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Socialism Is Bad

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I get a worrying sense that socialism is becoming cool again. You can see it all over social media where people brag about joining the Democratic Socialists of America, and in the popularity of the socialist magazine Jacobin. If Trump fails terribly, I worry that left populism will be what replaces it and the end result will be a more socialist U.S. That’s bad because socialism is bad. Given the growing popularity of socialism, I think it’s worth talking about why socialism is bad specifically.

Matt Bruenig has written a useful piece on socialism that I think is a jumping off point. As usual with Matt, it’s written with clarity and specificity that is appreciated. Unlike a lot o vague paeans to how socialism is good and we should have it, Matt offers specific plans for how we could get to government ownership of business.

The plan calls for the gradual socialization of existing companies, and Matt tells me on twitter that this would apply only to large firms. It may be appealing to think of a massive, centralized company like Apple and assume that it wouldn’t matter whether the government slowly became the sole shareholders. After all (ignoring the importance of options in executive compensation for the moment) the shareholders aren’t doing the innovating, the employees are. What does it matter who the dividend checks go to?

One issue is that the government would not just own but control companies, and this plan doesn’t tell us what they would do with that control. And yes, Matt does see this control as a benefit and not a cost to be avoided. Would Apple be free to innovate with the government controlling it? Or would they be forced to onshore all their production? It would be a lot easier for Trump to push Ivanka’s clothing line if the government owned and controlled Nodstrom, Sears, and K-Mart. It is hard to both desire control presumably as a means to some unspecified end and also to assume this control won’t have negative consequences for productivity.

Second, even if we could easily socialize every large company in the U.S. without negatively affecting them, this does not tell us about the future large companies who don’t exist yet. If socialism was in place in 1995 would we have Google today? If we were socialist in 1975 would we have Apple today? Why would small business founders grow their businesses knowing that this would cause them to be socialized? This is especially true given that you can’t socialize the globe at once and companies on the cusp of growing large enough to be socialized would be free to locate in, say, New Zealand.

Fast growing, small companies are a very important source of new job creation and innovation. More productive firms are more likely to grow, and less productive ones more likely to exist. Telling firms to stay small or be socialized is going to give small, successful companies incentive to avoid the important growth dynamics that are essential to a productive economy. To take one recent example for how costly inefficiencies like this can be, Garicano, Lelarge, and Van Reenan examine laws in France that affect only firms with 50 or more workers. They find that this creates more small firms than would otherwise be the case, and the distortions lower GDP by 3.5% by increasing unemployment and keeping productive firms below their optimal size.

Indeed, a broad literature shows that the inability of small successful companies to grow is an important factor that holds back economic development. Hsieh and Klenow show that in the U.S., as manufacturing firms age they get bigger. The effect can be seen in the graph below, from Charles Jones “The Facts of Economic Growth”.  Hsieh and Klenow estimate that if U.S. firms expanded as slowly as they do in India and Mexico, total factor productivity in the U.S. would be 25% lower.

klenow

Because he is Matt Bruenig, I know exactly how he will reply to this: if reducing firm size along some margin is bad, then making firms be bigger must be good so let’s just mandate all firms be large somehow. Of course this ignores the fact that it is not arbitrary size that is good, but a system that incentivizes the most productive firms to grow and the least productive to shrink or exist. It is the productivity increasing selection mechanism of capitalism that matters, and not just the mere outcome of firm size that should be mandated by politicians like some kind of dial to turn up or down.

Socialism is bad and it is bad that socialism is becoming cool again. Nevertheless I enjoy reading Matt Bruenig and other new socialists who clearly lay out their ideas for how it all would work. I think entrepreneurship, productivity, dynamism, and reallocation are first order factors for economic growth and socialists should address these issues. There are many other reasons why socialism is bad, but I think this is an important place to start.

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dukeofwulf
4 days ago
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People are rightly unnerved by companies with too much power, because we've seen how it can go wrong. Well, the largest company in the world by revenue is Walmart with $482 billion in revenue last FY. US government revenue in FY2016 was $3270 billion. Include state and local, and that jumps to $7030 billion.

One would think that, given the recent election, progressives would be backing away from philosophies that vests undue power in the government. We've just seen how easily those reins can be taken by a malefactor. We've also seen lots of large companies step up against that malefactor.
salsabob
4 days ago
duke, the vast majority of federal spending is for Social Security, Medicare and Medicaid - all that spending goes to individuals who then spend it in the private sector. Then there's Defense spending. Do you think Apple, Amazon or Google should be providing money to people instead? Do you believe they should be running our military? And at the local level, government spending goes almost entirely to schools, social services, roads, police and fire departments. You want Walmart to do that? Weird.
dukeofwulf
4 days ago
salsa, you're putting words in my mouth. I consider myself a moderate. Example: I support Dodd Frank and ACA, and think that neither went far enough. My point was that the US government is by far the largest organization on Earth, and it's fair to be skeptical of any attempt to increase its power further due to the risk of its abuse. - And yes, funds dedicated to SS, Medicare/Medicaid, schools, roads, etc are still under government discretion, and are a source of government power. I don't care if Amazon gets ripped off by their purchasing manager by giving a bid to their cousin, because I don't own Amazon; but if that happens to government, that's the people's money.
popular
5 days ago
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Flubnut
4 days ago
Please don't confuse true Socialism (aka Venezuela) with a large social safety net (aka most of EU). Higher taxes and more government services != government ownership and management of major industries.
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4 public comments
kleer001
5 days ago
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Companies need to have lifespans like other living things. Different legal instars. Moultings and matings.
subbes
6 days ago
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this post is wrong :)
SF Bay Area
sfrazer
6 days ago
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Yeah, I'm seeing a lot of "socialism is bad" without much supporting evidence.

There's a middle-ground between 100% laissez-faire capitalism and complete government ownership of all businesses.
Chicago
wreichard
6 days ago
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Having just lived in the UK, I lived to say there's absolutely nothing wrong with socialism.
Earth
acdha
5 days ago
The weirdest thing about these propaganda posts is the way they completely ignore all of the other countries available for comparison. I mean, maybe Denmark has taxes which are too high but just how bad can it be when everyone seems pretty content with it and surprised by, say, Americans pleading online for donations to cover their medical bills?

camellia-quince: Tweet of our fucking lifetime

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camellia-quince:

Tweet of our fucking lifetime

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dukeofwulf
14 days ago
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popular
14 days ago
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New GameStop Program Leads Employees To Lie To Customers

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Illustration by Sam Woolley

Have you gone to GameStop over the past few months and tried to buy a new game? Have they told you that it’s not in stock? They may simply be lying to you, fueled by a new program that discourages GameStop salespeople from selling unopened copies of video games.

The program, called “Circle of Life,” gives each GameStop store different percentage quotas for 1) pre-orders; 2) reward card subscriptions; 3) used game sales; and 4) game trade-ins. Each of these quotas is based on the store’s total transactions. Pre-orders and reward cards subscriptions are based on the number of transactions, while used game sales and trade-ins are based on the total dollar value of transactions. If a store’s quota for used game sales is 30%, and the store sells $1,000 worth of merchandise, GameStop expects at least $300 of that merchandise to be pre-owned.

So if someone walks into GameStop and picks up, say, a brand new copy of Yakuza 0 without 1) pre-ordering another game, 2) subscribing for a new rewards card, 3) buying a used game, or 4) trading in some games to help pay for it, then the transaction will knock down all four percentages.

The more new games an employee sells, the more used games they’ll have to sell to make up for it. In other words, according to salespeople speaking to Kotaku and elsewhere on the internet, GameStop is incentivizing employees to stop people from buying new games and hardware. GameStop staff say the company has threatened to fire people who don’t hit these quotas, which is leading to all sorts of scuzzy tactics.

“We are telling people we don’t have new systems in stock so we won’t take a $300 or $400 dollar hit on our pre-owned numbers,” one GameStop employee told me in an e-mail, requesting anonymity because he was not authorized to speak to press. “This is company wide and in discussions with my peers it is a common practice. We also tell customers we don’t have copies of new games in stock when they are on sale—for example, Watch Dogs 2 is currently $29.99 new and $54.99 pre-owned. We just tell them we don’t have the new one in stock and shuffle them out the door.”

The Circle of Life program, which began late last year but ramped up in early 2017 according to staff, attaches a specific “COL” score to each employee and each store. Each of the four categories represents 25% of that total COL score. So if a store hits their quotas for pre-orders and rewards cards, but not for trade-ins and used games, their COL will be 50%. If an employee hits all four of his quotas, he’ll get a COL of 100%.

GameStop staff have told me that corporate managers are monitoring both stores and individual employees, asking everyone to get a COL score of at least 75% by hitting at least three of their four quotas. If a store is hitting their COL targets but one salesperson is not, that salesperson may face punishment or even lose their job, according to company employees.

When contacted by Kotaku, GameStop’s corporate office sent over the following statement: “All of GameStop’s internal programs are designed to provide our customers the best value in all their video game purchases, including new and pre-owned merchandise. With any program, opportunities arise for improvement and we will continue to refine it to equip our knowledgeable store associates to provide a great store experience.”

Customers have long complained about GameStop’s tendency to push pre-owned games and pre-orders, but this new Circle of Life program has taken forcefulness to a new level. Employees across the web are complaining about this new practice, which they say punishes them for doing their jobs. On the GameStop Reddit, employees have gathered to share gripes and tips for hitting their COL numbers so they don’t get fired.

But these numbers are often out of the staff’s control. During game launch events, for example, GameStop employees will usually sell nothing but new games, damaging their percentages and therefore lowering their COL scores.

“The other day working the RE7/Kingdom Hearts launch we were telling walk-in (non-reserve) customers that we didn’t have the games in stock or that they were only for pre-orders in order to not sell new copies of games,” said a GameStop employee. “It’s that bad.”

A second employee also said they found themselves in trouble after selling a bunch of new games last Tuesday, during the launch of Resident Evil 7, Kingdom Hearts 2.8, and Tales of Berseria. “Now I’m fucked for the week,” that employee said. “Now I have to sell way more pre-owned this week.”

“Circle of Life” has long been a buzzword at GameStop, which makes the bulk of their profits off sales of pre-owned games and hardware, much to the dismay of video game publishers. In GameStop’s eyes, the transaction of video games is meant to be circular: You buy a game, trade it in, and use the extra cash to buy another game—ideally pre-owned.

Over the past few years, GameStop has gone through a number of policies to encourage pre-orders and reward card subscriptions, so some employees are hoping that the Circle of Life program will soon go away. But for now, it’s leading to a lot of stress.

“This has all been under the guise of ‘doing better for the customer’ and ‘giving the customer what they want/a better value’ which is definitely not true,” said a GameStop employee. “Why would I get reserves if it’s going to lead to a new sale? Why would I sell you a new game that you’re excited about if it’s going to hurt my numbers at the end of the day? Why would I sell you a new system if I’m going to be fired for doing so? It doesn’t make sense.”

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dukeofwulf
17 days ago
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This sounds a lot like the scheme Wells Fargo had, which led to a fine of $185 million... Too bad there's practically no regulatory oversight of retail customer abuse.
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A Christmas message from an unexpected source

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I found this [in 2008] at a European website reporting on the "alternative Christmas message" broadcast by Channel 4 that year. I've edited it for length, and trimmed some of the phraseology to disguise the speaker. 

See if you can guess who wrote this and delivered it on television Christmas evening (videos available on YouTube).  The more perspicacious among you may recognize the source or remember the event.  My posting of this message may offend some TYWKIWDBI readers, but I hope it will prompt some deeper reflection in others - especially at this time of year.
"[God] created every human being with the ability to reach the heights of perfection. He called on man to make every effort to live a good life in this world and to work to achieve his everlasting life…

Jesus, the Son of Mary, is the standard-bearer of justice, of love for our fellow human beings, of the fight against tyranny, discrimination and injustice…

"Now as human society faces a myriad of problems and a succession of complex crises, the root causes can be found in humanity's rejection of that message, in particular the indifference of some governments and powers towards the teachings… of Jesus Christ.

"The crises in society, the family, morality, politics, security and the economy which have made life hard for humanity and continue to put great pressure on all nations have come about because… some leaders are estranged from God…

"If Christ were on earth today, undoubtedly He would hoist the banner of justice and love for humanity to oppose… terrorists… the world over

"Today, the general will of nations is calling for fundamental change… demands for a return to human values are fast becoming the foremost demands of the nations of the world.

"The response to these demands must be real and true. The prerequisite to this change is a change in goals, intentions and directions…

"We believe Jesus Christ will return… and will lead the world to love, brotherhood and justice.

"The responsibility of all followers of Christ… is to prepare the way for the fulfilment of this divine promise and the arrival of that joyful, shining and wonderful age…

"Once again, I congratulate one and all on the anniversary of the birth of Jesus Christ. I pray for the New Year to be a year of happiness, prosperity, peace and brotherhood for humanity. I wish you every success and happiness."

Can you guess who wrote this?  Give up?  The answer is at the Belfast Telegraph.  

Reposted again for Christmas 2016.
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dukeofwulf
56 days ago
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rebel-timelord: wetwareproblem: wetwareproblem: Unfriendly fucking reminder that the best...

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rebel-timelord:

wetwareproblem:

wetwareproblem:

Unfriendly fucking reminder that the best predictor of mass shootings is not mental illness, but being an angry young white man who has recently experienced rejection and has easy access to guns.

Bringing this back because it makes terrible people angry. And I’ll add a note to all the people saying “But you’d have to be mentally ill to do that!”: Mental illness is, by definition, abnormal. Does “mediocre white boy is so entitled that he resorts to violence when told no” really sound particularly unusual to you?

I devoted my entire graduate studies and thesis on mass school shootings, multiple murderers, and criminal psychology and I can tell you that this is in fact completely true and is suported by an unbelievable amount of emperical, quantifiable data that I slaved over for years. 💯

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dukeofwulf
57 days ago
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Exhibit 15372 on why Trump won: Hypocrisy. Stereotypes are bad, except when applied to white males. I don't care if you're right, you're alienating a lot of people, and you won't win the culture battle that way. Use some tact.
sirshannon
57 days ago
Heh.
popular
57 days ago
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quad
57 days ago
I want this to be true; but, [citation needed]
wmorrell
56 days ago
Not that hard to find: https://davinasquirrel.wordpress.com/2012/04/13/school-shootings/ School shootings: overwhelmingly by white males.
codersquid
56 days ago
The person's tumbler profile lists their name as Megan, and their age as 26. Searching scholar.google.com for articles since around 2012 keywords school mass shootings pulls up author names containing an M initial. I got impatient and stopped searching there. I'm not confident I picked the right date range either. I'm guessing >22 years old would be post-grad work.
codersquid
56 days ago
I totally wouldn't have posted my comment if I saw yours first. woot.
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Saturday Morning Breakfast Cereal - Irrational

2 Comments and 9 Shares


Hovertext:
I'm sorry. I'm so very sorry.

New comic!
Today's News:
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dukeofwulf
72 days ago
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When is Donald going to ban these from entering the country?
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Lythimus
72 days ago
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When is Michael Bay going to turn this into a feature film?
jhamill
72 days ago
Not soon enough!
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