Arnold Kling  

Class Discussion Starter

Long-Run Commodity Prices: Ess... Arbitrage Challenge...

The question of whether businesses should be public-spirited is a great one for class discussion. Teachers and professors will want to bookmark Creative Capitalism. Thanks to Tyler Cowen for the pointer.

Here is Michael Kinsley's introduction:

why not just pay out the money in dividends and let the shareholders do what they want with it? [Warren Buffett] pointed out that this would add a layer of taxation...Still, free-market purists would say that this is a faulty arrangement and that there is no reason the government should be promoting corporate philanthropy over individual philanthropy.

...“Tiered pricing” is a genteel name for price discrimination, which is ordinarily frowned upon. In theory it’s even impossible. And even in practice, there is leakage. (When you cross the border from Canada to the United States these days, the customs officials are looking for prescription drugs more than for recreational ones.) But giving poor countries a price break on software and pharmaceuticals can be good creative capitalism even as it solves a problem for capitalism of the traditional kind.

...the big question whether what is called “creative capitalism” is just charity in disguise. And whether the beneficiaries might prefer to take their charity straight.

Comments and Sharing

COMMENTS (2 to date)

Isn't "Creative Capitalism" simply the type of capitalism that was practiced by Henry Ford and by most of the Japanese economy?

The seminal case on the question of whether profits could be shared between employees and shareholders is Dodge v. Ford.

The way to split the baby is to observe that profit is more sustainable over very long periods of time when there is a fair balance between employees and shareholders.

Brad Hutchings writes:

If there's one thing I really admire about Bill Gates, it's how he deploys Michael Kinsley. Kinsley is married to the current CEO of the Bill and Melinda Gates Foundation. So that's how Kinsley gets to sit at the table with Gates and Buffet and ponder these things. Then he's free to go off and start a discussion. Just like with Slate, the existence of the discussion benefits Bill Gates. The outcome doesn't much matter. Nor will the obvious criticisms of Kinsley as moderator. Critics and detractors are free to discuss it elsewhere, but if they do, they're still discussing it. Playing the PR game (or any game) that way demonstrates a very rare confidence in one's own righteousness.

That said, I prefer modularity and separation of concerns. If wealthy people want to take a business approach to solving the world's problems, I would prefer to see them contract with for-profit concerns that can solve those problems with a profit motive injected. Government contractors are the model. Working as or for one, you can be very passionate about the work you do and still know you're going to get paid.

Comments for this entry have been closed
Return to top