Conservatism or Corporatism?

[bord-du-rasoir.livejournal.com]

What accounts for the spikes in these graphs? Conservative (free market) policy or corporatist (government intervention) policy?









Why'd average Wall St. bonus pay recently quadruple average annual salaries? Why'd the financial sector recently triple the nonfinancial sector? Why'd the highest incomes recently increase 36 times faster than median family income?

Provide concrete explanations as to how X (policy) caused Y (economic indicator). Point to specific legislation or executive orders.

The liberal position is predictable: The unprecedented extreme growth in the financial sector and increased inequality is bad. Free market policy (deregulation of banks --> derivatives market expansion --> collapse) is to blame.

I'm more interested in the conservative position: How do you explain the unprecedented growth in the financial sector and the increased income inequality? What're the causes? Is corporatism (government interventionism) responsible? If so, how? Do you draw a connection between the above figures and the financial collapse?

I honestly don't understand the conservative position.

Comments

[rasilio.livejournal.com]

Actually this is incorrect.

The Republicrat party is a party of big business, of course so is the Democan party, they just each favor a slightly different set of big businesses.

However the conservative movement actually distrusts big business at best, they are MUCH more aligned with pro small business policies.

That said the what you refer to as the interests of corporate America sufers from the broken widow falacy.

Let us assume that a corporation doubles it's income and halves it's cost. It's profit has now quadrupled. What happens to those huge profits?

Well, some will be reflected in increased stock prices for that company and who are the majority stockholders? Common Peoples retirement and investment accounts. So the common man benefits.

Even for the big time investors who hold that company though, they take the profits they make from that increased stock price and invest somewhere else in the economy allowing another business to grow and create new jobs, more jobs = more demand for labor = higher wages. Again the common man benefits.

Now, other people all of a sudden look at that marketspace and see the huge profits that company makes and decide they want a piece of that. They either expand their existing businesses into it or open new ones. Both create jobs, good for the common man once again.

Once these competitors get off the ground there is now price competition for the original company as the new players can undercut the existing companies prices and still make a significant profit. In theory they could charge as little as 25% of the original company and still make the profit it started with. The end result however is a price war as the price of the commodity or service is driven down to near the same profit margin it had originally which leads to lower prices and therefore once again a benefit for the common man.

Anyway you cut it a benefit to the corporation is a benefit to the average Joe with one exception. When a corporation gets large enough that it can use the power of the state to alter the business rules to lock out competition or raise the competitions costs relative to their own and this is the source of conservatives not being fans of big business, because those big businesses drive the government to seize more and more power so they can offer more and more benefits to the businesses that power the politicians campaigns.