241 sats \ 8 replies \ @fm 5 Mar freebie \ parent \ on: 1 in 3 small public companies is unprofitable charts_and_numbers
There are several people wrinting abou this..
here is an example: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3901652
Not a fan of this guy.. but thats just an example
When wealth concentration keeps money stranded, it stops generating wealth.
lets say there are 3 people and only two exchange money. the one excluded cant generate weath even if he works.. ( measured in fiat, i know, but nuts on your pocket doesnt count when we analyze economy )
Also, when we insist on maximize profits, and reduce costs, to an extreme, either the product or the worker have to become poor. this because the profit is considered sacred and have to increase every year..
Im not agains capitalism, im just saying we dont have the best practices and we probably can destroy the best system we had if we dont regulate some things
This entire paper is operating under the fixed pie fallacy.
In your example - assuming human nature still exists - the person can generate wealth by accumulating capital that will increase the efficiency of the other 2.
I will agree that there are inefficient markets due to information asymmetry. In these markets, certain regulations aimed at reducing information asymmetry can be beneficial. Often times there are market solutions for this, but sometimes it is just not feasible.
However, the vast majority of regulations incentivize corporations to lobby the government for protection and etc. If not, it is likely a regulation that will hurt its competitors.
I am trying to find it, but at one point I looked at research on minimum wage and start up success. It was something like a 1% increase in minimum wage leads to a 3% reduction in start up success. Minimum wage and other regulations that increase costs for small companies on thin budgets only lead to more concentration of wealth.
The notion of "extreme capitalism" is similar to "late-state capitalism". they are buzz words that are actually describing a movement away from free markets.
I think there are a lot of concepts that you got wrong.
The austrians got it right, the problem is lack of capitalism + fiat. that generates weird economic effects and perverse incentives.
Wealth """concentration""" isn't a thing to be concerned only for those who are envious. Under hard money and Free Market 100% lassie faire the economy thrives, don't have such a cyclical bubles from the business cycle and capital goes with people who take better care of it. And yes, some people work harder, are more productive and thus accumulate more capital than others and it is fine.
Don't take me wrong, I'm not trying to be based or something but I honestly thing there is a lot of your point of view that is based in a lack of understanding of what capitalism is. Though I also think there is a bit of true in going against "this" system, since a lot of fortunes were created not on the basis of providing value to society but in being close to a politician or the money printer.
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As i said, im no economist. I leave Economic definitions to the Chief Finacial Officer who i often figth with over decisions.
Im a chemist, that happen to read some papers on extreme capitalism.
Im not defining nothing here.
I believe by professional experience that we live in some sort of extreme capitalism that is leading to the disappearence of commercial margins for small companies. As distribution is not even of fair ( as you mentioned the money printer proximity) and leads to a disruption of a healthy economy.