jk's blog on the proclivity for war
In classical Greece the primary purpose of
government was the two-sided coin of war and defense. Courts and public works
consumed a much smaller percentage of taxes. The low productivity per hour entails
less tax money available. However, when Athens dominated the Delian League, the
windfall income was quickly consumed by the politicians headed by Pericles. This
role of warfare, including weapons and fortifications, today consumes between 30 and 50% of income for governments. Government has grown into providing a second vital service, that of the promotion of commerce. To do so, they help to maintain the infrastructure of roads, utilities, and like, and of assuring domestic
tranquility primarily by opposing religious, ethnic, and class violence (though there are unfortunate examples where government
partook in such violence). There is a steady evolution of government into a role
of promoting the public wheal.
The need for warfare is directly related to
the violent side of human nature and the relief of boredom. If man were by nature
much less violent, then the consumption of resources for war preparation and the building of armies would not occur. Given that we are what we are, there is hope, for education it is observed creates
other habits and activities, and those of learning on an average are less violent. Boredom contributes less. In the ancient world, Alexander the Great had no difficulty in recruiting mercenaries. The willingness of men to join is related in part to the tediousness of daily life. The automobile has done much to reduce boredom as well as shorter workdays, television, radios, and computers. Increased leisure time entails a reduction in tedious labor. It has been 35 years since the last major (Vietnam) war, and globally there has been a steady decline as
measured by percentages of population and costs in warfare over the last 60 years. Hopefully,
within the next 2 centuries both warfare and its preparation will cease, and life will be far less tedious. I am an optimist.
JK’S BLOG ON MYTH THAT
BEING PUBLICALLY TRADED CORPORATION IS BEST
Corporate structures:
1). Privately owned corporations. Because of tax laws business
are structured into corporations, and thus even in a tightly held not traded corporation there is a division of stock, generally
within in one family, and there is at least on paper corporate officers. The
stock theoretical worth is equal to that of the net assets of the corporation. The
net assets are called book value.
2). Publicly traded corporations. Each shareholder owns a percentage
of the net assets of the corporation; however, the shares are worth what they can be sold for.
If one takes the today’s price of the shares and multiples it by the number of shares outstanding, the value
will be at some multiple of the book value. However if more people attempt
to sell shares than purchase on a given day, the price of the shares decline, and thus so does the book value.
3). The sales price of a corporation (as during a merger) is the one way of evaluating a corporation’s
worth. It is often above the book value (assets minus debts) because a premium
is paid for its good will (name and customer base) and projected future profits.
4). When a corporation buys another that is publicly traded, normally there is an exchange of stock so that
the shareholders of the corporation purchased have their shares retired and replaced with the shares of the purchasing corporation.
5). Corporations can function efficiently without a stock market. It
is all a matter of management. Enron is an example of bad management. State run can do well. I worked from 1966 to 1968 for the
Pennsylvania State Liquor Board. Their distribution system was far better than
those in adjoining states, and the profits flowed into the state treasury and thus help fund public services.
There is a greater
degree of transparency in a socialist economy. The banks do not make a profit,
which they pay out to share holders. There are no stock bonuses to top management,
which for the larger corporations in the United States amount to 10’s of millions of dollars annually. The average earning on sales for a US corporation is about 10%, that is after all expenses are deducted. With sales of $1B, than means they have tacked on to the price of their tractors an
additional 10%. A $100,000 tractor costs them $90,000 (including all expenses),
the farmer is paying an extra $10,000 which goes into the corporate accounts. Part
of that will be given away as dividends on stock, the rest can be used for projects such as corporate expansion, stock buy
back, or purchase of assets such property. These profits are not necessary for
there
Another unnecessary
expense comes from marketing. In a socialist country, the government can simply
evaluate the tractors, and published their evaluation. Thus the farmer will be
able to make an informed choice when purchasing a tractor. Moreover, there is
no incentive to make parts that would fail early so as to promote sales of replacement parts.
As I have repeated
said, social is a superior economic system, but it won’t work until the most noble, moral, intelligent people run government. To have Bush, Kerry, and like run things would be to duplicate the failure of the
Soviet Union.
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