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3 Firms Confess To Fixing LCD Prices, Agree To Pay $585M Fine
Oldyeller89 writes "LG, Sharp, and Chunghwa Picture Tubes pleaded guilty to charges of price fixing in violation of the Sherman Antitrust Act. They fixed the prices on LCD screens used not only in their products but also in other products such as Apple's iPods. The three companies agreed to pay $585 million in fines. Perhaps this will cause the price of our TVs to drop?" The New York Times also has a story on the outcome of this case.
I wonder if the price to produce a plasma television is just inherently much higher than LCD if the already generally lower prices on those were being fixed in many cases.
~ I am logged on, therefore I am.
$585M in fines... so, how much did they profit before that?
... I'd expect this kind of BS from Sharp and LG but not from Chunghwa Picture Tubes.
"Perhaps this will cause the price of our TVs to drop?"
Um, except that they just added $585,000,000.00 to their cost of production, sure.
G.
So since I paid them more money than I should have, do I get $30x#numberScreensBought out of this $585M fine? Who gets the fine money?
Perhaps this will cause the price of our TVs to drop?"
Right. because nothing lowers a company's prices like an unexpected $585 million expense.
The LCD's in question were not sold directly to consumers, they were in devices like cell phones and ipods. The cost was absorbed by the manufacturers of these devices, and if it drops, good for them... but do you really think they'll pass that directly on to consumers? The illegal markup per unit probably isn't all that big. This will amount to a small increase in the profit margins of the device manufacturers, if it amounts to anything at all.
My grandmother used anecdotal evidence all the time, and she lived to be 120 years old.
That's a pretty brazen FU to their consumers and to the law. I can't believe they got away with it for 5 years. What are the chances that $585M is going to find its way back to the consumers that were taken advantage of?
What doesn't kill you only delays the inevitable
And so, now that we have found out they have fixed prices, we can all feel free to sit with thumbs up our asses about the jacked prices we had to pay to feed companies that agree to pay a fine that is higher than the average amount of money 5 families make in a lifetime.
And $50 says the CEO's won't be taking a dip in their salaries to compensate for the fine; nope, chances are they'll lay off some people and give pay cuts out to everyone that just does their job without trying to find a way to make a quick buck.
32" tv's just won't fall through the $500 floor, you could easily get a CRT of that size for under half that price and there was significantly more material involved in making the CRT (though admittedly less process).
There are 4 boxes to use in the defense of liberty: soap, ballot, jury, ammo. Use in that order. Starting now.
I doubt it - they're probably going to use this as an excuse to keep the prices up in order to recoup the lost money.
for that matter, i wonder by how much it affected the prices relative to the competitive market...
I'm guessing that the people who bought laptops etc. with all those overpriced screens in them won't see a dime of it. Just a guess though.
Matsumura Fishworks and Tamaribuchi Heavy Manufacturing Concern
I was just about to buy a new monitor for WotLK so I could quest easier (having quest info from wowhead on monitor A while gaming in windowed mode on monitor B).
Now I'm gonna definitely go with Samsung, because they are not involved in this lawsuit and therefore they must be rewarded for not getting caught. Anyone can tell that Samsung also does not pad their contrast ratios like LG obviously does. Who could believe a 10000:1 contrast ratio? That's ridiculous! Samsung has decided to only push their padding to 8000:1 which respectfully identifies with the company's obvious higher level of integrity.
The Samsung even looks nicer!
The dangers of knowledge trigger emotional distress in human beings.
"Perhaps this will cause the price of our TVs to drop?""
I don't know if you're aware of this but the prices on LCDs have been dropping?
Shai Schticks:"You don't make peace with friends, you make peace with enemies"
The cost was absorbed by the manufacturers of these devices, and if it drops, good for them... but do you really think they'll pass that directly on to consumers?
You really think they were absorbing the cost before? Still, I agree that any price drops will not exactly be through the floor.
Perhaps this will cause the price of our TVs to drop?
Perhaps instead they will factor this cost into their new products in attempt to recoup this lost $$.
So the scenario is: Purchaser is hurt due to collusion and price fixing. Companies are caught. Purchaser is hurt due to fines.
Fines are only a deterrent if they actually hurt the companies bottom lines. If they can make enough profit during the price fixing phase, and jack up enough prices during the penalty phase to more than offset the penalty there will continue to be massive collusion in such systems.
... and then Apple products cost just as much as their competitor's equivalents, and everyone lived happily ever after.
Dislike the Electoral College? Lobby your state to join the National Popular Vote Interstate Compact.
(problem is, I'm not sure that I'm kidding).
Sometimes boldness is in fashion. Sometimes only the brave will be bold.
"Sharp understands the gravity of this situation and will strengthen and thoroughly implement measures to prevent the recurrence of this kind of problem, and will earnestly work to regain the public's confidence,"
Don't you just love how they don't ever admit they did anything wrong? They sort of sidestep the whole thing with phrases like "Implement measures" and "this kind of problem". Almost like it was some kind of accident.
"Dear Consumers, it has recently being brought to our attention that we have been secrectly working together with our competitors to ram you up the ass and take all your money. I assure you we are as shocked as you are, and we assure you that now that we have been caught, we will do everything in our power to make sure such an embaressing thing (us being caught) never happens again!"
Does this have anything to do with the ridiculous inability of the laptop LCD screen market to put out 1920x1080 screens?
It's as though they're keeping the market for TV screens expensive by not allowing the format to bleed into laptop realm, wherupon cheap computers become high-quality televisions, killing the TV screen market.
"The cost was absorbed by the manufacturers of these devices,.."
WTF are you thinking? Do you not understand how businesses work? If spend money to produce something, you have to pass it on to the consumer, otherwise profit = 0
Small increase from small profit margins. Why do you think they were small? More precisely, minimal? Exactly. That is why they will return to their minimal value. Consumers will win.
I do not believe in karma. "Funny"=-6. Do good and forbid evil. Yours, Oft-Offtopic Flamebaiting Troll.
Well ... considering the world economy seems to be sliding a bit, manufacturers might need to lower their prices in order for customers to actually be able to afford their products (since customers have already shown they are incapable of NOT buying something even when its in their own best interest).
Please read Economics in One Lesson by Henry Hazlitt.
I wonder how many electronics have an artificially inflated price?
Why flood an already saturated market with more devices when you can gain so much more by selling less at a *premium* price.
Given today's technological advancements it still looks like a bargain.
i really don't think they care that much about the 585 million dollars. they are huge companies that make the small screen that are put into almost everything. i think the bad rap from getting owned by some anti-trust law will just give them a public relations shock. thats why they will drop prices
Its not my fault, someone put a wall in my way.
The cost of a mobile phone or iPhone is subsided through a contract with the network operator. You sign a three year contract, then the reduction from $400 to $100 is spread through the months at a rate of $8/month.
Vintage computer adverts: http://www.vintageadbrowser.com/computers-and-software-ads
Everybody have fun tonight! (Everybody have fun tonight) Everybody Chunghwa tonight! (Everybody Chunghwa tonight)
Why, without your clothes, you're naked, Miss Dudley!
Pricing strategies often have little to do with production costs these days.
Why do they "owe" "society" money? I guess it is kind of like the idea that everyone else owes me welfare so I can sit around watching TV all day. It is simply some elitists' fantasy, and everyone else loves the idea so they just start thinking it's true.
I can't see that they forced me to buy this 30" and the 24" before that, if anyone owes anyone anything perhaps I owe them because if no one had been bothered to make the monitor I wouldn't have been able to increase my standard of living as much.
Give them back their money, looters.
And I bet the taxes people paid on the monitors were far more than the extra money these companies made, and they just get spent on propping up failed businesses and killing people in the Middle East. Though it is funny how desperate the self-perpetuating propaganda machine is, if it has to do stuff like this to give itself meaning, sad losers.
This is the problem. There is absolutely no punishment to the company. They take their earnings all those years. They take the options, the bonuses, and the performance shares that accompany this. They take the raises and the praise. And what happens now?
They exclude these earnings as a "one-time item" from their non-gaap numbers. Executives keep their jobs, earnings from options, raises, and bonuses. BoD's keep doing what they're doing.
How about this for corporate reform: Any company convincted or pleading guilty to anti-trust violations is required to remove all C-class executives and replace all BoD members. In addition, executives must repay all cash bonuses and the FMV of all stock received/exercised during those years (which, for most exeuctives, is probably 75%+ of their total comp). I'll bet that'll get someone's attention.
The LCD's in question were not sold directly to consumers, they were in devices like cell phones and ipods. The cost was absorbed by the manufacturers of these devices, and if it drops, good for them
Do you really think an etailer cares if he sells a $100 or $200 gadget? No, they'll apply some markup and sell it for a profit margin, as long as every other retailer is selling it for the same price too. Obviously the one getting ripped off in this case is the consumers that all pay the extra $100. The rest of your post is just a strawman to draw attention away from it being exactly the same, Turn the question around and ask "Assuming we start with a market with no collusion, and the bill of materials increases for everyone by $10, what would happen?" The answer is that the market balance, however it is would probably not change much at all but all the customers of all products would pay another $10. Nice try though, you may be Wall Street material after all.
Live today, because you never know what tomorrow brings
It's sad your comment was modded informative.
The cost was absorbed by the manufacturers
No such thing. They have a material cost budget that is derived from working backwards from a target retail prices over the life of the product. Those material costs are passed onto the consumer in any case.
The illegal markup per unit probably isn't all that big.
You bet it is. In the quantities that these items are purchased, I've seen calculations out to the 10th of a cent. If they are measuring 10th's of cents, you better believe a penny is a big deal.
this will amount to a small increase in the profit margins
No, actually it translates into fewer units sold. Profit is something else and entirely impossible to quantify. There is no question fewer units are sold.
Finally, the transactions in question are from long ago. The finished product has long since been sold through. There is no price consumers pay that will decline as a result.
You and the moderators really have no clue how this works, how often it is done, and how much it harms all consumers. Ignorance isn't an excuse for very poor moderation.
http://www.maxineudall.com/2010/02/should-economists-be-sued-for-malpractice.html
The Sherman Act is a very good thing because when price fixing happens, competition, which is the most important element of an economy, ceases to occur. Therefore the logical conclusion, excluding any other factors, is that they should pay a fine. However you must realize that it doesn't work that way for businesses. Businesses do not have expenses of any kind. They actually collect the cost of these expenses from their customers and then pay it to someone else. When you buy a television, you are paying Samsung's cost to make that television, plus some pocket change which serves to justify Samsung being in the business. If Samsung's costs go up, for example because of taxes going up, lamps becoming more expensive, their rent going up, or a fine they have to pay, then those costs will be built into the prices of future televisions. In the end, such a fine is an easy way for the fining authority to receive money from you through the fined business. It would be better if the individuals who performed the price fixing on behalf of the company had to do some community service. This way the customers are not punished, those employees of the company's who didn't do wrong don't get punished, the shareholders of the company who didn't know price fixing took place don't get punished; only the dudes who knew what they were doing.
To shop more intelligently.
I *JUST* swapped out my CRT monitor after 8 years of solid, reliable use. I picked up a used LCD screen from my company for dirt cheap. I was never a beta tester for slow response-rate, burned out pixels and shoddy construction LCD screens.
I realize basic economics tells us, that there is a maximum profit point on the two line graph of units sold vs cost per unit, but dare I say they could have actually LOST money by charging too much, and forcing cheaper consumers out of the market.
meh, their loss.
Hi, I Boris. Hear fix bear, yes?
Now are they going to go after the RIAA for price fixing?
Theres no such thing as continents, since continental drift would have taken hundreds of millions of years and everyone knows the earth is only 6,012 years old...
So where's my refund for what they overcharged me?
Perhaps, as the fines are passed along to the consumers, prices for LCD TVs will rise.
It seems doubtful that the actual collusion was as interesting as you describe. It was probably to the tune of 10 or 20 percent, not the 100 percent in your post.
Of course, we are both speculating pointlessly.
Nerd rage is the funniest rage.
Normally, in the tech product cycle, as I learned in business school, you'd expect a 40 to 42 inch HDTV set to be running around $399 with rebate down to $350 at this point (1080p), but I'd been puzzled that prices were up to $200 higher than expected.
That explains it.
Mystery solved.
If the price fixing is broken, we should see 40 to 42 inch LCD HDTVs in the 1080p resolution selling for around $300 around Presidents Day 2009.
-- Tigger warning: This post may contain tiggers! --
Another magic trick of modern totalitarianism, passing as democracy through massive propaganda, is that you believe in things that simply don't exist - like the Invisible Hand of Adam Smith's imagining meaning something it does not. Here's the quote:
By preferring the support of domestic to that of foreign industry, he intends only his own security; and by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.
So the invisible hand was Adam Smith's belief that an Englishman would buy English products produced in England, or start a manufacturing company in England for English consumers.
However, this loyalty to one's country simply isn't implicit anymore, if it was, ever. Joseph Stiglitz, Nobel economist, states:
Whenever there are "externalities" - where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated - markets will not work well. Some of the important instances have been long understood - environmental externalities. Markets, by themselves, will produce too much pollution. Markets, by themselves, will also produce too little basic research. (Remember, the government was responsible for financing most of the important scientific breakthroughs, including the internet and the first telegraph line, and most of the advances in bio-tech.)
But recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets - that is always.
So, if you believe in a free market, globalization is very, very bad. GM is not failing because of the UAW (though they have many, many problems due to the UAW). GM is failing because it's being forced to compete with subsidized Japanese auto industry, and not receiving investment because of the inevitability of competing with Chinese automakers, which are a lot cheaper. Why? They can wreck their environment, exploit workers, and make unsafe products because China in many ways has a freer market than the US, if not a freer government. Why people are surprised that competition with third world countries wipes out entire manufacturing industries here at home, I'll never understand.
Repeat after me: I do not want a free market. I want a well regulated and competitive market that gives me the benefits of capitalist elements without wrecking the world in the process. I believe in liberty and equality and raising living standards for Americans, and trading with other nations so that they have the freedom to choose what they want to produce, not the "freedom" to sign up for another round of exploitation by Fortune 500 companies.
Anyway. There's good information on the Invisible Hand at the quite decent Wikipedia article, where I got my quotes from.
As I understand it, msft makes all sorts of deals with other hw, and sw makers. Msft does this to preserve, and extend, their monopoly. Consider, for example, msft's deal with Novell.
Why is it legal for msft?
What about for gaming though? You're essentially capped at 60fps due to needing Vsync on LCD monitors to avoid massive shearing issues. Whereas a HQ CRT supports 100+hz.
The naked eye may not see more than 60fps, but there are definite fluidity gains still up to the 100-120fps range which LCDs can't match currently.
with all the fraud and corruption in the world, this is no surprise. i mean, look at the usa - they elected fraud #1 to their highest office!
A real solution would be for the the individuals involved in fixing prices to serve jail time (with the costs of keeping these people in jail paid for by their company). These sorts of fines do little if anything to stop companies, or more specifically those people running the companies, from breaking the law as long as there is a disconnect between the corporation and the people who run it. Also, these fines do absolutely nothing for anyone living outside of the US who have been affected by fixed prices. With the possibility of jail time, the people in charge might think twice before breaking the law.
Does this have anything to do with the ridiculous inability of the laptop LCD screen market to put out 1920x1080 screens?
As far as I can tell, the lack of 1080p-class LCDs in notebook computers has more to do with physical size than anything else. On a reasonably-sized laptop, you'd have to set your laptop on "huge fonts" in order to read text without squinting. Make it any bigger, and it's not a "laptop" as much as an iMac 24" with a fold-out keyboard. (But then I prefer netbooks anyway.)
... has some quality control issues, because it's free.
The dangers of knowledge trigger emotional distress in human beings.
Billions of people seem to have disagreed with you over the course of the last 4,000 years. We know that in order to gain some liberties we value, we must give up some we don't, and we must let others be the boss of us sometimes. For instance, I gladly accept my duties as a citizen of the United States in exchange for the services I receive. It is entirely voluntary.
I let others be the boss of me not because I need bossing around, but because some people do. Most people will naturally cooperate successfully in a society without being forced to be good citizens. But there's always that small minority of people born without empathy or a drive towards fairness and reciprocity. And I need protection from them, because some of them are not only very clever, but very persuasive, and/or very violent. So I join a society and I follow its rules.
Look, I'm an anarchist at heart. Anarcho-syndicalist, actually. Part of the social branch of anarchy, as opposed to libertarianism which is part of the individualist branch of anarchy. But I'm a pragmatist, and I think that given the human condition today, if all government were to disappear, it would be, well, anarchy. In its negative sense, meaning no order or civilization, rather than its real meaning of 'an-archos', no tyrant.
I've been to real anarchist events like the Rainbow Gathering, where 'you're not the boss of me' is the rule. Nobody pays, nobody is forced to contribute work, yet somehow enough free food materializes and is prepared to feed tens of thousands. Most people naturally want to contribute, to pull their weight. Very few people enjoy being a leech. Some do, at Rainbow we call them 'drainbows' or 'bliss ninnies.'
We have to have our own police force and medical services, as well as the free food and shelter. Not to mention, communications, infrastructure management, budgeting committees, and cleanup. For a few weeks out of the year, we provide for twenty thousand people, better than the US system does, for free, on a voluntary basis. That is social anarchism in action. Can anyone provide any examples of individualist anarchy working in the real world?
But even so, there is the US system, surrounding the gathering both spatially and temporally. We can only do it for a few weeks a year, and only because we make enough money inside the system the rest of the year to pay for it all. One year a fellow came in with meningitis. We're not equipped to handle that! We had to take him to a local hospital.
I like civilization. I like being interdependent. I also know that in any system, there will be those who want to make me do things against my will. Sure, government attracts those kind of people, but the business world attracts them even more. At least with government, there is some semblance of accountability and transparency.
I fear that without regulations, pure unbridled capitalism will not lead to some sort of fair and equitable utopia, but to a new feudalism, a system where the owning class brutally oppresses the non-owning class by denying them the economic means to survive unless the serfs knuckle under and accept whatever the landlords deign to hand out. Price fixing of labor is only one problem.
The main problem is imbalance of information and how that affects the labor market. Labor will always be undervalued because employers know less than potential employees about the real value that potential employee can bring to their business. It is the same problem addressed in George Akerlof's famous paper, The Market for Lemons, asymmetric information. He won an economics Nobel for his research, so I think maybe he knows what he's talking about. Labor will never receive fair compensation in a capitalist system, it is a fault inherent in any free market system. If you can find a way to fix the asymmetric information problem, there may be an economics Nobel for you. And don't start by positing a set of companies that provide information, that simply pushes the problem back a step.
I stand by my assessment of libertarianism. I know you may disagree, but I hope you can at least see that I have arrived at my conclusions based on careful consideration.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
Comment removed based on user account deletion
I want my 19" Trinitron back. God I loved that monitor.
An LCD screen shows different colors depending upon your view angle. This is not good for graphics professionals.
No offense intended here, but I really don't think the giant corporation needs you to go to bat for them with those canned and, I'm sorry, but worthless sentiments. The whole, "money don't grow on trees" thing. Which, while being technically correct is only barely at that. With a world where money is very literally invented from nowhere, all facets of the economy, everything from taxes and government programs all the way to economic melt-downs, are 100% make-believe events designed to keep people like us running around in circles, preferably getting angry at largely abstract emotional hot-button concepts like the all-mighty, "welfare bum" so that we don't stop to see what's really going on.
Again, no offense, but I find it odd that when such ideas are made plain, (and I've not made it plain here; you'd have to research it a bit to see how it all works), but humanity as a whole seems to prefer to stay angry at the less complicated make-believe ideas, rather than get angry at the slave masters behind the illusion.
Aside from all that, you are correct. Nobody owes anybody a cheap flat screen TV set. The funny thing is, however, that given the state of mind-control these days, if people stopped wanting to buy TV sets, then you'd probably find that the powers that be would find some way to distribute them for free. And that it would be illegal to say "No". Do you have a cable subscription? Try canceling it sometime and see what happens. As a last ditch effort, (if you're really serious about getting rid of it), chances are good that you'll have it offered up for free rather than let you go without. I've lived through that weirdness, and I've seen it happen to others. In the end, I had to move to get away from TV.
-FL
Or maybe the price will remain the same as they now have reduced revenue and an increased cost per unit of the fine divided over the number of LCDs shipped. And I have bought a bunch of LCDs over the years. Think I will see any benefit? Doubtful! But maybe there will be a slight reduction in cost a while out. Current prices have already significantly dropped since this lawsuit was entered into.
- Tjp
I am in wallow with my inner money grubbing capitalistic pig. ... Oink!
Come'on, all I'm asking for is 90days. They just think that the fines are the cost of doing (dirty) business.
Only if the manufacturers of the products that use these LCDs collude. Otherwise there will likely be a savings passed along to the consumer. Undercutting the competition is a good way to boost sales, especially given the current economic climate and the holiday shopping season.
Even Sony and Sharp have shipped products with Chunghwa panels inside, simply because they're cheaper.
Somehow in the light of the article this statement is just troubling on so many levels....
--bornagainpenguin
Have a Virgin Mobile USA smartphone? Give VMRoms.com a try!
So, three corporations getting together and secretly agreeing to set prices at a certain point is wrong. But what if these three corporations instead merged their corresponding divisions into a single entity, beholden to the original corporations through stock? Now it's one company, and surely it can set prices how it sees fit without being accused of collusion. So why is one of these scenarios accepted while the other is anathema? In both cases there is a reduction of competition.
"Except we're not in a free market"
But quite a number seem to claim that you're in a free enough market for companies to buy politicians and legislators ;).
The way I see it, there MUST be regulation.
The issue is not whether you get less or more regulation, the issue whether you get good or bad regulation.
You are more likely to get bad regulation if the companies to be regulated get to create or influence the creation of regulation.
See: http://www.rense.com/general33/fd.htm
A game becomes crap if the players get to buy the referee/umpire or the rule makers.
Why is regulation so often bad?
Go figure what happens if voters keep voting for politicians mainly because those politicians got the most money from companies... Hint: you are selecting for politicians who are more likely to be bought/buyable.
Q: How many free market economists does it take to change a lightbulb?
A: Free market economists don't change lightbulbs - they continue writing their papers in the dark and wait for Adam Smith's Invisible Hand to do it.
In the end, I had to move to get away from TV.
You crazy old coot. So what, you live in the woods or something now? It's not like the TV can just grow legs and walk into your room and turn itself on. Even if they give away the cable for free, that doesn't mean you have to hook a TV up to it.
I won't even touch the idea that money = nothing, I don't have the time to write a 3-page essay.
You crazy old coot. So what, you live in the woods or something now?
You know. . , it's weird. Every time I respectfully disagree with somebody by being open-handed and polite, I can always mark the ones who are going to take that as a cue to bite back. Don't know what it is. Maybe it's the fact that lower-functioning, dog-pack mentality cases tend to embrace lower-functioning, dog-pack mentality ideas. --People who are more comfortable living in over-simple world views where they can bristle and growl to their heart's content because it's simply better suited to a little doggy brain.
Anyway, you're also making an unwarranted assumption, which is similarly typical.
It's not like the TV can just grow legs and walk into your room and turn itself on.
That is correct. It takes a room mate or family member to turn on a TV. Never watched the thing myself because I didn't want to, and moving away wasn't predicated on whether or not the thing existed. I was just describing an observation of how the world happens to behave.
I won't even touch the idea that money = nothing, I don't have the time to write a 3-page essay.
Three pages of howling rhetoric written based on more assumptions about what I was probably not even saying would likely have been quite tiresome.
Woof, you silly boy! WHO thinks he's a smart boy? WHO? Yeeezzzz. You're a big dumb ball of fur who hasn't managed to clamber up the social ladder to embrace a broader range of human response yet, but we still love you.
-FL
Nope, no price drop. In fact, it will probably go UP since the consumer must now pay for the court costs and fines!
Well, I guess I did imply that they would drop the price accordingly, but my main point was that pricing strategies have little to do with altruism as well.
This rips the libertarian arguments to shreds. Well done!
It seems that you want to have your cake and eat it too.
That of course, depends on your definition of cake. I'd prefer some organic fair trade bread in lieu of a Little Debbie sugar pile. Well, most of the time.
The "other nations", unless intimidated by the US military or other political forces, already do have freedom to choose what they want to produce.
Can you name a small country not intimidated by China, the US, or Russia?
Again, in theory, they have freedom. In practice, the dictatorships and governments supported by the United States always seem to have the same trait of serving US business interests, just like the countries supported by China and Russia are serving their interests. I single out America as an American, because it's the only place I have real influence.
Unless you believe people of other nations are idiots, they naturally chose the most profitable goods to produce, and your Fortune 500 companies buy them.
That's not the way it works. That would be trade that I believe in. Let's just take a random working paper from IZA which looks like a reasonably balanced third party. (Caveat - I gave their website a once-over. Consider it a "Palin" pick.)
In the paper concerning globalization and El Salvador, it plainly states that GDP has gone way up since the economic reforms of the 90s. That's often the statistic that's touted as progress. However, it also states that real wages for most workers have declined. It also states that almost 20% of the GDP is from workers who have fled to other countries and are sending money back home.
How does this happen? Well, it starts by giving corporate welfare precedence over indigenous rights by establishing Free Trade Zones. FTZs allow already rich corporations to build manufacturing centers that have almost no regulation - more commonly known as sweatshops. They don't have the same regulatory hurdles as local companies, they often corrupt local governments through huge infusions of cash (but not tax to benefit the rest of the population), and they don't pay tariffs. After a few years of operation, when the tax free period expires, the foreign investors threaten to leave if they don't retain huge tax breaks - there's certainly somewhere else in the world that has a more desperate and corrupt government. The local government usually concedes, the workers continue to be exploited (work for basically nothing or starve - what dishonest economists call "freedom" in the free market.)
Now, why would these people work for less money? Often at the same time as the establishment of the FTZs, another foreign investor buys up lots of farm land for agribusiness. Now there are tens of thousands of usually indigenous farmers thrown off of their land, who have no modern job skills and no home. Again, foreign investors profit, a small portion of local businessmen profit, corrupt governments profit, GDP goes up, trade goes up, and the rest of the population suffers. These are not accidents - they are done deliberately, since westerners can no longer depose local governments with brute force as they did in the decades following WWII.
The only way living standards for Americans will rise is when your Fortune 500 companies can buy labor from developing countries at dirt cheap prices, without that supply the prices of commodities will soar sky high, and you'll have to do the grunt work that the developing countries have been doing for decades.
Ahh. So if the developing countries have been doing that for decades, why have real wages declined in the US during those decades, and the top half percent of earners experienced a thousand percent increase in the same period?
Commodities are more effected by fuel prices than anything else (at least currently.) You are already paying for higher food costs because the real
So, since I bought an extremely overpriced LG Scarlet LCD TV, should I be able to initiate a class-action against one (or more) of these companies?
I can always mark the ones who are going to take that as a cue to bite back
All of your silly posturing aside, I don't think you're talking to who you think you're talking to. I'm not the OP.
On money ...
If we didn't have a common medium of exchange, the world would be plunged into a dark age the likes of which you can not comprehend, presuming we didn't adopt some egalitarian and utopian system of resource distribution (and half of the world seems ready to fight to the death to keep that from happening, so I don't see it happening). The difficulty of finding a double coincidence of wants, a prerequisite for trade in a barter economy, would preclude the existence of many highly intelligent and skilled professionals that our society currently supports.
Good luck finding someone who wants to trade food for an economics lecture, or someone who will fix your toilet for a statistical analysis. And you can't even comprehend the difficulty that would arise in taxation; we'd end up in a practically medieval system, most likely, paying our taxes in bales of wheat or hay. And how are you going to hire people to provide public services, like police protection, firefighting, water & power utilities ... when all you have to offer are odds and ends collected from the population?
I disagree with the practices of runaway fiat currency printing, but it's also been shown that when a country prints tons and tons of money, their currency tends to inflate rapidly. The money is valued by other people based on what they can get for it, and if there's too much money in your economy, there's less and less you can do with it.
The money multiplier is an important resource to society ... it moves excess resources from those who have too much to those who need resources in an efficient manner, and with the bank as a broker the investments are relatively secure. Getting a loan for anything before banking would have been next to impossible; the idiosyncratic risk is too much. Of course, lending can go too far; banks can shell out way too much of their reserves and end up with no money to pay anyone. That was one of the fears of the subprime crisis; as people declare bankruptcy and hand their depreciated homes to the bank, the bank runs a risk of not being able to pay it's debts, both to depositors and other banks. Of course, we learned all about this in the 1930's; that's why we have federal reserve requirements for the banks now. In my opinion, they shouldn't lend money that people didn't want to lend; savings and checking accounts shouldn't be touched for investment purposes, just CD's and money market accounts. However, even despite this minor complaint I have, the system is still relatively stable and provides our economy with tangible growth and efficiency.
In short, money problems aren't imaginary, and without money our specialized economy would crumble and thousands would die of famine. The system isn't perfect but it's more of a benefit than a detriment. Runaway money printing is a despicable practice, but the money markets correct this sort of abuse rather quickly through exchange rates and price inflation ... so on the whole your worries and complaints are just chicken little "the sky is falling" rhetorics.
I live in a pretty bustling city and I don't encounter TV, ever, aside from maybe your local restaurant lobby.
I find that once the choice is made, it becomes routine to remain in that choice. It's the breaking away/enlarging of perspective which is challenged. Dealers don't like to let go of their addicts.
I wouldn't hand you three pages of howling rhetoric, but I might bust out an old "money & banking" textbook. I'm an economics major and a laurels scholar, you know.
Systems can be studied with a high degree of confidence when they are contained within a box where internal rule systems may remain coherent. Looking at how money behaves between individuals, businesses and banks leaves one with a comforting sense of ordered chaos. It's when one starts looking at outside influences and larger rule systems when those internal rule sets take on a new aspect. What's your take on the Fed's of charging interest on the money it loans to the government for general issuance? Where does the extra money come from required to repay that interest plus the principal?
-FL