Re: [RC] Reinventing Capitalism

[David R. Block]

Oh yes they did make a lot of short term money, and no coercion was involved, just the implied racist charge if they failed to follow through. But that's not pressure or impacting the market artificially. No sir! ;-) I'm reacting to the whole house of cards erected by the government intervention in the mortgage business (and where I work processes tax payments from the escrow accounts), and the turning of the blame away from Freddie and Fannie and onto the banks by those in government who got the largest contributions from Freddie and Fannie: Barney Frank, Barack Obama, and Christopher Dodd. First through Third place in contributions from those two organizations. But nope, no conflict of interest here, move along now. They're playing the voters for rubes. Do you like being a rube?? If quasi-governmental organizations would not pressure banks into loans that they would not have otherwise made, that would be a great start. I'm still looking in the Constitution for that "right to a house" that a lot of folks seem to think is in there (got some bad news, it's not in there). If we could start THAT reform first and find that there are STILL problems, then I might consider a change in corporate governance of one of the already heavily regulated industries, the financial sector. Otherwise, I don't see much change required except for change in Congress. The watchdogs in Congress were paid by those whom they were supposed to be watching, Freddie and Fannie, to look the other way. They did look the other way, and we are witnessing the results. David “We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.”--Ayn Rand   Dr. Ernie Prabhakar wrote: Hi David, On Feb 26, 2009, at 9:36 PM, David R. Block wrote: This leaves out the influence of Freddie Mac and Fannie Mae encouraging banks to make risky home loans easy, thus putting more buyers in the market and inflating prices to the point that those buyers could not really afford them. Then insisting that they be given loans anyway so as to not "discriminate" against them. Which the financial industry was happy to do, and made a lot of short-term money in so doing. :-) In other words, this is one-sided twaddle. Public/Private partnerships are merely a more direct means by the government to screw up free markets so that they can claim that free markets don't work and that we need more government intervention. In this case, government intervention is the problem. More of it is not the solution. It will exacerbate the problem. I haven't read the whole article, but I don't think they are calling for more government involvement. Rather, they are calling for reform and creativity in corporate governance.  And for more adaptive innovation, rather than simply doing things the other way. Are you just reacting to what Obama is doing, or did you actually see something in this particular article that I missed? "When the government is paying you to do something, it is usually something stupid."--P. J. O'Rourke It is the bankrupting of the country as we know it, and Ernie feels fine. It is the bankruptcy of the old way of doing things, which always makes me excited, because it opens the door for people to do things better.  If they are willing to admit that their old answers didn't work. -- Ernie P. David “We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force.”--Ayn Rand   Dr. Ernie Prabhakar wrote: [I really need to update my Capitalism 2.0 proposal to take advantage of the current rethinking. -- Ernie P.] From: ActiveSkip Shouldn't corporate structure evolve too? Can't capitalism 'care'? Must read article in strategy+business: http://bit.ly/8bm16 http://www.strategy-business.com/press/enewsarticle/enews022609?pg=all&tid=230 The financial meltdown of 2008 was a direct result of the pursuit of immediate profit by investment bankers and mortgage brokers who disregarded the impact of their actions on customers, on the larger economy, and indeed on stockholders and the company itself in the long term. Those who wanted to operate with integrity found it difficult. They were constrained by a corporate design that reinforced the need to “make the numbers” by any means possible — a design that bestowed the greatest governance power on short-term shareholders, the stakeholders with the least interest in long-term performance or the external community. Conventional methods for preventing abuses, such as regulation and criminalizing egregious behavior, are only partially effective. In the long run, the best way to get to the root of the problem will be for corporate ownership and governance design itself to evolve. If the idea of creating alternative forms of corporate ownership and governance is unfamiliar in conversations about the meltdown (or other business abuses), it’s because the prevailing form of corporate design is generally taken as a given. Under the laws of most countries, it’s difficult for corporations to adopt any other form. But against the odds, tender green shoots of new company designs are emerging today, and existing alternatives are being adapted. Some emerging models are as likely to be profitable as more conventional companies, and all are more adept at pursuing goals that conventional for-profit companies usually fail to reach: treating customers fairly, protecting the environment, creating a healthy workplace, and supporting the communities in which they operate. Richard Nelson, an economics professor at Columbia University who cofounded the field of evolutionary economics, observes that social systems evolve because of two kinds of innovation: advances in physical technologies (such as new environmental and energy technologies), and advances in social technologies (such as new forms of organization). As these two types of innovation influence each other, the governance models that emerge, such as microfinance-related structures, take their place alongside older, more established alternative models, such as cooperatives, employee-owned firms, and government-sponsored enterprises. These designs can be thought of as emergent new organizational species, occupying a new sector of society that is a greenhouse of design experimentation in which the future of our economy may be growing.... _______________________________________________ Centroids mailing list: Centroids@radicalcentrism.com http://radicalcentrism.com/mailman/listinfo/centroids_radicalcentrism.com Archives at http://radicalcentrism.org/pipermail/centroids_radicalcentrism.com/ _______________________________________________ Centroids mailing list: Centroids@radicalcentrism.com http://radicalcentrism.com/mailman/listinfo/centroids_radicalcentrism.com Archives at http://radicalcentrism.org/pipermail/centroids_radicalcentrism.com/ _______________________________________________ Centroids mailing list: Centroids@radicalcentrism.com http://radicalcentrism.com/mailman/listinfo/centroids_radicalcentrism.com Archives at http://radicalcentrism.org/pipermail/centroids_radicalcentrism.com/

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