Thursday, July 26, 2012

If Laissez-faire is so great, why doesn't Wal-Mart follow it?

I was just musing as I cook dinner about companies profits and business models, and the economic models of the candidates they support.

Businesses run a more or less Keynesian model, running a deficit mode in times of depression, running a surplus at all other times of the year. When the economy is bad, most successful businesses will stop growing, but won't cut back. Right now the terrible drought/heat wave across the country is hurting farmers, and in order to keep themselves in business many are taking a loss this year to keep their livestock alive, so that when the drought is over they can more than recover their loss. Every successful business does this. They run a deficit in the bad years to stay in business so that when the economy is good they can recuperate their relatively small loss. These are the winners of a capitalist system. (or, frankly, Democratic Socialist systems like Europe, Japan, Australia, and Canada) 

However, many companies that follow this model and their leaders support politicians who run a laissez-faire economic policy. Instead of holding on or investing during the down times, they support cutting streams of revenue (taxation), cutting spending, and shrinking the size and scope in order to balance the budget. I want these businesses that support these policies to put their money where their mouth is and adopt this policy for their businesses. First of all, when they see their expenses exceed their revenue (like many farmers are currently seeing) they should cut their streams of revenue which are also their largest expenditure. They should close store fronts and they should fire employees in massive numbers. These are the largest expenditures to almost any company. They should put on sales to clear their stores or overstock their warehouses. By cutting their employees (wages) and storefronts (management costs) laissez faire would predict that this should balance their budget. Then why don't they? Because the world doesn't work like that. They are cutting the future revenue streams when their industries recover in a few years at the maximum.

In fact, no Fortune 500 company does this. The only times they do this is when they are in Chapter 7 Bankruptcy, like when Borders closed last year after their foolish mistake to give Amazon control of their website (idiots). But if Laissez-faire was so great, and they obviously believe in these policies they should put their money where their mouth is and stop practicing the Keynesian model they follow (or close corporate equivalent) and practice the laissez-faire model they preach (or close corporate equivalent).

They also should end their double standard when it comes to movement of goods across the world when goods can travel across borders for little to no charge at gigantic volumes without prearranging the crossing but people need to spend months setting up visas and paying taxes for practically the same thing across the same borders. I do not oppose free trade, but if we are going to allow the free movement of goods we need to allow free movement of people to stop our hypocrisy. Before people start saying that it is to protect us, then why do we import and export so many dangerous items at little to no charge (depending on the border) where average people can't travel freely through most of the world. The European Union did it right, they said something like "sure, you can move your goods freely between the borders large corporations, but people need to move freely also." Because of this, Sarkozy is no longer President of France after those terrible things he said about Poles and Gypsies. Racism has had a massive hit. On top of that, if I hadn't set enough nails into laissez-faire's coffin I want to point out that the current practice of laissez-faire in Greece and Spain and Italy are collapsing their governments' revenues, rapidly increasing their unemployment, and cutting all sources of revenue. Just what Thatcher, Reagan, and other crooks want! Despite what they claim their governments are only getting less revenue through their absolutely perfect practice of laissez-faire which most Americans call REAGANOMICS!

Just sayin'

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