I’m not entirely sure why the alternative to paying a bigger salary is “throwing money into a business in an effort to make it grow”. There’s also targeted money, used carefully and after thought and study, used in an area designed to promote growth best.
Which isn’t actually a guarantee either, of course. Perhaps all it will do is allow a company to keep up with the times… although that’s also a benefit. But it could just fail altogether. And it also could have a significant effect.
I have no issue with the idea that a company is in business to make profit. Or a businessperson, generally.
You’re presuming perfect action and reaction on his part, which is odd given that you’ve already pointed out that plowing money into a business is no guarantee of success for many reasons. Businesses go out of… business… fairly often. Clearly there is some percentage of the population, at least, who aren’t capable of making the best decisions when it comes to maximising profit. And those are just the ones who fail completely. You also have to factor in those who “coast” with a “sufficient” level of profit and/or renumeration, or who seek to increase the latter at the expense of the former. You’re going to have to come up with something more than that to say that “Chances are…” Why are they? What stats have you based that probability on?
It hurts his company. It is the company’s concern, I would hope you’d agree, what one of their employees is paid?
I challenged you on it because you’re leaping to a conclusion that I don’t see in Kobal2’s statement. Wealth is not like the vat of gruel in Oliver Twist, where some people fill up swimming pools with the stuff before poor Oliver gets to the front of the line with his bowl, and I don’t see Kobal2 saying that it is.
Or do you still believe that the supply of money is infinite?
They pay a disproportionate share of the taxes because they have a disproportionate share of the income. As has been discussed here many times, and cited here, the tax burden (all taxes, not just federal income) across income levels (expressed as a percentage of income) is roughly the same.
And I notice you didn’t address my comment about the historical trend of those numbers. How has the tax burden, and income distribution, shifted in recent decades, and why?
I understand that perfectly well. Do you mean to say that they’re not just “job creators”, and need their taxes cut to encourage their noble efforts?
You want to keep all the executives in one place? Fine, hire the whole C-suite in Bangalore. Think of the savings and increased profits! That is what companies try to do, right, make a profit?
It’s none of my business where a company keeps its executives employed? I suppose that’s true, unless I’m in a discussion about income inequality and the ways in which rich people put downward pressure on the incomes of those who aren’t.
But if there’s an advantage to keeping the executives together, convenience and communication and such, why doesn’t that apply at all levels of a company? I ran across this article a while ago which describes GE bringing some manufacturing jobs back from China. With their designers and manufacturers in the same place, the same large room it sounds like, the designers got feedback to make their water heater better, and eventually cheaper, than when it was made in China.
You think it’s childish resentment and envy? Fine, then you deify executives and show nothing but contempt for blue-collar people. “Labor is a commodity”, just scoop a hundred manufacturers out of the bin, they’re all the same.
I said that because it looked like you were saying that rather than take home the $500,000 he should spend it instead on trying to grow the business.
Certainly. And since most astute businessmen do that as a matter of course, I assumed that the $500,000 guy had already done that before taking out his $500,000.
Why must one factor that in? And what is it being factored into? It’s really no one else’s business how a man chooses to operate his company. If he wants to forego marketing and R&D and coast with an amount of profit that he’s happy with, he’s well within his rights to do so.
It’s a concern in the same sense that it’s a concern what they pay for the equipment and supplies they need to run their business. It’s not a concern in the sense that they should voluntarily forego profit in order to altruistically pay their employees more than they’re worth in the job market.
If he was driven by the the notion of profit, for himself or for his company, that would seem to be a reasonable thing to do.
Of course, if he isn’t interested in those things, then certainly there’s no particular obligation or “should” to the question.
You say that most astute businessmen do that as a matter of course. Do you have cites on that? How is it that you’ve pegged our hypothetical businessman as an astute one? What is the ratio of astute business people to non-astute? Does this mean that we can assume that any business person (assuming we accept by some standard that they are “astute”) accepting a raise would not benefit at all from an influx of money to that degree to his company?
Because he’s a businessman, in charge of a company, and businesses are designed to maximise profit. That is their purpose. As you said; that is what they’re in business to make. He would seem to have failed, or at least been found wanting, by the standard which you brought up.
Of course, he’s not beholden to that standard, or so I would have said. There’s no requirement whatsoever that our hypothetical businessman or his company make a profit.
I don’t recall suggesting they should be altruistic at all - I’m not entirely sure why you bring that up with me.
Anyway, as you say; yes, it is a company’s concern as to how much they pay their employees, because they are rightly concerned about how much they pay to keep their company running. Our hypothetical businessman should well be a concern to his company; he harms it by his actions.
So we’re in agreement then that wealth is not a zero sum game in which for some people to have more, less is available to everyone else?
The supply of money is what it is at any given moment and capable of growth no matter how much money the wealthy have.
I’m sure you haven’t noticed but you’ve contradicted yourself here. On the one hand you agree they pay a disproportionate share and on the other you claim that as a percentage they pay the same as everyone else.
The fact of the matter is that on the whole, the more money someone makes (legal loopholes notwithstanding) the higher the percentage of their income they must pay in taxes. One merely has to look at the meaning of “progressive taxation” (or alternatively, simply look at tax rates) to observe this perfectly obvious fact.
Yes I did address it. See my comments about the power of the poor to vote higher taxes on the wealthy. As far as income distribution, that goes back to my original argument that it’s meaningless. People earn what they earn (or make what they make entrepreneurially) based upon the value of what they bring to the market. How it’s otherwise distributed is of no consequence, other than to give in to childish pettiness and resentment over the fact that some people have more than others.
Certainly I would say they’re not “just job creators”. But jobs are created through the growth of the business, and lower taxes allow more money to be spent on efforts to make the business grow.
Yes, but not at the expense of common sense. You’re really talking apples and oranges here. For one thing, moving production to foreign countries isn’t the same as moving your own employees there. And for another, in the real world all of a company’s executives and not going to want to uproot their families and leave more family behind in order to move to a second or third world country for the sake up creating an uptick in their company’s profits.
And how does the question of where executives are employed come to bear on income inequality? Once again you seem to be of the opinion that people should be paid more ‘just because’. They are paid what they’re worth on the job market, pure and simple. It really isn’t kosher to take the attitude that if company owners took less of a profit or if its executives were paid less then the company could pay its employees a higher wage. Employees aren’t paid according to whatever excess money happens to be lying around, they’re paid according to the value their time, knowledge and skill bring to the labor market. Again, labor is a cost of doing business and for a business to undertake steps to lessen spending in order to pay an artificially high amount to its employees makes no more sense than doing so in order to pay more than it has to for equipment and supplies.
Steve Jobs explained to Barack Obama that Apple could move more of its manufacturing back from China except for the fact that not enough lower level engineers can be found in the U.S. to facilitate production. IIRC, he said they needed 35,000 engineers online for the production process and the American educational system is failing to produce enough people with enough education to meet that demand. To his credit Obama has taken Jobs’ advice and has been taking steps to rectify this situation.
Thus it becomes apparent that there are good reasons for some companies to move production to other countries other than simply to maximize profit. But even if it were simply to maximize profit, there is nothing wrong with that. Companies do not owe it to anyone to employ them, and/or to pay them more than the going rate.
Once again you seem to feel that the solution to income disparity should be simply for those who have it to voluntarily give it to those who have less.
I’ve neither deified executives nor shown contempt for blue-collar workers. I’ve simply explained the facts the way they are.
My, but you do go on. Labor is a commodity. Companies no more owe it to their employees to employ them needlessly or pay them more than they’re worth than they do to frivolously overpay for the equipment and supplies they need to operate their business. That’s just a fact of life. It isn’t unfair and it isn’t a moral failing on the part of the business owners and executives.
If someone wants to make more money they should focus on ways to make themselves more valuable to the job market rather than expecting someone to employ them needlessly and/or pay them more than they’re worth just to make it more ‘fair’.
You haven’t shown in any way how he harms his company, nor have you shown why it should be of concern to anyone but him if he does. There is no legal or ethical reason why a businessman should artificially suppress his income in order to pay more than he has to for labor.
Or to look at it from the other side, there is no legal or ethical reason for a company’s employees to voluntarily ask for a pay cut or to work off the clock simply to maximize profits for the company. The relationship between employers and employees is a quid pro quo situation where each gets what it needs from the other and does so for its own benefit.
Granted, it would be nice if everyone were more foregoing with their time, effort and money in order to benefit others, and sometimes it happens. But it isn’t the norm and neither can’t nor should be expected.
To take the second part first; didn’t you just say;
[QUOTE=Starving Artist]
It’s a concern in the same sense that it’s a concern what they pay for the equipment and supplies they need to run their business. It’s not a concern in the sense that they should voluntarily forego profit in order to altruistically pay their employees more than they’re worth in the job market.
[/QUOTE]
I thought by saying “It’s a concern in the same sense that it’s a concern what they pay for the equipment and supplies they need to run their business” that you meant the wages that an employee receives are of concern to the company. If you’re saying that they may have that concern but there is no good reason why they should do, that would make your statements match up. Is that what you’re saying?
To take the first part; he harms his company so long as there is some benefit that may be attained by their having $500,000 that is not outweighed by his having $500,000, as also judged by the company’s interests. I’m sure there are indeed economic situations in which a company having $500,000 provides no benefit, or no net benefit. But, by the same token, I’m sure there are also situations in which a company having $500,000 does in fact provide such a benefit or net benefit.
Do you think that the second scenario is impossible, or unlikely?
Ah, this is interesting. So what you’re saying here, effectively, is that the interests of an employee and of an employer aren’t necessarily aligned. It would be to the great advantage of the company if employees volunteered for pay cuts or unpaid overtime - but it wouldn’t be to the employees (at least in terms of pay). In fact, in that situation, the two interests are directly opposed! Should we conclude from that that the profitability of a company, and the profitability of an employee (or employees), are not indicators of each other? That is to say, that an employee making a vast wage may actually be to the detriment of the profitability of a company, or that a company making a vast profit might be to the detriment of its employees, given that we can have such diametrically opposed interests and results?
They are two different types of concern. One is the kind of concern that keeps an eye on expenses and the need to keep the costs of labor in line, while the other is the concern you seem to believe they should have - which is how to minimize profit in order to altruistically pay more for labor.
To take the first part; he harms his company so long as there is some benefit that may be attained by their having $500,000 that is not outweighed by his having $500,000, as also judged by the company’s interests. I’m sure there are indeed economic situations in which a company having $500,000 provides no benefit, or no net benefit. But, by the same token, I’m sure there are also situations in which a company having $500,000 does in fact provide such a benefit or net benefit.
Do you think that the second scenario is impossible, or unlikely? Ah, this is interesting. So what you’re saying here, effectively, is that the interests of an employee and of an employer aren’t necessarily aligned. It would be to the great advantage of the company if employees volunteered for pay cuts or unpaid overtime - but it wouldn’t be to the employees (at least in terms of pay). In fact, in that situation, the two interests are directly opposed! Should we conclude from that that the profitability of a company, and the profitability of an employee (or employees), are not indicators of each other? That is to say, that an employee making a vast wage may actually be to the detriment of the profitability of a company…
[/quote]
This is true.
No, it’s not a detriment to its employees in a real world sense. They are being paid the amount they agreed to work for (i.e., what they agreed to charge for their time and labor). The amount of the company’s profit, if any, has no more bearing on that than the price it must pay for the goods and services it needs to buy in order to do business. You might just as well be arguing that a house painter owes it to the paint store to voluntarily pay more for his paint because he’s making a profit. He pays the same for his paint whether he’s making money or not. It’s the same with labor. They get paid the same whether their employer is making money or not.
Given that I’ve - twice now, I think? - pointed out quite directly that I have made no mentions of or calls for altruistic behaviour here, I’m at a total loss to guess why you think I “seem to believe” companies should altruistically pay more for labour. I think in fact the only times I’ve even mentioned altruism or ethical behaviour have been in response to your raising of those issues, to point that out.
What is it I’ve said that’s given you this impression of me?
There’s a big bit of your post that seems to have got fucked up from weird quoting. I end up doing that all the time! I thought about putting it together in a way that made sense, but I didn’t want to accidentally misquote you. If you’d like to have another go at it, please do.
[QUOTE=Revenant Threshold]
or that a company making a vast profit might be to the detriment of its employees…
[/QUOTE]
[QUOTE=Starving Artist]
No, it’s not a detriment to its employees in a real world sense. They are being paid the amount they agreed to work for (i.e., what they agreed to charge for their time and labor). The amount of the company’s profit, if any, has no more bearing on that than the price it must pay for the goods and services it needs to buy in order to do business.
[/quote]
You mistake my meaning. I’m merely looking at the point you yourself made - that the employer/employee relationship is a quid pro quo one, with each getting what it needs from the other and does so for its own benefit. Since those benefits are not necessarily aligned, what is good for the goose is not necessarily good for the gander.
You keep bringing up this “owes it to” or “expectation” or “should get” point, even when I’ve explicitly agreed with you on it already. Of course, you don’t “owe it” to me to take me at my word, either, but generally speaking if I agree with a point you’ve made, you don’t then need to make the same argument again as though I haven’t.
Making a point in your response to another poster isn’t necessarily assigning that position to that person, for you? Alright. I’ll bear that in mind for the future. Thanks for clearing it up.
I read that Judge Judy is given $900,000.00 per show. I heard that Oprah Winfrey has $2.9-billion to her name. Basketball players are signing $200-million contracts.
I dunno, somehow it strikes me that our capitalist system could use some tweaking.
So what? You are the owner, so you get to do what you want. If it were a publicly held company, then the share-holders would likely by concerned. If the employees are concerned, then they should look for work elsewhere. As they are not owners of the company, they don’t get to decide executive salaries.
If the guy wanted to to, he could shut the company down and just walk away. That’s what it means to be the owner.
I understand that the owner gets to do what they want; that’s actually contingent on the hypothetical making any kind of sense at all, so I don’t really see the need to point it out.
I’d answer your question, but you seem to have already answered it yourself; so, the company might shut down. It might also simply be less profitable - or less profitable than it might have been. Those are some of the possible results of the action.
All because of voluntary exchanges, where both parties in each exchange come out ahead. You are welcome to withhold your participation; I do. Their high wages do not concern me in any major way.
I know lots of people are upset that Lebron James and Oprah Winfrey make vastly more money than they do, but that’s because frankly Oprah and Lebron generate far more money than most of the bitter white losers upset and jealous of them.
They don’t get their money due to white guilt or luck but because they can generate vastly more money for the team they play for or the studios that produce their shows. If I was as good a basketball player as Lebron or as good a talk show host as Oprah and had the drive and discipline they have then I’d be where they are, but I don’t so I’m not.
Hebron making all that money due to his talent, hard work, discipline and sacrifices, doesn’t take away money from me.
And let’s be honest, while this certainly isn’t true of you, much of the reason for this envy and why professional basketball players are subjected to it more than say actors, musicians or other entertainers is at least partly due to racism(conscious or otherwise) on the part of bitter white losers who are pissed off and probably a little embarrassed that with all the advantages they had being born straight, white and male they still make vastly less money than some black men they they view as less deserving.
And of course, in some cases it’s probably people who never got over high school and they still have issues with the “jocks” whom they were jealous and or afraid of in school
These people are the only ones who can do what they do at the level they do it at. I’m less concerned about the reasons these people making a lot of money than I am about the reasons an otherwise intelligent and hard working minimum wage McDonalds worker might be stuck working at McDonalds the rest of their life:
High education costs
High health care costs
“Uberization” of the labor market (long term careers replaced with temps, contractors and freelancers)
Lack of social safety nets
Socioeconomic class distinctions
Depends. Does he run successful chain of frozen yogurt stores or a billion dollar hedge fund?
You can’t examine the issue of income inequality by looking at a single company. Even the largest employer (Walmart at 2 million employees IIRC) employs but a fraction of the 157 million people in the American labor force. You have to take a systematic viewpoint.
I guess I look at the issue from several points of view:
What are the barriers that prevent someone who is poor from rising to a higher level (not millionaire per se, but comfortable middle class).
What are the forces that are shifting wealth and opportunity away from the middle class?
What is the minimum standard of living we will accept for the most incompetent, drug addict asshole? It’s all well and good to talk about education and training, but some people just don’t have the wherewithal to do much more than the most rudimentary jobs. Or any job for that matter. Do we just drive them into shanty towns on the outskirts of civilization like you find in places like Calcutta or Sao Paulo?
But you brought that up as a reason why people might be concerned about income inequality. What, exactly, was the concern that your example was supposed to illustrate? Imagine the guy didn’t pay himself $500K, but re-invested it in the company making it more valuable. Since he is the owner, he becomes even richer than he would be if he paid himself cash earlier. Income inequality becomes even worse, since he has no obligation to pay employees more simply because the company is more valuable.
Good point. As a proportion of total budget wages might not be high enough for that. I should’ve picked a percentage, perhaps, rather than a figure for my example.
[QUOTE=John Mace]
But you brought that up as a reason why people might be concerned about income inequality.
[/QUOTE]
Nope. I brought that up to illustrate to cornopean, who could imagine ways that his neighbour having millions of dollars could help him but not how it might hurt him, that it’s entirely possible for it to be detrimental on his individual level. It isn’t actually a question of income inequality; the same could be true even if cornopean makes the exact same amount as his neighbour.
