understanding capitalism and efficiently run business

Discussion in 'Economics' started by z32000, Aug 18, 2007.

  1. z32000


    I plan to start my own e-business soon. I'm very frugal and tend to run everything as efficiently as possible, by minimizing amount of inventory costs, debt to income ratio. Basically, I'm hiring the least amount of employees I need in order to run a successful website. And of course, trying to make millions and millions of dollars...

    but here is my question, besides paying more for taxes.... how is my business benefiting society (besides the service i offer which is going to be purely recreational)?

    Basically, if a couple of people and myself can make huge amounts of money, someone else must be making less...

    I know this is capitalisim, but in accumalating $$$ and not spending it... am I harming the economy more than I am helping it since I am running it as efficiently as possibly and barely throwing back $$$$ into the market since I'm minimizing my workforce?
  2. i would personally prefer to see people achieve extraordinary things, succeed and be happy in life - i think it would set higher standards for the society, which is good for all of us in the long-term. u don't have to make any sacrifices or care about what others think - because that could limit your potential to be successful.

    so if you are happy and are not hurting anyone i wouldn't mind if you make a lot of money. but if you have an excess amount of money - maybe you can give something back to the people who are handicapped.
  3. "maybe you can give something back to the people who are handicapped."

    I hope you mean like a book or a job.

  4. Anytime you can bring a product or service to the market at a lower cost you allow people to save money. That saved money then will help grow the economy.
    Either that extra money will be spent (increasing consumer spending leading to more jobs) or the extra money will go to savings.
    Add that savings to the money you decided to save and not spend and you help grow the money supply through fractional banking reserve lending. The banks then lend money at better rates to allow business expand and make capitol investments to catch up to your better efficientcy.

    fractional reserves example:
    If the reserve requirement is 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit. If the borrower then writes a check to someone who deposits the $90, the bank receiving that deposit can lend out $81. As the process continues, the banking system can expand the initial deposit of $100 into a maximum of $1,000 of money ($100+$90+81+$72.90+...=$1,000).
  5. "I know this is capitalism, but in accumulating $$$ and not spending it... am I harming the economy"

    Imo, the gov't makes it difficult to accumulate money, hence confiscatory taxes, on the flip side the gov't offers tax incentives to spend your "accumulating $$$". I think one of the Kyiosaki books explains the concept of the velocity of money, gotta keep the money moving and working to obtain its true potential value for yourself and society.
  6. Akavall


    In the US a lot of the money is spent on foreign goods, especially Chinese, which leads to the Current Account deficit.
  7. So true......Look at the richest families, wealth locked up gets so spread out and diluted by the second and thrid generation , they are still wealthy but hardly the fortune of the earlier generations.

    The familes that invest and spread their wealth and take risks, grow their fortunes.
  8. z32000


    but it sounds like capitalisim is about greed. Everyone for himself. Could it be that the only reason the economy would do well, is if others aren't doing so well?

    Hence, could capitalisim be cause of the growing gap between the rich and the poor?
  9. As you said, you have found a way to be more efficent.....that helps your customer get better value. You get to keep the rewards...but unless you can help people either save money or make their life easier, you will have no rewards....So capitalisim is about making things better for your customer (ie..the public). As long as the public has a choice the "Capitalist" has to provide a better option to get that business.....
    This is the weakness of goverment run programs, the public has little choice, thus programs become inefficent and wasteful.

    As a society becomes weathly the bottom will rise but not as fast as the top...but that bottom are not always the same people...the idea is you start poor and then through capitolism move up the wealth scale....few people spend their life at minium wage.

    With the chioce provided by capitalism, every dollar you make does not mean a dollar less for somebody else. As your company makes more money your demands for raw material and other B2B items will spur growth for your suppliers and create more jobs and more suppliers trying to compete for your business.

    As Milton Friedman said all the fed needs to do is make sure money supply keeps growing
  10. i believe that if there's demand it will get supply, either by you or someone else. Don't reason that you will create only a couple of jobs, it's better than nothing. Most new companies start small and grow from there. Who knows how many jobs you'll have created in 10 or 20 years time.
    #10     Aug 19, 2007