“Big Business sucks out the lifeblood from the consumers.”
It’s one of the most popular “socialist” fallacies that I only read online, but was surprised to have personally heard a variation of last week from an unexpected source.
The negative connotation is that trade signifies as a parasite-host relationship where only one party benefits from the engagement.
This represents sheer political absurdity.
Here's why.
When a person say, purchases a pair of shoes from a shoe store at a mall, he/she expects that the new pair of shoes to either replace his/her old pair or to augment the inventory of shoes-perhaps for fashion purposes or in combination with his/her clothes in order to comply with the required uniform in the workplace or for many other personal reasons (as gifts, etc..)
When a person pays to eat at a restaurant, he/she fulfills the need for nourishment, irrespective of the classification of the venue (fine dining, fast food, canteen etc.) and or the variety of food served and consumed.
When a person buys a car from the car dealer, he expects that the new car to accomplish his/her mobility goals or social esteem needs.
In other words, when people voluntarily exchange money for certain goods or services they expect to directly benefit from the exchange-either to enhance the person’s wellbeing by expanding utility (or increasing convenience by usage) and or for reputation (self esteem) motives and or social (gifts, charities, donations, Keeping up with the Jones', etc...) incentives.
In addition, the presence of competition expands the consumer’s array of choices. This means producers will have to earnestly compete with each other to please the consumer’s desires by offering the most desirable products or services in terms of prices or through quality or in some forms of intangible advantages or a combination thereof.
Of course, the reward from having to meet the consumer’s needs or wants translates to the ultimate goal- profits.
And one must not forget that producers or service providers are themselves consumers. In short, people produce in order to consume.
So nowhere in the above circumstances reveals that trade has been a one-sided affair or a parasite-host relationship because both the sellers and buyers directly benefits from the voluntary exchange, aside from assuming reciprocal roles.
In the US, the steady entrenchment of life enhancing technology enhanced tools or equipments essentially translates to an increase in the standards of living (see chart above from AOLnews), is a product of free trade.
As W. Michael Cox chief economist of the Federal Reserve of Dallas wrote, ``As the great economist Joseph Schumpeter put it: "Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist of providing more silk stocking for queens but in bringing them within the reach of factory girls for steadily decreasing amounts of effort."
``Innovation and trade continually drive down the real cost of goods and services and increase the productivity of each hour of work. As this capitalist engine churns onward, the scarcity that plagued mankind for millennia has given way to the abundance that's the foundation of today's vast middle class." (bold emphasis mine)
This should well apply to economies that are also responsive to freer trade. And this phenomenon do not escape the Philippines.
Unfortunately such intangible benefits can’t entirely be captured by statistical GDP. And it is due to the ambiguities of the observable but unquantifiable benefits that has prompted liberals or socialist to argue based on fallacious premises.
Trade As Wealth Drain?
The other negative implication about the misleading sucking out the life of consumers is the impression that the “wealth” of consumers are allegedly being drained by businesses.
This is another utter nonsense.
Money isn’t wealth. Money is a medium of exchange. Regardless of whether people acquire things by falling victim to boom bust policies by loading up on intractable debt or not isn’t the issue. Inflationism is likewise not an issue here.
The issue is that people voluntarily conduct exchanges in the expectations that they would directly benefit from it, regardless of how it is funded.
When people undertake trade, basically people do not trade money for goods, but on their output or the product or services which they represent. Money only serves as a proxy for one’s output or an alternative instrument to facilitate for an exchange of goods and services.
So the money spent by a local bum in the Philippines, which may come from remittances by an overseas worker benefactor (usually a parent/s) is pretty much the same money spent by a spoiled brat from a wealthy parent or even from a politico sponsor. They represent some forms of product or services that have been converted into money and used for the exchange.
In other words, the idea that big business bleeds dry the consumers in a competitive marketplace is pure hogwash.
Taxes And Political Concessions As Wealth Suckers
Let me tell you where the consumer’s wealth gets truly sucked out.
The marketplace represents as a platform for continuous human actions of voluntary exchanges where consumers and producers employ choices for the ultimate goal of having to directly meet a specific end or goal or benefit. Hence voluntarism translates to mutually beneficial actions.
When the voluntarism is stripped out of the equation, then consumers are essentially held hostage to abide by the conditions imposed by law. Hence consumers would be forced to comply with the service or goods that they normally would not likely accept in the context of the marketplace.
Taxes are fundamentally the best example of wealth sucking activities employed by governments on the consumers.
Taxes are coercive or not voluntary. There is no choice for consumers but to pay for services it may or may not want, otherwise non-conformity means penalty (fines, legal harassment or at worst incarceration).
Taxes don’t have direct specific benefits to each taxpayer. Unlike trade where the benefits are direct and mutual, we use some but not all the privileges from government funded (public goods) projects, e.g. we don’t use all government most constructed roads do we?) In short, while the supposed benefits are assumed by most people as direct, they are realistically indirect.
Since government is a political entity then its tax funded expenditures are similarly deployed politically, hence taxes end up mostly to:
-funding pet projects of elected officials for vote generating purposes
-subsidizing liabilities of vested interest groups
-the pockets of these officials and or many of the bureaucrats involved on them
-expand bureaucracy
-finance worthless projects or projects of little market value
-dispense favors to political allies via behest loans etc…
-fund substandard and overpriced projects
-redistribute resources from productive to non-productive segments of the society
-and many others
In short, where the alleged exchange (tax for public goods) is imposed by decree, the cost benefit ratio for the consumers is heavily skewed towards the cost. So except for bureaucrats and politicos, people essentially pay more for taxes than they benefit from it. Thus, forced compliance by the consumers, where the cost is apparently larger than the benefits, equals to a net drain to our wealth.
Of course one may add that politically based economic concessions (economic rent seekers) or legislative decree based “private” monopolies which eludes competition and restricts consumers to pay for overpriced and inefficient goods or services serves the same function, it is a net drain for capital accumulation, and thus, economic wealth.
In short free trade benefits the economy's wellbeing and adds to wealth, while government imposed tax for service and political monopolies function as a net drain on wealth.
Don't fall for vicious political propaganda.
It’s one of the most popular “socialist” fallacies that I only read online, but was surprised to have personally heard a variation of last week from an unexpected source.
The negative connotation is that trade signifies as a parasite-host relationship where only one party benefits from the engagement.
This represents sheer political absurdity.
Here's why.
When a person say, purchases a pair of shoes from a shoe store at a mall, he/she expects that the new pair of shoes to either replace his/her old pair or to augment the inventory of shoes-perhaps for fashion purposes or in combination with his/her clothes in order to comply with the required uniform in the workplace or for many other personal reasons (as gifts, etc..)
When a person pays to eat at a restaurant, he/she fulfills the need for nourishment, irrespective of the classification of the venue (fine dining, fast food, canteen etc.) and or the variety of food served and consumed.
When a person buys a car from the car dealer, he expects that the new car to accomplish his/her mobility goals or social esteem needs.
In other words, when people voluntarily exchange money for certain goods or services they expect to directly benefit from the exchange-either to enhance the person’s wellbeing by expanding utility (or increasing convenience by usage) and or for reputation (self esteem) motives and or social (gifts, charities, donations, Keeping up with the Jones', etc...) incentives.
In addition, the presence of competition expands the consumer’s array of choices. This means producers will have to earnestly compete with each other to please the consumer’s desires by offering the most desirable products or services in terms of prices or through quality or in some forms of intangible advantages or a combination thereof.
Of course, the reward from having to meet the consumer’s needs or wants translates to the ultimate goal- profits.
And one must not forget that producers or service providers are themselves consumers. In short, people produce in order to consume.
So nowhere in the above circumstances reveals that trade has been a one-sided affair or a parasite-host relationship because both the sellers and buyers directly benefits from the voluntary exchange, aside from assuming reciprocal roles.
In the US, the steady entrenchment of life enhancing technology enhanced tools or equipments essentially translates to an increase in the standards of living (see chart above from AOLnews), is a product of free trade.
As W. Michael Cox chief economist of the Federal Reserve of Dallas wrote, ``As the great economist Joseph Schumpeter put it: "Queen Elizabeth owned silk stockings. The capitalist achievement does not typically consist of providing more silk stocking for queens but in bringing them within the reach of factory girls for steadily decreasing amounts of effort."
``Innovation and trade continually drive down the real cost of goods and services and increase the productivity of each hour of work. As this capitalist engine churns onward, the scarcity that plagued mankind for millennia has given way to the abundance that's the foundation of today's vast middle class." (bold emphasis mine)
This should well apply to economies that are also responsive to freer trade. And this phenomenon do not escape the Philippines.
Unfortunately such intangible benefits can’t entirely be captured by statistical GDP. And it is due to the ambiguities of the observable but unquantifiable benefits that has prompted liberals or socialist to argue based on fallacious premises.
Trade As Wealth Drain?
The other negative implication about the misleading sucking out the life of consumers is the impression that the “wealth” of consumers are allegedly being drained by businesses.
This is another utter nonsense.
Money isn’t wealth. Money is a medium of exchange. Regardless of whether people acquire things by falling victim to boom bust policies by loading up on intractable debt or not isn’t the issue. Inflationism is likewise not an issue here.
The issue is that people voluntarily conduct exchanges in the expectations that they would directly benefit from it, regardless of how it is funded.
When people undertake trade, basically people do not trade money for goods, but on their output or the product or services which they represent. Money only serves as a proxy for one’s output or an alternative instrument to facilitate for an exchange of goods and services.
So the money spent by a local bum in the Philippines, which may come from remittances by an overseas worker benefactor (usually a parent/s) is pretty much the same money spent by a spoiled brat from a wealthy parent or even from a politico sponsor. They represent some forms of product or services that have been converted into money and used for the exchange.
In other words, the idea that big business bleeds dry the consumers in a competitive marketplace is pure hogwash.
Taxes And Political Concessions As Wealth Suckers
Let me tell you where the consumer’s wealth gets truly sucked out.
The marketplace represents as a platform for continuous human actions of voluntary exchanges where consumers and producers employ choices for the ultimate goal of having to directly meet a specific end or goal or benefit. Hence voluntarism translates to mutually beneficial actions.
When the voluntarism is stripped out of the equation, then consumers are essentially held hostage to abide by the conditions imposed by law. Hence consumers would be forced to comply with the service or goods that they normally would not likely accept in the context of the marketplace.
Taxes are fundamentally the best example of wealth sucking activities employed by governments on the consumers.
Taxes are coercive or not voluntary. There is no choice for consumers but to pay for services it may or may not want, otherwise non-conformity means penalty (fines, legal harassment or at worst incarceration).
Taxes don’t have direct specific benefits to each taxpayer. Unlike trade where the benefits are direct and mutual, we use some but not all the privileges from government funded (public goods) projects, e.g. we don’t use all government most constructed roads do we?) In short, while the supposed benefits are assumed by most people as direct, they are realistically indirect.
Since government is a political entity then its tax funded expenditures are similarly deployed politically, hence taxes end up mostly to:
-funding pet projects of elected officials for vote generating purposes
-subsidizing liabilities of vested interest groups
-the pockets of these officials and or many of the bureaucrats involved on them
-expand bureaucracy
-finance worthless projects or projects of little market value
-dispense favors to political allies via behest loans etc…
-fund substandard and overpriced projects
-redistribute resources from productive to non-productive segments of the society
-and many others
In short, where the alleged exchange (tax for public goods) is imposed by decree, the cost benefit ratio for the consumers is heavily skewed towards the cost. So except for bureaucrats and politicos, people essentially pay more for taxes than they benefit from it. Thus, forced compliance by the consumers, where the cost is apparently larger than the benefits, equals to a net drain to our wealth.
Of course one may add that politically based economic concessions (economic rent seekers) or legislative decree based “private” monopolies which eludes competition and restricts consumers to pay for overpriced and inefficient goods or services serves the same function, it is a net drain for capital accumulation, and thus, economic wealth.
In short free trade benefits the economy's wellbeing and adds to wealth, while government imposed tax for service and political monopolies function as a net drain on wealth.
Don't fall for vicious political propaganda.
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