com/cap/com debate - laboring under delusions

[Az]

Newspapers would cost a LOT more then.

It's possible. Also, it's possible that in a couple of years, newspapers will become completely obsolete altogether, so I am not sure of the importance of that topic. It's also possible to fund them through government cash, but allow them to be free from the influence of government through separation of powers.

[Kidlicious]

Cutting wages are tough. Companies have a tough time getting their employees to do it in a recession. They have more success in asian countries.

[Az]

ugh, we're talking about a newspaper here. I just can't imagine THAT being outsourced.

[Kidlicious]

I wasn't talking about newspapers. That doesn't seem to important. I'm talking about recessions in your system. Were you implying that your solution to recessions would be cutting wages.

[Az]

ugh, no. recession is term of market economies. a planned economy can't really have a recession. It can run at a deficit, but not have a recession.

[Kidlicious]

Do your state run companies have to stay in the black to function?

[Kidlicious]

I think Az will have to think about that. Who's next?

[Flubber]

Originally posted by Kidicious


That's exactly why I said that it's not a real situation that would work with capitalism. All that you have done is show that capitalism can't work that way, and we already agreed on that.

Actually it was a real life type situation.

I find your logic interesting. You define "fair pay" in such a way that no system ever could meet it ( unless you know of a way that any entity can know what its speculative profits 3 years from now will be so they can share them with the workers now!!!!!)

Then, because capitalism is among the systems that can't meet your definition of fairness, you propose overthrowing it and imposing a new system that unless I miss my guess would never pay the workers in the only way that you claim is fair for capitalism.

[Flubber]

Originally posted by Azazel


Labor differential, also, it's possible to be fired, and be unemployed. However, that wouldn't mean that your kids would have problems going to school, or problems with medicine, because that would be free. Welfare would be rather minimal, btw.

hmnmm-- on some of your positions your state would be to the RIGHT of Canada ( welfare is far from minimal).

Or Does the unemployed personn get the same standard of living as everyone else or would there be a slate of undersiable jobs that people do if they can't find work in their chosen fields

Originally posted by Azazel

If you want to quit, btw, it's possible, too. That's why there are somewhat more students studying than job positions available. To have a pool of professionals (That would have their skills degraded, due to not using them for a lot of time, of course, but as I've said, that's already a problem, anyway ) . They'll find jobs in positions adjacent to the positions that they were training for. That's the case for most of the students in many fields today, btw, so it's still better.

Scarcity of supply in capitalist societies is lessened somewhat USUALLY by the increase of wages that comes with such scarcity. Would you allown such increases? If you do aren't you simply creating a capitalist society where it just happens that the government is the employer?

[The Mad Viking]

Originally posted by Flubber

Open-- anyone can bid and highest bid wins . . .

The fact is that there are a small handful of bidders and who compete about as effectively as the oil compaies setting gasoline prices.

I'm not an expert on the oil business. Maybe you are. I'm not an expert on Hibernia either. But I do know a few things.

Firstly, Gulf was forced to abandon their investment in Hibernia because the Recihmans/Olympia & York, who owned them, was going broke at Canary Wharf. Mulroney brought some guy in from Arkansas, took piece for the feds, tossed in a huge loan guarantee (> $1 billion, I think) and then the other companies - Mobil and Exxon? took a bigger share.

At this time, oil prices had fallen to $12 per barrel. It was going to take too long to get the money back.

Large infrastructure investments that make sense over decades almost always need government help. Very few private companies have the patience to wait that long for return. These days, unfortunately, even governments are increasingly short-sighted...

If you would guarantee oil companies a return -- say as a service contractor with a 15% markup on the costs of paying the skilled personell. . . .. they would likely go for it-- In fact there are companies that specialize in production service operations.

Such a contract could make a lot of sense. I do not want to suggest that there are not a lot of very smart, competent people in the industry.

There is a sense that only entrepreneurs take risk. But when they crash and burn, there is often a pile of smouldering remains for the public purse to clean up.

You made me laugh with your talk about clean up at the end of the project. It will be a mess. It always is. The company is no longer liquid, so it walks away from the mess. Whether you are talking mines or oil.

In Hibernia, we guaranteed over a billion in loans. That is serious risk. We are not getting compensurate returns, IMO.

I think there are better ways to structure the contracts. Ways that spread the risk more equitably. Ways that provide greater return on publicly owner resources.

And don't get me started about stumpage fees. A friend of my parents operates a timber and sawmill business. He would pay 10x what MacMillan Bloedel does for standing timber. But he isn't allowed to bid...

[Flubber]

Originally posted by The Mad Viking

I'm not an expert on the oil business. Maybe you are. I'm not an expert on Hibernia either. But I do know a few things.

Not an expert but I have worked in the area for six years now.

Originally posted by The Mad Viking

Firstly, Gulf was forced to abandon their investment in Hibernia because the Recihmans/Olympia & York, who owned them, was going broke at Canary Wharf. Mulroney brought some guy in from Arkansas, took piece for the feds, tossed in a huge loan guarantee (> $1 billion, I think) and then the other companies - Mobil and Exxon? took a bigger share.

At this time, oil prices had fallen to $12 per barrel. It was going to take too long to get the money back.

The bottom line was that factors were such that you could get into an ownership position on Hibernia for relatively little and that not very many years ago, there were pretty much no takers.

Oil fell to 12 bucks a barrell again in 1998 IIRC so even as late as then, Hibernia was looking like a bad proposition. Since then, a whole bunch of unforseen stuff put oil over $40 . All I am saying is if you didn't join in the risk, I don't see taking the bulk of the profit.

Originally posted by The Mad Viking


The fact is that there are a small handful of bidders and who compete about as effectively as the oil compaies setting gasoline prices.

But nothing in the system or the bidding process stops others from bidding. Its a reality that a well costs 30 Million to drill so most companies in the world do not have the resources to compete

Originally posted by The Mad Viking

Large infrastructure investments that make sense over decades almost always need government help. Very few private companies have the patience to wait that long for return. These days, unfortunately, even governments are increasingly short-sighted...

Not the case anymore in the offshore. Love it or hate it, the Hibernia deal DID create an industry and projects like Terra Nova and White Rose are going ahead solely on private investment. The companies do take a long view, probably longer than government in many instances and if the risk-weighted rate of return is good enough, the project proceeds even if it does take 5 years for the first oil to flow.

Originally posted by The Mad Viking


Such a contract could make a lot of sense. I do not want to suggest that there are not a lot of very smart, competent people in the industry.

Companies like say Maersk or Sclumberger do a lot on the service side. They would operate projects for anyone but they are generally risk-averse in that they want to be paid for their services regardless of success or failure of a project.

Originally posted by The Mad Viking




There is a sense that only entrepreneurs take risk. But when they crash and burn, there is often a pile of smouldering remains for the public purse to clean up.

You made me laugh with your talk about clean up at the end of the project. It will be a mess. It always is. The company is no longer liquid, so it walks away from the mess. Whether you are talking mines or oil.

Oil companies of the scale that operate in the Newfoundland offshore WILL be around to clean up the mess. Particularly in the Hibernia case, the operators are required to be planning the abandoment scheme including funding NOW. In addition the royalty regime is such that the governments will have substantial sums to refubd to the oil companies for the capitol costs of such abandonment.

Government agencies have learned from the mistakes of the past and no longer accept "trust me, we are a big company" as security for abandonment liability. Bonds, letters of credit or other security are the norm. Everyone knows there will be a big cost and are moving to address it

[Flubber]

I seem to have double postitis

[Flubber]

Originally posted by The Mad Viking


In Hibernia, we guaranteed over a billion in loans. That is serious risk. We are not getting compensurate returns, IMO.

The loan guarantees were mainly a result of the deal to build a massive GBS in Newfoundland. It was very little about the Hibernia project and very much about funding a massive make-work project in Newfoundland. The oil companies spent more capital than they otehrwise would have done and got some conscessions in return.

Originally posted by The Mad Viking
I think there are better ways to structure the contracts. Ways that spread the risk more equitably. Ways that provide greater return on publicly owner resources.

Any suggestions? As it stands, provincial royalties go to 20% if the return to the oil companies exceeds 5% above the long term bond rate and goes to 30% at 15% over the long term bond rate. So the government takes almost a third while taking ZERO risk in a bonanza profit situation. Then later of course comes the income tax.

The Hibernia and Terra Nova deals were negotiated and have their own royalty schemes but the idea is the same. A quick look reveals royalty rates that can vary from 1% to 42.5% depending on the production and profitability of the project

[Kidlicious]

It's not going to go to 500?