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Old 2012-11-12, 17:53   Link #41
Anh_Minh
I disagree with you all.
 
 
Join Date: Dec 2005
Quote:
Originally Posted by DonQuigleone View Post
Disagree. A company cannot exist without customers. A company exists to perform a function, and that function is defined by the customers that the company serves.

If customers no longer desire the company's services, it may as well not exist.
You won't have much of a company without operatives or investors, either.

Generally, a customer wants a product, shareholders and employees want money. They also have different things they're willing to give. If a company can't satisfy all three with what it's given, one of them will pull out and you have no company any more.
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Old 2012-11-12, 18:42   Link #42
DonQuigleone
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Quote:
Originally Posted by Anh_Minh View Post
You won't have much of a company without operatives or investors, either.

Generally, a customer wants a product, shareholders and employees want money. They also have different things they're willing to give. If a company can't satisfy all three with what it's given, one of them will pull out and you have no company any more.
Nope. A company can exist without shareholders. And rarely without even employees.

For the former, imagine if I decided to set up a business setting up students with the many engineering grads I know for tutoring sessions. This is a viable business that requires no capital investment, in this case you have a company with employees(myself and the tutors), but no investors or shareholders.

Likewise, imagine if I set up some coin operated microwaves/ovens in the local supermarket to allow customers to cook their own food on the spot, and they're exceedingly advanced and need no regular maintenance. Then I have a company with assets (and hence shareholders) but no actual employees. I simply have to pop by the ovens and regularly collect my money.

But there is no instance of a money making enterprise (a "company") which exists without a customer, of some kind.

So the employees or shareholders can each pull out, and the business can still continue to exist (though it will likely be damaged), but if the customer pulls out then the shareholder will go bankrupt, as he has created something no one wants (dead weight), and the employee will lose his job, as he no longer has a task to do.

Employees should concern themselves with serving the customer, and shareholders should concern themselves with whether the company is successfully serving the customer. It might be advisable for both to look for the other to be satisfied, but it is not a necessity for a company to run well. Arguably, the most disposable is probably the shareholder, as he plays no direct role in the value creation process.

I would define a business without a customer as being a "get rich quick scheme" whereby you only care about enriching yourself and don't care about serving a customer. Generally, such schemes don't work.
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Old 2012-11-13, 02:13   Link #43
Anh_Minh
I disagree with you all.
 
 
Join Date: Dec 2005
Quote:
Originally Posted by DonQuigleone View Post
Nope. A company can exist without shareholders. And rarely without even employees.
Which is why I used the terms "operatives" and "investors" at first. But then I switched back to the most common case because it's easier to visualize.

Quote:
For the former, imagine if I decided to set up a business setting up students with the many engineering grads I know for tutoring sessions. This is a viable business that requires no capital investment, in this case you have a company with employees(myself and the tutors), but no investors or shareholders.
It would still require a time investment. You'd need to advertise your business, and then you'd need to advance the first few expenses without treasury...

Quote:
Likewise, imagine if I set up some coin operated microwaves/ovens in the local supermarket to allow customers to cook their own food on the spot, and they're exceedingly advanced and need no regular maintenance.
Those don't exist.

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Then I have a company with assets (and hence shareholders) but no actual employees. I simply have to pop by the ovens and regularly collect my money.
Which still means one operative. If you're going to invent fictitious technology, why don't you say your ovens all work with electronic payments and transfer the money to your bank?

Besides, my point wasn't that every company was built around the same model, but that a company had to serve all the stakeholders - all the ones who give it something necessary to function, be it capital, money, or labor. If one of those doesn't apply, too bad, but it doesn't change the basic point.

Heck, if you want a customer-less "company", I could propose the example of an association for ecological preservation made up of volunteers who pick up trash on beaches or something.

Quote:
But there is no instance of a money making enterprise (a "company") which exists without a customer, of some kind.

So the employees or shareholders can each pull out, and the business can still continue to exist (though it will likely be damaged),
Actually, for the most part they can't. Your examples were cute, but at most they apply to a tiny fraction of enterprises. Ones built, from the ground up, to work without investors or employees.

Quote:
but if the customer pulls out then the shareholder will go bankrupt, as he has created something no one wants (dead weight), and the employee will lose his job, as he no longer has a task to do.

Employees should concern themselves with serving the customer, and shareholders should concern themselves with whether the company is successfully serving the customer. It might be advisable for both to look for the other to be satisfied, but it is not a necessity for a company to run well. Arguably, the most disposable is probably the shareholder, as he plays no direct role in the value creation process.
What are we, slaves? We concern ourselves with the good of the customers (who, presumably, want everything top quality instantaneously and for free, but will settle for less) as long as is it's in our interest to do so. If it isn't, it's time to either renegociate terms, or quit.
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Old 2012-11-13, 07:32   Link #44
DonQuigleone
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Quote:
Originally Posted by Anh_Minh View Post
It would still require a time investment. You'd need to advertise your business, and then you'd need to advance the first few expenses without treasury...
The initial investment is so minor as to be insignificant. I think the example stands.
Quote:
Those don't exist.
I could probably think of something better, but I got lazy. You might also have some kind of website which you have to pay to keep on a server, but doesn't need any employees to service it.
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Which still means one operative. If you're going to invent fictitious technology, why don't you say your ovens all work with electronic payments and transfer the money to your bank?
Good point.
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Besides, my point wasn't that every company was built around the same model, but that a company had to serve all the stakeholders - all the ones who give it something necessary to function, be it capital, money, or labor. If one of those doesn't apply, too bad, but it doesn't change the basic point.
The question is what is the purpose of a company, the reason it exists. Coca Cola exists to provide Cola to thirsty people with a sweet tooth. The Gap exists to provide a convenient place to buy a variety of casual wear for average people. Burger King exists to serve Burgers (and some other foods) quickly to people looking for a quick eat.

That is the reason they exist. They don't exist to provide excellent returns to investors. And they do so to make a profit, but the profit is after the fact, not before.
Quote:
Heck, if you want a customer-less "company", I could propose the example of an association for ecological preservation made up of volunteers who pick up trash on beaches or something.
You could argue that the "customer" in that case is the environment. Of course, the environment can't really "pay" for your services. If you were to make such an association but payed your volunteers a basic wage, then the customer would be whoever is providing that money, be it donors or the government. You are still providing them a service that is presumably of value to them.

You could also argue that the volunteers themselves are also the customers, and the full-time paid people organizing the association are the "real" employees. You are selling the volunteers the opportunity to feel good about themselves by cleaning up the environment, and they're paying with time rather then with money. In this case the association still has to cater to their customers (IE volunteers) needs and desires. For instance, those volunteers won't be happy if instead of clean up, you assigned them to do tedious paperwork. And if you ran your association badly, and had no customers (IE volunteers/donors), you're not going to be able to pay yourself.

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Actually, for the most part they can't. Your examples were cute, but at most they apply to a tiny fraction of enterprises. Ones built, from the ground up, to work without investors or employees.
I think most businesses can continue to operate if they lose their source of capital. They simply won't be able to grow as fast, but most businesses do not necessarily require that much seed capital.

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What are we, slaves? We concern ourselves with the good of the customers (who, presumably, want everything top quality instantaneously and for free, but will settle for less) as long as is it's in our interest to do so. If it isn't, it's time to either renegociate terms, or quit.
While we are doing our jobs, yes. Outside of work hours, perhaps you might want to renegotiate things if they're too harsh. While your working, your purpose there is to serve (and that might also be someone else in the organisation, even, not necessarily an actual customer). You are not being kept there so you can enrich yourself, and the business does not exist to enrich you.

While you are working, your concern is to provide the best service to your customer that is possible. What that is depends on what your customer wants, and what you think your customer wants. So the service might be oriented towards high quality, high value, or on fast delivery, or all three (or others I haven't thought of). Part of serving the customer is doing so in a sustainable manner. The customer is not well served if you go out of business tomorrow. And likewise, if the company is to continue to operate effectively, it needs to maintain a happy workforce, so it is necessary to pay them a satisfactory wage.

Everything stems from your source of income (the "customer"), and how best you can serve their requirements. In some situations, investors can even become the "customer" for instance in a hedge fund.
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Old 2012-11-13, 10:04   Link #45
willx
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I agree with the man that disagrees with us all.

1) All companies have owners. A owner can be the proprietor, a common shareholder or a limited partner .. ultimately though there is an owner.
2) That owner will put in the initial capital. This could be leases, working capital, whatever .. money to buy your microwaves, work out maintenance contracts, pay for inventory and the like..
3) That invested capital involves risk. Your business could fail. People might not use your microwaves.. Or maybe your microwaves could break? They might be stolen? You might lose your investment of money and/or time.
4) Because of the risk involved, owners require a return. Maybe it's a coffee shop and they do it so they can be their own boss, so the required return will be very low. Maybe it's a pure profit minded venture. Higher risk. Higher return.

It's not complicated, it's intuitive. Occam's Razor. That's how the economy works.

PS: Facebook's founding principal was "We don't make cool stuff to make money, we make money so we can make more cool stuff" -- and they did abysmally bad at the whole profit making thing .. but the reason why people were so heated up about it was the profit "potential" -- they have no since rejigged how they do advertisements and their focus on earning profits

It is decidedly so
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Old 2012-11-13, 17:27   Link #46
Anh_Minh
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Quote:
Originally Posted by DonQuigleone View Post
The initial investment is so minor as to be insignificant. I think the example stands.
Maybe. As I said, it doesn't matter.

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I could probably think of something better, but I got lazy. You might also have some kind of website which you have to pay to keep on a server, but doesn't need any employees to service it.
You always need someone. To do your taxes if nothing else.

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Good point.
The question is what is the purpose of a company, the reason it exists. Coca Cola exists to provide Cola to thirsty people with a sweet tooth. The Gap exists to provide a convenient place to buy a variety of casual wear for average people. Burger King exists to serve Burgers (and some other foods) quickly to people looking for a quick eat.

That is the reason they exist. They don't exist to provide excellent returns to investors. And they do so to make a profit, but the profit is after the fact, not before.
Wrong question. And wrong answer.

"Why does something exist" is a mostly philosophical question. You're free to make up almost any kind of answer. But from a more... practical point of view, the reason a company exists is that someone created it. Most likely to make a living, but not necessarily.

The question is, why do people keep contributing to its continued existence? And the answer to that depends on whom you ask. You're fixated on the point of view of the "customer" screaming at some poor minimum wage worker in a call center that his impossible demands are not satisfied.

But as I've said, several times, the customer isn't the only one contributing, and therefore not the only one with reasons to do things. A company is a convergence of interests. The customers, the investors, the workers. Even with slavery, where the interests of the worker is in not being flogged to death, you still need that convergence where all those who are necessary come together for their own reasons and keep a company alive.

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You could argue that the "customer" in that case is the environment.
But I wouldn't, because the environment isn't a person, and doesn't care. About anything.

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Of course, the environment can't really "pay" for your services.
It's not about money in the first place.

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If you were to make such an association but payed your volunteers a basic wage, then the customer would be whoever is providing that money, be it donors or the government. You are still providing them a service that is presumably of value to them.

You could also argue that the volunteers themselves are also the customers, and the full-time paid people organizing the association are the "real" employees.
Or I could use the term "stakeholder", which describes what I mean without unseemly stretching.

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You are selling the volunteers the opportunity to feel good about themselves by cleaning up the environment, and they're paying with time rather then with money. In this case the association still has to cater to their customers (IE volunteers) needs and desires. For instance, those volunteers won't be happy if instead of clean up, you assigned them to do tedious paperwork. And if you ran your association badly, and had no customers (IE volunteers/donors), you're not going to be able to pay yourself.
It could be one-man volunteering operation. The point is that it is about the will of everyone concerned. Not just one particular subset.

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I think most businesses can continue to operate if they lose their source of capital. They simply won't be able to grow as fast, but most businesses do not necessarily require that much seed capital.
I don't know enough about business to be sure, but I think most business are dependent on banks lending them money in the short term to smooth things out, and the banks' willingness to lend is conditioned on the existence of people not only believing in the company's viability, but putting their money where their mouth is.

More importantly, you're forgetting about the concept of ownership: if the owners want out and find no one to sell the company to, they will liquidate its assets and call it a day.

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While we are doing our jobs, yes. Outside of work hours, perhaps you might want to renegotiate things if they're too harsh. While your working, your purpose there is to serve (and that might also be someone else in the organisation, even, not necessarily an actual customer). You are not being kept there so you can enrich yourself, and the business does not exist to enrich you.
As I said, the question isn't "why does the business exist?", but "why do people keep it existing?". Different people, different reasons.

As for mine, well, it's obvious. It gives me a salary, I give it my labor. That's the deal. There are other, unwritten things involved, but the basis of my motivation is to make a living. The customer is only indirectly involved.

And no, the purpose of a company can't be solely to satisfy the customer. "Do this for me, or I'll take my business elsewhere" is a common negotiation tactic. A company, if it wants to survive, has to calculate the point at which it tells the customer to sod off. And no, it's not because the customer needs the company. Always more of them, the loss of one won't be noticed. It's because the company's survival and profitability are in the interests of its employees and owners.
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Old 2012-11-13, 18:02   Link #47
oompa loompa
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Quote:
Originally Posted by DonQuigleone View Post
The initial investment is so minor as to be insignificant. I think the example stands.
The example you made does not sound particularly viable. You are talking about engineering graduates, teaching college level work. I'm sure you know how much higher education costs. Do you really think you will be able to pay these guys more than they could easily earn otherwise with the minimal capital investment you're talking about? Do you really think that tutoring college freshman is more stimulating than the work they would get otherwise? If not, then the work is part-time, and on a small scale. It is not a viable option to support yourself with this kind of job, as an employee. As an owner, you will only survive till someone else has the same idea.

Quote:
The question is what is the purpose of a company, the reason it exists. Coca Cola exists to provide Cola to thirsty people with a sweet tooth. The Gap exists to provide a convenient place to buy a variety of casual wear for average people. Burger King exists to serve Burgers (and some other foods) quickly to people looking for a quick eat.

That is the reason they exist. They don't exist to provide excellent returns to investors. And they do so to make a profit, but the profit is after the fact, not before.
You could argue that the "customer" in that case is the environment. Of course, the environment can't really "pay" for your services. If you were to make such an association but payed your volunteers a basic wage, then the customer would be whoever is providing that money, be it donors or the government. You are still providing them a service that is presumably of value to them
No. They exist to make money first. I'm not saying that they shouldn't have other things on their agenda, but priorities. Its unsaid. Hell they're called for-profit companies as opposed to non-profit organizations. Its about making a living for yourself, not worrying about some nobody who wants your shit. Coca-Cola did not start because some guy thought 'Hey, I want to give all these wonderful people a sweet drink'. It was 'Right now, if I make a sweet drink people will BUY it.' All that the founders of GAP did was realize that there was a large section of the population that they could cater to to make money. I think people have a misconception about this type of thinking being wrong; not everyone is in a position to think about those who are less fortunate, especially when there is no personal connection. There is nothing wrong with the ambition of getting rich. If someones parents couldn't afford to send their kids to college, is it wrong for the kid to not put his children in the same situation? To not die of a disease? To see whats there in the rest of the world? To enjoy this one life that we get? I'm not saying it's correct, but I have a tough time genuinely believing that type of thinking is wrong.


Besides, by increasing the size of the organization, and increasing profits, you (hypothetically) increase the livelihood and standard of living of all your employees, Not to mention potentially create new jobs for other people. Another question, is it more important that people have a job and don't get paid that well, or just some people have jobs and get treated well? Can you have both? Probably not, because you certainly can't enforce love, even if that does genuinely increase peoples productivity more than other emotional stimulants. Instead, another company will cut corners on their employees and crush you. Look at Walmart. This is really not a long-run game, though it should be. If you try and think too long run from the start, in all probability you will be crushed. If you look through all the bullshit and lies most companies put out, I'm sure you will have trouble even finding a handful that run in the way you say companies should. It's not that they don't want to, they really don't have a choice if they want to survive. Like I said before, we haven't got the system correct, but the world must move on, and being cut throat seems easier than revolutionizing business practices. I once did an internship in an infrastructure fund, and I was shocked and disgusted by how short run people think. These guys are the worst, forget years, they care mostly about whats happening next quarter.

Quote:

You could also argue that the volunteers themselves are also the customers, and the full-time paid people organizing the association are the "real" employees. You are selling the volunteers the opportunity to feel good about themselves by cleaning up the environment, and they're paying with time rather then with money. In this case the association still has to cater to their customers (IE volunteers) needs and desires. For instance, those volunteers won't be happy if instead of clean up, you assigned them to do tedious paperwork. And if you ran your association badly, and had no customers (IE volunteers/donors), you're not going to be able to pay yourself.
Thats a good way of putting it, and you bring up an interesting point about what people want. What incentive can you possibly give your employees to give their customers their devotion. Speaking of NGO's, they rarely make a profit if they're run right. Perhaps its because of the way they're run?

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I think most businesses can continue to operate if they lose their source of capital. They simply won't be able to grow as fast, but most businesses do not necessarily require that much seed capital.
No. You need capital to start, and capital deteriorates. If you cannot replace your capital you are doomed. Not to mention the fact that the purpose of adding new capital is to increase productivity, not to inflate assets. I'm not sure you're right about a business not requiring that much capital, I hear office square meters are quite expensive. Naturally, the capital requirements for different businesses are different. If you're talking about the service sector, sure, you don't need that much capital in a conventional sense. Except when you're in the service sector it just becomes 'human' capital. It is not easy to train people in most things, and not cheap either.

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While you are working, your concern is to provide the best service to your customer that is possible. What that is depends on what your customer wants, and what you think your customer wants. So the service might be oriented towards high quality, high value, or on fast delivery, or all three (or others I haven't thought of). Part of serving the customer is doing so in a sustainable manner. The customer is not well served if you go out of business tomorrow. And likewise, if the company is to continue to operate effectively, it needs to maintain a happy workforce, so it is necessary to pay them a satisfactory wage.
Again... your purpose is not to make the consumer as happy as possible, I find a much more believable purpose is to make as much money as possible for the company. What drives customer service is competition, the same way that being cut throat is driven by competition. Lets say that there is only one company in the world that has the technology to make computers. Once a person buys a computer, where is the incentive to fix it for them if it breaks? Why bother about some nobody who can't keep his things in order. As hypothetical employee A of this company, I quite frankly care a lot more about putting food on my plate, going home and reading a book, than helping some shmuck out with his computer. After all, we're the only ones who make them so they HAVE to come to us. Maybe some will be unhappy, but they will still come. Only when there is another company, when there is an alternative, does this become important.

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Everything stems from your source of income (the "customer"), and how best you can serve their requirements. In some situations, investors can even become the "customer" for instance in a hedge fund.
Ah, but you forget, the consumers are as dependent on the producers. We are hopelessly dependent on them. It is because of this system we can live the way we do.

Though let me make myself clear; I'm quite uneasy the way we have embraced free market capitalism. I really believe, we will destroy ourselves if we continue like this, with this mentality. I find it... fair.. in a perverse, cold way, and I admire that. However, I certainly don't believe its sustainable.

Last edited by oompa loompa; 2012-11-13 at 18:21.
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Old 2012-11-14, 00:25   Link #48
frivolity
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I think the discussion is starting to become quite circular with the classic competing ideologies of Say's law (loosely translated as supply creates its own demand) and the Keynesian school (demand creates supply)
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Old 2012-11-14, 03:13   Link #49
oompa loompa
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Originally Posted by frivolity View Post
I think the discussion is starting to become quite circular with the classic competing ideologies of Say's law (loosely translated as supply creates its own demand) and the Keynesian school (demand creates supply)
Thats not actually where the Keynesian school is different... Not like there is a Says school of economics anyways. More importantly, while Keynes did disagree with Say, its not because he thought the truth was vice-versa. The difference is more subtle than that, and has a lot more to do with disconnects between the supply and demand side, as well (the cornerstone of Keynes famous General Theory) money neutrality. At any rate, the question of 'which comes first, supply or demand' is really an irrelevant chicken and egg question. A more important question is which effects the other more, when, and why ( Of course there is extensive literature on this subject)

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Old 2012-11-14, 12:06   Link #50
willx
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Re: U.S. Economy / Fiscal Cliff / Debt & Deficiet

Thought I'd pop in and remind people here of a concept we deal with a lot in restructuring. It's the difference between a balance sheet insolvency and a liquidation. A balance sheet insolvency is when a business is over-leveraged and it's assets become unable to ever to repay it's liabilities. A liquidation occurs when the underlying business is deemed to have no more or less valuable than if it was reduced and sold piecemeal.

A company that has a balance sheet insolvency can be saved. A compromise with its creditors can be reached. Certain liabilities will be left by the wayside, equityholders will get zero, the business will be sold or emerge owned by senior creditors. A company that needs to be liquidated is a company that cannot be saved. It's business is obsolete, redundant or otherwise no longer desired. The whole is worth less than the sum of it's parts.

Despite everything that is being said, remember that GDP is a proxy (albeit not a great one) for the aggregate productive capacity of a country. The U.S. as a country in aggregate produces significant services and goods consumed both domestically and internationally. We may not yet agree or know whether the U.S. is really insolvent or not.. but the above will remain true to more or less an extent whether social security and other services are decimated and debt is compromised.

Prospects remain neutral
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Old 2012-11-14, 20:45   Link #51
frivolity
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Originally Posted by oompa loompa View Post
Thats not actually where the Keynesian school is different... Not like there is a Says school of economics anyways. More importantly, while Keynes did disagree with Say, its not because he thought the truth was vice-versa. The difference is more subtle than that, and has a lot more to do with disconnects between the supply and demand side, as well (the cornerstone of Keynes famous General Theory) money neutrality. At any rate, the question of 'which comes first, supply or demand' is really an irrelevant chicken and egg question. A more important question is which effects the other more, when, and why ( Of course there is extensive literature on this subject)
That's very interesting, and I'd really like to hear more about that. Haven't really covered much about economic history or competing economic ideologies in my classes. All that I know about Keynes is his argument about wages being downward sticky and that the economy is slow to recover to long-run equilibrium.
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Old 2012-12-04, 12:58   Link #52
willx
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So, I missed this bit of "news" a while back -- things are looking gloomy in the land of the rising sun

Japan’s Foreign Minister ready to devalue the yen

http://www.theweek.co.uk/world-busin...dy-devalue-yen

This is after the country intervened in the currency markets in August already. It's all very shocking to me and is a clear sign that at some point in the future the entire developed world is in for either a long period of stagnant growth due to deleveraging requirements (with accompanying civil unrest) .. or some combination of repudiation of unsecured pension/social security liabilities as the younger generation pretty much decides that the older generation left it saddled with debt and liabilities and just refuses to pay some or all of it (with accompanying civil unrest)

This also reminds me about how historically export driven economies typically have a moderate-long period of significant growth then coupled with a startling decline. Wealth transfers can only happen for so long after all ..

Reply hazy, ask again later
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Old 2012-12-04, 16:54   Link #53
mangamuscle
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Hasn't been the strong yen a problem for the japanese economy for decades already?
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Old 2012-12-04, 18:19   Link #54
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Originally Posted by ogon_bat View Post
Hasn't been the strong yen a problem for the japanese economy for decades already?
JPY/USD historical exchange rate, from Jan 1, 2002 to Dec 1, 2012.



Source: FXTop.com

The "strength" of any currency is relative. You need to specify its "strength" against which currencies, and over which period of time.

There is no doubt that the yen has been rising, especially in the few years since the Federal Reserve's quantitative easing measures. The yen was seen as a "safe haven" currency and attracted an abnormal amount of interest from traders keen to preserve as much wealth as possible.

This is bad for an economy that depends heavily on exports. And it's made worse by the relative inability of the Bank of Japan to do anything about it. You can't beat the market on your own, after all.

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Originally Posted by willx View Post
This also reminds me about how historically export driven economies typically have a moderate-long period of significant growth then coupled with a startling decline. Wealth transfers can only happen for so long after all.
You'll need to qualify that. The so-called "slow down" in export-oriented growth comes from a variety of factors, not all of them necessarily bad. By and large, the relative decline is to be expected, as the economic base grows thanks precisely to the sustained prosperity made possible by exports.
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Old 2012-12-04, 21:30   Link #55
mangamuscle
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Originally Posted by TinyRedLeaf View Post
The "strength" of any currency is relative. You need to specify its "strength" against which currencies, and over which period of time.

There is no doubt that the yen has been rising, especially in the few years since the Federal Reserve's quantitative easing measures.
Exactly, it is not the yen getting stronger, is the all-mighty dollar™ getting weaker even as we speak (and the euro shouldn't be far behind).
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Old 2012-12-04, 22:27   Link #56
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Location: Singapore
Age: 39
Quote:
Originally Posted by ogon_bat View Post
Exactly, it is not the yen getting stronger, is the all-mighty dollar™ getting weaker even as we speak (and the euro shouldn't be far behind).
It's a bit of both. The yen has grown stronger against the US dollar, even as the US dollar has weakened against many major currencies including the yen. The US dollar has collapsed in the wake of the country's growing debt problems. Meanwhile, traders have been buying up the yen because they regard it as a reliable store of value.

Paradoxical, given Japan's national debt, which is twice the size of its GDP? Perhaps so. The key difference is that Japan's debt is backed up by its tremendous savings, so the shortfall is not regarded as unsustainable. Not yet, anyway. It's only a matter of time before it becomes toxic, so it's right for the national government to take action. To be sure, Japan will require far more fiscal measures than monetary action to tackle its 20-year malaise.
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Old 2012-12-05, 00:47   Link #57
SaintessHeart
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Join Date: Nov 2007
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Quote:
Originally Posted by TinyRedLeaf View Post
It's a bit of both. The yen has grown stronger against the US dollar, even as the US dollar has weakened against many major currencies including the yen. The US dollar has collapsed in the wake of the country's growing debt problems. Meanwhile, traders have been buying up the yen because they regard it as a reliable store of value.

Paradoxical, given Japan's national debt, which is twice the size of its GDP? Perhaps so. The key difference is that Japan's debt is backed up by its tremendous savings, so the shortfall is not regarded as unsustainable. Not yet, anyway. It's only a matter of time before it becomes toxic, so it's right for the national government to take action. To be sure, Japan will require far more fiscal measures than monetary action to tackle its 20-year malaise.
It is more of perspective. The Japanese had always been very confident of their currency that their traders are not willing to let go. It creates a buy and hold, and subsequently when the rest of the world has been shedding the USD, the tanking of th JPY is seen as a sign of "stability", thus creating the buyout.

A graph doesn't show as much as a biyearly or quarterly bar chart, given how the immense psychological backing currency speculation has.
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Old 2012-12-05, 03:03   Link #58
Arturia Polaris
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Join Date: Jan 2012
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I know this may sound idealistic, but the only way the world will move forward is when there are no boundaries left. In the 1930's the whole world clamped down with extreme mercantilism in an attempt to keep gold inside their own nations, and that brought us WW2.

If everyone tries to have less imports than exports, international commerce is reduced to virtually 0. More so if countries want to buy raw materials to produce manufactures to sell back.

Once the world starts thinking not in terms of nations but in the terms of a world, it'll all become much clearer. It's just a matter of time, a looooong time.

Just my humble opinion.

Arty
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Old 2012-12-05, 03:17   Link #59
TinyRedLeaf
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Join Date: Apr 2006
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Quote:
Originally Posted by Arturia Polaris View Post
I know this may sound idealistic, but the only way the world will move forward is when there are no boundaries left.

If everyone tries to have less imports than exports, international commerce is reduced to virtually 0. More so if countries want to buy raw materials to produce manufactures to sell back.

Once the world starts thinking not in terms of nations but in the terms of a world, it'll all become much clearer. It's just a matter of time, a looooong time.
You don't have to wait a long time. It's already a proto-reality, in the form of borderless multinational corporations. And, frankly, I'm not thrilled by the prospect of living in a global plutocracy.

In any case, even if you were to remove arbitrary political boundaries, division will still inevitably occur. It's a basic, inescapable reality of any functional economy: the division of labour by specialisation, which increases the quality of goods and services as well as overall productivity. And, in order for specialised groups to survive, they would have to trade with others to get the goods and services they aren't making on their own.
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Old 2012-12-05, 05:27   Link #60
SaintessHeart
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Join Date: Nov 2007
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Quote:
Originally Posted by TinyRedLeaf View Post
You don't have to wait a long time. It's already a proto-reality, in the form of borderless multinational corporations. And, frankly, I'm not thrilled by the prospect of living in a global plutocracy.

In any case, even if you were to remove arbitrary political boundaries, division will still inevitably occur. It's a basic, inescapable reality of any functional economy: the division of labour by specialisation, which increases the quality of goods and services as well as overall productivity. And, in order for specialised groups to survive, they would have to trade with others to get the goods and services they aren't making on their own.
I call BS on that. My job is under quality assurance, and as my company continues to segment and specialise departments, my workload grows. Never had I see much more defective products since the first month where they changed business plans and hired me.

It is more like "divide at the part when the people know what they have to do next due to their knowledge of what they have done previously" that division of labour works. Otherwise, overspecialisation means that productivity has no way to decrease returns - after all, prevention is better than cure.

Or maybe it is because I have joined a big company - too big, too bureaucratic, too inefficient.
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When three puppygirls named after pastries are on top of each other, it is called Eclair a'la menthe et Biscotti aux fraises avec beaucoup de Ricotta sur le dessus.
Most of all, you have to be disciplined and you have to save, even if you hate our current financial system. Because if you don't save, then you're guaranteed to end up with nothing.
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