I agree that the amount of government controls over the market prevent it from being a pure, free market economy. I do not know if Capitalism requires a pure, free market economy as part of its definition.
I also don't believe a pure, free market economy exists on this planet. It would fail as bad Communism has, although none of those were examples of pure communism.
The problem with both is that, over time, the control goes to a very small portion of the population. With communism, it goes to a select number of government officials who oversee the allocation of resources. In a pure, free market, it would go to the most successful businesspeople (who gain that wealth by any means...nothing but consumers to stop them), who control the most of the wealth (and thus the allocation of resources).
EDIT: Ironically, Adam Smith proposed Capitalism to maintain a fairly even distribution of wealth (and thus power) to reduce the corruption, by a side effect of its use (as opposed to gov't oversight). However, the wealth keeps accumulating in small pockets in practice.
There's a time and a place for monopolistic competition, but sometimes you also need something closer to perfect competition. Too bad voting with your wallets doesn't work if too many peoples are wasting their vote.
Cause if you Look up the Dutch East India company from the 1600s, which was one of the first stocks offered to public investors. You can see what purpose it was for: to expand capital and use it to build ships for the spice trade.
Another bald assertion. Give me something to back it up.
Now obviously stock markets have evolved over time, but its original purpose is still there.
You haven't shown what the original purpose was, or even that there was a single original purpose. Furthermore, if you had, it would be irrelevant to discussion of the purpose of the stock market today, or whether it even has one.
False. Not showing a purpose and not backing it up are two different things. [citation needed] does not mean something was not said:
You can see what purpose it was for, to expand capital and use it to build ships for the spice trade.
Give me something to back it up.
This is a fair enough request. I, too, would like to know more about the original purposes of stock markets. Thus more exposition on this Dutch affair would be exquisite. However, it seems funny you would bring this up when, below, you claim that any answer he could conceivably provide must be wrong. Why point out his lack of support when you make it clear you do not believe that he can support it?
I believe that the burden of proof rests on both sides. In that frame of mind, it would be bullshit to call out someone else's statements as needing proof without backing your own. For example, I could pull this quote:
Furthermore, if you had, it would be irrelevant to discussion of the purpose of the stock market today, or whether it even has one.
You haven't shown this to be true; instead, you simply stated it. Please identify all purposes that were originally relevant to his argument and explain how none of them are relevant to this discussion. Alternatively, explain how the entire space of possible rationales for stocks from any time besides now would be irrelevant to today's driving reason for using stocks, and also describe how you chose your time granularity.
EDIT: Also, editing other people's grammar is counter to the board "ethics". Everybody knows this is not strongly enforced, but please don't do this when making an argument. It makes it look like you have some need to empower your argument by nitpicking the grammar of the other argument. Grammar is not at all a part of the argument. Grammar does not contribute to nor deflect from the logical consistency of an argument, so long as you understand it. That fact that you were able to correct the grammar unambiguously implies that you did, in fact, understand his grammar.
Only moderators are responsible for enforcing the rules of the forum. If you are not a moderator, you should not take it upon yourself to inform other users of their forum-related transgressions.
Most frequently this rule applies to correction of grammar and spelling. If someone has poor grammar and spelling, don't correct them, or warn them, publicly. A private message / whisper is fine, as rules do not apply to private communications. Let moderators take care of it and go about your business.
Another bald assertion. Give me something to back it up.
Really, REALLY... It's not bald if it's true.
So historical fact is not good enough for you?
Are you that unwilling to google or go to a library?
Fine I'll cite my source the American way! Through hollywood and the silver screen. Do you remember when George Clooney, Matt Damon and Brad "Fucking" Pitt in Oceans Twelve had to steal something to make money. In order to pay Andy Garcia the money the trio stole.
Well guess what it was, the first stock certificate ever issued by the... VOC (layman terms DUTCH EAST INDIA company)
If you can't trust these guys then god help us all... Oh here is the link.
@Bryan: Thanks best friend, if you want to learn more I recommend the book The Accent of Money by Niall Ferguson. This guy is a Harvard economics professor and brilliant economic historian. If more students studied economic history, rather then just modern economics we would have a lot less problems today.
Are you that unwilling to google or go to a library?
Actually, I do think, to back up your own case, it would be prudent for you to hit up Google Scholar and/or Google Books and pull a few that support your cause. I usually aim for articles that have the end result summarized in the abstract so that no one actually has to read the article.
Thanks best friend,
Don't thank me yet. You still have a lot of burden of proof you haven't supported yet. Start cracking on that Google for evidence to support your cause.
If more students studied economic history, rather then just modern economics we would have a lot less problems today.
I found some evidence to support some of Jason's conclusions (which are against my own) via a guy named Milton Friedman.
I don't like this guy mostly because he seems to be a crotchety old man instead of maintaining the poise of an educated and erudite academic. That doesn't diminish his points, though.
Ironically, as I researched Milton Friedman, I found that he supports some of my conclusions in the face of the current economic climate. Basically, he supports the Quantity Theory of Money which focuses on the supply of economic resources, whereas Keynesian economics focus more on the demand of economic resources. Keynesian economics is currently the accepted "best solution", and those who studied economics in college in recent time might not be aware that there are still proponents of non-Keynesian economics who have made major contributions to the field of economics since the 1950s (such as Milton Friedman).
I can't believe I'm using Milton Friedman to support any part of my argument. He's basically an economic anarchist who believes free market will balance everything out and any government interference must by its very nature fuck up that balance.
I also learned that neither system balances supply and demand in the equations. Pre-Keynesian focused much more heavily on supply, Keynesian and Post-Keynesian seem to focus heavily on demand. Both schools factor both parameters, of course.
Friedman is interesting because he never could have predicted that someone -- namely credit card companies -- could vastly increase the money supply by leveraging debt as a resource. They actually caused debt to become an asset by making it possible for me to pay you tomorrow for a cheeseburger today. They sell opportunity.
They actually caused debt to become an asset by making it possible for me to pay you tomorrow for a cheeseburger today. They sell opportunity.
How is this practically different from the borrowing and debt that existed prior to credit card companies? The only difference I see is that the credit cards don't review the plan for payback (i.e. as a loan officer might).
They actually caused debt to become an asset by making it possible for me to pay you tomorrow for a cheeseburger today. They sell opportunity.
How is this practically different from the borrowing and debt that existed prior to credit card companies? The only difference I see is that the credit cards don't review the plan for payback (i.e. as a loan officer might).
Pre-approval, volume, and frequency of use -- plus electronic integration so that debt can be traded instantly for goods and services.
They actually caused debt to become an asset by making it possible for me to pay you tomorrow for a cheeseburger today. They sell opportunity.
How is this practically different from the borrowing and debt that existed prior to credit card companies? The only difference I see is that the credit cards don't review the plan for payback (i.e. as a loan officer might).
Pre-approval, volume, and frequency of use -- plus electronic integration so that debt can be traded instantly for goods and services.
This is tangential, but I was just thinking about the electronic integration that credit cards introduce. Without them, I don't know if we would have debit cards or the other forms of electronic currency (not based in debt) that we have right now. I kinda love instant currency transactions (until the card gets stolen, that is).
Now relate that back to my Dutch East India rant. The "bald assertion" that Starfox said I made, starts making sense. But that's working backwards because IPOs (Initial Public Offering) evolved from what the Dutch created.
Therefore stock markets exist for companies to raise capital and expand.
Alright Bryan, for us to discuss the purpose of the stock market. You have ask yourself why does a company want to go public?
I don't disagree with you that stocks do exist to build a company by borrowing from investors and then paying them back in interest from profits gained during expansion.
My business partner views going public as a way to get publicity before selling off a company. It's business politics. So there do exist other reasons to enter into stock trade.
I am also inclined to agree with you that Dutch Each India company started selling stock as a way to grow the company beyond being limited to consumers. However, as other people have stated, you haven't supported your claim with evidence that directly supports your claim. An example of such evidence would be historical record from the DEI management that states clearly what their purpose in starting the stock trade was.
Now relate that back to my Dutch East India rant.
The problem is that the article you posted doesn't reference the Dutch East India company at all.
An argument in a similar style could be made thusly: A dog marks his territory by peeing on something. You just witnessed a dog pee on the grass. Therefore, because dogs mark territory by peeing, that dog must have been marking the grass.
The fact is, dogs also pee to drain the lizard, without any territorial claims. In any given circumstance of a dog taking a wee, that dog might be doing one or the other.
Likewise, while it makes sense that the DEI traded for the reasons you claim (the dog must be marking territory), the possibility still exists that they did it for reasons other people claim (maybe the dog was draining the lizard).
The problem is not what you are saying, but the form of the argument in which you are presenting it.
Comments
Ok, what is the US economy then?
I also don't believe a pure, free market economy exists on this planet. It would fail as bad Communism has, although none of those were examples of pure communism.
The problem with both is that, over time, the control goes to a very small portion of the population. With communism, it goes to a select number of government officials who oversee the allocation of resources. In a pure, free market, it would go to the most successful businesspeople (who gain that wealth by any means...nothing but consumers to stop them), who control the most of the wealth (and thus the allocation of resources).
EDIT: Ironically, Adam Smith proposed Capitalism to maintain a fairly even distribution of wealth (and thus power) to reduce the corruption, by a side effect of its use (as opposed to gov't oversight). However, the wealth keeps accumulating in small pockets in practice.
I'll start:
Get yours today!
I believe that the burden of proof rests on both sides. In that frame of mind, it would be bullshit to call out someone else's statements as needing proof without backing your own. For example, I could pull this quote: You haven't shown this to be true; instead, you simply stated it. Please identify all purposes that were originally relevant to his argument and explain how none of them are relevant to this discussion. Alternatively, explain how the entire space of possible rationales for stocks from any time besides now would be irrelevant to today's driving reason for using stocks, and also describe how you chose your time granularity.
EDIT: Also, editing other people's grammar is counter to the board "ethics". Everybody knows this is not strongly enforced, but please don't do this when making an argument. It makes it look like you have some need to empower your argument by nitpicking the grammar of the other argument. Grammar is not at all a part of the argument. Grammar does not contribute to nor deflect from the logical consistency of an argument, so long as you understand it. That fact that you were able to correct the grammar unambiguously implies that you did, in fact, understand his grammar.
So historical fact is not good enough for you?
Are you that unwilling to google or go to a library?
Fine I'll cite my source the American way! Through hollywood and the silver screen. Do you remember when George Clooney, Matt Damon and Brad "Fucking" Pitt in Oceans Twelve had to steal something to make money. In order to pay Andy Garcia the money the trio stole.
Well guess what it was, the first stock certificate ever issued by the... VOC (layman terms DUTCH EAST INDIA company)
If you can't trust these guys then god help us all... Oh here is the link.
@Bryan: Thanks best friend, if you want to learn more I recommend the book The Accent of Money by Niall Ferguson. This guy is a Harvard economics professor and brilliant economic historian. If more students studied economic history, rather then just modern economics we would have a lot less problems today.
I don't like this guy mostly because he seems to be a crotchety old man instead of maintaining the poise of an educated and erudite academic. That doesn't diminish his points, though.
Ironically, as I researched Milton Friedman, I found that he supports some of my conclusions in the face of the current economic climate. Basically, he supports the Quantity Theory of Money which focuses on the supply of economic resources, whereas Keynesian economics focus more on the demand of economic resources. Keynesian economics is currently the accepted "best solution", and those who studied economics in college in recent time might not be aware that there are still proponents of non-Keynesian economics who have made major contributions to the field of economics since the 1950s (such as Milton Friedman).
I can't believe I'm using Milton Friedman to support any part of my argument. He's basically an economic anarchist who believes free market will balance everything out and any government interference must by its very nature fuck up that balance.
I also learned that neither system balances supply and demand in the equations. Pre-Keynesian focused much more heavily on supply, Keynesian and Post-Keynesian seem to focus heavily on demand. Both schools factor both parameters, of course.
Answer: " When a private firm becomes publicly traded, the primary benefit is increased access to financial markets and to capital for projects"
Now relate that back to my Dutch East India rant. The "bald assertion" that Starfox said I made, starts making sense. But that's working backwards because IPOs (Initial Public Offering) evolved from what the Dutch created.
Therefore stock markets exist for companies to raise capital and expand.
Hope that helps
My business partner views going public as a way to get publicity before selling off a company. It's business politics. So there do exist other reasons to enter into stock trade.
I am also inclined to agree with you that Dutch Each India company started selling stock as a way to grow the company beyond being limited to consumers. However, as other people have stated, you haven't supported your claim with evidence that directly supports your claim. An example of such evidence would be historical record from the DEI management that states clearly what their purpose in starting the stock trade was. The problem is that the article you posted doesn't reference the Dutch East India company at all.
An argument in a similar style could be made thusly:
A dog marks his territory by peeing on something.
You just witnessed a dog pee on the grass.
Therefore, because dogs mark territory by peeing, that dog must have been marking the grass.
The fact is, dogs also pee to drain the lizard, without any territorial claims. In any given circumstance of a dog taking a wee, that dog might be doing one or the other.
Likewise, while it makes sense that the DEI traded for the reasons you claim (the dog must be marking territory), the possibility still exists that they did it for reasons other people claim (maybe the dog was draining the lizard).
The problem is not what you are saying, but the form of the argument in which you are presenting it.