Growth

[horizon]

if income is the same or more than expenditure then why do you need to get rid of staff in the hope of producing more profit? That, I believe, is called greed.

that's both harsh and naiive.

a company has to evolve to become ever more competitive because that is what the competition will be doing. if one company doesn't keep up, then it'll go under.

then there's regulations. if the income remains the same, where does a company get newly required paternity pay from, or pay a carbon tax, or meet ever more demanding H&S commitments?

But I would go back to what I said previously: if it is expanding or 'streamlining' so that it can keep going then that's fair enough, if on the other hand it is expanding or 'streamlining' because it just wants more and more profit then that can lead to hardships for its workers, and even the end of the organisation if it over stretches (you only have to look at the current financial crisis to see an example of this...which is what got the topic going in the first place).

It's maybe worth noting that what concerns many people the most at the moment is low interest rates whittling away their savings. So, in pops the question "where can I invest my money for a better return?" Up pops the capitalist firm, "Here of course!" Along pops the socially concerned observer who is concerned that the drive for greater profits will squeeze both workers' pay and the number employed.

The moral of this tale is that capitalism is driven by the need for a return on capital invested; that return is constantly whittled away by competition and lower profit margins. So the drive for more profit is not necessarily an empty or greedy one - it's a desperate one.

[al_yrpal]

The trouble is with some here is that you are only seeing things from one point of view. If you started a business from scratch when you too old to get another job. You built it up working all hours. You have saved it from disaster several times. You found that people you employ have let you down tried to cheat you with the danger that they could wreck what its been so hard to build, you get hard, objective and pretty ruthless. You are not a charity, you have built something that provides satisfying well paid employment for lots of others.
You continually seek better ways of delivering your product producing more for less. If you have a strong workforce and a growing business, you have strength and security for everyone. We are in a world where the strong survive and the weak fall by the roadside. If you don't play the game you will go the way of British Leyland and the rest who failed, then everyone loses.

Brooks is a well marketed marque just like Morgan Cars, nothing chinese will have the same cache
Growth is good, greed is not, you can have growth without greed

Al

[reohn2]

Al
I ran my own business for 25years.

[horizon]

We are in a world where the strong survive and the weak fall by the roadside. If you don't play the game you will go the way of British Leyland and the rest who failed, then everyone loses.

Brooks is a well marketed marque just like Morgan Cars, nothing chinese will have the same cache
Growth is good, greed is not, you can have growth without greed

Al

Al, I agree with that. Interestingly, Morgan decided against the advice of John Harvey Jones to go for rapid expansion and have, perhaps as a result, survived. But Brooks is now Italian owned and Morgan is a niche. Most firms will, as you say yourself, compete or die. Capitalism doesn't have it all its own way: institutional restraints (as in Germany), nationalism (as in Spain in the post-war years), protectionism (in the US) and consumer inertia and loyalty all stand in the way. But national wealth arises from unbridled capitalism. The fact that the nation is richer but the people are poorer is ignored.

[thirdcrank]

Aldi has been mentioned above, in the context of the teutonic work ethic, if I've understood the post correctly. It's interesting that whenever European employment practices are mentioned in the UK (and I'm conscious that the EU is larger than Germany) the cry from the employers' organisations is always that they couldnot afford the additional costs, loss of flexibility etc.

British Leyland has also been mentioned, and IIRC, one of the things blamed for the problems there was trade unions activity as in "intransigeant" and one of the things Thatcher is supposed to have done was to stamp that out.

I suspect that our society, still deeply divided on class lines, must play some part here.

While no company can survive without well-kept books, I think it's probably significant that the top people at British companies seem to be accountants, with the technical people in a subsidiary role, the Germans and many others seem to have it the other way round. The UK economy seems to be ruled by short-termism, and if that means selling assets to make a quick buck, so be it. The fact that these assets are being assiduously acquired by others with a longer-term view seems to go unremarked.

It's a basic assumption of traditional economics that people are "rational" which is a polite word for greedy - they want as much of the good things in life as they can get at the lowest cost. In a perfect world, the market keeps everything in balance and firms that pay too much go bust, and employees who claim too much lose their jobs. However, as firms have grown way beyond the original model of a single owner/employer with a group of employees, we have reached a stage where the people running many companies are themselves employees whose personal interests are not the same as those of the company. (Ironically, the owners of the company, in the form of the shareholders are often pension funds investing employees' contributions.) In particular, the top people make sure that their own contracts of employment include, as well as a telephone number salary, perks like compensation for any sort of job loss, even when caused by their own abject incompetence. These are,after all, excellent people who would go elsewhere if they were not paid handsomely. In their eyes, the only problem is the idle, thieving workforce, who will only clock-in for work if they are kept in constant fear of losing their jobs.

[al_yrpal]

The best and most successful bosses are much better than that. They know that treating people right produces the best performance, greater productivity, growth and profits which can be invested to grow the business.
Unfortunately deeply cynical views are all to common as are accountants who can only tell you what happened, not what is going to happen-one of the most important differences between the uk and germany

Al

[Si]

You found that people you employ have let you down tried to cheat you with the danger that they could wreck what its been so hard to build, you get hard, objective and pretty ruthless. You are not a charity, you have built something that provides satisfying well paid employment for lots of others.

Again, this is different to what you originally wrote. And again, I don't think that anyone would disagree with sacking someone who is cheating their employers and endangering the business's future. However, what we are talking about is cutting jobs just for the sake of increasing profit. A somewhat different kettle of fish.

[hubgearfreak]

if on the other hand it is expanding or 'streamlining' because it just wants more and more profit then that can lead to hardships for its workers, and even the end of the organisation if it over stretches

but a profitable business will be able to cope with the future. what if it needs new machinery? what if it meets new regulatory obligations? a business that hasn't accumulated some profit will be unable to deal with either and will have to go begging to the banks or go under.
if you're suggesting that there's a balance to be met, then i agree. we don't know enough of al's son's business to comment upon whether he's got the balance right, but i'm sure he's doing what he sees as being the best thing.

we think it right that people who are working should be safe at work, have limits on working hours and rights to maternity / paternity leave etc. (And whilst there's lots of huffing and puffing about the nanny state it's hard to argue that the lot of the average worker in this country isn't much improved compared to a 100 years ago) But we expect employers to compete in global markets with producers in countries that do not provide similar levels of protection. On the whole we seem content to expect other people somewhere else to have the conditions we used to have 100 years ago so we can have cheap stuff.

very eloquently put. i think this paragraph applies perfectly to the 'spa brooks clone thread', although that is just a review and the politics musn't be commented upon

[Edwards]

very eloquently put. i think this paragraph applies perfectly to the 'spa brooks clone thread', although that is just a review and the politics musn't be commented upon

As this is not the review section you can discus the politics here if you so wish. I agree that there is a double standard in this country with regard to workers rights.
Do not worry this government will carry on where the last conservative lot left off and try to reduce the Rights here to those of other countries.

[hubgearfreak]

this government will carry on where the last conservative lot left off and try to reduce the Rights here to those of other countries.

sad but true

[Vorpal]

I think one of the problems with today's economy--and not just in the UK--is the drive to increase profitability for shareholders. The concept of issuing stock (and related stuff, whatever you want to call it) is possibly a good one, as it allows companies to obtain money for investment that might be difficult to obtain otherwise.

However, the people (companies, investment groups, etc.) who buy a little piece of the company subsequently have an interest in how it is run. And unfortunately for far too many, that interest is primarily in making money. And if they play it right, they can make lots of money and sell their stock when the prices are high.

That leads to a short term focus for not just companies, but countries. And it has also, to some extent, defined how growth is seen in the economy.

[Si]

but a profitable business will be able to cope with the future. what if it needs new machinery? what if it meets new regulatory obligations? a business that hasn't accumulated some profit will be unable to deal with either and will have to go begging to the banks or go under.

There is a difference between having a contingency fund and increasing payouts to shareholders. Again I draw your attention to the recent banking crisis.

[Mattie]

If a company makes more profit doesn't it pay more tax on those profits ?
Isn't that a good thing ?
Isn't that where some of the redistribution of wealth comes from ?
No tax receipts means no government and no infrastructure - like Somalia - nobody investing in anything productive, no jobs, no money.
Or pretend like Greece did - pretend to be rich and spend lots of (borrowed) cash which was not backed up by productivity and therefore tax receipts. This can go on for some time but sooner or later you do not have the cash to pay back even the interest.
The basis of a "good way of life" (IMHO) is to have companies employing people and all paying their taxes which is redistributed those unable to find work, and also for the benefit of the wider society.

[Si]

Yes, but if all of that tax is being used to pay off the debt incurred due to the country over stretching then it's all a bit pointless - a lot of hard work to get back to where you started.

[tramponabike]

Socialist utopias are fine in theory but are useless in practice.
Al

Is that a fact?

Strange, as a socialist for almost half a century I have no knowledge of anything remotely resembling a "socialist utopia" ever existing "in practice". "Socialism" has never yet been achieved so how it's practicality can be judged in such an absolutist and dismissive way is a mystery to me. You may wish to criticise it in theory but have no evidence to judge it in practice.

The dominance of world capitalism has been achieved though and we are far better placed to judge its success or otherwise. At least we have the data and experience to form a valid conclusion from. Imo, the idea of a capitalist utopia (contradiction in terms!) succeeding "in practice" is already an evidentially proven fallacy. No more boom and bust?

Capitalism's failure to provide a world of social justice should be obvious to all and is effectively enshrined in it's own ideology. There is no getting away from the fact that economic growth is a fundamental and crucial element of the capitalist myth. It should also be apparent to everyone that infinitely continuous growth in a closed system is impossible.

Any exploitative system requires a constant supply of unprotected targets for it's continued exploitation. In the case of capitalism these targets include the finite resources of the planet and the labour of those who do the work. The finite nature of the planets resources is increasingly obvious. Unless we go the whole hog to outright slave labour, workers acceptance of subjugation to exploitation is far more complex and variable but also has it's limits.

We may previously have evaded these critical flaws in the capitalist dream by increasingly exporting our exploitation of resources and people to other parts of the world but dependence on imperialism is no longer an available solution for a small, bankrupt, nation in decline.

You may predict that a socialist utopia might be impractical, but we already know for a fact that a capitalist one is.

Capitalism is eating itself.

Personaly, I hope it chokes!