Government: *encourage* distribution of wealth rather than distributing it

[B.S. Lewis]

It seems to me that every party -- major or otherwise -- is either for (1) free handouts, or (2) unrestrained capitalism.

I'd like to see government actions that help the poor help themselves; but things that really help them help themselves, not just the lip-service that conservatives give to this idea while they continue consolidating the world's wealth.

For example:

-Policies that encourage much wider ownership of capital (stock)
-Free fiscal education for the poor
-Tighter regulation on things like false advertising and shark-ish loans (e.g., Check Into Cash programs)


Distributism
Cooperative
A real-world example (http://www.sunkist.com/about/)

[premjan]

It is absolutely not about entitlements and it is about actual accruing benefits.

[B.S. Lewis]

I should have named this thread "Distributism." -Isms always get everybody's attention around here.

[Preno]

But only if they go in pairs. You should have called it something like "distributism vs. attributism".

[Hooboy !!]

I say neither. The government should only work to create an environment where wealth can be created and then once created, is protected. This includes making it so that what a person creates, they get to keep.

What a person does with their wealth is their own business. pardon the pun.

[Jimmy Higgins]

I say neither. The government should only work to create an environment where wealth can be created and then once created, is protected.Is this what you would consider as the sole purpose of government, or would there also be other things as well?

And to what limit should the government protect people's money?

[Jimmy Higgins]

It seems to me that every party -- major or otherwise -- is either for (1) free handouts, or (2) unrestrained capitalism.

I'd like to see government actions that help the poor help themselves; but things that really help them help themselves, not just the lip-service that conservatives give to this idea while they continue consolidating the world's wealth.The problem with the helping programs is that they typically seem to be all or nothing. If you live well under the poverty level you get help. But if you get to borderline poverty... you're on your own.

Honestly, both parties, at least in the US, are for both 1 and 2. It's just that they disagree as to where to apply those two things.

[Hooboy !!]

Is this what you would consider as the sole purpose of government, or would there also be other things as well?
No, that would be pretty much it.

And to what limit should the government protect people's money?
It's not just about money. "Wealth" can be many things. People should be able to keep their wealth or trade it, as they see fit, without coercion.

[enoch007]

It's not just about money. "Wealth" can be many things. People should be able to keep their wealth or trade it, as they see fit, without coercion.


Should drug dealers and other organized criminals also be allowed to keep their wealth?

[Jimmy Higgins]

Is this what you would consider as the sole purpose of government, or would there also be other things as well?
No, that would be pretty much it.Even if that were the only task, it would seem a rather large one. ;)

And to what limit should the government protect people's money?
It's not just about money. "Wealth" can be many things. People should be able to keep their wealth or trade it, as they see fit, without coercion.My bad. "Wealth" not money. What are you defining as "wealth"... is it mainly just cash and assets or does it expand beyond that?

Secondly, without coercion, as in from the government or from third parties or both? And what do you mean by coercion?

[B.S. Lewis]

From Distributism:

Distributism, also known as distributionism and distributivism, is a third-way economic philosophy formulated by such Roman Catholic thinkers as G. K. Chesterton and Hilaire Belloc[...]. According to distributism, the ownership of the means of production should be spread as widely as possible among the general populace, rather than being centralized under the control of a few state bureaucrats (some forms of socialism) or wealthy private individuals (capitalism). A summary of distributism is found in Chesterton's statement: "Too much capitalism does not mean too many capitalists, but too few capitalists."

Essentially, distributism distinguishes itself by its distribution of property. Distributism holds that, while socialism allows no individuals to own productive property (it all being under state, community, or workers' control), and capitalism allows only a few to own it, distributism itself seeks to ensure that most people will become owners of productive property.

Distributism has often been described as a third way of economic order besides socialism and capitalism. However, some have seen it more as an aspiration, which has been successfully realised in the short term by commitment to the principles of subsidiarity and solidarity (these being built into financially independent local co-operatives).

The suggestions in my OP were merely supposed to be concrete ways for achieving this ideal. It's the ideal that I really want to discuss.

Distributism, as outlined in that quote, seems to capture the best of both worlds. There is still a selfish competition motive in place, so you don't need to worry about the feasibility of creating a "new man." However, there isn't the gross consolidation of wealth/power into a few hands that you see in modern capitalism.

[Hooboy !!]

Should drug dealers and other organized criminals also be allowed to keep their wealth?
Sure. How they obtained their wealth though might be a problem, because by doing so they could be (likely are) harming others. To be incredibly vague... our "selves" is an asset or is wealth. So therefore, the government is responsible for protecting us from harm as well.

But, if it is a victimless crime... I really do not see how it is a "crime". That would be an imposition of morality in my view. So, it becomes semantically subjective here.

[Hooboy !!]

Even if that were the only task, it would seem a rather large one. ;)
Indeed. Part of the strategy the state should take (IMO) to protect wealth should be to take advantage of available resources. Every individual is somewhat capable of protecting wealth too. Why not use them by empowering them?

My bad. "Wealth" not money. What are you defining as "wealth"... is it mainly just cash and assets or does it expand beyond that?
Basically anything of value, including intellectual property.

Secondly, without coercion, as in from the government or from third parties or both? And what do you mean by coercion?
Both. By coercion, I mean taking without voluntarily consenting. We could debate what is "voluntary" or what is "consent" I suppose.

Basically... any transfer of wealth should be in the form of some kind of transaction where each party was free to enter into the transaction and negotiate terms.

[PaineInTheBrain]

Basically anything of value, including intellectual property.
Isn't it true that intellectual property only has values inasmuch as the government grants monopoly rights (patents)?

[Hooboy !!]

Isn't it true that intellectual property only has values inasmuch as the government grants monopoly rights (patents)?
Not really. Value from intellectual property can be realized through the application of the intellectual property. Holding a patent is really no more useful than owning a title or a deed.

[Gamera]

It seems to me that every party -- major or otherwise -- is either for (1) free handouts, or (2) unrestrained capitalism.

I'd like to see government actions that help the poor help themselves; but things that really help them help themselves, not just the lip-service that conservatives give to this idea while they continue consolidating the world's wealth.

For example:

-Policies that encourage much wider ownership of capital (stock)
-Free fiscal education for the poor
-Tighter regulation on things like false advertising and shark-ish loans (e.g., Check Into Cash programs)


Distributism
Cooperative
A real-world example (http://www.sunkist.com/about/)

It's funny how the only people who own stock tend to have lots of money. There seems to be some connection or other. It's almost as if you need money to buy the things.

The way to encourage stock ownership is to encourage higher wages paid by owners, which is the result of more financial security of working people, which is the result of a robust social safety net and rules that protect workers from capital flight (like outsourcing). But of course conservatives don't want to do that, for heaven sakes.

[coloradoatheist]

It seems to me that every party -- major or otherwise -- is either for (1) free handouts, or (2) unrestrained capitalism.

I'd like to see government actions that help the poor help themselves; but things that really help them help themselves, not just the lip-service that conservatives give to this idea while they continue consolidating the world's wealth.

For example:

-Policies that encourage much wider ownership of capital (stock)
-Free fiscal education for the poor
-Tighter regulation on things like false advertising and shark-ish loans (e.g., Check Into Cash programs)


Distributism
Cooperative
A real-world example (http://www.sunkist.com/about/)

It's funny how the only people who own stock tend to have lots of money. There seems to be some connection or other. It's almost as if you need money to buy the things.

The way to encourage stock ownership is to encourage higher wages paid by owners, which is the result of more financial security of working people, which is the result of a robust social safety net and rules that protect workers from capital flight (like outsourcing). But of course conservatives don't want to do that, for heaven sakes.


The people who are welathy know to put money where it makes money instead of just spending it all. They save 15% of their salary and keep putting it in their nest egg and it builds up over time.

They key is education and changing education to actually teach usefull life skills, which psik and I agree.

You can't just happily pay people more and not have other consequences.

Mike

[Bonniedundee]

It seems to me that every party -- major or otherwise -- is either for (1) free handouts, or (2) unrestrained capitalism. Actually neither party is for either of these, if by unrestrained capitalism you mean free markets and voluntaryism they are of course not for this because it would destroy the rich and of course they aren't for handouts which help the poor anymore than the rich require.

I'd like to see government actions that help the poor help themselves; but things that really help them help themselves, not just the lip-service that conservatives give to this idea while they continue consolidating the world's wealth.

For example:

-Policies that encourage much wider ownership of capital (stock)
-Free fiscal education for the poor
-Tighter regulation on things like false advertising and shark-ish loans (e.g., Check Into Cash programs)


Distributism
Cooperative
A real-world exampleDistributism is good stuff, real decentralism and voluntaryism.
But no government is going to bring it about, all gov'ts are the executive committees of the ruling classes.

Have you heard of mutualism? Or Agorism or Anarcho-sydnaclism they are all similar to these ideas.

http://en.wikipedia.org/wiki/Mutualism_%28economic_theory%29
http://www.mutualist.org/id4.html
http://www.mutualist.org/id47.html
http://en.wikipedia.org/wiki/Anarcho-syndicalism
http://www.spunk.org/library/writers/rocker/sp001495/rocker_as1.html
http://en.wikipedia.org/wiki/Agorism
http://flag.blackened.net/daver/anarchism/nlm/nlm.html

Free agreement and exchange bring about a natural distributism or even socialism(ie hardly any wage labour.), depending on the system of property rights it is based on, it is the gov't and its intervention that allows a few people to become mega rich and most to have little, not a free market or voluntaryism.

Mutualism is a political and economic theory or system, largely associated with Pierre-Joseph Proudhon, based on a labor theory of value which holds that when labor or its product is sold, it ought to receive in exchange, goods or services embodying "the amount of labor necessary to produce an article of exactly similar and equal utility"(receiving anything less is considered exploitation, theft of labor, or "usury"). Mutualists believe that a natural economic consequence of a truly free labor market is income to individuals being received proportionally to the amount of labor they exert. Mutualists oppose the idea of individuals receiving an income through loans, investments, and rent, as they believe these individuals are not laboring. They hold that that if state intervention ceased that these types of incomes would disappear.

[Loren Pechtel]

It's funny how the only people who own stock tend to have lots of money. There seems to be some connection or other. It's almost as if you need money to buy the things.

The way to encourage stock ownership is to encourage higher wages paid by owners, which is the result of more financial security of working people, which is the result of a robust social safety net and rules that protect workers from capital flight (like outsourcing). But of course conservatives don't want to do that, for heaven sakes.

Higher wages = higher prices. If you dig deep enough every $ you pay for something goes to pay someone. Double wages and prices will double, you gained nothing.

[Loren Pechtel]

The people who are welathy know to put money where it makes money instead of just spending it all. They save 15% of their salary and keep putting it in their nest egg and it builds up over time.

They key is education and changing education to actually teach usefull life skills, which psik and I agree.

You can't just happily pay people more and not have other consequences.

Mike

Fiscal responsibility?! Oh, the horrors! What an onerous requirement!

[Bonniedundee]

Higher wages = higher prices. Higher profits=Higer prices.

"Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people."-- Adam Smith, Wealth Of Nations

[B.S. Lewis]

The people who are welathy know to put money where it makes money instead of just spending it all. They save 15% of their salary and keep putting it in their nest egg and it builds up over time.

They key is education and changing education to actually teach usefull life skills, which psik and I agree.

You can't just happily pay people more and not have other consequences.

Mike

Right. A working class person who wins the lottery typically just goes out and buys a lot of stuff. Poor people don't know how to invest, because they've never been able to, and their parents were never able to, and so on. That's why I would consider free financial education the most essential part of a distributist economy.

P.S. - remember that Chappelle's Show skit about what would follow if reparations were actually given to blacks? There's some truth to that, although it's not for blacks specifically, but rather for poor people generally.

[untermensche]

The most significant redistribution of wealth occurs when tax dollars are spent on worthless wars and to build more weapons used in the voluntary wars.

Government spending on the poor and lower classes is not distribution or redistribution of wealth. Nobody gets wealthy, and nobody is made poor, from these kinds of programs.

[Stinger]

The most significant redistribution of wealth occurs when tax dollars are spent on worthless wars and to build more weapons used in the voluntary wars.

Government spending on the poor and lower classes is not distribution or redistribution of wealth. Nobody gets wealthy, and nobody is made poor, from these kinds of programs. Then we should immediately eliminate gov. programs for the poor and cut taxes to the rich???

[untermensche]

The most significant redistribution of wealth occurs when tax dollars are spent on worthless wars and to build more weapons used in the voluntary wars.

Government spending on the poor and lower classes is not distribution or redistribution of wealth. Nobody gets wealthy, and nobody is made poor, from these kinds of programs. Then we should immediately eliminate gov. programs for the poor and cut taxes to the rich???
We should help with the poverty capitalism creates wherever it exists.

[Loren Pechtel]

Higher wages = higher prices. Higher profits=Higer prices.

"Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people."-- Adam Smith, Wealth Of Nations

That's hardly a rebuttal.

Most of the money a company takes in goes to wages somewhere. Raise those wages and the price of the goods has to go up. The percentage of the total that goes to the capitalists is a small % of the total and even then if you raid this you kill your economy in the long run.

[Loren Pechtel]

We should help with the poverty capitalism creates wherever it exists.

First you need to prove this assertion.

The more capitalist a society the better off people are on average.

Don't repeat the garbage about the two-bit dictatorships being capitalist. They aren't. They're corrupt.

[untermensche]

First you need to prove this assertion.

The more capitalist a society the better off people are on average.

Don't repeat the garbage about the two-bit dictatorships being capitalist. They aren't. They're corrupt.
Just tell me how you think capitalism, not actions by the government that the capitalists oppose with all their might, addresses poverty.

I have heard capitalists my whole life and the only answer any of them give is charity.

Some economic plan.

[Stinger]

First you need to prove this assertion.

The more capitalist a society the better off people are on average.

Don't repeat the garbage about the two-bit dictatorships being capitalist. They aren't. They're corrupt.
Just tell me how you think capitalism, not actions by the government that the capitalists oppose with all their might, addresses poverty.

I have heard capitalists my whole life and the only answer any of them give is charity.

Some economic plan. Simple: government paid welfare. Welfare and other assistance are paid from tax revenue generated from capitalism. Some countries have a larger safety net than others. There is less poverty in Western Europe that in America. However, the western Europeans pay more in taxes.

[coloradoatheist]

First you need to prove this assertion.

The more capitalist a society the better off people are on average.

Don't repeat the garbage about the two-bit dictatorships being capitalist. They aren't. They're corrupt.
Just tell me how you think capitalism, not actions by the government that the capitalists oppose with all their might, addresses poverty.

I have heard capitalists my whole life and the only answer any of them give is charity.

Some economic plan.

Because poverty is now defined in relative terms, not real terms so just spend time in America and then go down to Mexico, Jamaica, Africa and see how even the poor here live well. There isn't shit of the street(animals, clothes, human feces, etc).

Mike

[untermensche]

Because poverty is now defined in relative terms, not real terms so just spend time in America and then go down to Mexico, Jamaica, Africa and see how even the poor here live well. There isn't shit of the street(animals, clothes, human feces, etc).

Mike
I agree. But there are still people who meet definitions of "hunger" and "exposure" in the US.

There is no viable capitalist plan to deal with this.

[Stinger]

Because poverty is now defined in relative terms, not real terms so just spend time in America and then go down to Mexico, Jamaica, Africa and see how even the poor here live well. There isn't shit of the street(animals, clothes, human feces, etc).

Mike
I agree. But there are still people who meet definitions of "hunger" and "exposure" in the US.

There is no viable capitalist plan to deal with this. So we should switch to the socialist plan in which everyone lives in poverty except the government class?

[Bonniedundee]

That's hardly a rebuttal.You hardly gave an argument.

Most of the money a company takes in goes to wages somewhere. Raise those wages and the price of the goods has to go up. The percentage of the total that goes to the capitalists is a small % of the total and even then if you raid this you kill your economy in the long run.
You are killing our economy, not all economies run this way.

And the workers create all value, if it was a free market and they were free it would be fine, but when there is massive statist coercion they are being exploited.

In a free market labour would have equal bargaining power to capital hence removing the returns on capital to almost zero.

[untermensche]

So we should switch to the socialist plan in which everyone lives in poverty except the government class?
I think the first thing that needs to be recognized is that capitalism only works when there are profits to be made.

You cannot make a profit from the poor so capitalism does not address the poor in any way except to use them as tools for production as wage slaves.

[Bonniedundee]

So we should switch to the socialist plan in which everyone lives in poverty except the government class?Why is your definition of socialism the direct opposite of socialism? Socialism means the end of economic exploitation.

[Loren Pechtel]

Just tell me how you think capitalism, not actions by the government that the capitalists oppose with all their might, addresses poverty.

I have heard capitalists my whole life and the only answer any of them give is charity.

Some economic plan.

There's nothing about capitalism that prohibits some sort of welfare system. It's just that capitalists don't try to pretend welfare is earned income.

[Bonniedundee]

There's nothing about capitalism that prohibits some sort of welfare system. It's just that capitalists don't try to pretend welfare is earned income.What is capitalism? If you mean free markets then a welfare system is prohitibited, of course it unlikely to be needed.

And modern capitalists love to pretend the income they get only due to the state is earned.

[Loren Pechtel]

Because poverty is now defined in relative terms, not real terms so just spend time in America and then go down to Mexico, Jamaica, Africa and see how even the poor here live well. There isn't shit of the street(animals, clothes, human feces, etc).

Mike

Actually, even in poor areas you don't see much in the way of shit on the street. It's only the little bits of stuff (cigarette butts etc) you see a lot of.

Shit in the ditch beside the road, though...



To really illustrate what poverty can be like there:

Kampala, Uganda, 1982. We were in a large campsite (multiple groups of travellers were staying there) that had security provided by the military. (They were to keep bad guys out, not to keep us in.) One night this woman sneaks into the camp. We puzzled about her behavior but the best we could figure is that she was simply trying to get some warmth from our fire. She was obviously bending over backwards to appear harmless. She was *ENTIRELY* naked.

That's real poverty.

[Bonniedundee]

Because poverty is now defined in relative termsHow else were you planning to measure it?

[Loren Pechtel]

That's hardly a rebuttal.You hardly gave an argument.

Most of the money a company takes in goes to wages somewhere. Raise those wages and the price of the goods has to go up. The percentage of the total that goes to the capitalists is a small % of the total and even then if you raid this you kill your economy in the long run.
You are killing our economy, not all economies run this way.

You mean there are economies out there that magically create wages out of thin air? How do they avoid the rampant inflation this would cause??

And the workers create all value, if it was a free market and they were free it would be fine, but when there is massive statist coercion they are being exploited.

I don't see the relevance.

In a free market labour would have equal bargaining power to capital hence removing the returns on capital to almost zero.

Thus ensuring no investment. Thus ensuring no future.


If we want to merely maintain the same standard of living we need the supply of capital to grow at least as fast as the population does. To actually make progress (and if we don't make progress we die from resource depletion) requires even more capital.

[Bonniedundee]

You mean there are economies out there that magically create wages out of thin air? How do they avoid the rampant inflation this would cause??What? I just made the comment that there could be different ways of organising the economy, like free markets for instance.

I don't see the relevance.Of course you don't, you don't want free markets, you are happy with statism.


Thus ensuring no investment. Thus ensuring no future.First is this worse than having coercion? Secondly why would there be? Do you think that people are unable to save?

If we want to merely maintain the same standard of living we need the supply of capital to grow at least as fast as the population does. To actually make progress (and if we don't make progress we die from resource depletion) requires even more capital.And people in a free market are unable to save?

[untermensche]

There's nothing about capitalism that prohibits some sort of welfare system. It's just that capitalists don't try to pretend welfare is earned income.
No it's called taking care of your mess. The mess the system by it's nature leaves many in.

Many must be excluded, in capitalist systems from moving upward, because there are simply not enough slots to fill, or opportunities to attract investment, in capitalism's forced pyramidal artificial heirarchies.

A few ultimately decide the destinies of millions by the willfull direction of capital at their disposal. That is a form of tyranny.

[Bonniedundee]

A few ultimately decide the destinies of millions by the willfull direction of capital at their disposal. That is a form of tyranny.This is not a natural thing however with free markets, it is the state that creates this.

Adam Smith was right when he said it is impossible to be exceedingly rich without the state's help.

[untermensche]

This is not a natural thing however with free markets, it is the state that creates this.

Adam Smith was right when he said it is impossible to be exceedingly rich without the state's help.
Adam Smith supposedly said it, so it must be true.

The role of the government is to be the power that keeps power in check.

Huge amounts of concentrated capital working under the control of a few is huge power.

The duty of government is to curtail that power.

[Bonniedundee]

The role of the government is to be the power that keeps power in check.

Huge amounts of concentrated capital working under the control of a few is huge power.

The duty of government is to curtail that power.No all states are class states that exploit the poor for the benefit of the rich.

They are the executive committee of the ruling classes, as Marx said.

[untermensche]

No all states are class states that exploit the poor for the benefit of the rich.

They are the executive committee of the ruling classes, as Marx said.
If you break up society below the state level then the corporations would simply hire the best armies and rule everybody else. Without government they would return to forced slavery.

[Bonniedundee]

If you break up society below the state level then the corporations would simply hire the best armies and rule everybody else. Without government they would return to forced slavery.They only exist due to the gov't. They are an outgrowth of it like all large industry.

Obviously I advocate breaking up state property and that of its outgrowths like the corporations.

[Metaphor]

Just tell me how you think capitalism, not actions by the government that the capitalists oppose with all their might, addresses poverty.

I have heard capitalists my whole life and the only answer any of them give is charity.

Some economic plan.

There's nothing about capitalism that prohibits some sort of welfare system. It's just that capitalists don't try to pretend welfare is earned income.

Whereas as the passive income of capitalists is somehow earned?

[untermensche]

They only exist due to the gov't. They are an outgrowth of it like all large industry.

Obviously I advocate breaking up state property and that of its outgrowths like the corporations.
If they exist because of the government then the government can control their nature and powers and thus control them.

But presently the corporations own the government. Which is a problem in terms of controlling corporations.

[B.S. Lewis]

The more capitalist a society the better off people are on average.

If you're talking about the mean, yes. If you're talking about the median, that's much more doubtful.

Because poverty is now defined in relative terms, not real terms so just spend time in America and then go down to Mexico, Jamaica, Africa and see how even the poor here live well. There isn't shit of the street(animals, clothes, human feces, etc).

Mike

I'm so tired of hearing this--capitalism is great, just look at America compared to the third world! The third world, by and large, is ubercapitalist. They provide workers for our corporations. But they cannot become successful capitalists themselves (India's Mittal & Son notwithstanding) because it is near impossible for them to compete with existing Western corporations to sell their products. Is America the greatest country in the world? Well, maybe, but only because the other guys don't have a chance.

[B.S. Lewis]

The more capitalist a society the better off people are on average.

If you're talking about the mean, yes. If you're talking about the median, that's much more doubtful.

Because poverty is now defined in relative terms, not real terms so just spend time in America and then go down to Mexico, Jamaica, Africa and see how even the poor here live well. There isn't shit of the street(animals, clothes, human feces, etc).

Mike

I'm so tired of hearing this--capitalism is great, just look at America compared to the third world! The third world, by and large, is ubercapitalist. Many of them provide workers for U.S. corporations. But they cannot become successful capitalists themselves (India's Mittal & Son notwithstanding) because it is near impossible for them to compete with existing Western corporations to sell their products. Is America the greatest country in the world? Well, yes, but only because the other guys don't have a chance.

[Bonniedundee]

If they exist because of the government then the government can control their nature and powers and thus control them.Perhaps, but the government is the same people; the ruling classes and always is. You will find no socialism with the state.

But presently the corporations own the government. Which is a problem in terms of controlling corporations.
It doesn't really matter, the corporations and government represent the same factions, the same class, who controls who is not really important to the workers and producers.

[Bonniedundee]

Whereas as the passive income of capitalists is somehow earned?Ahh but don't forget their importance for investing capital, obviously regular people in a free society could never actually invest capital. Heaven forbid the common man takes charge of his life, he needs some rich, state supported thief to do it for him.

[Stinger]

So we should switch to the socialist plan in which everyone lives in poverty except the government class?
I think the first thing that needs to be recognized is that capitalism only works when there are profits to be made.

You cannot make a profit from the poor so capitalism does not address the poor in any way except to use them as tools for production as wage slaves. This is absolute balony. The vast majority of businesses don't make a dime. I'll bet that at least 90% of the small retail shops all across the US never make a profit.

[Loren Pechtel]

There's nothing about capitalism that prohibits some sort of welfare system. It's just that capitalists don't try to pretend welfare is earned income.

Whereas as the passive income of capitalists is somehow earned?

Yes. They chose to forego current consumption in exchange for an expectation of having more in the future.

If there's nothing to be gained by foregoing current consumption they they aren't going to do it and there will be no investment.

[Loren Pechtel]

The more capitalist a society the better off people are on average.

If you're talking about the mean, yes. If you're talking about the median, that's much more doubtful.

Both rise.

[B.S. Lewis]

I'm convinced!!

:rolleyes:

[Bonniedundee]

Yes. They chose to forego current consumption in exchange for an expectation of having more in the future.Rubbish, they artificially contract supply, so to create a far from free market in capital making labour compete for capital, rather than the other way around which would be more natural on a free market.

On a free market the interest rate would drop to the labour(indirect ie costs like utilities and direct like staff.) cost of banking due to free competition among banks and the removal of all money monopolies and laws which prevent mutual banking.

[Loren Pechtel]

Yes. They chose to forego current consumption in exchange for an expectation of having more in the future.Rubbish, they artificially contract supply, so to create a far from free market in capital making labour compete for capital, rather than the other way around which would be more natural on a free market.

On a free market the interest rate would drop to the labour(indirect ie costs like utilities and direct like staff.) cost of banking due to free competition among banks and the removal of all money monopolies and laws which prevent mutual banking.

Please clarify. I don't understand any of your points here.

[Gamera]

It's funny how the only people who own stock tend to have lots of money. There seems to be some connection or other. It's almost as if you need money to buy the things.

The way to encourage stock ownership is to encourage higher wages paid by owners, which is the result of more financial security of working people, which is the result of a robust social safety net and rules that protect workers from capital flight (like outsourcing). But of course conservatives don't want to do that, for heaven sakes.


The people who are welathy know to put money where it makes money instead of just spending it all. They save 15% of their salary and keep putting it in their nest egg and it builds up over time.

They key is education and changing education to actually teach usefull life skills, which psik and I agree.

You can't just happily pay people more and not have other consequences.

Mike


Yeah, rich people are the best people in the world. I mean, look how wise Paris Hilton is.

Talk about a person who has bought into the discourse of privilege. You take the cake.

[Gamera]

It's funny how the only people who own stock tend to have lots of money. There seems to be some connection or other. It's almost as if you need money to buy the things.

The way to encourage stock ownership is to encourage higher wages paid by owners, which is the result of more financial security of working people, which is the result of a robust social safety net and rules that protect workers from capital flight (like outsourcing). But of course conservatives don't want to do that, for heaven sakes.

Higher wages = higher prices. If you dig deep enough every $ you pay for something goes to pay someone. Double wages and prices will double, you gained nothing.

Nope, it can mean lower profits for the rich, if the environment is competitive.

Economics 101.

[Gamera]

Whereas as the passive income of capitalists is somehow earned?Ahh but don't forget their importance for investing capital, obviously regular people in a free society could never actually invest capital. Heaven forbid the common man takes charge of his life, he needs some rich, state supported thief to do it for him.

People with money invest capital. That's hardly an insight. Increase wages of working people and they's invest it in mom and pop business.

The irony is the top 1% do not invest capital in any businesses. So increases profits or giving tax breaks to the rich produces no economic growth.

The top 1% have so much capital all they can do is put it in the stock market, which of course is not an investment in anything, but rather a side bet with other rich stockhholders.

[PaineInTheBrain]

The top 1% have so much capital all they can do is put it in the stock market, which of course is not an investment in anything, but rather a side bet with other rich stockhholders.
That's not quite true to the extent you imply.

[Gamera]

The top 1% have so much capital all they can do is put it in the stock market, which of course is not an investment in anything, but rather a side bet with other rich stockhholders.
That's not quite true to the extent you imply.

Billionaires tend not to wait around for a tax cut in order to invest in start up businesses, and billionaires tend not to invest in start up businesses at all.

I can count on one hand the number of times Bill Gates opened a mom and pop grocery store down the street. Yet working folk do that all the time.

[PaineInTheBrain]

Billionaires tend not to wait around for a tax cut in order to invest in start up businesses, and billionaires tend not to invest in start up businesses at all.

I can count on one hand the number of times Bill Gates opened a mom and pop grocery store down the street. Yet working folk do that all the time.
I was more referring to your stock market thoughts.

[Gamera]

Billionaires tend not to wait around for a tax cut in order to invest in start up businesses, and billionaires tend not to invest in start up businesses at all.

I can count on one hand the number of times Bill Gates opened a mom and pop grocery store down the street. Yet working folk do that all the time.
I was more referring to your stock market thoughts.

There's a general notion in society (fueled by the sloppy rhetoric of our dimwitted president and the intentional duplicity of conservative "thinkers') that buying publicly traded stock somehow capitalizes the businesses whose stock is bought. So that if I buy IBM stock, IBM gets the money and uses it to become more productive. Unless it's a IPO, of course, this is untrue (and even IPOs are mostly a transfer of funds to the initial owners).

I'm sure you understand the fallacy of this perception, and that IBM doesn't get one thin dime of the money someone pays to buy its stock. But you'd be amazed at how many conservatives spout it.

[Loren Pechtel]

Higher wages = higher prices. If you dig deep enough every $ you pay for something goes to pay someone. Double wages and prices will double, you gained nothing.

Nope, it can mean lower profits for the rich, if the environment is competitive.

Economics 101.

Except that's not going to happen.

If competition would raise wages with prices doubled then it would raise them without the doubling also.

[Loren Pechtel]

Ahh but don't forget their importance for investing capital, obviously regular people in a free society could never actually invest capital. Heaven forbid the common man takes charge of his life, he needs some rich, state supported thief to do it for him.

People with money invest capital. That's hardly an insight. Increase wages of working people and they's invest it in mom and pop business.

Nope. The savings rate of the middle class is far too low to sustain society.

The irony is the top 1% do not invest capital in any businesses. So increases profits or giving tax breaks to the rich produces no economic growth.

The top 1% have so much capital all they can do is put it in the stock market, which of course is not an investment in anything, but rather a side bet with other rich stockhholders.

You're forgetting about the IPO.

It's the secondary market in stocks that drives most primary investing in stocks.

Note, also, that most of the top people on the Forbes list got there by making a company (or being an immediate relative of someone who did), not by simply playing the market.

[Nitrousoxide]

I was more referring to your stock market thoughts.

There's a general notion in society (fueled by the sloppy rhetoric of our dimwitted president and the intentional duplicity of conservative "thinkers') that buying publicly traded stock somehow capitalizes the businesses whose stock is bought. So that if I buy IBM stock, IBM gets the money and uses it to become more productive. Unless it's a IPO, of course, this is untrue (and even IPOs are mostly a transfer of funds to the initial owners).

I'm sure you understand the fallacy of this perception, and that IBM doesn't get one thin dime of the money someone pays to buy its stock. But you'd be amazed at how many conservatives spout it.

Correct me if I'm wrong, but doesn't the company get the money for the initial sale of the shares (and any shares they buy back later and then resell) and any new shares they release? After that though, trading is mostly done between individuals owning stock and wanting stock.

So, at the very least, the initial issuence of shares helps the company raise money and any additional issuences do too.

[Gamera]

[QUOTE]
Nope. The savings rate of the middle class is far too low to sustain society.
The tautology of this statement hardly requires mentioning, but I will: if people made more money, they'd save more. It kind of follows.


You're forgetting about the IPO.

Not forgetting it. Discounting. IPOs constitute a de minimus fraction of stock sales.

It's the secondary market in stocks that drives most primary investing in stocks.

Yep, and none of those funds go to the corporations at issue.

Note, also, that most of the top people on the Forbes list got there by making a company (or being an immediate relative of someone who did), not by simply playing the market.

I agree. They inherited their wealth. They didn't earn it. All the more reason to pursue policies that increase the wages of working people so they can share in the country's wealth. Leaving it to the luck of parentage seems silly at best, immoral at worst.

[Gamera]

Correct me if I'm wrong, but doesn't the company get the money for the initial sale of the shares (and any shares they buy back later and then resell) and any new shares they release? After that though, trading is mostly done between individuals owning stock and wanting stock.

So, at the very least, the initial issuence of shares helps the company raise money and any additional issuences do too.


The intial owners may get a large portion of the IPO funds, depending on how it's structure.

But regardless, IPOs are an infinitessimal percentage of stock sales, and only already successful business have IPOs. It's not like the company needs capital to succeed at the point of an IPO. Nobody would invest in an IPO unless it was already a financial success.

[Gamera]

Nope, it can mean lower profits for the rich, if the environment is competitive.

Economics 101.

Except that's not going to happen.

If competition would raise wages with prices doubled then it would raise them without the doubling also.

Your logic escapes me.

If company A and company B are in a competitive market, and wages increase within the profit margin for both firms, they have a choice: (1) raise prices to cover the increased wages, (2) raise prices to cover only a portion of the increased wages (i.e., reduce profit margins) or (3) don't raise prices at all (i.e., reduce profit margins even more).

If company A increases prices (option 1) and company B doesn't or does so less (option 2 or 3), who are you going to buy from?

You seem to be saying that there isn't real competition in modern corporate Ameica. If that's the case, we need to fix that problem first with a vigorous anti-trust legislative regime (which was gutted by the conservative shills Reagan and Bush)

[coloradoatheist]

Except that's not going to happen.

If competition would raise wages with prices doubled then it would raise them without the doubling also.

Your logic escapes me.

If company A and company B are in a competitive market, and wages increase within the profit margin for both firms, they have a choice: (1) raise prices to cover the increased wages, (2) raise prices to cover only a portion of the increased wages (i.e., reduce profit margins) or (3) don't raise prices at all (i.e., reduce profit margins even more).

If company A increases prices (option 1) and company B doesn't or does so less (option 2 or 3), who are you going to buy from?

You seem to be saying that there isn't real competition in modern corporate Ameica. If that's the case, we need to fix that problem first with a vigorous anti-trust legislative regime (which was gutted by the conservative shills Reagan and Bush)

There's is competition in most of America so it depends on how wages get raised. If it becomes mandatory like a min wage increase businesses will cut expenses (workers, extras etc, raise prices if they can (not always possible as LP was pointing out, go out of business). So if wages increase rapidly you raise rates of unemployment, to compensate govts will release more money to remain the same unemployment levels but that causes inflation so it becomes a circle where the intent was to raise wages but all it did was cause inflation losing all the gains.

Mike

[Bonniedundee]

Please clarify. I don't understand any of your points here.Well currently capital is far more restricted in competition than labour, hence labour's far weakened position that has always marked capitalism since its state sanctioned birth. This is not a natural thing, capital should be at least as competitive as labour, if not more so.

Looking at a free market with lockean(ie the standard American libertarian property rights.) property right albeit with the provisos intact, then credit would drop drastically as the money monopoly would end therefore competition among banks would increase greatly and mutual banks would be set up at these banks you could mortgage off most of your property including buildings, land, furniture etc and you future labour for half of its value, competition driving the interest rate down to 1% or less and you'd simply have to agree to use the currency of the bank as tender and to recieve it in payment.
And as long as the provisos made by Locke, ie that natural resources that are claimed cannot be wasted and that there must be enough to go around, this would end the land monopoly, pretty much destroying land speculation and dropping the price of land to very cheap.

These two combined would mean you could set up a business orm co-op as easy as you could apply for a job in a free market, even using the standard lockean rights(well I know many modern American libertarians forget about the provisos.)of American libertarians, of which you claim to be one.

[Loren Pechtel]

Correct me if I'm wrong, but doesn't the company get the money for the initial sale of the shares (and any shares they buy back later and then resell) and any new shares they release? After that though, trading is mostly done between individuals owning stock and wanting stock.

So, at the very least, the initial issuence of shares helps the company raise money and any additional issuences do too.

Half right.

Companies do not start from scratch releasing shares on the public markets. You're going to have to raise private financing first.

The presence of the stock market provides those private financiers a means of recouping their money if the business succeeds, though, and thus has a substantial effect on their willingness to engage in such behavior.

[Loren Pechtel]

[QUOTE=Loren Pechtel;4510520]
.
The tautology of this statement hardly requires mentioning, but I will: if people made more money, they'd save more. It kind of follows.

Of course but irrelevant.

1) If you get rid of the rich and distribute the money to everyone else they need to save just as much of it as the rich were doing for this not to trash the economy. People at the level of the new income level don't have a savings rate anything like that high.

2) If you increase the total consumption rate you trash the economy. All you can do is move consumption from the rich to those who have less. There simply isn't enough such consumption to make much of an effect.

Not forgetting it. Discounting. IPOs constitute a de minimus fraction of stock sales.

But without a secondary market there would be almost no primary market.

I agree. They inherited their wealth. They didn't earn it. All the more reason to pursue policies that increase the wages of working people so they can share in the country's wealth. Leaving it to the luck of parentage seems silly at best, immoral at worst.

Last time I looked over the top part of the list it was about equally split between those who earned by building a company it and their *IMMEDIATE* families. The only one that wasn't either of those is Warren Buffet.

[Loren Pechtel]

The intial owners may get a large portion of the IPO funds, depending on how it's structure.

But regardless, IPOs are an infinitessimal percentage of stock sales, and only already successful business have IPOs. It's not like the company needs capital to succeed at the point of an IPO. Nobody would invest in an IPO unless it was already a financial success.

You're missing the point.

The stock market supports the IPO's. The IPO's support the venture capitalists that actually do invest in the new businesses. Remove either link and the amount of investment in new business goes way down.

[Loren Pechtel]

Except that's not going to happen.

If competition would raise wages with prices doubled then it would raise them without the doubling also.

Your logic escapes me.

If company A and company B are in a competitive market, and wages increase within the profit margin for both firms, they have a choice: (1) raise prices to cover the increased wages, (2) raise prices to cover only a portion of the increased wages (i.e., reduce profit margins) or (3) don't raise prices at all (i.e., reduce profit margins even more).

And in the state before the wage increase they were in the same position--competing. The wage increase doesn't change anything other than cloud matters and allow them to temporarily raise prices more than they need to.

You seem to be saying that there isn't real competition in modern corporate Ameica. If that's the case, we need to fix that problem first with a vigorous anti-trust legislative regime (which was gutted by the conservative shills Reagan and Bush)

No, you're the one saying there isn't competition!

I'm saying the effects you're attributing to the price increase have already happened. There simply isn't the excess profit you think there is.

If there really is a company making that much extra profit, go buy their stock!

[Loren Pechtel]

Please clarify. I don't understand any of your points here.Well currently capital is far more restricted in competition than labour, hence labour's far weakened position that has always marked capitalism since its state sanctioned birth. This is not a natural thing, capital should be at least as competitive as labour, if not more so.

What are you saying here? How is capital restricted in competition??

Looking at a free market with lockean(ie the standard American libertarian property rights.) property right albeit with the provisos intact, then credit would drop drastically as the money monopoly would end therefore competition among banks would increase greatly and mutual banks would be set up at these banks you could mortgage off most of your property including buildings, land, furniture etc and you future labour for half of its value, competition driving the interest rate down to 1% or less and you'd simply have to agree to use the currency of the bank as tender and to recieve it in payment.

Except this wouldn't work. Human nature seems to expect about a 3% interest rate.

And as long as the provisos made by Locke, ie that natural resources that are claimed cannot be wasted and that there must be enough to go around, this would end the land monopoly, pretty much destroying land speculation and dropping the price of land to very cheap.

Land speculation is a minor factor in land prices. Land is expensive because people want to be in desirable locations.

Lets take a simple case: How far from the center of town should I live? Lets look at two identical houses. The only difference is the price of the land under them. The neighborhoods are the same, also--the only factor affecting the land price is location. What's the price difference?

The difference is what the typical purchaser of such a home considers the cost of the additional commute living farther out to be. If the differential is less than that then almost everyone is going to want to buy the close-in property and the demand will drive up the price until the market-set difference is reached.

These two combined would mean you could set up a business orm co-op as easy as you could apply for a job in a free market, even using the standard lockean rights(well I know many modern American libertarians forget about the provisos.)of American libertarians, of which you claim to be one.

The problem is you are making wild assertions of how the economy would work.

[Gamera]

[
And in the state before the wage increase they were in the same position--competing. The wage increase doesn't change anything other than cloud matters and allow them to temporarily raise prices more than they need to.

It means lower profit margins, meaning less income for the wealthy, and more for workers. A good thing.


No, you're the one saying there isn't competition!
I'm saying the effects you're attributing to the price increase have already happened. There simply isn't the excess profit you think there is.

What is "excess profit?" Owners maximize profit by trying to pay as little to working Americans as possible. If they have to pay more, they get less profit. More money for millions of working Americans, less money for the top brackets.

That's a good thing. Why are you against it?

If there really is a company making that much extra profit, go buy their stock!

What is extra profit? What are you talking about. See above. Owners maximize profit. Make rules that raise wages and they get less profit -- a good thing!

[Gamera]

[QUO]You're missing the point.

The stock market supports the IPO's. The IPO's support the venture capitalists that actually do invest in the new businesses. Remove either link and the amount of investment in new business goes way down.

I think you missed the point. The argument was how the top 1% have no place to put their money but in the market, where in fact they put it. That "investment" is no investment at all, but a side bet. The money doesn't go to the companies involved (except IPOs in some cases, which are an infinitessimal percentage of the stock market or the top 1% portfolio)

Try again.

[Gamera]

[[QUOTE]Of course but irrelevant.

1) If you get rid of the rich and distribute the money to everyone else they need to save just as much of it as the rich were doing for this not to trash the economy. People at the level of the new income level don't have a savings rate anything like that high.

2) If you increase the total consumption rate you trash the economy. All you can do is move consumption from the rich to those who have less. There simply isn't enough such consumption to make much of an effect.


1) Straw man arguments. Nobody is "getting rid of the rich." I'm suggesting they pay higher taxes, say, the rate they did under Eisenhower -- that socialist.

2) Your logic escapes me. Consumption is a good thing for the economy. OVer 70% of GDP is consumer driven. Raise wages for working Americans, and you get more consumption, more economic activity, more wealth.

But without a secondary market there would be almost no primary market.

That's irrelevant to the argument, which is where the rich stash their money. They put it in equities and that produces no economic activities.

Last time I looked over the top part of the list it was about equally split between those who earned by building a company it and their *IMMEDIATE* families. The only one that wasn't either of those is Warren Buffet.

Yep about 40-50 percent of the wealthiest people inherited their wealth, so any argument you make about the rich earning their money is false from the start in 50% of the cases.

[Gamera]

Half right.

Companies do not start from scratch releasing shares on the public markets. You're going to have to raise private financing first.

The presence of the stock market provides those private financiers a means of recouping their money if the business succeeds, though, and thus has a substantial effect on their willingness to engage in such behavior.


You're not even half right. Companies that go public are already extremely successful and have access to all the capital they want. They go public not to get capital, but so the initial owners can "cash out" and make a fortune on their already successful investment by making it public.

Your notion that companies that go public are cash starved and are looking for a break is simply naive and part of market funi mythology.

[Gamera]

Your logic escapes me.

If company A and company B are in a competitive market, and wages increase within the profit margin for both firms, they have a choice: (1) raise prices to cover the increased wages, (2) raise prices to cover only a portion of the increased wages (i.e., reduce profit margins) or (3) don't raise prices at all (i.e., reduce profit margins even more).

If company A increases prices (option 1) and company B doesn't or does so less (option 2 or 3), who are you going to buy from?

You seem to be saying that there isn't real competition in modern corporate Ameica. If that's the case, we need to fix that problem first with a vigorous anti-trust legislative regime (which was gutted by the conservative shills Reagan and Bush)

There's is competition in most of America so it depends on how wages get raised. If it becomes mandatory like a min wage increase businesses will cut expenses (workers, extras etc, raise prices if they can (not always possible as LP was pointing out, go out of business). So if wages increase rapidly you raise rates of unemployment, to compensate govts will release more money to remain the same unemployment levels but that causes inflation so it becomes a circle where the intent was to raise wages but all it did was cause inflation losing all the gains.

Mike


This is a textbook, and hence false, description of what happens. Card's study shows that the min wage hikes had no substantial deleterious effects on unemployment. What happens in the real world -- IF competition exists -- is that companies reduce their profit margins. Which is tough tooties. No profit margin is set in stone.

Companies that raise prices or fire workers lose out to companies that don't raise prices and don't fire workers. That's the economic reality. Everything depends on the rules you use to set up the market. If you set up rules to maximize profit, you get maximum profit for the rich. If you set up rules to maximize wages, you get higher wages for workers and lower profit margins for the owners.

I prefer the latter rules. Make more sense.

[Loren Pechtel]

This is a textbook, and hence false, description of what happens. Card's study shows that the min wage hikes had no substantial deleterious effects on unemployment. What happens in the real world -- IF competition exists -- is that companies reduce their profit margins. Which is tough tooties. No profit margin is set in stone.

Companies that raise prices or fire workers lose out to companies that don't raise prices and don't fire workers. That's the economic reality. Everything depends on the rules you use to set up the market. If you set up rules to maximize profit, you get maximum profit for the rich. If you set up rules to maximize wages, you get higher wages for workers and lower profit margins for the owners.

I prefer the latter rules. Make more sense.

The studies don't show that there is no effect. They show that any effect is below the ability to measure. That's to be expected--I would be surprised if they could detect it in all the noise.

However, it's trivially simple to show that minimum wage hikes are harmful: Examine the effect of raising the minimum wage to $100/hr.

[Gamera]

[The studies don't show that there is no effect. They show that any effect is below the ability to measure. That's to be expected--I would be surprised if they could detect it in all the noise.

I'll take this as a concession that you have no empirical support for your claim that higher wages cause unemployment. If you have no support for it, you should stop claiming it.

However, it's trivially simple to show that minimum wage hikes are harmful: Examine the effect of raising the minimum wage to $100/hr.

More strawman arguments.

If the increase is within the profit margin it has no affect on prices or employment, and instead restributes income from owners to workers. A good thing. If the increase is beyond the profit margin, that does have bad effects.

When's the last time minimum wage hikes where beyond the profit margin?

[Stinger]

[The studies don't show that there is no effect. They show that any effect is below the ability to measure. That's to be expected--I would be surprised if they could detect it in all the noise.

I'll take this as a concession that you have no empirical support for your claim that higher wages cause unemployment. If you have no support for it, you should stop claiming it.

However, it's trivially simple to show that minimum wage hikes are harmful: Examine the effect of raising the minimum wage to $100/hr.

More strawman arguments.

If the increase is within the profit margin it has no affect on prices or employment, and instead restributes income from owners to workers. A good thing. If the increase is beyond the profit margin, that does have bad effects.

When's the last time minimum wage hikes where beyond the profit margin? Edit.

[Loren Pechtel]

[The studies don't show that there is no effect. They show that any effect is below the ability to measure. That's to be expected--I would be surprised if they could detect it in all the noise.

I'll take this as a concession that you have no empirical support for your claim that higher wages cause unemployment. If you have no support for it, you should stop claiming it.

We already know the research data--it can't measure anything but there's no reason to think it could, either.

However, it's trivially simple to show that minimum wage hikes are harmful: Examine the effect of raising the minimum wage to $100/hr.

More strawman arguments.

If the increase is within the profit margin it has no affect on prices or employment, and instead restributes income from owners to workers. A good thing. If the increase is beyond the profit margin, that does have bad effects.

When's the last time minimum wage hikes where beyond the profit margin?

Slight problem. The minimum wage used to be much lower. It's been increased many times. Any slack got squeezed out long ago.

And before you reply that the slack returned over time--that means the prices went up and the minimum wage hike translated into higher prices.

[Gamera]

We already know the research data--it can't measure anything but there's no reason to think it could, either.

Again, if so, then stop claiming that minimum wage increases worsen unemplooyment. A constant market fundi talking point.


[QUOTE]Slight problem. The minimum wage used to be much lower. It's been increased many times. Any slack got squeezed out long ago.
You're assuming that the pitiful MW increases have squeezed out the profit margin. Any evidence of that or just market funi talking points.

And before you reply that the slack returned over time--that means the prices went up and the minimum wage hike translated into higher prices.

Any evidence of that? You mean increased productivity can't happen?

[Loren Pechtel]

You're assuming that the pitiful MW increases have squeezed out the profit margin. Any evidence of that or just market funi talking points.

The minimum wage has increased 1275% since it was first created. Overall, all costs are really labor costs--everything a business sees as a material cost is really a labor cost by some other company. You don't put money in a hole, you pay it to someone.

To assert that there is profit margin that can be squeezed out without raising prices means that back when the minimum wage was first created that over 90% of the income of a company was profit.

If there wasn't such a profit margin back then then prices have risen due to labor costs.

Any evidence of that? You mean increased productivity can't happen?

There haven't been productivity gains that great.

[Canard DuJour]

Overall, all costs are really labor costs--everything a business sees as a material cost is really a labor cost by some other company.

http://www.frif.com/gifs/marx.jpg

[Loren Pechtel]

Overall, all costs are really labor costs--everything a business sees as a material cost is really a labor cost by some other company.

http://www.frif.com/gifs/marx.jpg

And what is this supposed to mean?

[Gamera]

You're assuming that the pitiful MW increases have squeezed out the profit margin. Any evidence of that or just market funi talking points.

The minimum wage has increased 1275% since it was first created. Overall, all costs are really labor costs--everything a business sees as a material cost is really a labor cost by some other company. You don't put money in a hole, you pay it to someone.

To assert that there is profit margin that can be squeezed out without raising prices means that back when the minimum wage was first created that over 90% of the income of a company was profit.

If there wasn't such a profit margin back then then prices have risen due to labor costs.

This is the most incoherent post yet. Comodities increase for a variety of reasons, the labor input only being one. When you run out of copper, copper costs go up, without raising wages

Further owners raise prices when they can, not just to recoup costs. To blame labor cost on all price hikes is a new low in market fundamentalilsm.


There haven't been productivity gains that great.

Talk about comparing apples and oranges.

[Gamera]

http://www.frif.com/gifs/marx.jpg

And what is this supposed to mean?

He's pointing out that your post suggests Marx's view of surplus value from labor, something you seem to be unaware of.

[Canard DuJour]

And what is this supposed to mean?

He's pointing out that your post suggests Marx's view of surplus value from labor, something you seem to be unaware of.

:cool: Indeed - something which Loren had previously declared to be fundamentally mistaken. I wondered what could have precipitated this startling conversion. Perhaps Loren has taken the bold step of actually reading some Marx since then ?

[Bonniedundee]

Indeed - something which Loren had previously declared to be fundamentally mistaken. I wondered what could have precipitated this startling conversion. Perhaps Loren has taken the bold step of actually reading some Marx since then ?I'm convinced he has never even picked up a work of Marx, when people start talking about Marx and his ideas he inevitably just starts talking about the Soviet union or such.

[Loren Pechtel]

He's pointing out that your post suggests Marx's view of surplus value from labor, something you seem to be unaware of.

:cool: Indeed - something which Loren had previously declared to be fundamentally mistaken. I wondered what could have precipitated this startling conversion. Perhaps Loren has taken the bold step of actually reading some Marx since then ?

The problem here is you are interpreting "labor" in Marxian terms.

Managers are a form of labor.

[Gamera]

:cool: Indeed - something which Loren had previously declared to be fundamentally mistaken. I wondered what could have precipitated this startling conversion. Perhaps Loren has taken the bold step of actually reading some Marx since then ?

The problem here is you are interpreting "labor" in Marxian terms.

Managers are a form of labor.

But ownership and management isn't coterminous.

[B.S. Lewis]

The minimum wage has increased 1275% since it was first created. Overall, all costs are really labor costs--everything a business sees as a material cost is really a labor cost by some other company. You don't put money in a hole, you pay it to someone..

Not all. A diamond doesn't cost more than a lump of coal because it is harder to mine.

[premjan]

Well, there are costs, and then there are profits. Profits accumulate in a bank account and are not paid to anyone for their labor.

[coloradoatheist]

The minimum wage has increased 1275% since it was first created. Overall, all costs are really labor costs--everything a business sees as a material cost is really a labor cost by some other company. You don't put money in a hole, you pay it to someone..

Not all. A diamond doesn't cost more than a lump of coal because it is harder to mine.


Costs include labor, equipment, land, and profit. So I think LP was wrong but he was trying to say that equipment = someone else's labor, however it's someone else's labor, equipment, land, and profit. So increasing labor at one point is going to have a buildup of costs through the system.

Mike

[Loren Pechtel]

Not all. A diamond doesn't cost more than a lump of coal because it is harder to mine.


Costs include labor, equipment, land, and profit. So I think LP was wrong but he was trying to say that equipment = someone else's labor, however it's someone else's labor, equipment, land, and profit. So increasing labor at one point is going to have a buildup of costs through the system.

Mike

True, it does include someone else's profit. That doesn't change my fundamental issue about the huge increase in the minimum wage having to translate into increased costs, though. Fundamentally it comes down to labor + profit whether it's one company or 100 involved. There simply isn't enough profit margin to support that big an increase in the minimum wage without also increasing costs.

[B.S. Lewis]

But, since labor is not 100% of the cost of products, any raise in prices due to a raise in wages will affect the workers disproportionately less than non-workers, ceteris paribus.

Of course that's only how things would work out if wages for all workers were raised across the board. So its better for describing a min wage hike than a voluntary unilateral raising of wages by a single company.

[Gamera]

Costs include labor, equipment, land, and profit. So I think LP was wrong but he was trying to say that equipment = someone else's labor, however it's someone else's labor, equipment, land, and profit. So increasing labor at one point is going to have a buildup of costs through the system.

Mike

True, it does include someone else's profit. That doesn't change my fundamental issue about the huge increase in the minimum wage having to translate into increased costs, though. Fundamentally it comes down to labor + profit whether it's one company or 100 involved. There simply isn't enough profit margin to support that big an increase in the minimum wage without also increasing costs.


Depends on the industry and the profit margin.

Industry with large profit margins have an incentive not to raise prices after a minimum wage hike. If they do, and their competitor doesn't, opting instead to cut the profit margin, the company that raised prices will lose customers, and the other company will ironicaly increase total profits, though with a lower profit margin.

This is Economics 101.

[Nitrousoxide]

Gamera, you don't seem to have a basic understanding of something known as DEAD WEIGHT LOSS which results from raising the minimum wage, taxes, price ceilings and floors, and just about any government mandated prices.

[Gamera]

Gamera, you don't seem to have a basic understanding of something known as DEAD WEIGHT LOSS which results from raising the minimum wage, taxes, price ceilings and floors, and just about any government mandated prices.

Nope, I don't know about the bizarre unverified claims of market fundis. But I do know that increased wages cannot be just passed on in a competitive environment, assuming a profit margin exists that can absolve the higher labor costs. It's called competition and it works.

[Nitrousoxide]

Nope, I don't know about the bizarre unverified claims of market fundis. But I do know that increased wages cannot be just passed on in a competitive environment, assuming a profit margin exists that can absolve the higher labor costs. It's called competition and it works.

Business will not just simply absorb increases in cost like taxes and minimum wage, they pass on part (but not all) of the cost to the consumer. How much is passed on depends on the elasticity of demand and supply of the final product being produced. For things like gasoline and cigarettes, that amount is greater than things with a higher elasticity of demand.

Government mandated minimum wage effectively acts like forced benefits (eg, health care) which affects the final price similarly to taxes when the business is considering how to much to price it's product (how much of a tax it is depends on how many employees are needed to produce the product).

The notion is called "Tax Incidence" and it produces deadweight loss.

http://en.wikipedia.org/wiki/Tax_incidence (http://en.wikipedia.org/wiki/Tax_incidence)

[Gamera]

Nope, I don't know about the bizarre unverified claims of market fundis. But I do know that increased wages cannot be just passed on in a competitive environment, assuming a profit margin exists that can absolve the higher labor costs. It's called competition and it works.

Business will not just simply absorb increases in cost like taxes and minimum wage, they pass on part (but not all) of the cost to the consumer. How much is passed on depends on the elasticity of demand and supply of the final product being produced. For things like gasoline and cigarettes, that amount is greater than things with a higher elasticity of demand.

Government mandated minimum wage effectively acts like forced benefits (eg, health care) which affects the final price similarly to taxes when the business is considering how to much to price it's product (how much of a tax it is depends on how many employees are needed to produce the product).

The notion is called "Tax Incidence" and it produces deadweight loss.

http://en.wikipedia.org/wiki/Tax_incidence (http://en.wikipedia.org/wiki/Tax_incidence)

You're repeating what I said and acting as if you're arguing against it.

If the profit margin is high enough, and the market is competitive, business can not only absorb higher wage prices, they must. If they don't, and their competitors don't raise prices, the competition wins out. It's no more complex than that.

It all depends on the industry. You're the one claiming that wage hikes are ALWAYS passed on. I'm pointing out that it depends.

You're link is dead. But that's OK. I'm familiar with the deadweight loss fantasy of market fundies. They essentially define themselves into it. They claim taxes are a "market distortion," which assumes there is a default market that somehow exists without rules and just is, natural and pristine. The whole premise is of course wrong. All market consist of rules. You can make the rules to benefit owners, or you can make the rules to benefit workers. I prefer rules that benefit workers since owners are doing OK. But in any case, the deadweight rhetoric is not a real economic phenomenon, just a different rule regime with difference consequences (enriching the lower brackets so they can save more and consume more, generating more economic activity)

[Loren Pechtel]

Depends on the industry and the profit margin.

Industry with large profit margins have an incentive not to raise prices after a minimum wage hike. If they do, and their competitor doesn't, opting instead to cut the profit margin, the company that raised prices will lose customers, and the other company will ironicaly increase total profits, though with a lower profit margin.

This is Economics 101.

True. However the same forces apply even when there is no price hike. In any reasonably stable industry the same forces drive profit margins down to minimum acceptable levels. Thus there is no slack to be absorbed in a minimum wage hike.

[Gamera]

Depends on the industry and the profit margin.

Industry with large profit margins have an incentive not to raise prices after a minimum wage hike. If they do, and their competitor doesn't, opting instead to cut the profit margin, the company that raised prices will lose customers, and the other company will ironicaly increase total profits, though with a lower profit margin.

This is Economics 101.

True. However the same forces apply even when there is no price hike. In any reasonably stable industry the same forces drive profit margins down to minimum acceptable levels. Thus there is no slack to be absorbed in a minimum wage hike.

True, but minimal acceptable levels exist in the context of a prevailing wage rate, which owners try to keep at a minimum to increase profit. Increase the wage rate and those levels must be reevaluated.

[Loren Pechtel]

True. However the same forces apply even when there is no price hike. In any reasonably stable industry the same forces drive profit margins down to minimum acceptable levels. Thus there is no slack to be absorbed in a minimum wage hike.

True, but minimal acceptable levels exist in the context of a prevailing wage rate, which owners try to keep at a minimum to increase profit. Increase the wage rate and those levels must be reevaluated.

There's no reason for the minimums to change. They are set by market forces, not simply what somebody wants.

When the profit margin is too high competitors show up and drive it down. If it's too low then the least efficient producers get out of the market driving it up.

[Gamera]

True, but minimal acceptable levels exist in the context of a prevailing wage rate, which owners try to keep at a minimum to increase profit. Increase the wage rate and those levels must be reevaluated.

There's no reason for the minimums to change. They are set by market forces, not simply what somebody wants.

When the profit margin is too high competitors show up and drive it down. If it's too low then the least efficient producers get out of the market driving it up.

You realize that market forces are set by rules (i.e., government action)? Or are you just pretending not to know?

So rules that allow outsourcing are one set of rules. You could simply not allow it. Or you could simply allow outsourcing only with countries that have similar worker and environmental protections. Or you could have no treaties for capital conversion, ending outsourcing.

I'm afraid your claim that "market forces" are somehow "natural" is really really silly.

[Loren Pechtel]

There's no reason for the minimums to change. They are set by market forces, not simply what somebody wants.

When the profit margin is too high competitors show up and drive it down. If it's too low then the least efficient producers get out of the market driving it up.

You realize that market forces are set by rules (i.e., government action)? Or are you just pretending not to know?

I realize that government rules are part of market forces. That's irrelevant to the issue.

So rules that allow outsourcing are one set of rules. You could simply not allow it. Or you could simply allow outsourcing only with countries that have similar worker and environmental protections. Or you could have no treaties for capital conversion, ending outsourcing.

Except that it's basically impossible to prevent outsourcing.

You don't need treaties for capital conversion, people will trade currencies without them.

I'm afraid your claim that "market forces" are somehow "natural" is really really silly.

I never said they were natural.

What I said was that market forces will in time squeeze out extra profit.

[Gamera]

[Q
I realize that government rules are part of market forces. That's irrelevant to the issue.

Idenify one "market force" that is separate from the rules applied to the market. Start with outsourcing: market "force" or rule applied by government?. Go into detail


Except that it's basically impossible to prevent outsourcing.

Actually you need complex international treaties to make it occur. That's why outsourcing is an issue now and wasn't in 1950.

You don't need treaties for capital conversion, people will trade currencies without them.

Unless you want to do away with the national state, this is nonsense. If one nation doesn't allow capital investment from another, what's an outsourcing capitalists to do?

I never said they were natural.

I know, you assumed it.

What I said was that market forces will in time squeeze out extra profit.

Depends on the market rules set up.