A survey polled people on how they felt about capitalism and socialism - positive or negative. But did the pollsters give a definition of these two terms or ask respondents to give their own definitions? I think not.
See "Is Rush Limbaugh's Country Gone?", Thomas B. Edsall, New York Times, 2012-11-19.
Capitalism is gathering resources to do something, whether it's to start a neighborhood grocery or to start an airline. Capitalism is not the buying and selling of stocks and schemes based on the stock; that is finance. Finance can raise capital, but the secondary markets of that capital are not capitalism.
Socialism is the government providing all the resources to do something and controlling how those resources are used. I don't think there is a country in the world where that happens for all projects. Even China has private capital ventures. Social welfare is the government providing various safety nets or investments that help people with needs that "capitalism" doesn't provide to everyone. Most developed countries have capitalist economies supported by social welfare programs.
Think of LM Ericsson in Sweden, Nokia in Finland, Siemens in Germany, and FIAT in Italy. These large capitalist companies aren't going away. Well, maybe Nokia will go away but that's because of technology, not government interference.
And many of these social welfare programs depend on a large number of private organizations, large and small. Germany has hundreds of insurance companies underpinning its health care. England has thousands of physicians in private practice who provide government listed services.
What I find ironic is that proponents of "capitalism" don't understand how "socialism" makes "capitalism" work better. If there weren't government-provided roads, sewers, schools, and yes, regulation there would be chaos. Chaos is something capitalists do not need or want. If there wasn't government-sponsored research, many new ideas would never even reached the capitalists who would implement them into products. If there is a good public health care system, then corporations don't have to fund them directly at great inefficiency. Wasn't it G. Richard Wagoner of General Motors who said that he wasn't an auto executive but a health care executive? See "U.S. Firms Losing Health Care Battle, GM Chairman Says", Ceci Connolly, Washington Post, 2005-02-11.
Be careful how you define things. If you define things incorrectly or too narrowly, you may miss out on many opportunities for a better society.
Showing posts with label General Motors. Show all posts
Showing posts with label General Motors. Show all posts
Tuesday, November 20, 2012
Tuesday, August 28, 2012
Can't corporations live within their means?
Many complain about government borrowing and say that government should live within its means. But few complain about corporate borrowing. Shouldn't corporations live within their means?
From the semi-annual report of the AllianceBernstein Income Fund (Ticker AWF):
AT&T, 6.50%, due 2037
Ford Motor Co., 7.45%, due 2031
Citigroup, 8.50%, due 2019
Pacific Life Insurance Co., 9.25%, due 2039
Weyerhauser Co., 7.375%, due 2032
Borrowing does have its purposes, among other things having the capital for expansion or to smooth out cash flows. But how much borrowing is too much?
For example, Citigroup as of June 2012 had a debt to equity ratio of 3.024, that is, it owed bondholders three times as much as the value of shareholders' stock. See http://ycharts.com/companies/C/debt_equity_ratio. On the better side, General Motors had a debt to equity ratio of 0.3555. See http://ycharts.com/companies/GM/debt_equity_ratio. On the worse side, Ferrellgas Partners has a debt to Equity Ratio of 25.36. See http://ycharts.com/companies/FGP.
But why is Citigroup paying bondholders 8.50% when it pays savers 2% or less? See "Taking a Look At Citigroup's Latest Fixed-Income Prospectus", Rajiv Tarigopula, Seeking Alpha, 2012-07-11. Remember when savings and loans were required to pay 5% by law (which they used to justify not paying more)? And this 2% is not being paid for demand deposits, but three-month notes.
It gets even a bit screwier. Citigroup does offer a fixed-rate 15-year mortgage at 4.375 percent. So, it is borrowing at 8.50% to finance mortgages returning 4.375%. That doesn't sound like it's living within its means! See "Who Are the Best Mortgage Lenders for Bad Credit", Beth Lytle, eHow Contributor, no date.
From the semi-annual report of the AllianceBernstein Income Fund (Ticker AWF):
AT&T, 6.50%, due 2037
Ford Motor Co., 7.45%, due 2031
Citigroup, 8.50%, due 2019
Pacific Life Insurance Co., 9.25%, due 2039
Weyerhauser Co., 7.375%, due 2032
Borrowing does have its purposes, among other things having the capital for expansion or to smooth out cash flows. But how much borrowing is too much?
For example, Citigroup as of June 2012 had a debt to equity ratio of 3.024, that is, it owed bondholders three times as much as the value of shareholders' stock. See http://ycharts.com/companies/C/debt_equity_ratio. On the better side, General Motors had a debt to equity ratio of 0.3555. See http://ycharts.com/companies/GM/debt_equity_ratio. On the worse side, Ferrellgas Partners has a debt to Equity Ratio of 25.36. See http://ycharts.com/companies/FGP.
But why is Citigroup paying bondholders 8.50% when it pays savers 2% or less? See "Taking a Look At Citigroup's Latest Fixed-Income Prospectus", Rajiv Tarigopula, Seeking Alpha, 2012-07-11. Remember when savings and loans were required to pay 5% by law (which they used to justify not paying more)? And this 2% is not being paid for demand deposits, but three-month notes.
It gets even a bit screwier. Citigroup does offer a fixed-rate 15-year mortgage at 4.375 percent. So, it is borrowing at 8.50% to finance mortgages returning 4.375%. That doesn't sound like it's living within its means! See "Who Are the Best Mortgage Lenders for Bad Credit", Beth Lytle, eHow Contributor, no date.
Tuesday, August 03, 2010
GM buys into a good idea
GM has bought a minority stake in Bright Automotive, an electric vehicle start-up, "GM invests in electric vehicle start-up Bright", cnet news, 2010-08-03.
Bright has a prototype van that can run on plug-in electric or gasoline. The name of the van is Idea.
Why did it take me half the afternoon to realize that GM bought into the Bright Idea?
Bright has a prototype van that can run on plug-in electric or gasoline. The name of the van is Idea.
Why did it take me half the afternoon to realize that GM bought into the Bright Idea?
Friday, November 14, 2008
One solution for GM's problems
I sent the following to Barack Obama's transition web site at
http://change.gov/page/s/yourvision
One solution for GM's problems is for it to start selling like mad in China.
Supposedly many Chinese like big vehicles. American auto manufacturers traditionally have bought foreign factories rather than export. Rather than the paltry 50,000 vehicles that Ford supposedly sold in China, why don't all of the U.S. auto makers start some really serious sales in China.
Oh, I forgot, foreign languages are a "frill" in American schools. Well, maybe there are enough English speakers in China to respond to some of the American car ads broadcast or published in English.
http://change.gov/page/s/yourvision
One solution for GM's problems is for it to start selling like mad in China.
Supposedly many Chinese like big vehicles. American auto manufacturers traditionally have bought foreign factories rather than export. Rather than the paltry 50,000 vehicles that Ford supposedly sold in China, why don't all of the U.S. auto makers start some really serious sales in China.
Oh, I forgot, foreign languages are a "frill" in American schools. Well, maybe there are enough English speakers in China to respond to some of the American car ads broadcast or published in English.
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