General Question

iamthemob's avatar

How should we regulate business in a globalized capitalistic economy?

Asked by iamthemob (17147points) September 5th, 2010

Although this assumes that business needs regulation, I would like to start with that assumption. The assumption is based on the fact that some basic human rights need to be recognized in the workforce. However, how much should it be regulated, and in what way?

Please take into account, if possible, the fact that labor can be outsourced to countries with unstable government, and what the risks are associated with that. Please also consider how this should play out in a capitalist economy…and when you think regulation may mean the economy has crossed over into some other form and is capitalism in name only.

If you can imagine a system that you think is ideal but for some reason unworkable…why do you think so?

Thanks!

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16 Answers

Ben_Dover's avatar

Perhaps we cold start by outlawing slave labor.

iamthemob's avatar

@Ben_Dover means “could start” just so we all know. :-)

But we both think that the sentence pretty much works both ways.

Zyx's avatar

To regulate anything first you’d have to monitor all money. Then you’d have to somehow make dicisions about right and wrong where some leadership might be required. Then like all society you declare war on the people who disagree with you. God speed.

Ben_Dover's avatar

Another cold start…We legislate money out of the equation!

iamthemob's avatar

@Zyx

The question requests we assume regulation as a given. As @Ben_Dover
states, regulation includes laws against such things as slave labor. I can think of two main implications I can get from your answer: (1) regulation is effectively impossible, or less drastically (2) you want minimum regulation.

If you would like, please clarify, and address the ways in which it should be regulated.

iamthemob's avatar

@Ben_Dover

But how does that work in a capitalistic system (e.g., is this now a barter-based economy?) remember, we’re assuming a globalized capitalistic system.

Dr_Lawrence's avatar

This question sets too many prior unstated assumptions. It is set up to be a—reductio ad absurdem.
It is designed to show that regulation is impossible because of international competition with countries that allow exploitation of workers and the resulting uneven playing field.

Let’s set aside all these assumptions and then ask, what kind of country do you want to have and how do you want businesses to operate to help realize your goals for your country.

Dr_Lawrence's avatar

The OP asked me to try to answer this question as he originally posed it:

Governments can regulate work safety, and minimum wages. Governments can give tax breaks to companies who produce their products in the country as opposed to outsourcing the labour overseas.

Companies can advertise that all their products are produced in the USA (for example) of materials produced in the USA. Consumers of up-market high quality products may favour such products over foreign products that don’t generate taxable income in the country or contribute to the GDP.

If domestic companies can not produce superior products that domestic and foreign consumers will demand and will be willing to purchase, then they will fail.

Most products that used to made in the USA are no longer made there.

Consumers have responded to mass marketing outlets that sell low quality disposable goods made elsewhere, often my workers exploited or underpaid.

I believe that there may be a niche market for high quality domestically produced products. With government support in the form of tax incentives, a well run company could indeed succeed. The benefits to the government include greater employment that generates income taxes and the stimulus to the national economy.

iamthemob's avatar

@Dr_Lawrence

Thanks! Of course, this answers more about how companies should operate or can operate in order to keep business in the domestic space. Tax breaks do not qualify as regulations, as they are meant to attract business to a certain area rather than mandate standards for how a business is run.

The the basic regulatory structure so far speaks only to whether there should be a minimum wage and a safe work environment. @Zyx has mentioned that “all the money” would have to be tracked. So does anyone think that there should be any regulatory requirement covering the profits or losses of a company (whatever the structure) or other monetary aspects of running a business?

ETpro's avatar

The fact is that we have regulated businesses in a number of ways for as long as business has existed in America. It has not resulted in all work being off-shored to unstable nations who welcome slavery and poisoning of their air and waters. The business climate in such places is a counterweight to such outsourcing. Failed states are unsafe for business, rife with corruption, and fraught with enormous uncertainties.

Regulation, however, must always be carefully balanced. Too much regulation, particularly of the wrong kind, and too frequent changes to regulations stiffles business and costs economic prosperity and jobs. Too little lets things like the Great Depression, the Enron energy price manipulation and fraud, and the financial meltdown of 2007 happen.

Good regulation prevents slave labor, unsafe work conditions, excessive pollution, the sale or distribution of unsafe products, fraud, extortion, monopolies, price fixing and misrepresentation to investors in a capitalist enterprise. Where regulations tend to run amok is when government starts trying to outsmart the free market on what should be produced, how much of it to produce, and how to price it.

I’ve been wondering about ways to use regulation and corporate tax stricture to reward companies that keep jobs here and penalize those that choose to off-shore. How could we do that without triggering any trade wars? If anyone has any thoughts on that, I’d welcome their ideas.

iamthemob's avatar

misrepresentation to investors in a capitalist enterprise.

This is one that I have particular interest in. Any ideas from anyone on “best practices” for regulation to promote this?

Ben_Dover's avatar

@iamthemob We must abolish capitalism as a system. the very nature of the capitalist system creates slavery. As a matter of fact, capitalism (and communism/socialism) are just forms of slavery.

Ron_C's avatar

Business is already regulated internationally through trade agreements, trade pacts like NAFTA and other trading regions and systems. Unfortunately the regulations are either written buy businesses and not closely monitored by governments or governments, especially in Africa and the middle east are bought off with bribes to pertinent officials. Therefore many of our goods are imported from companies that use what is essentially slave labor, child labor, and intimidation.

I have never seen a trade agreement that actually benefited our country. I remember being amazed, when I was in high school, at the concessions and extraordinary contortions that our country made when we were opening up trade with other countries, especially ones in the Soviet block. I then learned that our negotiators freely changed sides to work for other countries, Therefore it was better for their careers to insure that we traded with the most lenient terms with those countries.

International business is still carried out that way, always to the detriment of the American worker and for the profit of international corporations.

What is incredible to me is that if I, as a teenager could see the problem, why couldn’t our leaders? I still can’t answer that question.

Ron_C's avatar

@iamthemob
You suggest that I post my solutions to trade issues and capitalism instead of just showing that we have never (in my lifetime) made an agreement that actually benefited the country, so here they are:

In my ideal world trade agreements would insure a level playing field for both parties. To that effect I would:

1. Insure that labor was properly compensated.
2. Insure that our trading partner has law comparable to ours for environmental, factory safety.
3. If parts are to be made to industry standards they must actually follow the ISO or QSL standards set forth by the industrial or automotive purchaser of those parts.
4. We should retain the ability to protect our farmer from imbalances in agricultural standards and trades.
5. We should insure that the agreements are not written to the benefit of the trading corporations to the detriment of our country.
6. We should insure that neither party uses these agreements to form a monopoly in what ever product is being traded.
7. We need independent inspectors to insure that the agreements are being followed. These inspectors need to be constrained from joining the corporations or industry they are supposed to be regulating (a really big problem here).
8. We need to use a tariff system to insure that American labor isn’t undermined by slave labor scales in other countries.
9. No trade agreement should be placed on the “fast track”. Congress needs to stop giving its powers to the president.
10. No trade agreement should last more than 4 years.
11. All aspects of the agreements must be made public. No special or secret status should ever be condoned.
12. We cannot have a sustained market if we undermine the buying power of the American public. That should be the ultimate criteria for any agreement. If our labor base suffers, the trade agreement is automatically voided.
13. Our trading partners must avoid manipulating the value of their currency by tying their currencies value to the dollar. This the regular practice in China, insuring that they can always under price their products and control the market.

How is that? I doubt that any of my proposals would be acceptable to our international corporate sponsors.

iamthemob's avatar

We need to use a tariff system to insure that American labor isn’t undermined by slave labor scales in other countries

Tariffs generally concern me, as I feel like they come from a protectionist standpoint, which can reduce innovation.

What if there were a method to, essentially, outsource the regulation instead? Such as mandating not only quality product, but proof of labor conditions, etc., without which the tariff is imposed…?

Ron_C's avatar

@iamthemob you have a point about that. It is the reason that American cars were junk in the 70’s but a tariff with time limits and a decreasing level would provide sufficient warning to American industry that they are operating on borrowed time. If, when the tariffs expire, the industry has not improve they deserve to take their licks.

I truly dislike the idea of outsourcing. There are certain parts of life in this country that are the commons. They are the property and responsibility of the citizens. Things like roads, parks, law enforcement, health care, and the military should never, never be outsourced. They absolutely need to be owned and operated by our country otherwise we become just a corporation, heartless, and without a future for our children.

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