Profits are a tax on labor

Great Debates
1

Consider a simple hypothetical: A man is a corporation. He’s the CEO, CFO, the security guard and everybody else, all rolled into one. At the end of the quarter, he pays himself a salary, and turns the rest of the corporation’s income to someone else - the owner. The owner, in turn, does nothing, except cash the check.

Or consider a landowner. The landowner owns the land, and everyone who lives there pays him rent. The people enjoy part of the value of their labor, but the rest goes to the landowner. He enjoys part of the value of everyone’s labor, without contributing anything himself.

Or consider, hypothetically, a place where someone owned the air. The air-owner charges people to breathe his air, and everyone who pays him must work a little harder, or consume a little less, so that he can consume more, without working.

Is there a justification - a moral justification - for subsisting on the efforts of others, assuming you’re able-bodied yourself?

2

The idea is that the corporation/landowner/whatever contributes by providing the factory/the land/whatever.

3

Your hypothetical man can always go into business for himself.

No? There’s no way a left-threaded valve attacher can make a living for himself? Then maybe the factory owner does contribute something to the process.

4

Economics 101. An individual may own a natural resource. I might own the only water well in town, and charge people money for water. I might own a patch of land where oil can be drilled, and sell the oil. I might own a stretch of land where minerals have, by nature, accumulated: I hire a team of miners, they bring up the ore, and I sell it. I might simply own a few acres of wet dirt, plant peas, pick them, and sell them.

Profit.

Sure, you could change things, eliminate private ownership of resources, and distribute goods publicly. Nobody owns the air; nobody owns the sea. There are very complicated rules governing passage, access, right-of-way, and so on, so that nobody is ever trapped on their land, surrounded by other land, and thus unable to travel.

Do you want all mines, wells, and crop-fields to be publicly owned, held as collective property by the government, and the resources mined or harvested in a socialist fashion? It isn’t intrinsically a bad idea. The government owns the roads (for the most part) and that works out well enough. There are historical problems with socialism/communism, so you’ll have to take some care to avoid corruption. The government could run crops and harvesting the way it runs the military, the highways, or the national parks. Is that a model you find preferable to the private property model we use today?

5

This is why there needs to be a social safety net.

If I can’t find work than I should be able to farm land for food. If all that land is owned then I am not allowed to do this so society owes me a safety net. Otherwise, I should be able to move onto land and farm.

6

Define “can’t find work.”.

And, don’t we have a social saftey net? (in the U.S.)

7

If you can’t find work, try harder. Try fishing. But yes, if all of that fails, there needs to be a safety net so you don’t starve. As we have.

8

You understand, of course, that you can’t just take a piece of land and start farming. You are going to need seeds, fertilizer, irrigation, plows, hoes, pesticides, fungicides (or the natural equivalents). Then if the weather cooperates and no pests kill off your crops, several months later you may or may not get something edible growing in the soil.

9

A farm is just another sort of factory.

Furthermore: the world has a limited amount of arable land. If that land is not worked in the most efficient manner possible, then the world will starve. Individuals planting food for themselves is not the most efficient manner possible.

10

A misleading question in at least two ways:

  1. Whether something is morally justified or not is not the same thing as whether it’s moral. I don’t know how to morally justify eating the melon chunks I just ate, but I don’t think I did something immoral.
  2. As others have pointed out, the factory-owner is providing something: the factory. Also, she’s risking capital, and that’s the nature of the game.
11

But he didn’t create it: the land was there already, the factory was built by workers, and the corporation was made by lawyers, and law-makers.

12

What is it you think he contributes?

13

Your first analogy is totally different than your second and third analogies. As a semi Georgist I agree with the land and air problem. However, that is not profit, that is rent. Rents are totally different than profits.
Corporations are not natural resources, they have to be created. If the owner created the corporation, that is work. Any benefits accrued,such as profits, are a result of that work.
Profits are what make possible economic growth, and economic growth is what makes possible a rise in the standard of living. The earth has fewer resources then it did a thousand years ago, yet the average person in the West lives like a king did then. This is because of the economic growth caused by profits.

14

Are you serious with this question? Tools, materials, a place to work, clients?

15

Well, what I’m asking about is whether there’s a moral justification for it. It sounds like you’re saying no one’s figured out a better way of doing things, so it’s a necessary evil. Maybe you’re right.

In terms of harm-reduction, though, aren’t there things that could be done? For example: reducing unemployment. If there’s more demand for labor, that shifts the balance of power away from owners, and toward workers. Then more value goes to the workers, and less to the owners.

16

Suppose you’re planning to start a business. Depending on the nature of the business, you might need to purchase or rent land. You might need raw materials, or equipment, or goods to sell. You might well also need to pay someone (construction companies, contractors, lawyers, etc.) to set up these things before anyone can start work. You need to hire employees, some or all of whom may be highly skilled, and thus demand hiring bonuses. You need to pay your workers, even before you ever sell anything. And you need still more workers, to administrate all of this (or you need to do that work yourself). All of this requires resources. Mostly money, but also effort and time. The bigger the business, the more of these resources are required. Owners of businesses contribute these resources, and are taking the risk of losing them if the business fails.

I fail to see anything immoral about this. You look at a successful business and ask “What is the owner contributing?”, but you should look at a business that does not yet exist and ask “What will the owner contribute?”. In that light, it should be obvious: the owner will contribute everything except the labor of the employees.

17

How can you seperate the moral justification from the results? We have two options A and B. A leads to poverty and misery, B leads to riches and abundance. Can we then say that B is a necessary evil? A is evil and B is good.
Read thisabout how private property transformed China from a poverty stricken backwater that could not even feed its people to an economic miracle.

18

Walk out to the sidewalk. You see a grocery store, a sandwich shop, a gas station, and so on. Did those businesses sprout up from the ground like mushrooms?

The idea that the owner of a business contributes nothing is an incredibly pernicious idea. So is the idea that the workers contribute nothing, or that the communally owned infrastructure around the business contributes nothing, or that the other businesses that the business relies on to provide necessary services.

Take the owner of the sandwich shop and plop them down naked in the Amazon rainforest and they’re not going to build and run a sandwich shop using the raw materials around them. But if you take the worker who makes the sandwiches, or the construction worker who built the building, they aren’t going to be building any sandwich shops either.

If there is no justification for the profits of the sandwich shop owner, and so we forbid people from owning sandwich shops, what will happen? There are no more sandwich shops. Maybe that’s what you want–no sandwiches except ones made for use, not for profit. So the people collectively decide that there should be sandwiches created and distributed by some rule. How many sandwich shops? What kind of sandwiches? How do you get one of these sandwiches? Who is going to work in the sandwich shop? What happens if I don’t feel like working in a sandwich shop?

Or maybe you don’t think collective provision of sandwiches is what’s important, what’s important is that no one is in the position of being an employer or employee. Everyone works for themselves, and keep the excess profits of their labor for themselves. Except that’s not how it would really work. I can make sandwiches, and set up a sidewalk sandwich cart, and sell the sandwiches. But what if I’m good at making sandwiches, but terrible at customer service? I can’t hire a guy who’s good at customer service to sell the excellent sandwiches I make? No, because then he’d be my employee, and I would be siphoning off the excess profits of his labor. So what we do is, he’ll run a sandwich cart business, and I’ll make sandwiches. And instead of making sandwiches and hiring him to sell them, I’ll make sandwiches and sell them to him in bulk, and he’ll sell them to the passersby. Now I haven’t exploited him.

Except it is obvious that in a situation where I supply necessary goods for his labor, and he provides necessary services for my labor, it is easily possible for one or the other of us to extract an outsize portion of the profits. Maybe it’s hard to make sandwiches but easy to sell them, and he makes a pittance on the markup he can charge after he buys my sandwiches. Maybe it’s the opposite, and I sell them the sandwiches for a pittance and he makes large profits.

The fact that he is my employee or I am his employee, or we are independent businessmen makes no difference. We both get some profit (or loss) from the sandwich selling business, but one of us might make a lot more than the other depending on supply and demand. It is easy to imagine a scenario where I don’t employ someone to sell my sandwiches, instead the sandwich salesman is an independent contractor. Just like I might not employ a janitor, I might call someone with a cleaning business to come in once an week and clean up. A situation where there are no employees working at the sandwich shop, but rather each person is running their own business selling goods and services to each other is different in exactly what way than calling them employees?

Private ownership of the means of production has been shown to work much better than the alternatives. Collective ownership in real life means ownership by the government, not by “the people”, because the people are busy running their own lives and don’t have time to supervise the operation of the collective goods they putatively own. And so operation falls to full time managers who ostensibly work for the people but in real life become the new owners of the “collective” property.

So is the problem with profits? Or with the employee-employer relationship? Or with one person selling an apple for 10 cents and the person they sold it to driving it across town and selling it for a dollar? Is the grocery store committing fraud because they buy apples from the farmer for less money than they sell to the shopper? The grocery store provides no value?

19

Workers of the world unite!

I have a vague recollection this has been tried before.

20

Just follow the advice of Mitt Romney: