East Germany was hollowed out by the Soviets, who had neither the resources nor the inclination to rebuild, so long as a reliable political entity was in place. West Germany was the darling of the US, deeply adoring of our system and values, willing to accept investment, willing to forgive and forget some of the…indiscretions…of it corporate leaders in the Recent Unpleasantness.
Sorry, lad, but the experiment you seek does not exist, where all other factors save the “economic system” are accounted for. The complexity, diversity, and sheer cussedness of humanity buggers all theory. Even, I daresay, libertarianism. (A bold statement, that I may regret.)
So, the jury is still out on the comparative efficiency and effectiveness of capitalism vs communism? Is that what you’re saying? We might as well flip a coin?
[Sigh] Reductio ad absurdem estJohn In tres partes omnia elucidator divisa est**
The jury is not out, John, the jury will never come in! It will never be proven, because the indeterminancy of people makes quantum physics look like arithmetic. “Flip a coin”? Please.
No. I’m pretty sure you’re too smart for that, I’m pretty sure you know better. That particular snark was intended for those persons, unlike yourself, who attribute nearly supernatural power to minor subcurrents in human thought. The “Free Market” is a foma, an intellectual construct that has no reality, but is convenient for those in error. Like Marxism, its is made of whole cloth, it cannot be but a lie.
Of course it’s an intellectual construct. So is Evolutionary Theory and Quantum Theory and every other theory we use to model the real world. It’s not an accident that every country that ever tried communism turned into a dismal failure from which countless people risked their lives to escape. Find me an ecomomist who teaches that communism is an accurate model of how large groups of people behave or that it can produce a more effective and efficient economy than capitalism and I’ll introduce him to Dr. Behe, his intellectual brother in the Biology Dept.
I want to address this point - you CANNOT not put a value judgement the commodity of labor. It’s a bit like Schroedinger’s cat. The mere observation of it requires a subjective viewpoint. With your criteria, ‘purely objective and not taking into account human need’, then it’s possible that labor is a pure commodity. But those two assumptions do not exist in the real world. Real labor requires taking into account human need - and those needs are always valued from a subjective viewpoint.
This is one of the fundamental flaws of modern economics. It is based on countless assumptions that might be, but often are not, valid in the real world. And when push comes to shove, economists try to shove reality into their model rather than adjust their models.
That ‘natural forces’ dont care about human need is most likely true, but I have yet to see evidence that economics is based on purely natural forces. Modern economics is based on the ‘law’ of supply and demand, but that law only exists within a system based on mutual beneficial exchange - which itself is a very modern idea. ‘Might makes right’ was the defining ‘law’ behind economics for millenia. Both of these laws are artificial creations of human society. We could easily decide on a different method. The majority of the 20th century was a debate between such methods. Capitalism has won the first round, with market socialism coming in a second. Mercantilism, communism and fascism didnt fair too well. The economic successes of this century will probably decide the issue.
This is where a lot of the debate lies - does society create economics, or economics create society? I believe in the former. Economic history is still in its infancy though along with modern sociology. That both sides of the debate can be so dogmatic is a bit discouraging.
Can you give a cite for this? I honestly dont know one way or the other, but I lean towards the opposite. The hypocrisy of CEO and their compensation commitees is a main reason I detest modern corporations. They use protectionist policies for the board room, but wail on about the how the labor market must be free. How many more jobs would entrepeneurs be able to create if the money was available instead of tied up in the personal accounts and assets of overpaid executives? And would not those jobs increase the value of unskilled labor?
In regards to Jack Welch, if an executive can create value and increase the size of a company through increased sales or efficiencies, fine. They may be entitled to a share of that wealth. It does not translate that they should command an inflated income for merely doing what they were hired to do. I find Bill Gates the better role model in that regard. The Microsoft millionaires were created by turning a multi-million dollar firm into a multi-billion one, not by taking home million dollar salaries.
As far as the OP,
I would say the majority of the people in the world already believe it. It’s the people who create the jobs that don’t tend to believe it. Nor will they if it concerns any job. In that case, nor should they.
Will the majority of people in the world ever earn a living wage? I can see within the next few decades, i.e., mid 2020’s, that the simple majority will. It could be argued that a simple majority of primary wage earners already do earn a living wage. The problem is the still very large number of people who do not.
I think this thread had focused too much on an American lifestyle model though. Sufficient shelter is more likely to be an apartment or condo in a very large city (such as Hong Kong, New York or New Delhi), not a home in the 'burbs. Reliable transportation, healthcare and education will rely mostly on public expenditures, not private. Large cities help make these far more cost effective also. Modern communications will also drive down these costs. More universities will emulate the University of Phoenix instead of Harvard or even land-grant colleges.
So another question is will non-urban residents be able to earn a living wage? Most of them I hope. Everyone was poor just a few centuries ago. The current global middle class is larger than the global population only 100 years ago. (To me that is the most amazing fact.) But as even the industrialized countries show, relative poverty tends to be greater in rural areas than urban ones.
Since there are people less bright than the sweethearts on this board. what do we do with them. Since a living wage is seen as too costly and may even be too liberal, what happens to the people who can not command lsurvival salaries. Do we build camps.? The dont deserve a decent salary and are not entitled to anything. They cant afford homes or food. Tough huh. Minimum wage ,they dont deserve it they are not productive enough. They should have thought of that before they were born with less than average IQs.
No, but I can’t give a cite for this either: If I put a candle in my window, that won’t make unskilled jobs any more valuable. The two things are not connected. They are only conneced because some people like to compare the two. Even if you took all of Jack Welch’s huge bonuses and split that among the lowest paid workers at GE, that wouldn’t make their labor worth more. If I pay $600k for a $500k house, I still just have a $500k house.
What do you think rich people do wtih their unspent money? They don’t keep in a money room so that they can look at it-- they invest it. And that money is available to entrepeneurs.
Yeah, we build camps and shoot them. Isn’t that what I’ve been advocating in all of my posts? :rolleyes:
You also could take all of Jack Welch’s bonuses and use them to fund new projects, factories, and lines of business which would create a greater demand for labor, skilled and unskilled. There are connected. The main question is if the return is greater in paying for Mr. Welch’s knowledge, expertise and leadership or in the above. I dont know. In his case, it arguably is. But I sincerely doubt it for most of the ‘rockstar’ executives pocketing their paychecks. To state that companies can justify the income of overpaid execs, but cannot afford to overpay basic labor is bollocks, which is what you claim if the two are unconnected.
And if you pay more for something, then it definitely worth more. If you paid $600K for a $500k house, you just made the house worth $600K. Whether you can sell for that price in the future is irrelevant. Its going on your balance sheet now for $600K. I dont understand how you argue otherwise.
And the vast majority of investment funds come from idle corporate or organizational cash, not personal accounts, as reflected by the negative savings rate. The ‘unspent’ money is less and less these days, and conspicuous consumption increasing, and too much of that money is spent on industries that only support the rich.
I think the economy would be better off if the average Joe and Jane could afford to take an average vacation, then if just the super-rich take their super-rich vacations. I think thats a good reason why Southwest is doing so well against its competition - they sell a product that average people can afford. We are becoming a nation of Wal-Marts and Manhattan boutiques with nothing left in the middle.
Another argument for limiting executive pay is if they are investing so much money from personal assets, then that merely distracts them from managing their employer’s assets. I would prefer my corporate officers to spend their time on the business at hand, not on their side ventures. Which also foster insider deals and other subversions of the ‘sacred’ free market.
What do you think Jack Welch does with his wealth, and who is going to “fund” new projects if we distribute that money some other way? I’m not going to justify paying him that much money-- I don’t make that decision, so I don’t realy know what he’s “worth”.
You have to do more than say “they are connected” to demonstrate that they are.
Then you don’t know what the term “worth” means in a market economy. This is the same flaw you make when you say you can make a job “worth” more simply by mandating a higher wage.
Well, I don’t know if that’s true, but even if it is… so what? That doesn’t change the fact that rich folks like Welch invest large chunks of their money.
How much money should be spent on industries that only support the rich? You don’t have to give an exact amount, just a range. But tell us how you determined that range.
First of all, the “average Joe” does take an average vacation. The “average Joe” isn’t making the MW unless you define “average” as “lowerst paid 3% of the work force”. How many “average Joe” types went to Hawaii on vacation 50 years ago vs today? Secondly, there are plenty of companies like Southwest-- in fact, WalMart is one of them! The best way you can errode the middle class is to artificially inflate the wages for unskilled labor so that those jobs compete with skilled jobs. All you’re encouraging people to do is not to differentiate between the value of a skilled job and the value of an unskilled jobs because you are obscuring the difference in value.
Then that’s the way you should vote in shareholder meetings for companies you invest in. Essentially what you are saying is that the economy would be doing better overall if you were managing it. That is hubris of the highest order.
I think the problem some folks are having is that they think “The Market” is something invented by captalists and imposed on society. In fact, “Market Theory” is just an observation about how humans behave. Every economy has a market whether the government thinks it does or not. And the harder a government tries to eliminate a market, the more the underground economy is going to thrive.
The Soviet Union didn’t have long lines and shortages of basic goods because they planners didn’t do a good enough job-- you simply can’t plan that way in the first place. People behaved just as the would in a market economy, but because the government tried to eliminate the information carried in prices, people acted with much less knowledge about the goods and services they needed to buy. That’s the key. The price of a good or service is a crucial piece of information that tells people how to respond to that good or service. Take that information away, and bread becomes just a valuable or just as worthless as whatever else costs the same amount.
People have to know the price (value) of something in the market in order to make intelligent decisions. What’s the first thing a realtor does when he or she works out an asking price for your house? He or she does a market analysis to look at comparable sales. If you were somehow unable to access that information, you’d have no idea how to set the price of your house other than guessing. That’s also a good example of how people get too emotionally tied into thinking the market can be “outsmarted”. When there’s a downturn in the housing market, many people have troupbe parting with their houses for less than they bought it, and they overprice the homes. If I paid $600k for this house, then it must be “worth” at leat $600k, right? Wrong.
The value of exec salaries is being set by the execs themselves. Strangely they also determine that lower wage people are worth practically nothing. Do the people working in a company have any sayso about exec perks and retirement pkgs. Nope they reward thenselves. Who in their right mind would allow a 200 million dollar retirement pkg. The system is twisted and run by the insiders. It is not that they are worth it. They spread all the corporations money amongst themselves.
It is possible that if exec salaries were not so twisted out of reality ,not only could more money be paid to other workers , but investment in the company could happen. It is looting and other countries can see it. In Japan when a company fails or lays off workers the management is shamed. Here laying off people is rewarded. No failure at all. They are rewarded for gross theft and mismanagement. Look at GM for crying out loud. Our auto companies continued to make SUV s when every one else was trying to downsize and go green. They were paid millions to think short term and fail.
Well, I think it’s time we put this thread out of its misery. I’ve said just about everything I have to say on the subject, so I’ll just wish everyone a Merry Christmas and a Happy New Year.
First, Jack Welch does use his money to fund new projects and businesses. It is called investing. CEOs don’t just pile up money in a vault somewhere like Scrooge McDuck*. Second, good CEOs get their money by increasing the value of the company, which usually leads to more jobs down the road. Are there bad CEOs? Yes, but they usually don’t last too long.
Third, what one individual pay for something does not make that object worth that amount to the market. If someone buys a 500,000 house for 600,000 and then tries to sell it the next day for 600,000, that person is going to be out of luck. Not too long ago a girl I work with bought a used Dodge Neon. This particular girl doesn’t know much about money. She bought the 2004 Dodge Neon for roughly $22,000. She could have bought a brand new Neon for less money. Do you think that since she paid 22,000 for a used Neon that the value of that Neon on the market is suddenly 22,000 when a new Neon costs less?
And I would point out that there are also bad Unions. But unlike bad CEO’s, Union workers are hard to get rid off. We have a number of auto parts plants in my area where the average daily no-show rate is over 25%.
We live in a nation where a HS student can make $30 to $60 a year in 5 years with no financial investment and little training.
Again, most income is spent on consumption, not capital investment. No, they dont hoard their money in a vault, they just spend it on $5000 suits, watches, country club memberships and other non-productive items. That income could just as easily be spread through a thousand accounts, enabling a thousand households to increase their standard of living, instead of just one. Which scenario creates a greater economy?
And I am not arguing about increased wealth through increasing the underlying equity - thats the execs main job (maximizing value for shareholders, yadda, yadda, yadda - heck, its supposed to be everyone’s priority) I am against excessive income at the top. Shareholders are not in an uproar since the majority of them are investment funds, banks, and their ilk working hand in hand with management. Neither party gives a rat’s ass about the average shareholder who puts the money into those funds, banks, etc. Or cares about any other stakeholders such as employees, customers, communities, etc., except when they want more concessions or subsidies. Of course this not true for every company, but it has been true for far too many and most of the Dow 30.
And the value of a transaction is based on the transaction, not the market. It doesnt bloody matter what the market price for the house or car is until its put back on the market. If the $500K house is only worth that, then the seller is only going to pay capital gains on that amount? Or for the total $600K? When the company records the sale, are they going to list the market value or the price paid? If they want to devalue it at tax time and take the loss, that loss is also based on the value paid.
There is also confusion between the value of an asset and the cost of an expense. Assets may be adjusted to market, but costs certainly arent. Guess which labor is? If you paid the dishwasher $12/hr, he’s worth $12/hr. If the market says he’s only worth $8/hr, you dont revalue his labor. If you decide to fire him and hire someone else for $8, fine, but the first guy’s value was still $12/hr.
Essentially I am saying that I want employees focused on their work. I dont see the hubris in that, nor the claim that I am worlds best manager. I wouldnt want clerks selling Amway out of their cubicles. I dont want execs to do the same. Is that too much to ask for?
And I would say the best way to erode the middle class has been shown to loot companies, downsize them, ship jobs overseas, reinvest in industries without strong unions that can act as a countervailing power. Then employees with skills they can no longer use are forced to compete with unskilled labor driving down wages. And then Wall Street complains that labor is demanding too much money when labor is merely trying to maintain the status quo.
With all the productivity gains over the last decade, I would expect the middle class to be even stronger than then, but that is not the case - so where did all those gains go?
Finally, I am not an opponent of the market. I detest corporations, but that is a separate issue. The market is essential to a functioning economy, but the mechanisms of the market are controlled by society - either by business, government, or simply culture and tradition, and I do not believe that the market is inviolate. I do believe that the cost of labor has been artificially depressed by the oligarchs who hide behind the mantra of the ‘free’ market when they manipulate it daily.
How does all this relate to earning a living wage? I believe there are sufficient resources to support a living wage, or will be within the next few decades. But I do not believe those resources are allocated according to the market, but by the oligarchs.
I saw a program a few years ago about the guy who invented Virtual reality for computers. He presented it to many American companies. It would require investment and time to make it useful. The American wizzards running our corps rejected him by saying it was not possible for them to invest in something 5 years or more in the future. It would require a lot of money and some risk. Our corps have bottom line meetings yearly .If they do not produce for stockholders they could possibly lose their jobs.
It is short term greedy long term stupid. The system does not reward long term planning and thinking.
Regardless of how impressive the Virtual Reality was he cou;d not sell it in America. He offerered it up in Japan and they jumped at it.
We need a government organization to invest in future products and inventions. Ours is short term and greedy.
Assuming that this is even true, the money is being spent in the local economy. Yes, there are better ways to spend it, but doesn’t that mean the entities currently receiving the income are also going to spend it in other areas, like capital investment and labor? It’s called the “trickle down effect” which most, if not all, progressives don’t seem to believe in, or believe in it as little as the “invisible hand.” The last thing you want to see is people hoarding the money in their mattresses. It used to be taught that even buying second-hand stuff wasn’t that productive, but with increased technology and increased market demand, that isn’t so bad anymore.
What if a thousand people can’t get together and decide to make a multi-million transaction that will invariable put a business on the map? Who would’ve agreed to fund Fed Ex in its infancy (and whole bunch of others that I am fogetting about right now, i.e. seemingly bad ideas needing a lot of money to start up, but eventually becoming successful)? Yes, there are more failures than winners, but in the economy, it’s better to try and fail, than to not try at all. Success breeds competition. Competition brings prices down. Competition makes more products available and increases supply, which then increases choice. All of this increases jobs, productivity and wealth.
[snip] And, here is the underlying argument for the Living Wage. I was going to bring this up back on page one, but I figure I would let this thread fester until someone said these exact words: “I am against excessive income at the top.” (actually, another poster brought it forward, and the accompanying argument to go with it, but I find his/her posts so incomprehensible that I don’t bother replying to it). Often people arguing for a living wage, are really arguing that somoene is making too much money. These people think that there is a limited amount of wealth in the world, and that the rich are hoarding it.
Ok, who are you to decide that someone is getting paid too much? Like the house (which I will get to in a moment), executive compensation is a product of market value. If the shareholders do not agree to an executive compensation package, then it is not of market value. Like John Mace and Sam Stone have said, price fixing is the worst kind of market manipulation. Mandating the price of goods is equally harmful to mandating the price of labor. If we’re going to limit exec comps, where does it end? When is rich too rich? These are all individual value-based judgments applied to a system as a whole. That is hubris of the highest order.
Don’t get me started on taxes. Again, this goes to show that taxes are distorting the market, however, this isn’t the complete argument, which is difficult to articulate in a message board post, so I’ll try to explain it further: You are confusing extrinsic value (what the market believes something is worth) versus instrinsic value (what you think it’s worth). It’s also best to think of prices as an average. The idea of market value is the buying price of the good/item/service/etc, as an average across the market. So, while you sold your home for $600k, it might not necessarily be the market value for your house. You have to look at the other houses in your neighborhood.
This is exactly re-valuing his labor. It’s just that at higher positions (i.e. positions which aren’t as commoditized and bring more value), these people are typically fired or not given raises or bonuses, etc. If you want to argue that capitalism commoditizes labor, then that’s fine, you won’t get any argument out of me. But, at the same time, I’m not going to support anyone who doesn’t on his own decide to add value to his position.
[quote
And I would say the best way to erode the middle class has been shown to loot companies, downsize them, ship jobs overseas, reinvest in industries without strong unions that can act as a countervailing power. Then employees with skills they can no longer use are forced to compete with unskilled labor driving down wages. And then Wall Street complains that labor is demanding too much money when labor is merely trying to maintain the status quo.[/quote]
The best way to erode the middle class is to put a minimum on labor. At first, a dymnamic and robust economy can absorb the wage increase in the form of lower profits and less capital expenditure. However, as the populace becomes accostomed to the minimum, the value of unskilled and low-skilled start to trend towards the minimum. This happens because technology and innovation enter that particular industry causing increase in efficiency, which in turn causes commodization to take place. As more low-skilled jobs get replaced by automation and other technological advances, coupled with increases to the minimum wage (particularly because of inflation), more jobs start becoming set to the minimum.
The problem compounds itself when an organization comes up, like a union, to artificially set the price of labor above the minimum. Now, industry has to start increasing the price of its goods and services. Jobs on the lesser-skilled/everyone-can-do-it end now polarize towards either the minimum wage or the union wage, with workers preferring the union wage. If the wages are set too high, more and more workers will gravitate towards minimum wage because there is less incentive to work harder for a better job. However, industry can only pass on so much costs to the price of the product, so they will have to cut jobs, which causes increases in unemployment. Increases in unemployment will further reduce taxable revenue and increase wealth transfers to the poor, the more the cycle perpetuates, the more the number of poor will grow, which will finally then erode the middle class.
How do you define the shrinking of the middle class? How do you define the middle class? Again, how do you define rich? These classifications are intrinsic value based judgements. The issue at hand should be: what is the rate of unemployment? what is the average wage of the workers? What is the average educatiional level?
Without a corporation, unless you are extremely wealthy, you probably won’t be using a computer, have a job (debatable), drive a car, watch tv, etc.
If anything, it is artificial, and because it is artificial, I’m willing to bet it’s higher than what it would be naturally. Please provide specifics on how oligarchs are actually manipulating anything. Actually, start a new thread, because this is way beyond anything to do with a living wage.
How does all this relate to earning a living wage? I believe there are sufficient resources to support a living wage, or will be within the next few decades. But I do not believe those resources are allocated according to the market, but by the oligarchs.