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| Why not? Sure, unemplyment may rise but overall market efficiency is bound to go up, which is better for us the consumers. As long as the market isn't an economy then prices would fall and we'd get innovation, etc Better than Governments being on control and generaly failing all over the place.
A balance is always the desirable option, though. |
Right now, corporations are not transparent enough to make that happen though. Look at public corporations, who is making the decisions? Usually the CEOs. Who hires the CEOs? The Board of Directors. Who hires the Board of Directors? The Shareholders. But here is where the problem is. Many shareholders out there do not research or oversea the company that they fund. Most go to their financial planners or use mutual funds. In the end, people know very little except that profits are increasing or decreasing. In many more cases, they just know that their portfolio is increasing or decreasing.
So when it comes to it, the only point of accountability is profit. Well, what is profit? Contrary to belief, profit is not the how much cash the company made after expenses. No, it is how much revenue was accrued after accrued expenses. Revenue and expenses do not necessarily encompass cash. Actually, they mainly encompass promises. If you come to me and tell me you will buy my computer for $500, it is a sale, even if no cash is exchanged. That means, $500 goes on the books.
At the same time, the rules of accounting make it so that it is more of an art-form than a science. Look at Enron. The company had revenues and profits growing like crazy with no liabilities. But in reality, the company owed a shit load of money and the revenues were not even close to what were being reported. Accountings were using their molding clays to deceive the public and its shareholders.
So if I was corrupt and I was a CEO of a company, I would do what ever I could to make the company look as profitable as possible, so when the shareholders see that one little number, they would extend my contract and give me a bonus. If the company goes under, fine. Who cares? I will still walk out a millionaire.
Now, do not get me wrong. I am pro-capitalism (but I also believe in a social element). I have a business degree, a business masters degree, and actually teach Marketing at the Uni level. I also used to operate a business with my family (but now I work for the Ministry of Health
To view links or images in this forum your post count must be 20 or greater. You currently have 0 posts.). I do not believe all business is bad. I believe most people have the right intentions. So I am no socialist or pessimist. But I do want to make it clear that there is not enough information out there for the market to control itself.