamental concept. Will what we are doing produce wealth now?........will it guarantee us long term wealth in the future?

If both answers are a resounding NO.......then don't fucking do it!!!!!!!!!!!!!!

Will this thing that we are funding, or working on, be it private or public, conclusively and measurably produce more money than it cost us to undertake?

That answer must be a massive yes.

These should be the general question that must be answered before proceeding.....but clearly aren't even being asked anymore.

Be it the government.......or the private sector........we need to stop with this short term, sell-out, economic policy and get with the long term wealth generation models that made this country what it used to be.

Today money is no longer about what you can produce over multiple decades (on your own).......as much as it is what you can E-bay, fire, cut, and gut (from something you essentially inherited) for an instant insurance policy payout by tomorrow.

America's economy is less about creating a dynasty and more about pillaging somebody else's castle.

That has to change.......something has to change it.
Post edited by Mockery at 12/21/2011 2:41:41 AM

Originally posted by: Stryk

Originally posted by: (SF) DirtyRatFink

Originally posted by: Pixël
http://www.nytimes.com/2011/12/17/business/at-amazon-jeff-bezos-talks-long-term-and-means-it.html?hp

great read on Amazon and very revealing on the problem with what has become American Capitalism. too much focus on the near term while very little on long term. everybody just wants numbers now, get their bonus and screw long term stability. that is what got us into this mess in the first place.

In true free market there would be no mess. Amazon sells with lower profit margins, so when you want to buy something you buy from them, not the competitors. The competitors then sell even cheaper or go out of business. As they should. The reason we are in this mess is over regulation, govt sponsored monopolies crushing competitors who cant meed the bizarre and expensive regulations and stifling creativity.

This is hopelessly idealistic.

In reality large retailers can command special deals that don't come from economy of scale, but because of the shear control of distribution they have. Wal-mart blackmails producers to give it better prices. But not just better prices, but 'better than competitors'.

In that case walmart doesn't offer better prices because its a better retailer. Walmart has better prices simply because its using its size to gain an imposed price advantage.

OTOH, on another level you are correct wrt the original post.

The public ownership model (aka the stock market) is horribly flawed. However the government has so heavily regulated the process, we are stuck with a single model. There's only one way to 'go public' essentially. And that model doesn't have to compete with better approaches that reward long term perspectives.

This is a topic, unlike perhaps foreign policy, that we have always been in agreement on.

I don't know if I buy the Ron Paul's libertarian belief that antitrust cases can, or will, resolve themselves in a truly "free market".

I've seen too many examples that have defied that belief......but I've also, admittedly, never seen a truly free market.

But I'll digress on that......I can also see where regulation can sustain and permanently solidify a monopoly just as well as permanently destructor them.

For that reasoning, I still can't help but think that our government still has an essential duty (that it never uses) to stop all monopolies from forming, ensure that viable market choices remain, and openly promote a fair market place for all businesses to compete in (from a purely laissez faire perspective.....not from social engineering bullshit they currently advocate).

It's a very dirty statist position that I can't help but adhere to and sincerely wish that someone could break me from. Not that it really matters.....since it's about the only function of government that I believe in but they clearly refuse to use.
Post edited by Mockery at 12/21/2011 2:54:14 AM

Originally posted by: Stryk
This is hopelessly idealistic.

In reality large retailers can command special deals that don't come from economy of scale, but because of the shear control of distribution they have. Wal-mart blackmails producers to give it better prices. But not just better prices, but 'better than competitors'.

In that case walmart doesn't offer better prices because its a better retailer. Walmart has better prices simply because its using its size to gain an imposed price advantage.

OTOH, on another level you are correct wrt the original post.

The public ownership model (aka the stock market) is horribly flawed. However the government has so heavily regulated the process, we are stuck with a single model. There's only one way to 'go public' essentially. And that model doesn't have to compete with better approaches that reward long term perspectives.

But Walmart is using those self same principals I am talking about. They are not an end user customer, but they are still a customer. They are willing to buy in huge bulk, and as such are demanding the lowest price they can get to achieve this end. If you as a customer are willing to buy in huge bulk, you would also want a better price. Not blackmail at all. If the manufacturer is not making enough money, they would just not sell to walmart. In fact, it is the opposite. They are clamoring to get thier product onto walmart shelves. Why would they want to do this rather than find another way to sell? Because selling through walmart will make them the most money overall.


In the free market, you make people compete to give you the "better than competitor" deals that you are talking about. I fail to see how this is a bad thing.

Ok Mockery. I might be missing something, so I'm going to let you explain to me why you think monopolies are evil.

See, I think that govt made/sponsored/protected monopolies are evil, because it gives an unsurmountable advantage to one company over another.

But as a business, your goal is to do better than your competitor. Why have a small ski shop, among thousands of other ski shops, when you can have a larger piece, get better deals from manufacturers, pass those savings onto your customers, and grow. That is the point.

Granted, I haven't given this subject a ton of thought, what am I missing?

Originally posted by: (SF) DirtyRatFink

Originally posted by: Pixël
http://www.nytimes.com/2011/12/17/business/at-amazon-jeff-bezos-talks-long-term-and-means-it.html?hp

great read on Amazon and very revealing on the problem with what has become American Capitalism. too much focus on the near term while very little on long term. everybody just wants numbers now, get their bonus and screw long term stability. that is what got us into this mess in the first place.

In true free market there would be no mess. Amazon sells with lower profit margins, so when you want to buy something you buy from them, not the competitors. The competitors then sell even cheaper or go out of business. As they should. The reason we are in this mess is over regulation, govt sponsored monopolies crushing competitors who cant meed the bizarre and expensive regulations and stifling creativity.

False. In a true free market society Amazon would lower their prices so low that nobody else would be able to match them and then slowly choke out all of their competitors. Then once everyone else is out of the way, they would hike up prices on account of their full control of the entire market. Just like Standard Oil did during the gilded age, back when we did have a free market and before we learned that they don't work as advertised.
Post edited by William T. Sherman at 12/21/2011 3:04:36 AM

Originally posted by: (SF) DirtyRatFink

Originally posted by: Stryk
This is hopelessly idealistic.

In reality large retailers can command special deals that don't come from economy of scale, but because of the shear control of distribution they have. Wal-mart blackmails producers to give it better prices. But not just better prices, but 'better than competitors'.

In that case walmart doesn't offer better prices because its a better retailer. Walmart has better prices simply because its using its size to gain an imposed price advantage.

OTOH, on another level you are correct wrt the original post.

The public ownership model (aka the stock market) is horribly flawed. However the government has so heavily regulated the process, we are stuck with a single model. There's only one way to 'go public' essentially. And that model doesn't have to compete with better approaches that reward long term perspectives.

But Walmart is using those self same principals I am talking about. They are not an end user customer, but they are still a customer. They are willing to buy in huge bulk, and as such are demanding the lowest price they can get to achieve this end. If you as a customer are willing to buy in huge bulk, you would also want a better price. Not blackmail at all. If the manufacturer is not making enough money, they would just not sell to walmart. In fact, it is the opposite. They are clamoring to get thier product onto walmart shelves. Why would they want to do this rather than find another way to sell? Because selling through walmart will make them the most money overall.


In the free market, you make people compete to give you the "better than competitor" deals that you are talking about. I fail to see how this is a bad thing.

Finally a damn fine debate......been itching for this for weeks and mentally constipating this topic for months (with no sound conclusions).

This, I believe, is the type of argument that I have seen being made against Wal-Mart (by individuals much like Stryk).

http://www.fastcompany.com/magazine/77/walmart.html

Basic timeline:
Wal-Mart cuts great bulk deal with Vlasic.

Vlasic can grow operations by 50%

Vlasic takes out new loans to expand

Vlasic does great...........initially

Wal-Mart tries to renegotiate deal

Wal-Mart demands prices less than, or equal to, cost of Vlasic to manufacture their pickles.

Vlasic says no.......

Wal-Mart threatens to not buy anything more from them.....

Vlasic, with new loans, now loses half of their business, killing them for the year or forcing them into bankruptcy.

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That doesn't even get into what Wal-Mart does to the low volume distributer, mom and pop, shops who used to sell a quart sized jar of pickles for what Wal-Mart can sell a gallon for (who also got crushed).

============================================================

Now, with that said.......I don't buy the entire argument. It certainly sucks ass, but it also reeks with empathetic emotion and not enough sound fiscal policy. I personally think that Vlasic has the personal responsibility to make sure that no single distributor had the ability to crush them. I think that mom and pop shops need to start selling brands that Wal-Mart doesn't offer......that are either better quality (and more expensive)......or simply from another vendor (but still competitive).

I have a hard time not faulting Vlasic for getting too big and greedy for their own britches and allowing a massive conglomeration like Wal-Mart to bend them over a barrel of insolvency.

So I entertain both sides......but not enough to pluck any heart strings for Vlasic or most Mom and Pop shops when they had other means of staying competitive and not being taken advantage of.

Originally posted by: William T. Sherman

False. In a true free market society Amazon would lower their prices so low that nobody else would be able to match them and then slowly choke out all of their competitors. Then once everyone else is out of the way, they would hike up prices on account of their full control of the entire market. Just like Standard Oil did during the gilded age, back when we did have a free market and before we learned that they don't work as advertised.

Very classic argument and I actually love the conciseness that it is worded with.

I agree with almost all of your argument.......except for one part that I'm still trying to "finger" out inside my head.

A bigger, more established, distributor will undoubtedly have the financial clout to land a big bulk deal from just about any distributor.

Advantage point to potential monopoly.

Doing this, for long enough, would undoubtedly disrupt and impede sales for smaller businesses, who deal in much lower volumes.

Second advantage point given to potential monopoly.

Doing this forever could force out market competition in that specific market and make all other direct competition go bankrupt.

Third advantage point given to potential monopoly.

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Up to right there is where we agree entirely.......as for where we don't agree.

Then once everyone else is out of the way, they would hike up prices on account of their full control of the entire market.

Because once prices go back up......what stops smaller vendors from being able to become more competitive again?

The answer is nothing.........in a real economy.....with real competition.......it would take nothing to jump back in and start competing against a greedy ass (in this case) Amazon who was trying to become a price setter and not a price competitor.

This is where government regulation has historically ruined the market and forced an eternal monopoly to take place.

Monopolies are not a bad thing because they compete and win at setting extremely low prices for all consumers.......that's a ridiculous argument (for anyone other than those failing to compete with them).

That's like saying that its evil to compete and openly give out gold, silver, and bronze medals for being a great competitor. Only kool-aid drunk socialists believe in that crap.

Monopolies are only bad when they run off their competition, mandates/establishes (usually through government intervention) that they are a sole source provider and shouldn't have any new competition........and then becomes price setters who never have to worry about competing with products that only they exclusively offer.

That's when shit gets all sorts of ugly......thats when monopolies ruin lives and economies (much like they are actively doing in America today).

Seeing as how Standard Oil......which is now called Exxon-Mobile is still alive and well today, after merging right back together again.......I think that most of us have been sold a pretty big bag of cheap bulk lies ourselves.
Post edited by Mockery at 12/21/2011 3:42:58 AM

Originally posted by: (SF) DirtyRatFink
Ok Mockery. I might be missing something, so I'm going to let you explain to me why you think monopolies are evil.

See, I think that govt made/sponsored/protected monopolies are evil, because it gives an unsurmountable advantage to one company over another.

But as a business, your goal is to do better than your competitor. Why have a small ski shop, among thousands of other ski shops, when you can have a larger piece, get better deals from manufacturers, pass those savings onto your customers, and grow. That is the point.

Granted, I haven't given this subject a ton of thought, what am I missing?

You are missing absolutely nothing from what I have seen so far.

Winning at being a price competitor isn't the problem with monopolies.......it's monopolies forcing themselves to be a sole source price setter.....who somehow defies market competition......that makes them evil in my eyes.

Hopefully we are pretty much in line from the rest of my responses......if not please call me out on it.

This is some good shit that I haven't thoroughly worked out in my mind before now. It's also one of the few areas where I can sometimes contradict my usual belief system (which I hate doing and love seeing new and improved views on).

I don't want it to sound like I am rooting for big business to win out of the little guy, because I am not. I would love to see more people able to live out their dream, open a business and do well.

But as you say, that is from an empathetic standpoint. Unfortunately, empathy doesn't feed your family. (well, unless someone feels bad for you and gives you food )
But it all comes down to a negotiation. Walmart asks for price A, Vlasic wants price C, and they settle, in this case, at price A. Nothing in the world is making Vlasic agree to price A, but agree to it they did. If Walmart didn't want to pay higher, they have every right and freedom to not buy it. If Vlasic wanted to make more money, they have every right and freedom to not sell it. If you as an end user dislike Walmart's business practice, you have every right and freedom to not shop there. If you are on a tight budget, you have every right and freedom to buy your Vlasic at the cheapest price (in this case at Walmart).


So far I see nothing amiss.

Where the problems start is when a large company approaches senator A and says "we will give X amount of dollars to your campaign fund, in return just pass this small legislation." Senator A then introduces a bill that requires certain conditions to be met in order for products to be sold. These conditions mean a crippling investment into r&d, manufacturing processes, etc, that smaller competitors simply cannot afford. Now the game has changed, and the large company has an unfair advantage not given by the free market, but by regulators who have a vested interest in seeing this particular company succeed.

Originally posted by: (SF) DirtyRatFink
I don't want it to sound like I am rooting for big business to win out of the little guy, because I am not. I would love to see more people able to live out their dream, open a business and do well.

But as you say, that is from an empathetic standpoint. Unfortunately, empathy doesn't feed your family. (well, unless someone feels bad for you and gives you food )
But it all comes down to a negotiation. Walmart asks for price A, Vlasic wants price C, and they settle, in this case, at price A. Nothing in the world is making Vlasic agree to price A, but agree to it they did. If Walmart didn't want to pay higher, they have every right and freedom to not buy it. If Vlasic wanted to make more money, they have every right and freedom to not sell it. If you as an end user dislike Walmart's business practice, you have every right and freedom to not shop there. If you are on a tight budget, you have every right and freedom to buy your Vlasic at the cheapest price (in this case at Walmart).


So far I see nothing amiss.

Where the problems start is when a large company approaches senator A and says "we will give X amount of dollars to your campaign fund, in return just pass this small legislation." Senator A then introduces a bill that requires certain conditions to be met in order for products to be sold. These conditions mean a crippling investment into r&d, manufacturing processes, etc, that smaller competitors simply cannot afford. Now the game has changed, and the large company has an unfair advantage not given by the free market, but by regulators who have a vested interest in seeing this particular company succeed.

Exactly.......free will......free choices....and free market competition. All exceptionally great things.

Not sure if you have Netflix, or love beer, but "Beer Wars" is a great show about exactly this.

It talks about a three tiered distribution system, setup and enforced by the government, since the end of the Prohibition, that is primarily controlled by Anheuser Busch, that completely fucks over microbreweries from being able to sell their products directly to the public, especially via the internet, to the public that clearly demands them.

Our system is riddled with monopolies today........and our government loves them. Nobody makes a better campaign contributor than a massive monopoly looking to buy more market favoritism/regulation/derguatlion (whatever statists sponsored shit they want to call it today).

Be it telecoms, oil, electricity, the internet, media, we are ingrained with antitrust conglomerations to our core.

We have essentially become about the least competitive, allegedly, capitalistic markets that I have ever seen in my life. There is a reason that China, with it's still sickeningly central planned Communal-Fascism, is kicking the shit out of us.

Too much riding on laurels and forced coercion/relevancy from government.......too many top to middle managers ......not enough actual working workers (on things they should be working on).

Everyone is fat off of someone else's hog meat and not from the fruits of their own labor.
Post edited by Mockery at 12/21/2011 4:31:14 AM