Portal:Business/Selected quote/31 "Judgments of this kind must always be inferior to those which an able business man forms, by the aid of instincts based on long experience with regard to his own business. But they may be made much more trustworthy than they are at present, if they can be based on statistical measures of the relative quantities of the benefits and the injuries which different courses of public action are likely to cause to the several classes of the community. Much of the failure and much of the injustice, in which the economic policies of governments have resulted, have been due to the want of statistical measurement. A few people who have been strongly interested on one side have raised their voices loudly, persistently and all together; while little has been heard from the great mass of people whose interests have lain in the opposite direction; for, even if their attention has been fairly called to the matter, few have cared to exert themselves much for a cause in which no one of them has more than a small stake. The few therefore get their way, although if statistical measures of the interests involved were available, it might prove that the aggregate of the interests of the few was only a tenth or a hundredth part of the aggregate of the interests of the silent many."

—Alfred Marshall, Principles of Economics, 1890

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Portal:Business/Selected quote/32 "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices. It is impossible indeed to prevent such meetings, by any law which either could be executed, or would be consistent with liberty and justice. But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary.

A regulation which obliges all those of the same trade in a particular town to enter their names and places of abode in a public register, facilitates such assemblies. It connects individuals who might never otherwise be known to one another, and gives every man of the trade a direction where to find every other man of it.

A regulation which enables those of the same trade to tax themselves in order to provide for their poor, their sick, their widows and orphans, by giving them a common interest to manage, renders such assemblies necessary.

An incorporation not only renders them necessary, but makes the act of the majority binding upon the whole. In a free trade an effectual combination cannot be established but by the unanimous consent of every single trader, and it cannot last longer than every single trader continues of the same mind. The majority of a corporation can enact a bye-law with proper penalties, which will limit the competition more effectually and more durably than any voluntary combination whatever."

—Adam Smith, The Wealth of Nations, 1776

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Portal:Business/Selected quote/33 "The world economy, like the economy of a single country, can be visualized as a system of interdependent processes. Each process, be it the manufacture of steel, the education of youth or the running of a family household, generates certain outputs and absorbs a specific combination of inputs. Direct interdependence between two processes arises whenever the output of one becomes an input of the other: coal, the output of the coal mining industry, is an input of the electric power generating sector. The chemical industry uses coal not only directly as a raw material but also indirectly in the form of electrical power. A network of such links constitutes a system of elements which depend upon each other directly, indirectly or both. The state of a particular economic system can be conveniently described in the form of a two-way input-output table showing the flows of goods and services among its different sectors, and to and from processes or entities (“value added” and “final demand”) viewed as falling outside the conventional borders of an input-output system. As the scope of the inquiry expands, new rows and columns are added to the table and some of the external inflows and outflows become internalized. Increasing the number of rows and columns that describe an economic system also permits a more detailed description of economic activities commonly described in highly aggregative terms."

—Wassily Leontief, Structure of the World Economy, 1973

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Portal:Business/Selected quote/34 "This essay has been devoted to an exposition and elaboration of a single syllogism: given that the structure of an econometric model consist of optimal decision rules of economic agents, and that optimal decision rules vary systematically with changes in the structure of series relevant to the decision maker, it follows that any change in policy will systematically alter the structure of econometric models.

For the question of short-term forecasting, or tracking ability of econometric models, we have seen that this conclusion is of only occasional significance. For issues involving policy evaluation, in contrast, it is fundamental; for it implies that comparisons of the effects of alternative policy rules using current macro-econometric models are invalid regardless of the performance of these models over the sample period or in ex-ante short-term forecasting."

—Robert Lucas, Econometric Policy Evaluation: A Critique, 1976

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Portal:Business/Selected quote/39 "Production Cloning

On the supply side, the ultimate source of a mass winner-take-all market is that the services of the best performers can be reproduced, or "cloned", at low additional cost. For example, once the master recording has been made, it costs no more to transcribe the best soprano's performance onto a compact disc than it does her understudy's. Once the film is in the canister, it costs no more to make an additional print of an Academy Award winner than a B western. Once the television cameras have been set up, it costs no more to broadcast a tennis match between the first- and second-ranked players in the world than it does to broadcast a match between the 101st and 102nd. If the best performers' efforts can be cloned at low marginal cost, there is less room in the market for lower-ranked talents.

More generally, whenever there are economies of scale in production or distribution, there is a natural tendency for one product, supplier, or service to dominate the market. The battle is to determine which one it will be.

Network Economies

On the demand side of many markets, a product becomes more valuable as greater numbers of consumers use it. A vivid illustration is VHS's defeat of the competing Beta format in home video recorders. VHS's defeat of the competing Beta format in home video recorders. VHS's attraction over the initial versions of Beta was that it permitted longer recording times. Thought Beta later corrected this deficiency and on most important technical dimensions came to be widely by experts as superior to VHS, the initial sales advantage of VHS proved insurmountable. Once the number of consumers owning VHS passed a critical threshold, the reasons for choosing it became compelling-variety and availability of tape rentals, access to repair facilities, the capability to exchange tapes with friends, and son on."

—Robert H. Frank, The Winner-Take-All Society, 1995

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Selected quote 40

Portal:Business/Selected quote/40 "One school of thought-influential in shaping the deregulatory policies that played a role in the current crisis-argued that the competitive equilibrium approach of microeconomics provided the correct foundations for macroeconomics. This school, based on the neoclassical model, was sometimes referred to as the "New Classical" school, or the "Chicago School," because some of its high priests taught at the University of Chicago. Because they believed that markets are always efficient, they contended that one should not be worried about economic fluctuations, such as the current recession-it was simply the efficient adjustment of the economy to shocks (such as changes in technology) coming from the outside. It was an approach that had strong policy prescriptions-a minimal role for government.

Thought they based their analyses on the neoclassical (Walrasian) models, they made a further simplification that all individuals were identical. This was called the "representative agent" model. But if all individuals are identical, there can be no borrowing or lending-that would simply be moving money from the left pocket to the right pocket. There can be no bankruptcy. While I argued earlier that problems of imperfect information are central to an understanding of modern economics, in their models there can be no information asymmetries, where one person knows something that someone else doesn't. Any information asymmetry would reflect intense schizophrenia, hardly consistent with their other assumptions of full rationality. Their models have nothing to say about the critical issues that are at play in the current crisis: so what if one gives the bankers an extra trillion dollars or two? In the model, the bankers and the workers are the same people. Key policy debates were simply assumed away. For instance, the representative agent model precludes any discussion of distribution. In a sense, views of values (including the view that the distribution of income is not important) are embedded in the very formulation of their analyses."

—Joseph Stiglitz, Freefall, 2010

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Portal:Business/Selected quote/44 "There are rumors that the Austrian army is obliged to retire a little; that the Spanish squadron is gone to South America; that the English have excited a rebellion there; and some others equally unauthenticated. I do not mention them in my letter to Mr.Jay, because they are unauthenticated. The bankruptcies in London have re-commenced with new force. There is no saying where this fire will end, perhaps in the conflagration of all their paper. If not now, it must erelong. With only twenty millions of coin, and three or four hundred millions of circulating paper, public and private, nothing is necessary but a general panic, produced either by failures, invasion, or any other cause, and the whole visionary fabric vanishes into air, and shows that paper is poverty, that it is only the ghost of money, and not money itself. One hundred years ago, they had twenty odd millions of coin. Since that they brought in from Holland by borrowing forty millions more, yet they have but twenty millions left, and they talk of being rich, and having the balance of trade in favor."

—Thomas Jefferson, Letter to Colonel Carrington, 27 May 1788

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Selected quote 45

Portal:Business/Selected quote/45 "The hindrance that the monetary or circulation credit theory had to overcome was not merely theoretical error but also political bias. Public opinion is prone to see in interest nothing but a merely institutional obstacle to the expansion of production. It does not realize that the discount of future goods as against present goods is a necessary and eternal category of human action and cannot be abolished by bank manipulation. In the eyes of cranks and demagogues, interest is a product of the sinister machinations of rugged exploiters. The age-old disapprobation of interest has been fully revived by modern interventionism. It clings to the dogma that it is one of the foremost duties of good government to lower the rate of interest as far as possible or to abolish it altogether. All present-day governments are fanatically committed to an easy money policy. As has been mentioned already, the British Government has asserted that credit expansion has performed "the miracle...of turning a stone into bread." A Chairman of the Federal Reserve Bank of New York has declared that "final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity." Many governments, universities, and institutes of economic research lavishly subsidize publications whose main purpose is to praise the blessings of unbridled credit expansion and to slander all opponents as ill intentioned advocates of the selfish interests of usurers.

The wavelike movement affecting the economic system, the recurrence of periods of boom which are followed by periods of depression, is the unavoidable outcome of the attempts, repeated again and again, to lower the gross market rate of interest by means of credit expansion. There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

—Ludwig Von Mises, Human Action, 1949

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Portal:Business/Selected quote/46 "Instead, this 'loss out of nowhere' is hidden in the detail that economists lose by treating infinitesimally small quantities as zeros. If perfectly competitive firms were to produce where marginal cost equals price, then they would be producing part of their output past the point at which marginal revenue equals marginal cost. They would therefore make a loss on these additional units of output.

As I argued above, the demand curve for a single firm cannot be horizontal-it must slope downwards, because if it doesn't, then the market demand curve has to be horizontal. Therefore, marginal revenue will be less than price for the individual firm. However, by arguing that an infinitesimal segment of the market demand is effectively horizontal, economists have treated this loss as zero. Summing zero losses over all firms means zero losses in the aggregate. But this is not consistent with their vision of the output and price levels of the perfectly competitive industry.

The higher level of output must mean losses are incurred by the industry, relative to the profit-maximizing level chosen by monopoly. Losses at the market level must mean losses at the individual firm level- yet these are presumed to be zero by economic analysis, because it erroneously assumes that the perfectly competitive firm faces a horizontal demand curve."

—Steve Keen, Debunking Economics, 2011

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Portal:Business/Selected quote/47 "Since I entered politics, I have chiefly had men's views confided to me privately. Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so complete, so pervasive, that they had better not speak above their breath when they speak in condemnation of it.

They know that America is not a place of which it can be said, as it used to be, that a man may choose his own calling and pursue it just as far as his abilities enable him to pursue it; because to-day, if he enters certain fields, there are organizations which will use means against him that will prevent his building up a business which they do not want to have built up; organizations that will see to it that the ground is cut from under him and the markets shut against him. For if he begins to sell to certain retail dealers, to any retail dealers, the monopoly will refuse to sell to those dealers, and those dealers, afraid, will not buy the new man's wares.

And this is the country which has lifted to the admiration of the world its ideals of absolutely free opportunity, where no man is supposed to be under any limitation except the limitations of his character and of his mind; where there is supposed to be no distinction of class, no distinction of blood, no distinction of social status, but where men win or lose on their merits.

I lay it very close to my own conscience as a public man whether we can any longer stand at our doors and welcome all newcomers upon those terms. American industry is not free, as once it was free; American enterprise is not free; the man with only a little capital is finding it harder to get into the field, more and more impossible to compete with the big fellow. Why? Because the laws of this country do not prevent the strong from crushing the weak. That is the reason, and because the strong have crushed the weak the strong dominate the industry and the economic life of this country. No man can deny that the lines of endeavor have more and more narrowed and stiffened; no man who knows anything about the development of industry in this country can have failed to observe that the larger kinds of credit are more and more difficult to obtain, unless you obtain them upon the terms of uniting your efforts with those who already control the industries of the country; and nobody can fail to observe that any man who tries to set himself up in competition with any process of manufacture which has been taken under the control of large combinations of capital will presently find himself either squeezed out or obliged to sell and allow himself to be absorbed"

—Woodrow Wilson, The New Freedom, 1913

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Portal:Business/Selected quote/48 "The trusts do not belong to the period of infant industries. They are not the products of the time, that old laborious time, when the great continent we live on was undeveloped, the young nation struggling to find itself and get upon its feet amidst older and more experienced competitors. They belong to a very recent and very sophisticated age, when men knew what they wanted and knew how to get it by the favor of the government.

Did you ever look into the way a trust was made? It is very natural, in one sense, in the same sense in which human greed is natural. If I haven't efficiency enough to beat my rivals, then the thing I am inclined to do is to get together with my rivals and say: "Don't let's cut each other's throats; let's combine and determine prices for ourselves; determine the output, and thereby determine the prices: and dominate and control the market." That is very natural. That has been done ever since freebooting was established. That has been done ever since power was used to establish control. The reason that the masters of combination have sought to shut out competition is that the basis of control under competition is brains and efficiency. I admit that any large corporation built up by the legitimate processes of business, by economy, by efficiency, is natural; and I am not afraid of it, no matter how big it grows. It can stay big only by doing its work more thoroughly than anybody else. And there is a point of bigness,—as every business man in this country knows, though some of them will not admit it,—where you pass the limit of efficiency and get into the region of clumsiness and unwieldiness. You can make your combine so extensive that you can't digest it into a single system; you can get so many parts that you can't assemble them as you would an effective piece of machinery. The point of efficiency is overstepped in the natural process of development oftentimes, and it has been overstepped many times in the artificial and deliberate formation of trusts.

A trust is formed in this way: a few gentlemen "promote" it—that is to say, they get it up, being given enormous fees for their kindness, which fees are loaded on to the undertaking in the form of securities of one kind or another. The argument of the promoters is, not that every one who comes into the combination can carry on his business more efficiently than he did before; the argument is: we will assign to you as your share in the pool twice, three times, four times, or five times what you could have sold your business for to an individual competitor who would have to run it on an economic and competitive basis. We can afford to buy it at such a figure because we are shutting out competition. We can afford to make the stock of the combination half a dozen times what it naturally would be and pay dividends on it, because there will be nobody to dispute the prices we shall fix."

—Woodrow Wilson, The New Freedom, 1913

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Portal:Business/Selected quote/49 "Therefore, when a small group of men approach Congress in order to induce the committee concerned to concur in certain legislation, nobody knows the ramifications of the interests which those men represent; there seems no frank and open action of public opinion in public counsel, but every man is suspected of representing some other man and it is not known where his connections begin or end.

I am one of those who have been so fortunately circumstanced that I have had the opportunity to study the way in which these things come about in complete disconnection from them, and I do not suspect that any man has deliberately planned the system. I am not so uninstructed and misinformed as to suppose that there is a deliberate and malevolent combination somewhere to dominate the government of the United States. I merely say that, by certain processes, now well known, and perhaps natural in themselves, there has come about an extraordinary and very sinister concentration in the control of business in the country.

However it has come about, it is more important still that the control of credit also has become dangerously centralized. It is the mere truth to say that the financial resources of the country are not at the command of those who do not submit to the direction and domination of small groups of capitalists who wish to keep the economic development of the country under their own eye and guidance. The great monopoly in this country is the monopoly of big credits. So long as that exists, our old variety and freedom and individual energy of development are out of the question. A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men who, even if their action be honest and intended for the public interest, are necessarily concentrated upon the great undertakings in which their own money is involved and who necessarily, by very reason of their own limitations, chill and check and destroy genuine economic freedom. This is the greatest question of all, and to this statesmen must address themselves with an earnest determination to serve the long future and the true liberties of men."

—Woodrow Wilson, The New Freedom, 1913

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Portal:Business/Selected quote/53 "The proletariat will use its political supremacy to wrest, by degree, all capital from the bourgeoisie, to centralise all instruments of production in the hands of the State, i.e., of the proletariat organised as the ruling class; and to increase the total productive forces as rapidly as possible.

Of course, in the beginning, this cannot be effected except by means of despotic inroads on the rights of property, and on the conditions of bourgeois production; by means of measures, therefore, which appear economically insufficient and untenable, but which, in the course of the movement, outstrip themselves, necessitate further inroads upon the old social order, and are unavoidable as a means of entirely revolutionising the mode of production.

These measures will, of course, be different in different countries.

Nevertheless, in most advanced countries, the following will be pretty generally applicable.

1. Abolition of property in land and application of all rents of land to public purposes.

2. A heavy progressive or graduated income tax.

3. Abolition of all rights of inheritance.

4. Confiscation of the property of all emigrants and rebels.

5. Centralisation of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.

6. Centralisation of the means of communication and transport in the hands of the State.

7. Extension of factories and instruments of production owned by the State; the bringing into cultivation of waste-lands, and the improvement of the soil generally in accordance with a common plan.

8. Equal liability of all to work. Establishment of industrial armies, especially for agriculture.

9. Combination of agriculture with manufacturing industries; gradual abolition of all the distinction between town and country by a more equable distribution of the populace over the country.

10. Free education for all children in public schools. Abolition of children’s factory labour in its present form. Combination of education with industrial production, &c, &c. "

—Karl Marx and Friedrich Engels, Manifesto of the Communist Party, English edition of 1888

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Portal:Business/Selected quote/54 " OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot."

—Warren Buffett, Stop Coddling the Super-Rich, 2011

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Portal:Business/Selected quote/55 "The type of fallacy involved in projecting loss experience from a universe of non-insured bonds onto a deceptively-similar universe in which many bonds are insured pops up in other areas of finance. “Back-tested” models of many kinds are susceptible to this sort of error. Nevertheless, they are frequently touted in financial markets as guides to future action. (If merely looking up past financial data would tell you what the future holds, the Forbes 400 would consist of librarians.)

Indeed, the stupefying losses in mortgage-related securities came in large part because of flawed, history-based models used by salesmen, rating agencies and investors. These parties looked at loss experience over periods when home prices rose only moderately and speculation in houses was negligible. They then made this experience a yardstick for evaluating future losses. They blissfully ignored the fact that house prices had recently skyrocketed, loan practices had deteriorated and many buyers had opted for houses they couldn’t afford. In short, universe “past” and universe “current” had very different characteristics. But lenders, government and media largely failed to recognize this all-important fact.

Investors should be skeptical of history-based models. Constructed by a nerdy-sounding priesthood using esoteric terms such as beta, gamma, sigma and the like, these models tend to look impressive. Too often, though, investors forget to examine the assumptions behind the symbols. Our advice: Beware of geeks bearing formulas."

—Warren Buffett, To the Shareholders of Berkshire Hathaway Inc., 2009

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Portal:Business/Selected quote/56 " My dear Bowley,

I have not been able to lay my hands on any notes as to Mathematico-economics that would be of any use to you: and I have very indistinct memories of what I used to think on the subject. I never read mathematics now: in fact I have forgotten even how to integrate a good many things.

But I know I had a growing feeling in the later years of my work at the subject that a good mathematical theorem dealing with economic hypotheses was very unlikely to be good economics: and I went more and more on the rules---(1) Use mathematics as a short-hand language, rather than as an engine of inquiry. (2) Keep to them till you have done. (3) Translate into English. (4) Then illustrate by examples that are important in real life. (5) Burn the mathematics. (6) If you can't succeed in 4, burn 3. This last I did often.

I believe in Newton's Principia Methods, because they carry so much of the ordinary mind with them. Mathematics used in a Fellowship thesis by a man who is not a mathematician by nature---and I have come across a good deal of that---seems to me an unmixed evil. And I think you should do all you can to prevent people from using Mathematics in cases in which the English language is as short as the Mathematical. ....

I find mathematicians almost invariably follow what I regard as Jevons' one great analytical mistake, his eulogy of the Geometric mean in general: and do not see that, according to his use, erroneous weighting may do far more mischief with the Geometric Mean than with the Arithmetic Mean. I always have to spend some time in convincing them of the danger.

Your emptyhandedly,"

—Alfred Marshall, Letter to A. L. Bowley, 1906

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Portal:Business/Selected quote/57 "In early September we wrote about the (ir)relevance of oil to equities and introduced the idea that the U.S. is a Plutonomy - a concept that generated great interest from our clients. As global strategists, this got us thinking about how to buy stocks based on this plutonomy thesis, and the subsequent thesis that it will gather strength and amass breadth. In researching this idea on a global level and looking for stock ideas we also chanced upon some interesting big picture implications. This process manifested itself with our own provocative thesis: that the so called “global imbalances” that worry so many of our equity clients who may subsequently put a lower multiple on equities due to these imbalances, is not as dangerous and hostile as one might think. Our economics team led by Lewis Alexander researches and writes about these issues regularly and they are the experts. But as we went about our business of finding stock ideas for our clients, we thought it important to highlight this provocative macro thesis that emerged, and if correct, could have major implications in terms of how equity investors assess the risk embedded in equity markets. Sometimes kicking the tires can tell you a lot about the car-business.

Well, here goes. Little of this note should tally with conventional thinking. Indeed, traditional thinking is likely to have issues with most of it. We will posit that: 1) the world is dividing into two blocs - the plutonomies, where economic growth is powered by and largely consumed by the wealthy few, and the rest. Plutonomies have occurred before in sixteenth century Spain, in seventeenth century Holland, the Gilded Age and the Roaring Twenties in the U.S. What are the common drivers of Plutonomy? Disruptive technology-driven productivity gains, creative financial innovation, capitalist-friendly cooperative governments, an international dimension of immigrants and overseas conquests invigorating wealth creation, the rule of law, and patenting inventions. Often these wealth waves involve great complexity, exploited best by the rich and educated of the time."

—Ajay Kapur, Niall Macleod, Narendra Singh, Plutonomy: Buying, Explaining Global Imbalances, 2005

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Portal:Business/Selected quote/58 " Until the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations.

This conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence -- economic, political, even spiritual -- is felt in every city, every State house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together

Akin to, and largely responsible for the sweeping changes in our industrial-military posture, has been the technological revolution during recent decades.

In this revolution, research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government."

—Dwight D. Eisenhower, Farewell Address, 1961

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Portal:Business/Selected quote/59 "A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.) It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline — argued economic interventionists — why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely — it was claimed — there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks ("paper reserves") could serve as legal tender to pay depositors.

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates. The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's."

—Alan Greenspan, Gold and Economic Freedom, 1966

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Selected quote 60

Portal:Business/Selected quote/60 "With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed "a mixed gold standard"; yet it is gold that took the blame.) But the opposition to the gold standard in any form — from a growing number of welfare-state advocates — was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale.

Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves."

Portal:Business/Selected quote/64 The author is far from taking the view held by many manufacturers that labor unions are an almost unmitigated detriment to those who join them, as well as to employers and the general public.

The labor unions — particularly the trades unions of England — have rendered a great service, not only to their members, but to the world, in shortening the hours of labor and in modifying the hardships and improving the conditions of wage workers.

In the writer's judgment the system of treating with labor unions would seem to occupy a middle position among the various methods of adjusting the relations between employers and men.

When employers herd their men together in classes, pay all of each class the same wages, and offer none of them any inducements to work harder or do better than the average, the only remedy for the men lies in combination; and frequently the only possible answer to encroachments on the part of their employers is a strike.

This state of affairs is far from satisfactory to' either employers or men, and the writer believes the system of regulating the wages and conditions of employment of whole classes of men by conference and agreement between the leaders of unions and manufacturers to be vastly inferior, both in its moral effect on the men and on the material interests of both parties, to the plan of stimulating each workman's ambition by paying him according to his individual worth, and without limiting him to the rate of work or pay of the average of his class.

—Frederick Winslow Taylor, Shop Management, 1911

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Selected quote 65

Portal:Business/Selected quote/65 The attempt which extreme radicals all over the world are making to get control of both the political and business systems on the theory that they would make the industrial and business system serve the community, is a real danger so long as our present system does not accomplish that end; and this danger is real irrespective of the fact that they have as yet nowhere proved their case.

Is it possible to make our present system accomplish this end! If so, there is no excuse for such a change as they advocate, for the great industrial and business system on which our modem civilization depends is essentially sound at bottom, having grown up because of the service it rendered. Not until it realized the enormous power it had acquired through making itself indispensable to the community did it go astray by making the community serve it. It then ceased to render service democratically, but demanded autocratically that its will be done. It made tools and weapons of cities, states, and empires. Then came the great catastrophe.

In order to resume our advance toward the development of an unconquerable democratic civilization, we must purge our economic system of all autocratic practices of whatever kind, and return to the democratic principle of rendering service, which was the basis of its wonderful growth.

Unless within a short time we can accomplish this result, there is apparently nothing to prevent our following Europe into the economic confusion and welter which seem to threaten the very existence of its civilization.

—Henry Gantt, Organizing for Work, 1919

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Selected quote 66

Portal:Business/Selected quote/66 Again, labor and capital can never be reconciled as long as labor persists in thinking that there is a capitalist point of view and capitalists that there is a labor point of view. There is not. These are imaginary wholes which must be broken up before capital and labor can cooperate. Or when you label a man a farmer or an artisan and then treat him as if his action tendencies were all farmer or artisan you make a grave mistake. You have to break him up into a number of things, I mean of course a number of activities. Parts, aspects, factors, elements — all these words are too static; we must differentiate into activities. The man sitting next me on a certain board represented the public. Have you a preconceived idea that the man who represents the public represents social interests. This man was part owner of a leather business, he was president of a bank and it was a year (1919) when the scarcity of money and the difficulty of getting credit affected more than usual the relation between banker and employer; he was a Mason, he was a member of the Presbyterian church, etc. All these things influenced him.

—Mary Parker Follett, Creative experience, 1924

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Selected quote 67

Portal:Business/Selected quote/67 At this point in the inquiry relation had established itself between the "interview programme" and the results obtained in the experimental rooms. The source of those constraints, relief from which the relay assemblers had so freely expressed, had, at least in part, revealed itself. Human collaboration in work, in primitive and developed societies, has always depended for its perpetuation upon the evolution of a non-logical social code which regulates the relations between persons and their attitudes to one another. Insistence upon a merely economic logic of production-especially if the logic is frequently changed-interferes with the development of such a code and consequently give rise in the group to a sense of human defeat. This human defeat results in the formation of a social code at a lower level and in opposition to the economic logic. One of its symptoms is "restriction". In its devious road to this enlightenment, the research division had learned something of the personal exasperation caused by a continual experience of incomprehension and futility. It had also learned how serious a consequence such experience carries for industry and for the individual.

—Elton Mayo, The Human Problems of an Industrial Civilization, 1933

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Selected quote 68

Portal:Business/Selected quote/68 Heroism and the respect it commands is a form of compensation by society for those who take risks for others. And entrepreneurship is a risky and heroic activity, necessary for growth or even the mere survival of the economy.

It is also necessarily collective on epistemological grounds-to facilitate the development of expertise. Someone who did not find something is providing others with knowledge, the best knowledge, that of absence (what does not work)-yet he gets little or no credit for it. He is a central part of the process with incentives going to others and, what is worse, gets no respect.

I am an ingrate toward the man whose overconfidence caused him to open a restaurant and fail, enjoying my nice meal while he is probably eating canned tuna.

In order to progress, modern society should be treating ruined entrepreneurs in the same way we honor dead soldiers, perhaps not with as much honor, but using exactly the same logic (the entrepreneur is still alive, thought perhaps morally broken and socially stigmatized, particularly if he lives in Japan.) For there is no such thing as a failed soldier, dead or alive (unless he acted in a cowardly manner)-likewise, there is no such thing as a failed entrepreneur or failed scientific researcher, any more than there is a successful babbler, philosophaster, commentator, consultant, lobbyist, or business school professor who does not take personals risks. (Sorry.)

Psychologists label "overconfidence" a disease, blinding people to the odds of success when engaging in ventures. But there is a difference between benign, heroic type of risk taking that is beneficial to others, in the antifragile case and the nastier modern type related to negative Black Swans, such as the overconfidence of "scientists" computing the risks of harm from the Fukushima reactor. In the case of the former, what they call overconfidence is a good thing, not something to medicate.

—Nassim Taleb, Antifragile, 2012

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Selected quote 69

Portal:Business/Selected quote/69 "Centralization is not a system of management good or bad of itself, capable of being adopted or discarded at the whim of managers or of circumstances; it is always present to a greater or less extent. The question of centralization or decentralization is a simple question of proportion, it is a matter of finding the optimum degree for the particular concern. In small firms, where the manager's orders go directly to subordinates, there is absolute centralization; in large concerns, where a long scalar chain is interposed between manager and lower grades, orders and counterinformation, too, have to go through a series of intermediaries. Each employee, intentionally or unintentionally, puts something of himself into the transmission and execution of orders and of information received, too. He does not operate merely as a cog in a machine. What appropriate share of initiative may be left to intermediaries depends on the personal character of the manager, on his moral worth, on the reliability of his subordinates, and also on the condition of the business. The degree of centralization must vary according to different cases. The objective to pursue is the optimum utilization of all faculties of the personnel."

—Henry Fayol, General and Industrial Management, 1949

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Selected quote 70

Portal:Business/Selected quote/70 "The trade of a joint stock company is always managed by a court of directors. This court, indeed, is frequently subject, in many respects, to the control of a general court of proprietors. But the greater part of those proprietors seldom pretend to understand anything of the business of the company, and when the spirit of faction happens not to prevail among them, give themselves no trouble about it, but receive contentedly such half-yearly or yearly dividend as the directors think proper to make to them. This total exemption from trouble and from risk, beyond a limited sum, encourages many people to become adventurers in joint stock companies, who would, upon no account, hazard their fortunes in any private copartnery. Such companies, therefore, commonly draw to themselves much greater stocks than any private copartnery can boast of. The trading stock of the South Sea Company, at one time, amounted to upwards of thirty-three millions eight hundred thousand pounds. The divided capital of the Bank of England amounts, at present, to ten millions seven hundred and eighty thousand pounds. The directors of such companies, however, being the managers rather of other people's money than of their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master's honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company. It is upon this account that joint stock companies for foreign trade have seldom been able to maintain the competition against private adventurers. They have, accordingly, very seldom succeeded without an exclusive privilege, and frequently have not succeeded with one. Without an exclusive privilege they have commonly mismanaged the trade. With an exclusive privilege they have both mismanaged and confined it."

—Adam Smith, The Wealth of Nations, 1776

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Selected quote 71

Portal:Business/Selected quote/71 "Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as a result of animal spirits -- of a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities. Enterprise only pretends to itself to be mainly actuated by the statements in its own prospectus, however candid and sincere. Only a little more than an expedition to the South Pole, is it based on an exact calculation of benefits to come. Thus if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die; -- though fears of loss may have a basis no more reasonable than hopes of profit had before.

It is safe to say that enterprise which depends on hopes stretching into the future benefits the community as a whole. But individual initiative will only be adequate when reasonable calculation is supplemented and supported by animal spirits, so that the thought of ultimate loss which often overtakes pioneers, as experience undoubtedly tells us and them, is put aside as a healthy man puts aside the expectation of death.

This means, unfortunately, not only that slumps and depressions are exaggerated in degree, but that economic prosperity is excessively dependent on a political and social atmosphere which is congenial to the average business man. If the fear of a Labour Government or a New Deal depresses enterprise, this need not be the result either of a reasonable calculation or of a plot with political intent; -- it is the mere consequence of upsetting the delicate balance of spontaneous optimism. In estimating the prospects of investment, we must have regard, therefore, to the nerves and hysteria and even the digestions and reactions to the weather of those upon whose spontaneous activity it largely depends."

—John Maynard Keynes, The General Theory of Employment, Interest and Money, 1936

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Selected quote 72

Portal:Business/Selected quote/72 "And out of the delusion that life is a battle that may be lost by a false move grows, I have noticed, a great love for regularity. Men fall into the half-alive habit. Seldom does the cobbler take up with the new-fangled way of soling shoes, and seldom does the artisan willingly take up with new methods in his trade. Habit conduces to a certain inertia, and any disturbance of it affects the mind like trouble. It will be recalled that when a study was made of shop methods, so that the workmen might be taught to produce with less useless motion and fatigue, it was most opposed by the workmen themselves. Though they suspected that it was simply a game to get more out of them, what most irked them was that it interfered with the well-worn grooves in which they had become accustomed to move. Business men go down with their businesses because they like the old way so well they cannot bring themselves to change. One sees them all about--men who do not know that yesterday is past, and who woke up this morning with their last year's ideas. It could almost be written down as a formula that when a man begins to think that he has at last found his method he had better begin a most searching examination of himself to see whether some part of his brain has not gone to sleep. There is a subtle danger in a man thinking that he is "fixed" for life. It indicates that the next jolt of the wheel of progress is going to fling him off."

—Henry Ford, My Life and Work Chapter II, 1922

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Portal:Business/Selected quote/76 "Who provides the profits -- these nice little profits of 20, 100, 300, 1,500 and 1,800 per cent? We all pay them -- in taxation. We paid the bankers their profits when we bought Liberty Bonds at $100.00 and sold them back at $84 or $86 to the bankers. These bankers collected $100 plus. It was a simple manipulation. The bankers control the security marts. It was easy for them to depress the price of these bonds. Then all of us -- the people -- got frightened and sold the bonds at $84 or $86. The bankers bought them. Then these same bankers stimulated a boom and government bonds went to par -- and above. Then the bankers collected their profits.

But the soldier pays the biggest part of the bill.

If you don't believe this, visit the American cemeteries on the battlefields abroad. Or visit any of the veteran's hospitals in the United States. On a tour of the country, in the midst of which I am at the time of this writing, I have visited eighteen government hospitals for veterans. In them are a total of about 50,000 destroyed men -- men who were the pick of the nation eighteen years ago. The very able chief surgeon at the government hospital; at Milwaukee, where there are 3,800 of the living dead, told me that mortality among veterans is three times as great as among those who stayed at home.

Boys with a normal viewpoint were taken out of the fields and offices and factories and classrooms and put into the ranks. There they were remolded; they were made over; they were made to "about face"; to regard murder as the order of the day. They were put shoulder to shoulder and, through mass psychology, they were entirely changed. We used them for a couple of years and trained them to think nothing at all of killing or of being killed.

Then, suddenly, we discharged them and told them to make another "about face" ! This time they had to do their own readjustment, sans [without] mass psychology, sans officers' aid and advice and sans nation-wide propaganda. We didn't need them any more. So we scattered them about without any "three-minute" or "Liberty Loan" speeches or parades. Many, too many, of these fine young boys are eventually destroyed, mentally, because they could not make that final "about face" alone."

—Smedley Butler, War Is a Racket, 1935

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Selected quote 77

Portal:Business/Selected quote/77 "In the United States, there is a union for each job function with many unions in each company. Lathe operators are allowed to operate only lathes. A drilling job must be taken to a drilling operator. And because the operators are single-skilled, a welding job required at the lathe section cannot be done there but must be taken to a welding operator. As a consequence, there are a large number of people and machines. For American industries to achieve cost reduction under such conditions, mass production is the only answer.

When large quantities are produced, the labor cost per car and depreciation burden are reduced. This requires high-performance, high-speed machines that are both large and expensive.

This type of production is a planned mass production system in which each process makes many parts and forwards them to the next process. This method naturally generates an abundance of waste. From the time it acquired this American system until 1973 oil crisis, Japan had the illusion that this system fit their needs."

—Taiichi Ohno, Toyota Production System, English edition of 1988

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Selected quote 78

Portal:Business/Selected quote/78 "WHEN CONFRONTED WITH a problem, have you ever stopped and asked why five times? It is difficult to do even though it sounds easy. For example, suppose a machine stopped functioning:

1.Why did the machine stop? There was an overload and the fuse blew.

2.Why was there an overload? The bearing was not sufficiently lubricated.

3.Why was it not lubricated sufficiently? The lubrication pump was not pumping sufficiently.

4.Why was it not pumping sufficiently? The shaft of the pump was worn and rattling.

5.Why was the shaft worn out? There was no strainer attached and metal scrap got in.

Repeating why five times, like this, can help uncover the root problem and correct it. If this procedure were not carried through, one might simply replace the fuse or the pump shaft. In that case, the problem would recur within a few months.

To tell the truth, the Toyota production system has been built on the practice and evolution of this scientific approach. By asking why five times and answering it each time, we can get to the real cause of the problem, which is often hidden behind more obvious symptoms."

—Taiichi Ohno, Toyota Production System, English edition of 1988

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Selected quote 79

Portal:Business/Selected quote/79 "Manufacturing is also done through teamwork. It might take 10 or 15 workers, for example, to take a job from raw materials to finished product. The idea is teamwork - not how many parts were machined or drilled by one worker, but how many products were completed by the line as a whole.

Years ago, I used to tell production workers one of my favorite stories about a boat rowed by eight men, four on the left side and four on the right side. If they do not row correctly, the boat will zigzag erratically.

One rower might feel he is stronger than the next and row twice as hard. But this extra effort upsets the boat's progress and moves it off course. The best way to propel the boat faster is for everyone to distribute force equally, rowing evenly and at the same depth.

Today a volleyball team has six players; previously there were nine. If a nine-member team tried to play a six-member team using the same plays, players might be injured bumping into one another. They would probably lose also because having more players is not necessarily an advantage.

Teamwork combined with other factors can allow a smaller team to win. The same is true in a work environment."

—Taiichi Ohno, Toyota Production System, English edition of 1988

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Selected quote 80

Portal:Business/Selected quote/80 "Unfortunately, however, Midas could fail; he did. His path did not lead unerringly upward. He starved because whenever he touched a biscuit or a ham sandwich it turned to gold. That was the whole point of the story, though the writer has to suppress it delicately, writing so near to a portrait of Lord Rothschild. The old fables of mankind are, indeed, unfathomably wise; but we must not have them expurgated in the interests of Mr. Vanderbilt. We must not have King Midas represented as an example of success; he was a failure of an unusually painful kind. Also, he had the ears of an ass. Also (like most other prominent and wealthy persons) he endeavoured to conceal the fact. It was his barber (if I remember right) who had to be treated on a confidential footing with regard to this peculiarity; and his barber, instead of behaving like a go-ahead person of the Succeed-at-all-costs school and trying to blackmail King Midas, went away and whispered this splendid piece of society scandal to the reeds, who enjoyed it enormously. It is said that they also whispered it as the winds swayed them to and fro. I look reverently at the portrait of Lord Rothschild; I read reverently about the exploits of Mr. Vanderbilt. I know that I cannot turn everything I touch to gold; but then I also know that I have never tried, having a preference for other substances, such as grass, and good wine. I know that these people have certainly succeeded in something; that they have certainly overcome somebody; I know that they are kings in a sense that no men were ever kings before; that they create markets and bestride continents. Yet it always seems to me that there is some small domestic fact that they are hiding, and I have sometimes thought I heard upon the wind the laughter and whisper of the reeds.

At least, let us hope that we shall all live to see these absurd books about Success covered with a proper derision and neglect. They do not teach people to be successful, but they do teach people to be snobbish; they do spread a sort of evil poetry of worldliness. The Puritans are always denouncing books that inflame lust; what shall we say of books that inflame the viler passions of avarice and pride? A hundred years ago we had the ideal of the Industrious Apprentice; boys were told that by thrift and work they would all become Lord Mayors. This was fallacious, but it was manly, and had a minimum of moral truth. In our society, temperance will not help a poor man to enrich himself, but it may help him to respect himself. Good work will not make him a rich man, but good work may make him a good workman. The Industrious Apprentice rose by virtues few and narrow indeed, but still virtues. But what shall we say of the gospel preached to the new Industrious Apprentice; the Apprentice who rises not by his virtues, but avowedly by his vices?"

—G. K. Chesterton, All Things Considered, 1908

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Selected quote 81

Portal:Business/Selected quote/81 "From the supermarket we got the idea of viewing the earlier process in a production line as a kind of store. The later process (customer) goes to the earlier process (supermarket) to acquire the required parts (commodities) at the time and in the quantity needed. The earlier process immediately produces the quantity just taken (restocking the shelves). We hoped that this would help us approach our just-in-time goal and, in 1953, we actually applied the system in our machine shop at the main plant.

In the 1950s, American-style supermarkets appeared in Japan, bringing the object of our research even closer. And when in America in 1956, I finally fulfilled my desire to visit a supermarket firsthand."

—Taiichi Ohno, Toyota Production System, English edition of 1988

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Selected quote 82

Portal:Business/Selected quote/82 "At Toyota, we began to think about how to install an autonomic nervous system in our own rapidly growing business organization. In our production plant, an autonomic nerve means making judgments autonomously at the lowest possible level; for example, when to stop production, what sequence to follow in making parts, or when overtime is necessary to produce the required amount.

These discussions can be made by factory workers themselves, without having to consult the production control or engineering departments that correspond to the brain in the human body. The plant should be a place where such judgments can be made by workers autonomously.

In Toyota's case, I believe this autonomic nervous system grew as the idea of just-in-time penetrated broadly and deeply into the production field, and as adherence to the rules increased through the use of kanban. As I thought about the business organization and the autonomic nerves in the human body, the concept began to interconnect, overlap, and stir my imagination."

—Taiichi Ohno, Toyota Production System, English edition of 1988

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Selected quote 83

Portal:Business/Selected quote/83 "In a plant where required numbers actually dictate production, I like to point out that the slower but consistent tortoise causes less waste and is much more desirable than the speedy hare who races ahead and then stops occasionally to doze. The Toyota production system can be realized only when all the workers become tortoises.

High-performance machines were in demand for a long time before the term "high performance" was thoroughly examined. When we say high performance, we may mean high-precision finishing, low energy consumption, or even high-precision finishing, low energy consumption, or even trouble-free machines. Each can be correct. However, a frequent mistake is to regard high-productivity and high-speed machines as being the same.

If we can raise the speed without lowering the operable rate or shortening the life of the equipment, if a higher speed will not change the manpower requirements or produce more products than we can sell - then we can say high speed means high productivity.

Speed is meaningless without continuity. Just remember the tortoise and the hare. Moreover, we cannot fail to notice that machines not designed for endurance at high speeds will have shortened lifespans if we speed them up."

—Taiichi Ohno, Toyota Production System, English edition of 1988

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Selected quote 84

Portal:Business/Selected quote/84 "Sloan grabbed hold of this important modification in the marketplace and began to offer more and more different models. This "full-line" policy was General Motor's unique strategy to answer public demands. How did the automobile industry as a whole respond to this diversification?

In the transition from mass-produced Model T's to the full-line policy of General Motors, production processes became complicated. To reduce costs while making various types of cars, standard parts had to be developed for use in different models. The Ford system, however, was not modified to any great extent.

At about this time, pricing policies were actively studied and employed in response to the wide variations resulting from diversification in the marketplace. I think that in production, however, the unfinished Ford system changed little and became deeply rooted.

When building up the Toyota production system, I always kept in mind the Japanese market and its demands for many types of cars in small quantities - different from American demands for a few types in large quantities.

The Toyota production system helps production meet market demands. We now know that producing many types of cars in large quantities is economically desirable, even though the Toyota system was built on the premise of many types in small quantities for the Japanese environment. Thus, the system is proving its effectiveness in the mature Japanese market. At the same time, I think the Toyota production system can be applied in America where the market for many types in large quantities has existed since Sloan's time."

—Taiichi Ohno, Toyota Production System, English edition of 1988

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Selected quote 85

Portal:Business/Selected quote/85 "The public services to which the yeomanry were bound were not less arbitrary than the private ones. To make and maintain the high roads, a servitude which still subsists, I believe, every-where, though with different degrees of oppression in different countries, was not the only one. When the king's troops, when his household or his officers of any kind passed through any part of the country, the yeomanry were bound to provide them with horses, carriages, and provisions, at a price regulated by the purveyor. Great Britain is, I believe, the only monarchy in Europe where the oppression of purveyance has been entirely abolished. It still subsists in France and Germany.

The public taxes to which they were subject were as irregular and oppressive as the services. The ancient lords, though extremely unwilling to grant themselves any pecuniary aid to their sovereign, easily allowed him to tallage, as they called it, their tenants, and had not knowledge enough to foresee how much this must in the end affect their own revenue. The taille, as it still subsists in France, may serve as an example of those ancient tallages. It is a tax upon the supposed profits of the farmer, which they estimate by the stock that he has upon the farm. It is his interest, therefore, to appear to have as little as possible, and consequently to employ as little as possible in its cultivation, and none in its improvement. Should any stock happen to accumulate in the hands of a French farmer, the taille is almost equal to a prohibition of its ever being employed upon the land. This tax, besides, is supposed to dishonour whoever is subject to it, and to degrade him below, not only the rank of a gentleman, but that of a burgher, and whoever rents the lands of another becomes subject to it. No gentleman, nor even any burgher who has stock, will submit to this degradation. This tax, therefore, not only hinders the stock which accumulates upon the land from being employed in its improvement, but drives away an other stock from it. The ancient tenths and fifteenths, so usual in England in former times, seem, so far as they affected the land, to have been taxes of the same nature with the taille."

—Adam Smith, The Wealth of Nations, 1776

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Selected quote 86

Portal:Business/Selected quote/86 "All labour is directed towards producing some effect. For though some exertions are taken merely for their own sake, as when a game is played for amusement, they are not counted as labour. We may define labour as any exertion of mind or body undergone partly or wholly with a view to some good other than the pleasure derived directly from the work. And if we had to make a fresh start it would be best to regard all labour as productive except that which failed to promote the aim towards which it was directed, and so produced no utility. But in all the many changes which the meaning of the word "productive" has undergone, it has had special reference to stored-up wealth, to the comparative neglect and sometimes even to the exclusion of immediate and transitory enjoyment; and an almost unbroken tradition compels us to regard the central notion of the word as relating to the provision for the wants of the future rather than those of the present. It is true that all wholesome enjoyments, whether luxurious or not, are legitimate ends of action both public and private; and it is true that the enjoyment of luxuries affords an incentive to exertion, and promotes progress in many ways. But if the efficiency and energy of industry are the same, the true interest of a country is generally advanced by the subordination of the desire for transient luxuries to the attainment of those more solid and lasting resources which will assist industry in its future work, and will in various ways tend to make life larger. This general idea has been in solution, as it were, in all stages of economic theory; and has been precipitated by different writers into various hard and fast distinctions by which certain trades have been marked off as productive and certain others as unproductive."

—Alfred Marshall, Principles of Economics, 1890

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Selected quote 87

Portal:Business/Selected quote/87 "That part of the thing which he is only just induced to purchase may be called his marginal purchase, because he is on the margin of doubt whether it is worth his while to incur the outlay required to obtain it. And the utility of his marginal purchase may be called the marginal utility of the thing to him. Or, if instead of buying it, he makes the thing himself, then its marginal utility is the utility of that part which he thinks it only just worth his while to make. And thus the law just given may be worded:

—The marginal utility of a thing to anyone diminishes with every increase in the amount of it he already has.

There is however an implicit condition in this law which should be made clear. It is that we do not suppose time to be allowed for any alteration in the character or tastes of the man himself. It is therefore no exception to the law that the more good music a man hears, the stronger is his taste for it likely to become; that avarice and ambition are often insatiable; or that the virtue of cleanliness and the vice of drunkenness alike grow on what they feed upon. For in such cases our observations range over some period of time; and the man is not the same at the beginning as at the end of it. If we take a man as he is, without allowing time for any change in his character, the marginal utility of a thing to him diminishes steadily with every increase in his supply of it."

—Alfred Marshall, Principles of Economics, 1890

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Selected quote 88

Portal:Business/Selected quote/88 "What can the world, or any nation in it, hope for if no turning is found on this dread road?

The worst to be feared and the best to be expected can be simply stated.

The worst is atomic war.

The best would be this: a life of perpetual fear and tension; a burden of arms draining the wealth and the labor of all peoples; a wasting of strength that defies the American system or the Soviet system or any system to achieve true abundance and happiness for the peoples of this earth.

Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and are not clothed.

This world in arms is not spending money alone.

It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.

The cost of one modern heavy bomber is this: a modern brick school in more than 30 cities.

It is two electric power plants, each serving a town of 60,000 population.

It is two fine, fully equipped hospitals.

It is some 50 miles of concrete highway.

We pay for a single fighter with a half million bushels of wheat.

We pay for a single destroyer with new homes that could have housed more than 8,000 people.

This, I repeat, is the best way of life to be found on the road the world has been taking.

This is not a way of life at all, in any true sense. Under the cloud of threatening war, it is humanity hanging from a cross of iron."

—Dwight D. Eisenhower, The Chance for Peace , 1953

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Selected quote 89

Portal:Business/Selected quote/89 "Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son happened to break a square of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—"It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?"

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier's trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, "Stop there! your theory is confined to that which is seen; it takes no account of that which is not seen."

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented."

—Frédéric Bastiat, That Which Is Seen and That Which Is Not Seen, 1850

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Selected quote 90

Portal:Business/Selected quote/90 The majority of these men beheve that the fundamental interests of employees and employers are necessarily antagonistic. Scientific management, on the contrary, has for its very foundation the firm conviction that the true interests of the two are one and the same; that prosperity for the employer cannot exist through a long term of years unless it is accompanied by prosperity for the employe, and vice versa; and that it is possible to give the workman what he most wants — high wages — and the employer what he wants — a low labor cost — for his manufactures.

It is hoped that some at least of those who do not sympathize with each of these objects may be led to modify their views; that some employers, whose attitude toward their workmen has been that of trying to get the largest amount of work out of them for the smallest possible wages, may be led to see that a more liberal policy toward their men will pay them better; and that some of those workmen who begrudge a fair and even a large profit to their employers, and who feel that all of the fruits of their labor should belong to them, and that those for whom they work and the capital invested in the business are entitled to little or nothing, may be led to modify these views.

No one can be found who will deny that in the case of any single individual the greatest prosperity can exist only when that individual has reached his highest state of efficiency; that is, when he is turning out his largest daily output.

—Frederick Winslow Taylor, The principles of scientific management, 1911

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Portal:Business/Selected quote/94 "So it was Mother the psychologist and Dad the motion study man and general contractor, who decided to look into the new field of the psychology of management, and the old field of psychologically managing a houseful of children. They believed that what would work in the home would work in the factory, and what would work in the factory would work in the home."

—Frank Bunker Gilbreth, Jr. and Ernestine Gilbreth Carey, Cheaper by the Dozen, 1948

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Portal:Business/Selected quote/98 "You may think, perhaps, that a little tea, or a little punch now and then, diet a little more costly, clothes a little finer, and a little more entertainment now and then can be no great matter but remember what Poor Richard says "Many a little makes a mickle; beware of little expense for a small leak will sink a great ship"."

—Benjamin Franklin, Poor Richard's Almanack, 1732-1758

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Selected quote 99

Portal:Business/Selected quote/99 "For a long time men failed to realize that the transition from the classical theory of value to the subjective theory of value was much more than the substitution of a more satisfactory theory of market exchange for a less satisfactory one. The classical economists met in the pursuit of their investigations an obstacle which they failed to remove, the apparent antinomy of value. Their general theory of choice and preference goes far beyond the horizon which encompassed the scope of economic problems as circumscribed by the economists from Cantillon, Hume and Adam Smith down to John Stuart Mill. It is much more merely a theory of the "economic side" of human endeavors and of man's striving for commodities and an improvement in his material well-being. It is the science of every kind of human action. Choosing determines all human decisions. In making his choice man chooses not only between various material things and services. All human values are offered for option. All ends and all means, both material and ideal issues, the sublime and the base, the noble and the ignoble, are ranged in a single row and subjected to a decision which picks out one thing and sets aside another. Nothing that men aim at or want to avoid remains outside of this arrangement into a unique scale of gradation and preference. The modern theory of value widens the scientific horizon and enlarges the field of economic studies. Out of the political economy of the classical school emerges the general theory of human action, praxeology. The economic or catallactic problems are embedded in a more general science, and can no longer be severed from this connection. No treatment of economic problems proper can avoid starting from acts of choice; economics becomes a part, although the hitherto best elaborated part, of a more universal science, praxeology."

—Ludwig Von Mises, Human Action, 1949

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Selected quote 100

Portal:Business/Selected quote/100 "We have no intention, however, of making a fetish of democracy. It may well be true that our generation talks and thinks too much of democracy and too little of the values which it serves. It cannot be said of democracy, as Lord Acton truly said of liberty, that it "is not a means to a higher political end. It is itself the highest political end. It is not for the sake of a good public administration that it is required, but for the security in the pursuit of the highest objects of civil society, and of private life." Democracy is essentially a means, a utilitarian device for safeguarding internal peace and individual freedom. As such it is by no means infallible or certain. Nor must we forget that there has often been much more cultural and spiritual freedom under an autocratic rule than under some democracies-and it is at least conceivable that under the government of a very homogeneous and doctrinaire majority democratic government might be as oppressive as the worst dictatorship. Our point, however, is not that dictatorship must inevitably extirpate freedom but rather that planning leads to dictatorship because dictatorship is the most effective instrument of coercion and the enforcement of ideals and, as such, essential if central planning on a large scale is to be possible. The clash between planning and democracy arises simply from the fact that the latter is an obstacle to the suppression of freedom which the direction of economic activity requires. But in so far as democracy ceases to be a guaranty of individual freedom, it may well persist in some form under a totalitarian regime. A true "dictatorship of the proletariat," even if democratic in form, if it undertook centrally to direct the economic system, would probably destroy personal freedom as completely as any autocracy has ever done.

The fashionable concentration on democracy as the main value threatened is not without danger. It is largely responsible for the misleading and unfounded belief that, so long as the ultimate source of power is the will of the majority, the power cannot be arbitrary. The false assurance which many people derive from this belief is an important cause of the general unawareness of the dangers which we face. There is no justification for the belief that, so long as power is conferred by democratic procedure, it cannot be arbitrary; the contrast suggested by this statement is altogether false: it is not the source but the limitation of power which prevents it from being arbitrary. Democratic control may prevent power from becoming arbitrary, but it does not do so by its mere existence. If democracy resolves on a task which necessarily involves the use of power which cannot be guided by fixed rules, it must become arbitrary power."

—Friedrich Hayek, The Road to Serfdom, 1944

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Selected quote 101

Portal:Business/Selected quote/101 "The greatest man of all on my horizon at this time was John Edgar Thomson, president of the Pennsylvania, and for whom our steel-rail mills were afterwards named. He was the most reserved and silent of men, next to General Grant, that I ever knew, although General Grant was more voluble when at home with friends. He walked about as if he saw nobody when he made his periodical visits to Pittsburgh. This reserve I learned afterwards was purely the result of shyness. I was surprised when in Mr.Scott's office he came to the telegraph instrument and greeted me as "Scott's Andy". But I learned afterwards that he had heard of my train-running exploit. The battle of life is already half won by the young man who is brought personally in contact with high officials; and the great aim of every boy should be to do something beyond the sphere of his duties-something which attracts the attention of those over him."

—Andrew Carnegie, Autobiography of Andrew Carnegie, 1920

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Selected quote 102

Portal:Business/Selected quote/102 "Since the bureaucracy according to its essence is the state as formalism, so too it is according to its end. The real end of the state thus appears to the bureaucracy as an end opposed to the state. The mind of the bureaucracy is the formal mind of the state. It therefore makes the formal mind of the state, or the real mindlessness of the state, a categorical imperative. The bureaucracy asserts itself to be the final end of the state. Because the bureaucracy makes its formal aims its content, it comes into conflict everywhere with the real aims. Hence it is obliged to present what is formal for the content and the content for what is formal. The aims of the state are transformed into aims of bureaus, or the aims of bureaus into the aims of the state. The bureaucracy is a circle from which no one can escape. Its hierarchy is a hierarchy of knowledge. The highest point entrusts the understanding of particulars to the lower echelons, whereas these, on the other hand, credit the highest with an understanding in regard to the universal; and thus they deceive one another.

The bureaucracy is the imaginary state Alonso de the real state; it is the spiritualism of the state. As a result everything has a double meaning, one real and one bureaucratic, just as knowledge is double, one real and one bureaucratic (and the same with the will). A real thing, however, is treated according to its bureaucratic essence, according to its otherworldly, spiritual essence. The bureaucracy has the being of the state, the spiritual being of society, in its possession; it is its private property. The general spirit of the bureaucracy is the secret, the mystery, preserved inwardly by means of the hierarchy and externally as a closed corporation. To make public -the mind and the disposition of the state appears therefore to the bureaucracy as a betrayal of its mystery. Accordingly authority is the principle of its knowledge and being, and the deification of authority is its mentality. But at the very heart of the bureaucracy this spiritualism turns into a crass materialism, the materialism of passive obedience, of trust in authority, the mechanism of an ossified and formalistic behaviour, of fixed principles, conceptions, and traditions. As far as the individual bureaucrat is concerned, the end of the state becomes his private end: a pursuit of higher posts, the building of a career. In the first place, he considers real life to be purely material, for the spirit of this life has its separate existence in the bureaucracy. Thus the bureaucrat must make life as materialistic as possible. Secondly, real life is material for the bureaucrat, i.e . in so far as it becomes an object of bureaucratic action, because his spirit is prescribed for him, his end lies outside of him, his existence is the existence of the bureau. The state, then, exists only as various bureau-minds whose connection consists of subordination and dumb obedience. Real knowledge appears to be devoid of content just as real life appears to be dead, for this imaginary knowledge and life pass for what is real and essential. Thus the bureaucrat must use the real state Jesuitically, no matter whether this Jesuitism be conscious or unconscious. But given that his antithesis is knowledge, it is inevitable that he likewise attain to self-consciousness and, at that moment, deliberate Jesuitism. While the bureaucracy is on one hand this crass materialism, it manifests its crass spiritualism in its will to do everything, i.e., in its making the will the causa prima, for it is pure active existence which receives its content from without; thus it can manifest its existence only through forming and restricting this content. The bureaucrat has the world as a mere object of his action."

—Karl Marx, Critique of Hegel's Philosophy of Right, 1843

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Selected quote 103

Portal:Business/Selected quote/103 "From a passage in the letter of the President, I observe an idea of establishing a branch bank of the U. S. in New Orleans. This institution is one of the most deadly hostility existing, against the principles & form of our Constitution. The nation is, at this time, so strong & united in it’s sentiments, that it cannot be shaken at this moment. But suppose a series of untoward events should occur, sufficient to bring into doubt the competency of a republican government to meet a crisis of great danger, or to unhinge the confidence of the people in the public functionaries; an institution like this, penetrating by it’s branches every part of the Union, acting by command & in phalanx, may, in a critical moment, upset the government. I deem no government safe which is under the vassalage of any self-constituted authorities, or any other authority than that of the nation, or it’s regular functionaries. What an obstruction could not this bank of the U. S., with all it’s branch banks, be in time of war? It might dictate to us the peace we should accept, or withdraw it’s aids. Ought we then to give further growth to an institution so powerful, so hostile? That it is so hostile we know, 1, from a knowledge of the principles of the persons composing the body of directors in every bank, principal or branch; and those of most of the stockholders: 2, from their opposition to the measures & principles of the government, & to the election of those friendly to them: and 3, from the sentiments of the newspapers they support. Now, while we are strong, it is the greatest duty we owe to the safety of our Constitution, to bring this powerful enemy to a perfect subordination under it’s authorities. The first measure would be to reduce them to an equal footing only with other banks, as to the favors of the government. But, in order to be able to meet a general combination of the banks against us, in a critical emergency, could we not make a beginning towards an independent use of our own money, towards holding our own bank in all the deposits where it is received, and letting the treasurer give his draft or note, for payment at any particular place, which, in a well-conducted government, ought to have as much credit as any private draft, or bank note, or bill, and would give us the same facilities which we derive from the banks? I pray you to turn this subject in your mind, and to give it the benefit of your knowledge of details; whereas, I have only very general views of the subject. Affectionate salutations."

—Thomas Jefferson, Letter to Albert Gallatin, 13 December 1803

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Selected quote 104

Portal:Business/Selected quote/104 "When the Aldrich-Vreeland Emergency Currency Bill was sprung on the House in its finished draft and ready for action to be taken, the debate was limited to three hours and Banker Vreeland placed in charge. It took so long for copies of the bill to be gotten that many members were unable to secure I copy until within a few minutes of the time to vote. No member who wished to present the people's side of the case was given sufficient time to enable him to properly analyze the bill. I asked for time and was told that if would vote for the bill it would be given to me, but not otherwise. Others were treated in the same way.

Accordingly, on June 30th, 1908, the Money Trust won the first fight and the Aldrich-Vreeland Emergency Law was placed on the statute books. Thus the first precedent was established for the people's guarantee of the rich man’s watered securities, by making them a basis on which to issue currency. It was the entering wedge. We had already guaranteed the rich men's money, and now, by this act, the way was opened, and it was intended that we should guarantee their watered stocks and bonds. Of course, they were too keen to attempt to complete, in a single act, such an enormous steal as it world have been if they had included all they hoped ultimately to secure. They knew that they would be caught at it if they did, and so it was planned that the whole thing should be done by a succession of acts. The first three have taken place.

Act No. 1 was the manufacture, between 1896 and 1907, through stock gambling, speculation and other devious methods and devices, of tens of billions of watered stocks, bonds, and securities.

Act No. 2 was the panic of 1907, by which those not favorable to the Money Trust could be squeezed out of business and the people frightened, into demanding changes in the banking and currency laws which the Money Trust would frame.

Act No. 3 was the passage of the Aldrich-Vreeland Emergency Currency Bill, by which the Money Trust interests should have the privilege of securing from the Government currency on their watered bonds and securities. But while the act contained no authority to change the form of the bank notes, the U. S. Treasurer (in some way that I have been unable to find a reason for) implied authority and changed the form of bank notes which were issued for the banks on government bonds. These notes had hitherto had printed on them, “This note is secured by bonds of the United States.” He changed it to read as follows: “This note is secured by bonds of the United States or other securities.” “Or other securities” is the addition that was secured by the special interests. The infinite care the Money Trust exercises in regard to important detail work is easily seen in this piece of management. By that change it was enabled to have the form of the money issued in its favor on watered bonds and securities, the same as bank notes secured on government bonds, and, as a result the people do not know whether they get one or the other. None of the $500,000,000 printed and lying in the U. S. Treasury ready to float on watered bonds and securities has yet (April, 1913) been used. But it is there, maintained at a public charge, as a guarantee to the Money Trust that it may use it in case it crowds speculation beyond the point of its control. The banks may take it to prevent their own failures, but there is not even so much as a suggestion that it may be used to help keep the industries of the people in a state of prosperity"

—Charles August Lindbergh, Banking and Currency and the Money Trust, 1913

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Selected quote 105

Portal:Business/Selected quote/105 "I have not set forth any bills in drafted form ready for enaction, because that is a mere detail which should come at a time when things have shaped themselves so as to make that step necessary. The ground must be plowed before the seeding is done. The people themselves must do the plowing. After that they must seed the land and keep possession of the field if they wish to harvest and reap the fruits of their labor. They have always done the plowing, the seeding, the cultivating, and practically all of the work in the field of industrial enterprise, but they have never reaped the results of their labor. There has always been a Rothschild, a Gould, a Rockefeller, a Carnegie, a Morgan and men of their kind, and a few thousand lesser harvesters who have gathered in the best fruits out of the fields of industry. They are on hand and active at every point of vantage; they understand human selfishness, and know how to deal with the individuals whom the people have selected to represent them. They know that the individual citizen whose interest is the same as that of the citizens in general, will not find it practicable to spend the time in the legislative halls or in Congress, to exert a direct influence over his official representative. But the other parties to whom I have alluded send their representatives to influence the people’s representatives, and the manner of their influence is so varied in its application that no description of its application in one case would serve as an index to another. I shall deal with that particular phase of the subject on another occasion but before dropping it at this point, let me call the attention of the citizen to the fact that he must be on guard that the new progressive spirit and movement is kept alive, and that special interests are made to understand that it is alive. The special interests are more alert individually than the people themselves are individually, for the reason that the interests get the bulk of the wealth that grows out of the work of the people, and, therefore, the special interests are seeking to convert the progressive movement into another victory for themselves. I started as an original progressive when there were but a few on the battle line of progressiveness, and I had known the wily moves employed by the interests in their efforts to divert this progressive movement to their own advantage, not only in dividing the progressives into factions and parties, which means one and the same thing in its effect upon the people, but in what is worse than that, the attempt on their part to fill the ranks of the progressives, with spies and traitors and then presume through selfish influence to convert many of those who honestly started the movement. “Temptation thou art a mighty power in the hands of those who hold the seductive bait.” The interests base their hope of victory upon the temptation furnished, by that "bait" Their first hope was to win by ridiculing the progressives and taking patronage from those whom the people had elected, but this proved a failure."

—Charles August Lindbergh, Banking and Currency and the Money Trust, 1913

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Selected quote 106

Portal:Business/Selected quote/106 "Jacob H. Schiff, one of New York's greatest financiers, and one of the witnesses who testified before the committee, is an example of a man with the kind of mind and over-selfish viewpoint which prevails among the men who had a personal financial interest in the result of the Committee's investigation, such as the banker members of the Banking and Currency Committee may be expected to have. Mr. Schiff, under oath, told the committee in substance that:

If individuals can accomplish a monopoly he believes they should not be hampered by law! The laws of nature, he told the committee, are best for preventing too gigantic projects; and he cited the fall of the Tower of Babel as in example of the futility of human effort extended too far. Among the articles expounded by Schiff in his creed of business and finance was the assertion that the minority in all corporations should not be allowed representation among the officers and directors by law. ‘The majority should always rule.’ he said, 'and the minority should protect their rights as best they can.’

Is it not easy to see by this statement of Mr. Schiff's that it is preposterous for Congress to appoint mostly bankers, their agents and attorneys on its Banking and Currency Committee? Mr. Schiff is not cut from a different cloth, nor by a different pattern than the rest of humanity. Acting in our individual capacity, we look after our own interests, but in a collective sense we have not carried this interest far enough, and, consequently, we have such financial wizards as Mr. Schiff."

—Charles August Lindbergh, Banking and Currency and the Money Trust, 1913

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Selected quote 107

Portal:Business/Selected quote/107 "It is not labor, not capital, not land, that has created modern wealth or is creating it today. It is ideas that create wealth, and what is wanted is more ideas more uncovering of natural reservoirs, and less labor and capital and land per unit of production. Gold has very little intrinsic value, diamonds have none except to cut glass and stone. It is a thought, a sentiment, that gives value to gold and diamonds ; it was the invention of the incandescent lamp that doubled the value of platinum. Columbus with his idea of land to the west, Franklin, Washington, Jefferson, with their ideas of liberty, Jefferson with his idea of territorial expansion, Fulton with his idea of the steamboat, Stephenson with his creation of the locomotive and track; it was Howe, Morse, Edison, Westinghouse, Bell and Gray, Marconi; it was Lincoln, it was Rockefeller, Carnegie, J. J. Hill and Harriman with their ideas, it was Roosevelt with the Panama Canal, that have made the United States what it is. All these men used labor and capital to uncover and develop the hitherto unutilized resources of the universe.

The Dutch and the Huguenots settled in South Africa about the same time North America above the gulf was colonized. The United States grew on account of ideas; South Africa remained undeveloped because of paucity of ideas, paucity of energy. The blacks had to do the work. There was no use for steam engines.

Muscular effort can be stimulated by the lash intelligent supervision, intellectual production, never! One single idea may have greater value than all the labor of all the men, animals, and engines for a century. The age of muscular human effort and of the lash is passing away, and the old morality with it; the age of supervision, of co-operative stimulus, is in full advance; and with it comes a new morality, under which the Golden Rule can be extended from the relations between individuals to those between classes, nationalities, and races. The highest official cannot dictate to the youngest apprenticed worker. Both are creatures of the machine, but both in turn must serve it, for unless its every law and need is lived up to, it will refuse to work efficiently, often reuse to work at all. With these new duties and privileges of men toward each other old truths become fallacies and paradoxes become the basic truths of tomorrow.

To forward the new morality, to extend the dominion of man over uncarnate energy and its use, to substitute highly paid thinkers and supervisors for devitalized toilers, to help each individual, each corporation, each government to meet its part of the obligation, above all to inspire those executives on whose skill all progress and all wise performance depends, is the justification of these essays."

—Harrington Emerson, The twelve principles of efficiency, 1924

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Selected quote 108

Portal:Business/Selected quote/108 "Men who promoted these large corporations were in many cases financiers or merchants, who previously had dealt almost exclusively with money and goods. They had bought in the cheapest markets and sold at the best price they could get. Their natural tendency, therefore, was to apply to the purchase of labor the same rules which they had applied to the purchase of materials, namely, to buy it as cheaply as possible. The great difficulty which stood in the way of accomplishing this result was that there was no exact means of measuring the labor received, and the best that could be done was to buy a man's time, on the theory that time consumed was a measure of labor performed. While this is in a measure correct if the workman feels that he is being equitably rewarded for the work done, it may be far from correct when he does not have this feeling. When he realizes, as is often the case, that the employer, taking advantage of his necessity, gives him the smallest hourly rate he can be hired for, he naturally does only just enough work to hold his job.

Moreover, there has seldom been any attempt to keep a record of the work any man did in order that a more equitable compensation might be accorded him; and, whether he did much or little, he was accorded the hourly rate of wages common to his class. The railroad companies, perhaps more than any other organizations, have offended in this manner, and the rates of wages, which they were willing to pay for different classes of workmen were not only fixed by employers, but maintained with all their power. A mechanic, therefore, had but little chance of getting a higher compensation than his class rate, no matter how industrious or conscientious he might be.

The introduction of piece work, by which the workman was paid for the work he did, instead of the time he worked, promised better results; but, as piece prices were commonly set on a basis of what had been done by a man dissatisfied with his daily wage, it soon became clear that the men could do much more work than had been done, and earned correspondingly higher wages, with the result that the employer reduced the price per piece. This "cutting" of piece prices was common practice whenever the workman earned much more than his class rate; and the capable workman, recognizing the impossibility of increasing his compensation through more, or better work, soon ceased to make any effort in that direction, and devoted his spare time to the organization of a union with the object of advancing the class rate."

—Henry Gantt, Industrial Leadership, 1916

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Selected quote 109

Portal:Business/Selected quote/109 "Two fundamental questions that must be answered in controlling the inventory of any physical good are when to replenish the inventory and how much to order for replenishment. In this book we shall attempt to show how these questions can be answered under a variety of circumstances. Essentially every decision which is made in controlling inventoried in any organization, regardless of how complicated the inventory supply system may be, is in one way or another associated with the questions of when to order and how much to order. There are certain types of inventory problems, such as those concerned with the storage of water within dams, in which one has no control over the replenishment industry. (In other words, the ressuply of the inventory of water within the dam depends on the rainfall, and the organization operating the dam has no control over this.) We shall not consider this type of problem here. The only problems with which we shall concern ourselves are those in which the organization controlling the inventory has some freedom in determining when, and in what quantity, the inventory should be replaced. On other hand, we shall assume that, in general, the inventory system has no control over the demands which occur for the item, or items, which it stocks. Again, this is just the opposite of what one encounters in dealing with inventory problems such as storage of water within dams, since the efflux of water through the dam is completely within the control of the organization operating the dam. In short, we are going to consider the type of inventory problem encountered in business, industry, and the military.

We shall concentrate on showing how mathematical analysis can be used to help develop operating rules for controlling inventory systems. When mathematics is applied to the solution of inventory problems, it is necessary to describe mathematically the system to be studied. Such a description is often referred to as a mathematical model. The procedure is to construct a mathematical model of the system of interest and then to study the properties of the model. Because it is never possible to represent the real world with complete accuracy, certain approximations and simplifications must be made when constructing a mathematical model. There are many reasons on this. One is that it is essentially impossible to find out what the real world is like. Another is that a very accurate model the real world can become impossibly difficult to work with mathematically. A final reason is that accurate models often cannot be justified on economic grounds. Simple approximate ones will yield results which are good enough so that the additional improvement obtained from a better model is not sufficient to justify its additional cost."

—Thomson McLintock Whitin and George F. Hadley, Analysis Of Inventory Systems, 1963

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Selected quote 110

Portal:Business/Selected quote/110 "On the economic front we have been warned by major independent institutions — the IMF, the OECD, the World Trade Organization, the Institute for Fiscal Studies and the Bank of England — that the UK economy would suffer if it left the EU. The OECD believes that GDP in the UK could be more than 3 per cent lower as a result. It believes that the UK’s economic dynamism and productivity will suffer and that the net effect on living standards will be strongly negative. It goes so far as to estimate that by 2030 UK GDP could be more than 5 per cent lower than if exit had not occurred."

—Jacob Rothschild, All the evidence shows that Brexit would be a disaster, The Times, 2016

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Selected quote 111

Portal:Business/Selected quote/111 "There is one sure mark of the coming partner, the future millionnarie; his revenues always exceed his expenditures. He begins to save early, almost as soon as he begins to earn. No matter how little it may be possible to save, save that little. Invest it securely, not necessarily in bonds, but in anything which you have good reason to believe will be profitable, but no gambling with it, remember. A rare chance will soon present itself for investment. The little you have saved will prove the basis for an amount of credit utterly surprising to you. Capitalists trust the saving man. For every hundred dollars you can produce as the result of hard-won savings, Midas, in search of a partner, will lend or credit a thousand; for every thousand, fifty thousand. It is not capital that your seniors require, it is the man who has proved that he has the business habits which create capital, and to create it in the best of all possible ways, as far as self-discipline is concerned, is, by adjusting his habits to his means. Gentlemen, it is the first hundred dollars saved which tells. Begin at once to lay up something. The bee predominates in the future millionnarie."

—Andrew Carnegie, The Empire of Business, 1908

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When national debts have once been accumulated to a certain degree, there is scarce, I believe, a single instance of their having been fairly and completely paid. The liberation of the public revenue, if it has ever been brought about at all, has always been brought about by a bankruptcy; sometimes by an avowed one, but always by a real one, though frequently by a pretended payment. The raising of the denomination of the coin has been the most usual expedient by which a real public bankruptcy has been disguised under the appearance of a pretended payment.

—Adam Smith, The Wealth of Nations, 1776

Can such a system conceivably deal with the problems we are now having to face? The answer is self-evident: greed and envy demand continuous and limitless economic growth of a material kind, without proper regard for conservation, and this type of growth cannot possibly fit into a finite environment. We must therefore study the essential nature of the private enterprise system and the possibilities of evolving an alternative system which might fit the new situation.

—E.F. Schumacher, Small is Beautiful, 1973

The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelope our future.

—John Maynard Keynes, The General Theory of Employment, Interest and Money, 1936

The problems raised by a conscious direction of economic affairs on a national scale inevitably assume even greater dimensions when the same is attempted internationally. The conflict between planning and freedom cannot but become more serious as the similarity of standards and values among those submitted to a unitary plan diminishes.

—Friedrich Hayek, The Road to Serfdom, 1944

The most successful supporters of tyranny are without doubt those general declaimers who attribute the distresses of the poor, and almost all evils to which society is subject, to human institutions and the iniquity of governments.

—Thomas Robert Malthus, An Essay on the Principle of Population, 1798

The more opportunities there are in a Society for some persons to live upon the toil of others, and the less those others may enjoy the fruits of their work themselves, the more is diligence killed, the former become insolent, the latter despairing, and both negligent.

—Anders Chydenius, The National Gain, 1765

All varieties of interference with the market phenomena not only fail to achieve the ends aimed at by their authors and supporters, but bring about a state of affairs which - from the point of view of their authors' and advocates valuations - is less desirable than the previous state of affairs which they were designed to alter.

—Ludwig von Mises

It is almost a cliché to describe India as rich in institutional infrastructure and poor in physical infrastructure.

—Paliniappan Chidambaram

If we stop thinking of the poor as victims, or as a burden, and start recognising them as resilient and creative entrepreneurs and value-conscious consumers, a whole new world of opportunity will open up.

—C K Prahalad

The only function of economic forecasting is to make astrology look respectable.

—John Kenneth Galbraith

It has long been my view that there is no economic process or problem that cannot be put in clear language - can not be made accessible to the literate and interested reader. Such effect does not, however, justify error or oversimplification.

—John Kenneth Galbraith, "A Journey Through Economic Time".