Free Enterprise - Objectives The American Dream Capitalism Businesses Corporations "The American Dream" Everyone can own some land. - Their own business - Their own home Everyone can be their own boss. Everyone can be successful. Everyone can prosper. Everyone can get rich. Everyone can have lots of toys. Everyone can be happy.     The Reality Unrealistic expectations Disregard for prerequisites (e.g., hard work) Un-level playing field Want instant gratification (get rich quick) Takes money to make money Spend before we earn Eat our profits Takes more than toys to be happy Money buys hollow happiness   "Capitalism" Opportunity to make a profit Free choices Have own business Set own prices Supply and price not dictated by government Accumulation of wealth (saving for future needs)     Socialism, in contrast, is where the state, i.e., the government, owns all of the production (GDP) and distributes it according to the wishes of the state. In the United States, the federal government owns or controls all of the military production, a major portion of the government budget (and debt).    The state and local governments own most of the police and fire protection productivity.   Most highways and bridges (Federal, state, and local) are government owned.   Most high-energy (nuclear) research is government owned or controlled (funded). Does this make the U.S. a socialist state? By the calculations of some people, yes, at least partially.   Which, in turn, drives other people bonkers. The Reality Oligopolies limit customer choices Most people work for someone else; Less than 10% own their own business and are self-employed. Supply and price typically set by giant, privileged corporations Governed by complex, bureaucratic private enterprises Accumulation of redistributed wealth   "Trickle-down economics" The corporation owns the work. The corporation owns the workers. The corporation owns the worker's work. The corporation owns the worker's work profits.   Fiduciary priorities (typical order): Executive Management Enterprise as an entity Shareholders (owners) Suppliers Customers Employees (expendable)   "Redistribution" Tiny fish get eaten by little fish. Little fish get eaten by medium fish. Medium fish get eaten by big fish. Big fish get eaten by bigger fish. Bigger fish get eaten by the biggest fish.   "Applied Redistribution" Transfer of wealth to the wealthy Wealth begets wealth Elections involve more dollars than voters   "Casino Capitalism" Giant corporations Giant financial institutions It's only a game Money is all that matters   "Businesses" Direct Markets - Basic, Primary Produce goods Perform services Store goods Distribute goods   Make customers happy; Get money in return   Indirect Markets - Advanced, Secondary Buy things to sell Trade items Arrange services Loan money (capital)   Help customers; Get money in return   Immitation Markets - Artificial, other Stockpike goods Speculate Gamble Casino Capitalism   Get money     1. Unlimited Financial Liability Sole proprietorships, partnerships, etc. Most businesses (by number) are of this type Owners can lose everything (including personal and family assets) Normally profit and loss managed Decisions based on long-term vision and objectives Craftsmanship, quality, and customer satisfaction 2. Limited Financial Liability Corporations (LLC, Ltd, Inc, PLC, etc.) These have the bulk of the business activity Owners risk no loss other than initial investment Profit and loss managed at top level; often cost-managed at lower levels Decisions based uon short-term vision and objectives Creative accounting Executive perks Interlocking directorates   "Corporations" Limited liability Protection from bankruptcy   Reduced regulation Play with someone else's bankroll Profit manipulation Threaten upstart competitors     The Chiefs Chief Executive Officer (CEO) Chief Operating Officer (COO) Chief Finanical Officer (CFO) Chief Compliance Officer (CCO) Chief Jailable Officer (CJO)     Outsourcing: Designated Hitter Designated Runner Designated Scape Goat Designated Inmate   A. Simple Corporations (1-2) Typically family owned and managed Top executives know most if not all of the employees by name Long term vision and decision making Emphasis on craftmanship, quality, and customer satisfaction B. Complex Corporate Enterprises (1-6) Typically "publically owned" (or owned by another corporation) Hired executives Profit and loss managed at top level; but often cost-managed at lower levels Remote decisions (far from production and customers) Decisions optimized for the short-term Emphasis on profit, growth, and acquisition Creative accounting Executive perks Interlocking directorates   The Reality Practically risk free - financially  (Criminal liability is becoming another thing)   Compare: Limited investment liability Limited financial liability (e.g., big banks) Limited negligence liability (e.g., big oil) Limited criminal liability (e.g., big tobacco)   The U.S.President is not allowed line item veto to hold down the national debt, ... but corporations have line item (subsidiary) bankruptcy to shed their unwanted debt   Regulatory bed partners   Heads we win, tails you lose We gamble, we win We gamble, you lose   Shuffle the deck and optimize use of tax havens (move the profits through our many subsidiaries)   Our huge legal staff always wins the poker hand   Please also see Do we really need regulations?

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