Anyone know what makes a free enterprise economy work?

[Brian R Pateman]

Simple, copy the Germans. Encourage businesses in the hands of families and long term private owners. Train youngsters in PROPER apprenticeships and traineeships. Work hard. Have a cash economy only buying when you have saved up. Keep businesses out of the hands of accountants and asset strippers - locusts as the Germans call them.

It's very simple really but no-one listens.

Al

And have legislation to prevent German businesses being wholly controlled by foreign companies.

Globalisation is the primary reason for most of the economic problems we face now. The earlier point about small businesses is very valid. It is harder for most people to rip off their neighbours than it is to profit from exploiting people you don't know, don't care about and who can't turn up on your doorstep.

[J.Y.Kelly]

My head hurts!
Kelly.

[thirdcrank]

I'd say we suffer from short-termism (if that's a word. The first-past-the post system discourages politicians from looking beyond the immediate because they know they will inevitably be in opposition eventually: immediate popularity is their only aim. (Their only thoughts about the longer term involve cosying up to big business so they will eventually have the sinecures like non-exec directorships to keep them in the style to which they think they are entitled.) In any case, they spend vastly more effort on spin than delivery, which may be why there is more interest in so-called media studies than training to be an underemployed engineer.

The ownership of Britsh industry - whose share capital is largely in the hands of pension funds and the like - is something else that encourages short termism AKA the quick buck. Afaik, German companies finance their working capital through bonds on which they pay fixed interest and so they are encouraged to plan for the longer term.

Apart from that, we have a society divided by class, which isn't the way to encourage a bit of joint effort.

[thirdcrank]

Meanwhile, I see that the contract to print our banknotes is due for renewal and is out for tender. The current contractors - De La Rue have been doing this work since 2003. Let me hasten to point out that this isn't "money printing." The Bank of England doesn't go in for that - they just create it electronically. I should have thought from runners should be John Waddingtons who have vast experience printing Monopoly Money.

Talking of Monopoly Money the new contract will run till 2029, when nobody knows what the £ will be worth. Lucky that Sir Mervyn has a firm grip on inflation. The only cloud in an otherwise blue sky is the way prices keep going up, but you can't have everything. Even so, I'm surprised there's no mention of the possibility of an official Bank of England wheelbarrow.

[Mick F]

It wasn't so long ago (20odd years ago?) that Scottish notes were printed in Saltash, Cornwall.

Dunno where they're printed now, the firm in Saltash went out of business.

[Mike Sales]

To get back to the original question.
If we judge by the economy which proclaims itself the finest example of the power of free enterprise, that is the USA: what makes a free enterprise economy work is government subsidy.

[TonyR]

In order to interpret this thread you have to remember that an economist is someone who will tell you tomorrow why what they predicted yesterday didn't happen today.

[hexhome]

Or Milton Friedman http://en.wikipedia.org/wiki/Milton_Friedman

Probably get more sense from Milton Jones - http://www.youtube.com/watch?feature=pl ... zDRhphRYjw

[531colin]

......... what makes a free enterprise economy work is government subsidy.

Where does the money come from for the Government subsidy?
Doesn't it come from taxation raised from the aforementioned free enterprise economy?
(or maybe they just print it?)

[mrjemm]

What makes a free...

The proles knowing their place and suffering for the wealthy.

...enterprise economy work?

I think it's a leading question. Does one?

[The Mechanic]

A simple explanation is this:

You sell me your old bike for £10 because you are skint.
I buy a £1 pot of paint and give the bike a new coat.
I then sell you a new bike for £20 because you really don't want to be without one.
I have, in fact, sold you back your old bike and made made £9 profit.
You have only what you started with but have £10 less

To those that have, even more shall be given and they shall have abundance
Those that have not, even that which they have shall be taken away and they shall have nothing.

[Sooper8]

Well, it doesn't work does it?
It lurches from boom to bust because that is inherent in it's nature.
At it's heart is an ideology that believes human nature is fundamentally selfish and greedy.
It is based on the value of profit - therefore anything that makes a profit must be 'right' regardless of quality or ethics. Hence all the arms sales to dubious nations, huge economic disasters, pollution and let's not even get started on the system of rewards for bankers that is just flawed economically in anything but the very very short term.
The utilities went out to the 'free market' as did the railways and soon to be the schools and the health service. Are they any better left to compete in the market? Of course not, they are far worse.
When people realise that transport, health, education and basic utilities need to be publicly owned in order to safeguard against greedy share owners then that will be a good thing.

[The Mechanic]

Well, it doesn't work does it?
It lurches from boom to bust because that is inherent in it's nature.
At it's heart is an ideology that believes human nature is fundamentally selfish and greedy.
It is based on the value of profit - therefore anything that makes a profit must be 'right' regardless of quality or ethics. Hence all the arms sales to dubious nations, huge economic disasters, pollution and let's not even get started on the system of rewards for bankers that is just flawed economically in anything but the very very short term.
The utilities went out to the 'free market' as did the railways and soon to be the schools and the health service. Are they any better left to compete in the market? Of course not, they are far worse.
When people realise that transport, health, education and basic utilities need to be publicly owned in order to safeguard greedy share owners then that will be a good thing.

Actually, considering it had been going on for several centuries, I would say it does work. Not perfect, but it does work.

[mrjemm]

The utilities went out to the 'free market' as did the railways and soon to be the schools and the health service. Are they any better left to compete in the market? Of course not, they are far worse.
When people realise that transport, health, education and basic utilities need to be publicly owned in order to safeguard greedy share owners then that will be a good thing.

Very +1.

And raise you public/council/LA housing.

[iviehoff]

A simple explanation is this:

You sell me your old bike for £10 because you are skint.
I buy a £1 pot of paint and give the bike a new coat.
I then sell you a new bike for £20 because you really don't want to be without one.
I have, in fact, sold you back your old bike and made made £9 profit.
You have only what you started with but have £10 less

What happened there is that someone earned £9 from
(a) the realisation that the bike could be renewed with a can of paint,
(b) from their dedication of time and skill to obtaining and applying the paint
(c) marketing the renovated product.

So actually your example is in part a brilliant example of capitalism in action, and a positive example rather than a negative one.

Too often these days we chuck stuff away because we do not have the skill or time to fix it ourselves, and other people charge so much for that skill and time it would be cheaper to buy a new one.

However your opening comment was that the bike was sold because the owner was skint. He later had the funds to retrieve the (renovated) bike for twice the money, so plainly it was only a temporary problem. Temporary cashflow constraints can be resolved with short-term loans. You may have heard of the Grameen Bank in Bangladesh, whose founder won the Nobel Peace prize, which provides the micro-finance needed for life and small businesses in that country. Over-regulation, or inappropriate regulation, of financial systems results in micro-finance in places like the UK either being unavailable to relatively poor people, or only available at very high interest rates (loan sharks). Heavy-handed regulation is often a dampener on economic activity.