Comment by klik99 | Hacker News Reader

Comment by klik99 | Hacker News Reader

Parent Full thread

This is exactly what I came to say - growth as the primary goal DOES create innovation, until innovation in that field yields diminishing returns or bottoms out completely, then it creates shittier and shittier product.

The entire American version of capitalism is built around growth as the primary goal, which did great things, but now (unequally, some sectors are still innovating) is creating more and more shitty things.

It's so hard for anyone to acknowledge this because everyone wants to take a "side", pro- or anti-capitalism, without being realistic that there are different implementations of capitalism and there is no system that universally works, it really depends on the situation. Right now we need to make "lifestyle company" not a bad word in investment circles, focus on dividends/revenue sharing over stock growth, create incentives around steady, well run companies, and not companies that outspend and destroy competition and then make their product shittier and/or more expensive.

I agree with a lot of what you are bringing up, but I don’t think of these things as synonymous with American capitalism as a whole. I think of them more as a failure mode.

I think it’s very human to keep doing what once helped us when even when it starts harming us. Like an alcoholic who started to help get over social anxiety and saw positive results early on but then starts seeing drink as what makes them happy rather than the social connection it helped facilitate. Yes I’m saying America is addicted to growth.

(I agree it’s more nuanced than that and it’s both succeeded and failed in other ways, and US isn’t the only one - but this a major feature of American capitalism)

Do socialist economies produce superior products?

If by "socialism" you mean the majority of economic activity being state-run, then probably not.

If by "socialism" you mean things like worker-owned corporations, strong anti-competition laws, high levels of consumer regulation, then absolutely.

If worker-owned collectives produce superior products, why aren't they everywhere? It's not illegal to form one.

Because capital doesn't like to fund them. Being worker-owned limits the potential upside for investors so a collective or co-op needs to be able to bootstrap itself to success, at which point capital will just fund a competitor that allows them to extract their desired rents.

Because our economic structure doesn't reward superior products, it rewards cheaper products. So such organisations get outcompeted.

But people here say they want superior products. So why do they buy the cheapest, instead?

1. "People here" are a very small fraction of the economy. They may in fact buy superior products over cheap ones, but their numbers are too small to matter much.

2. People don't always do what they say. They want superior quality, but they also want it at the same price as the inferior alternative. When push comes to shove, which will they choose? Not all will choose quality over cheapness. That doesn't mean they didn't want quality. It just means they didn't want it as much as they say they did.

Also "market for lemons"- a friend told me she used to go to Macys/Dillards to buy $50 bath towels b/c they were better, nicer, more durable than the $20 ones from Walmart.

Now she goes and still pays $50 for them, but they have been stealthily replaced by the equivalent of the inferior $20 ones.

It becomes a market for lemons: you can't trust that paying more for a product gets you a better product so game theory says you have to pursue price minimization at all costs.

You've forgotten your Pratchett. Quoth Men at Arms:

> The reason that the rich were so rich, Vimes reasoned, was because they managed to spend less money. Take boots, for example. He earned thirty-eight dollars a month plus allowances. A really good pair of leather boots cost fifty dollars. But an affordable pair of boots, which were sort of OK for a season or two and then leaked like hell when the cardboard gave out, cost about ten dollars. Those were the kind of boots Vimes always bought, and wore until the soles were so thin that he could tell where he was in Ankh-Morpork on a foggy night by the feel of the cobbles.

> But the thing was that good boots lasted for years and years. A man who could afford fifty dollars had a pair of boots that'd still be keeping his feet dry in ten years' time, while the poor man who could only afford cheap boots would have spent a hundred dollars on boots in the same time and would still have wet feet.

> This was the Captain Samuel Vimes 'Boots' theory of socio-economic unfairness.

The product people really want often isn't on the market at all. I speak of a product that is:

- Mass produced at scale

- High quality and will "last a lifetime" (a long time)

- Repairable when it breaks down

I believe that many people would happily pay a 20%, 50% or even 100% markup for such a product, but often often all of the available mass produced options are shitty quality (and the choice is between a bargain option or a "premium" option that is just as crappy quality but costs more because of the brand name). There might be a "boutique" hand-crafted alternative, but it will cost 5-10x more.

The other problem is imperfect access to information. Even where there is superior alternative on the market, it is often very difficult for consumers to determine which one it is. Which means they can't choose it. Which further means, there is no incentive for manufacturers to produce it.

> 20%, 50% or even 100% markup for such a product

I don't know that this is realistic. Like you recognize, there ARE usually boutique higher quality products - at significantly higher prices. There are also nearly always product management-based, "higher end" product lines. And the quality of these is only sometimes better. And they are not often repairable probably.

I think there is a significant issue with achieving "Mass produced at scale" together with "lifetime and repairable (ie, parts available and easy to replace)". Without people going out of their way to be evil, see lightbulb lifetime mgt, it's easy to be too expensive to miss the "mass produced" window, and your price might be much higher. Not just 20% higher.

Chinese companies built massive factories to corner the market on specific products. Years ago, see the halogen torchiere market. Suddenly the world was flooded with torchiere halogen lamps for an insanely low price. ... a price so low that nobody could really complain that spare parts were not available. These stunts must have been very expensive. An all or nothing bet on a market.

Nowadays, you get factories that make ALL the models of, say, steam irons for basically ALL the brands. These factories take care of some of the issue of quantity-related low price, by sharing parts and processes between all these brands. But could they be competitive in price on smaller runs of steam irons with replaceable parts? Plus the cost of stocking and distributing these parts? I don't know.

Because they were violently suppressed by the interests of the capital class over multiple generations.

i'll try mine

because they are a fantasy of people who have never once in their life seen what happens to a company with a strong union or excessive worker power, they become repressive towards newer employees among other things

I'll half-disagree. There are situations where "workers" having a seat at the table can produce favourable outcomes. Some German companies have union representation on the board and it results in workers sometimes willing to make sacrifices for the greater good, so long as they also then benefit if an upside materializes. It can also benefit the company as the top-down decisions can also receive comments and concerns from a different viewpoint within the company.

But it's also very much a cultural thing. The anglosphere tends to treat CEOs and corporate leaders as the smart drivers of corporate success, where as Germany and other European companies are more comfortable with some collective ways of working.

There's benefits to both models, but there's no arguing against the fact that the "anglo" way does seem much more successful at the entrepreneurial stages, especially with new ideas and industries.

I myself prefer the anglo-model, but I try my best to find places that appreciate and trust their workers. I also find myself appreciating goods that last a lifetime from "boring, but stable" companies. People like Jack Welch and his acolytes ruin companies.

There's plenty of arguing about whether the entrepreneurial stages are more successful.

Financially? Of course, in the narrow stonks-go-up sense. But not so much in the kind of wealth distribution that accelerates inventiveness and creativity of all kinds at all wealth levels.

The kinds of products that are developed tend to be packaged digital (re)intermediations, fintech, and ad tech, all of which are more likely to be hype-boosted corporate slop with toxic consequences than a genuine boon to the culture around them.

It's a model that's more likely to create the next Theranos than the next Jonas Salk.

Well, certainly a “hybrid” form of worker owned collectives are doing well: my company pays over 24 billion in stock to employees annually.

Publix has a model similar to this and it seems to work well for them both as a former employee and a customer. Their stores and products are always nice and they pay above average for their sector. They are on the expensive side but also they have good deals when you look for them especially the BOGOs. I definitely had a better time working for them than I did when I worked for Sprouts which is publicly traded and aiming at a similar market segment. I think if we are going to stick with some capitalism we need to switch to models like Publix and away from models like Sprouts and Walmart.

People on both sides of the capitalism/socialism divide also always conflate "Current Way Stock Markets Work" with capitalism. We do alot of extra damage to the average person's health and well being with the WAY we do capitalism. The plutocrats use the heavily propagandized stick of "SCARY SOCIALISM" to give you a more shriveled carrot year after year and tell you you should be thankful you dont get beat with the "SCARY SOCIALISM" stick while they still hit you with the "NO HOUSE, NO FOOD, NO HEALTHCARE" stick if you can't sell your bodily capital for enough value to please them.

The extra damage is all this profit over anything else no matter the circumstance. Look at United Healthcare getting sued because the new CEO, even if it was purely out of self preservation, decides they are going to actually give people some of the coverage they paid for and not do quite as many dirty tricks to skim as many denials off the top as they possibly can. MANY SUCH CASES

They don't do well in the US due to ideological aversion, no policy incentives and lack of funding platforms like community investment trusts.

But they are quite successful in other nations. Amul in India for example.

> due to ideological aversion

Nobody cares if they're buying from a collective or a conventional business.

> no policy incentives

Are you saying they should get special government incentives not available to businesses?

> lack of funding platforms

Nobody is stopping anyone from funding a collective. The reason they don't is they won't get ownership shares in return. That's one of the problems with a collective.

If they got the same incentives offered to businesses, that would be interesting.

Coops are fairly common in Europe, mostly in agro-food and related areas.

They're actually better at innovation for their market segments, because they can make long-term plans for expansion instead of being hamstrung by the demands of ridiculous short-term marketing-driven hype bubbles.

But if you want to profit from frothy get-rich-quick hype and don't care if this year's unicorn is next year's "Our incredible adventure comes to an end", they're definitely not for you.

> Nobody cares if they're buying from a collective or a conventional business.

Before buying, you need to startup and produce.

> Are you saying they should get special government incentives not available to businesses?

Its the other way around. They are not eligible for incentives that are available to traditional corporations. They cannot issue traditional equity. There are also no equivalent cooperative-friendly structure like a Delaware C corporation which allows for friendly taxation and non-liability for the debts and legal obligations of the corporation. Difficult to apply R&D Tax Credit like corporations since it cannot carry forward credits due to legal constraints. Cannot claim Payroll Offset like startups do, etc.

The system in the US simply does not give incentives to cooperatives to the same extent that it facilitates corporations.

No, and that’s not what I said. In fact I said being blindly pro or anti capitalism blinds people to things that could be fixed. Growth helps innovate and create great products up to point of innovation creating diminishing returns.

There’s a huge difference between capitalism and a specific implementation of capitalism.

literally proving his point with this question

It’s hard to compare. Almost everything at a mass market price point is made in China. From luxury iPhones to cheap commodity crap. With the exception of maybe cars, made in USA, Europe or Japan tends to be niche or specialty.

Yes, but that's creating products primarily for capitalist markets. So the same demand drivers exist, even if it's being produced in a semi-socialist country.

China is not a socialist economy.

Reply on news.ycombinator.com