# Profits are a tax on labor **URL:** \ **Category:** Great Debates\ **Created:** [July 12, 2013, 3:07am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283 "2013-07-12T03:07:25Z")\ **Posts on this page:** 20\ **Page:** 17
**Author:** ![QuickSilver](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quicksilver/32/7832_2.png) [@QuickSilver](https://boards.straightdope.com/u/QuickSilver)\ **Post date:** [July 29, 2013, 3:33pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/321 "2013-07-29T15:33:14Z")
[QUOTE=QuickSilver] … And I agree. I cite Sam’s Club. [/QUOTE] [QUOTE=HumanAction] He was responding to RickJay’s notion of a public system for distributing groceries, so a private, free-market grocer like Sam’s Club or Aldi doesn’t count. He wants the government to be in charge of food production and distribution, history be damned. [/quote] Poe’s Law. Because large quantities of things on pallets. 😉 ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [July 29, 2013, 3:35pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/322 "2013-07-29T15:35:12Z")
> [@SlackerInc](#): > > The purchasing power it would have would make most basic provisions dirt cheap, similar to prescription drugs. In what way are basic provisions NOT already dirt cheap? You can buy 25 lbs of flour for about 8 bucks. Beans, rice, pasta, etc… are all similarly cheap. Since they’re already commodities, the price is pretty much very near the lower limit of where farmers can produce them and make a slight profit anyway; government distribution wouldn’t drop that price very much at all- you might see $6.75 for a 25 lb bag of flour, but I wouldn’t expect more than that. ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [July 29, 2013, 7:23pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/323 "2013-07-29T19:23:45Z")
> [@Human\_Action](#): > > As for neighbors…did you forget South Korea, Hong Kong, and South Africa, for a start? South Korea I already acknowledged; but just as some businesses are run better or more poorly than others, the same will be true of command economies. And North Korea’s government is just pathetic. Hong Kong is debatable given their recent position as a British protectorate, but whatever. But South Africa? Really? First Botswana, and now them. Hoo boy. Admittedly, I have not been there, but my impression is that it is a grim existence for the bottom quintile (and again, that is my primary yardstick for comparing countries). > [@](#): > > Did you not read it, or just not understand it? It’s not a ranking of GDP or prosperity, but rather economic freedom. I understood it fine, and found it risible. You do understand that no one except the far right is going to agree with the WSJ and the Heritage Foundation on the definition of “freedom”? You, and they, are entitled to your ideological position; but citing something like this is about as dispositive as my citing Marx to show that capitalism is bad, mmkay? > [@](#): > > That must be why groceries were so cheap and plentiful in the Soviet Union and China! Oh, wait, the exact opposite occured. As noted above, I found food and basic generic consumer goods very cheap and plentiful in the USSR (Moscow, Leningrad, and several Ukrainian cities) in 1990. The long lines were for McDonald’s, and young people’s discontent seemed to revolve around the scarcity of Western labelled jeans (Levis in particular) and scoffed, when I protested that domestically produced clothing seemed plentiful and cheap, that wearing such was a ticket to extreme unpopularity. They also had an extremely unrealistic notion of what life was like in the US. Perhaps that is an indictment of socialism within one country more than anything. ETA: **bump** is right that food is cheaper than at any time in history, but a govt. run Sam’s Club could be “progressive” and subsidise the prices of healthier foods to incentivise eating them rather than less healthy foodlike substances. ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [July 29, 2013, 7:46pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/324 "2013-07-29T19:46:32Z")
> [@SlackerInc](#): > > South Korea I already acknowledged; but just as some businesses are run better or more poorly than others, the same will be true of command economies. And North Korea’s government is just pathetic. Hong Kong is debatable given their recent position as a British protectorate, but whatever. But South Africa? Really? First Botswana, and now them. Hoo boy. Admittedly, I have not been there, but my impression is that it is a grim existence for the bottom quintile (and again, that is my primary yardstick for comparing countries). So…you propose comparing socialist countries with their neighbors, so as to rationalize the poverty within the socialist countries…except when the neighbors are capitalist countries that out-perform their socialist neighbors. Then, they either can’t be compared (Hong Kong isn’t a neighbor of China because they used to be under British rule?), can be handwaved (North Korea is just pathetic), or…whatever you did with South Africa. [Here’s a map](http://www.indexmundi.com/facts/indicators/SI.POV.2DAY) with the percentage of the population living on $2 a day or less. Look at Africa, and then try to tell me poor people in the African socialist states are better off than poor South Africans. > [@SlackerInc](#): > > I understood it fine, and found it risible. You do understand that no one except the far right is going to agree with the WSJ and the Heritage Foundation on the definition of “freedom”? You, and they, are entitled to your ideological position; but citing something like this is about as dispositive as my citing Marx to show that capitalism is bad, mmkay? Then why don’t you explain it to me? Because your critique makes no sense that I can parse. The index supplies the criteria that go into compiling it, things like tariffs, property rights, the ease of starting a business, etc. General “freedom” as an abstract concept doesn’t factor in. > [@SlackerInc](#): > > As noted above, I found food and basic generic consumer goods very cheap and plentiful in the USSR (Moscow, Leningrad, and several Ukrainian cities) in 1990. The long lines were for McDonald’s, and young people’s discontent seemed to revolve around the scarcity of Western labelled jeans (Levis in particular) and scoffed, when I protested that domestically produced clothing seemed plentiful and cheap, that wearing such was a ticket to extreme unpopularity. They also had an extremely unrealistic notion of what life was like in the US. Perhaps that is an indictment of socialism within one country more than anything. Well, it seems nothing can budge you from the religion you embraced on your tourist visa to Socialist Mecca. So sad that the Soviet Union failed because its jeans were unpopular, and it had insufficent McDonald’s capacity. ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [July 29, 2013, 7:53pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/325 "2013-07-29T19:53:14Z")
> [@Human\_Action](#): > > So sad that the Soviet Union failed because its jeans were unpopular, and it had insufficent McDonald’s capacity. It really is. ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [July 29, 2013, 8:07pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/326 "2013-07-29T20:07:27Z")
> [@SlackerInc](#): > > It really is. And there’s Poe’s Law again. ---
**Author:** ![QuickSilver](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quicksilver/32/7832_2.png) [@QuickSilver](https://boards.straightdope.com/u/QuickSilver)\ **Post date:** [July 29, 2013, 9:12pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/327 "2013-07-29T21:12:23Z")
> [@SlackerInc](#): > > It really is. I wish I could dispel your romantic notions of the Soviet Union. It’s a shame you missed out by visiting in 1990, and not living there [20 years prior](http://en.wikipedia.org/wiki/Era_of_Stagnation). I assure you, it would have left you with a very different impressions. ---
**Author:** ![LinusK](https://avatars.discourse-cdn.com/v4/letter/l/258eb7/32.png) [@LinusK](https://boards.straightdope.com/u/LinusK)\ **Post date:** [July 29, 2013, 9:15pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/328 "2013-07-29T21:15:00Z")
So **Hellestial** , basically the deal is I come here for fun. There are certain things I’m interested in, and I like debating those issues with people. What I don’t come for is for flame wars, or personal attacks, or for name calling. I’d like to respond to your points - the relevant, non-personal ones - but I don’t like wading through oceans of snark to get there. It’s not fun. And if it’s not fun, I have no incentive to do it. So I guess what I’m saying is, turn it down a couple of notches. If you can’t, you probably shouldn’t expect me to respond to whatever it is you’re saying. Anyway. > [@Hellestal](#): > > Unless we live in times of feudal serfdom, the lord of a manor has to negotiate with people to do these jobs. This has already been explained to you. Ignoring a fact you don’t like doesn’t make the fact go away. Yes, people negotiate. A) What makes you think I’ve ever claimed otherwise, and B) So what? Are you trying to say if something’s negotiated, it must be fair? > [@](#): > > They have to decide which people seem most trustworthy. They don’t just “permit” the capital to be used, in the passive way that your narrow ideology compels you to write repeatedly. I have no ideology. And again, so what? Everyone has to make those decisions: when they hire a lawyer, or go to the dentist, even when they go to lunch. More importantly, not all owners do it: that’s what HR departments are for. > [@](#): > > They must make an active choice about who will give them the best return. Unless they hire someone to do that for them, like hedge fund manager, for example. > [@](#): > > This choice is based in a desire for profits, hopefully easy profits, but the decision is not necessarily an easy one to make. The result of an owner seeking out the best “tenants” is a slightly better chance of the capital being allocated to more capable hands. I’m not sure how you think that works, so I’ll just ask: How do you think that works? Are thinking about an estate owner putting Joey in charge of the mill, instead of Billy? Or something else? > [@](#): > > This is the abstract work of the owner. This has already been explained to you. Ignoring a fact you don’t like doesn’t make the fact go away. I’ve already said, a number of times, that some owners actively manage their own assets. The role of manager and owner are not mutually exclusive. But they’re also not the same. That’s why owners are able to delegate management to managers, and why managers are able to manage things they don’t own. > [@](#): > > They have to decide the appropriate compensation, striking a balance to retain trustworthy workers at a decent price. If it’s too low, they will bleed workers and there will be no production. Too high, and they won’t receive the return they’d like from their ownership. The balancing act often requires deep deliberation. This decision can’t be delegated away. This has already been explained to you. Ignoring a fact you don’t like doesn’t make the fact go away. It can’t be delegated away? But isn’t that exactly what happens, in every corporation? Aren’t there managers, to make those decisions, so owners don’t have to? > [@](#): > > Many owners _want_ to sit on their ass doing very little. Who wouldn’t? But they often don’t have this option because the market situation changes too much. This has already been explained to you. Ignoring a fact you don’t like doesn’t make the fact go away. The fact that the market situation changes is one of the reasons so many owners delegate those decisions to money managers: not only is it easier, professionals are likely to do a better job. > [@](#): > > This last sentence is pure fantasy. > > The owners of Exxon have to choose the board. They have to choose the board with the knowledge that the board has to choose management. They have to choose the board with the knowledge that the board chooses management and the management chooses employees. They have to choose the board with the knowledge that the board chooses management and the management chooses employees, and that all groups involved, including the shareholders themselves, will be involved in decisions about resource allocation at various levels. Even the shareholders themselves make direct decisions about resources whenever they vote to approve issuing more securities or to approve a merger. These don’t always happen with all companies or classes of stock, but they very often happen, and yes, the owners are part of the decision in determining how resources are allocated. I suspect many stock owners couldn’t even tell you what companies they own, much less who sits on the boards of those companies. But I appreciate your point: at some point the chain of responsibility ends with the owner. At the very least he has to decide who is agent is going to be, to make those other decisions for him. So I guess my question would be (again) so what? Are you arguing that an owner’s unearned income (dividends, rents, royalties, whatever) are actually disguised management fees? Because other people have made that argument, but I don’t know if that’s what you’re saying here. > [@](#): > > So we can add stock ownership to the growing list of topics that you write about despite your staggering lack of knowledge. > > It’s already been explained to you that owners don’t necessarily do all sub-allocations, but they must still set up the overall system in an effective way, in part by hiring management but also by choosing a board to set up the _general guidelines_, the rules of the corporation by which management must work, so that those sub-allocations have at least some chance of happening correctly so that a corporation like Exxon can be profitable. A small stockholder without majority voting rights might be indifferent to the vote, based on the low chance of making a difference, but that very decision is contingent on the existence of those other majority owners who are presumed to take a deep enough interest in the company to make good choices about who to hire. > > This general process, in somewhat less depth, has already been explained to you. Ignoring a fact you don’t like doesn’t make the fact go away. > And this is your final mistake. There is potential value added in making a purchase. > > This thread is easily as bad as the last Rothbardist goldbug thread we had. You’re on the other side of the ideological spectrum, but you’re just as indifferent to factual information as any goldbug I’ve ever come across. It’s the exact same habit of repeating the fantasy and ignoring all cogent criticism. I was ignoring you not because of cogent criticism, but because you can’t seem to go more than a couple sentences without saying how stupid you think I am. It’s not cogent criticism. It’s just pretentious name-calling. ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [July 29, 2013, 9:50pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/329 "2013-07-29T21:50:56Z")
> [@QuickSilver](#): > > I wish I could dispel your romantic notions of the Soviet Union. It’s a shame you missed out by visiting in 1990, and not living there [20 years prior](http://en.wikipedia.org/wiki/Era_of_Stagnation). I assure you, it would have left you with a very different impressions. So Brezhnev and his geriatric pre-Gorbachev successors did a poor job. Okay, stipulated. How is that supposed to dissuade me from my view that Gorbachev made great strides in a short (far too short) period of time, and that he was really on to something if he would have been given more of a chance? I have not subsequently been back, but I suspect I would not be impressed with Putin’s Russia, nor would I likely have been with Yeltsin’s. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [July 30, 2013, 2:33am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/330 "2013-07-30T02:33:01Z")
> [@LinusK](#): > > So **Hellestial** , basically the deal is I come here for fun. There are certain things I’m interested in, and I like debating those issues with people. > > What I don’t come for is for flame wars, or personal attacks, or for name calling. This is Great Debates. If I had called you names, you could have reported my post. I haven’t called you any names. Sometimes the moderators also like to step in when the tone of a thread seems, to them, unnecessarily abrasive. You could potentially report that as well. But tone is trickier, more subjective. My tone seems completely fine to me, but if you complain about my tone and they agree with you, they will write a little note to give me a nudge. > [@LinusK](#): > > I’d like to respond to your points - the relevant, non-personal ones - but I don’t like wading through oceans of snark to get there. It’s not fun. And if it’s not fun, I have no incentive to do it. My understanding of the word “snark” – and maybe it’s wrong – is that it’s supposed to be sarcastic. My posts haven’t been sarcastic. When I say you repeatedly make the same mistakes, I’m not being sarcastic. You have been making the same mistakes for the 300+ posts of this thread. When I say you have been corrected on your mistakes, I’m not being sarcastic. You actually have been corrected repeatedly. That’s not “snark” in my terms. That’s the actual progression of this thread. No matter how emotionally uncomfortable it is for you when we point out your errors, that doesn’t rise to the level of snark. > [@LinusK](#): > > Yes, people negotiate. A) What makes you think I’ve ever claimed otherwise, and B) So what? Are you trying to say if something’s negotiated, it must be fair? You have claimed, repeatedly, that owners do no work as owners. You said others produce and they consume. But negotiation with managers is the work of owners exclusively. It is not management work. Management cannot delegate responsibility to itself. It is the owner’s work. If you are denying that owners do any work as owners, then yes, you are denying that owners negotiate. And you are wrong. Owners do work, _because_ they must always negotiate. Even the act of delegating requires that they negotiate the terms of the delegation. It is impossible for owners to dodge this work. Sometimes it is very tricky. If you say owners do no work as owners – and you have, repeatedly, again and again – _then you are wrong_. I haven’t said anything about fairness. > [@LinusK](#): > > I have no ideology. You’re not the judge of that. I’m not saying I’m the final arbiter either. The rest of the world is the judge of how ideological we’re being, or in this case, the rest of the board. I would also like to tell myself I’m not an ideologue, but I’m careful enough to realize that it might not be true. We don’t know our own minds. Human beings don’t actually know [the deeper reasons why we make many decisions](http://en.wikipedia.org/wiki/Introspection_illusion). I might in fact be driven by an ideology I can’t see. I claim to be utilitarian, but is that true? I think so, but I don’t know so. In contrast, from the last 300+ posts of this thread you’ve given me a lot of evidence of your ideology. Sometimes it’s much easier to see the faults in others than the faults in ourselves. I believe I’m on fairly safe ground here. I can smell this stuff [a thousand miles away](http://boards.straightdope.com/sdmb/showthread.php?p=16375400#post16375400). When the Rothbardist types say that their own plan is “sound money”, they’re using a self-serving label to describe themselves. They give themselves these little pats on the back because of ideology. And when you repeatedly write that owners merely “permit” use of the capital they own, that’s exactly the same vibe. It’s a deliberately aggressive label. It ignores the potential difficulties that owners might have finding the right people to use their capital at the right price. The same is true of “unearned income”. It’s a real term, but it’s not a literally accurate term. Again, deliberately aggressive choice of labels is a typical hallmark of ideology. This is why I put you in the same category that I put them. Everything you’ve posted so far has backed me on that. You can deny you’re like this, and I can’t prove you wrong. But I don’t need to _prove_ anything. I can just document your arguments, point out their errors, and let everyone else decide. It’s fine if you don’t respond. That just makes my work easier. As for “fairness”, I think I’ve pretty clearly indicated that I don’t think the world is fair. (I have been overprivileged my entire life. That ain’t fair at all.) The thing is, though, that none of my arguments are based on the notion of unfairness. I’m trying to argue facts as much as I can. When I say that owner’s income is “earned”, that is a value judgment on my part, and you might have some bone to pick with me. But fairness has an inherent subjective flavor to it, too, and the very fact that you have some notion of fairness that you think is being violated by our current system is yet another piece of evidence – not proof, but evidence – that we’re dealing with a reflex ideology on your part rather than substantive argument. The same is true of asking about the “morality” of our current system. If you had real substance, I think you could make arguments that weren’t so dependent on _undefined_ notions of fairness and morality. You still have a chance to surprise me on this, but I think that’s a very low chance at this point. > [@LinusK](#): > > More importantly, not all owners do it: that’s what HR departments are for. The HR departments are hired by management. Management is hired by the owners. Owners must negotiate with managers. No one else can do the negotiating for them. Owners must make these decisions. Even if they delegate certain tasks, they cannot delegate away the decision of who to delegate to. They cannot delegate away the task of deciding how much to pay to those they delegate to. These sorts of decisions will always remain, and although some owners get lucky and it’s easy, there’s always the potential that it will become very tricky in the future. You can’t call these management decisions. Managers can’t decide to delegate management to themselves. > [@LinusK](#): > > I’m not sure how you think that works, so I’ll just ask: How do you think that works? > > Are thinking about an estate owner putting Joey in charge of the mill, instead of Billy? Or something else? That’s a part of what I mean, yes. But it goes much deeper than that. Maybe they will choose Joey instead of Billy. Maybe they will choose Billy instead of Joey. Maybe they will advertise in the city newspaper for a third party. Maybe they’re too stingy to pay a high enough wage, and the mill is never fully functional. Maybe they’ll choose to invest even more in capital goods to make the mill easier to handle, so they can hire that slow kid for a penny. Maybe that’s a mistake, too, because the slow kid will break the machine and they have to pay an expensive mechanic to fix it again. What the owner _wants_ is to get that mill producing at a nice rate of return with as little effort on their part as possible. What is the owner _gets_ depends on who they allocate the mill resource to, and for how much: Billy? Joey? City slicker? Slow kid? What wage? It might be that no matter who they hire, they can’t find anybody who can work in the mill at a wage low enough to make the return on that capital worthwhile. What they want is a return, and if they’re lucky, they’ll be able to hire slow kid for a penny and get lots of lots of flour from the mill. So what sometimes happens – and I’m no market absolutist, so I’m not saying it always happens – is that their desire to make a good return tends to get the mill in the most capable hands given the price that they can pay. Let’s say they think paying $10 an hour is highest wage that will make the mill worthwhile to own. Otherwise, they’ll just shut it down. This person must be of average competence. Now they really want to get Billy. Billy is the cleverest. Billy working at $10 would be a boon. But Billy because he’s so good can get $15 an hour working at the next manor over, helping to repair their machines. So this owner doesn’t get Billy. This capital is not allocated to him, even though the owner would really really like that. This is an important part: _Billy adds more value working elsewhere._ So they settle on Joey for $9, getting a little bit lucky on their negotiation, because Joey’s next best opportunity is working for $7 delivering newspapers. Joey doesn’t have to settle for seven bucks. The mill owner is willing to pay ten because no one else can do the job as well at a lower price. And Billy doesn’t have to settle for ten bucks, because the other owner is willing to pay fifteen. Resources get allocated to their highest paid use. Markets help allocate capital more efficiently. Often, not always. If the owner can’t find anybody at 10 bucks, then the mill shuts down. It is no longer worthwhile capital. The investment was a waste, and the owner loses out. You can’t just look at this system like it’s a bunch of non-working leeches making no important decisions, because that is not true. _Some_ of them are fat lazy slobs who get by on inheritance and lucky decisions, but many others are forced to make very very tough decisions or they will lose everything. Even the act of choosing the right person to delegate to can be an extremely tough decision. This is the core of what economics is about. Knowing bank accounting won’t help you with this. You have to look at the social system _as a system_, and see how the gears fit together. I often complain about the internet Austrians, but this is something that the classical Austrians got absolutely, 100% correct. The price system accomplishes the transfer of information in a way that no centralized system can match for the majority of economic tasks that we need to accomplish. Not all of them. There are exceptions. But for much of the economic work we need done, the price system handles the underlying flow of information that makes our civilization possible. This is about allocating resources, and owners have their role to play in that. All of this is very abstract, and you haven’t once acknowledged any of it. > [@LinusK](#): > > It can’t be delegated away? > > But isn’t that exactly what happens, in every corporation? Aren’t there managers, to make those decisions, so owners don’t have to? The act of _choosing the right person_ can’t be delegated away. The act of _negotiating the salary/fee of the managers_ can’t be delegated away. They can’t delegate away their choice of who to delegate to. These are hugely important decisions. No one else can make these decisions. This is the work of the owner. It is not management work. It is more fundamental than management work. > [@LinusK](#): > > The fact that the market situation changes is one of the reasons so many owners delegate those decisions to money managers: not only is it easier, professionals are likely to do a better job. Not really. Lots of money manager professionals only do a great job of losing their clients money. The owners choose wrong. For an important example: There are extremely few actively managed funds that manage to consistently beat the market, after we take commissions into account. Among those few funds, we have extremely little way of knowing whether the investors were actually clever or whether they were just lucky. They are professionals, but that doesn’t necessarily mean they’re good at their job given how much they get paid. They are panicky creatures, despite their professional jobs. When the Reserve Primary Fund broke the buck, it wasn’t “dumb money”, the individual accounts, that went into a panic and started the massive run. It was the institutional investors, people in charge of insurance pools and pension funds and the like, who went crazy and started pulling all their cash out. Hell, maybe that was a justified response. Not my area of expertise. But still, it’s interesting how the professionals tend to react. It’s not pretty to see them stampede. Index funds with low commissions are, hopefully, well managed. Even then, there’s no guarantee of that. Sometimes the managers are thieves, and they dip into the kitty. Work with a reputable company, and you minimize the chance of that particular risk, but you never eliminate it. > [@LinusK](#): > > Are you arguing that an owner’s unearned income (dividends, rents, royalties, whatever) are actually disguised management fees? Because other people have made that argument, but I don’t know if that’s what you’re saying here. I’m saying you shouldn’t conflate the work of owners and the work of managers. I’m talking about the situation when the owner wants to sit back with a nice annuity and do jack shit. I’m saying that even this kind of owner can’t avoid doing work. This owner must find, interview, negotiate with, and hire the manager. This process is not management work. It is owner work. The owner cannot delegate the decision about who they’re going to delegate to. This work is what owners get paid for, along with their initial choice of deciding what to own. There can be overlap between management and ownership, but there are some decisions that only owners can make. These are not “management” decisions. You conflate the two because it allows you to conveniently ignore the work that only owners can do. Owners get paid based on their choice of what to own, which can be an extremely tough decision. I’m saying further that they get paid based on the _unavoidable_ choice of who they delegate to and what wage/fee they negotiate with those they delegate to. These decisions aren’t management decisions. Managers can’t take this decision away from owners. Owners can delegate many tasks, but they cannot possibly delegate away the task of who to delegate to, nor the task of how much they’re willing to pay for the delegated work. That is the task of the owner alone. Any manager would make the wrong decision, because the incentives would be wrong. They have nothing at risk. If they’re going to allocate the resources under their control to a manager, they must still negotiate the terms of that allocation. That is inherently the owner’s job, no one else’s. If they make the right decision, they will get paid for it. If they make the wrong decision, they won’t. > [@LinusK](#): > > I was ignoring you not because of cogent criticism, but because you can’t seem to go more than a couple sentences without saying how stupid you think I am. It’s not cogent criticism. It’s just pretentious name-calling. I haven’t called you stupid a single time. You just used that fantasy as an excuse not to engage. “Pretentious” is a two dollar word, and I seriously doubt you know the dictionary meaning of it if you’re going to use it in this context. I did make some general comments on how human beings think, and about your posting style. I don’t think they’ve been personal, but if you report a post, the mods might disagree with me and tell me not to make those kinds of comments. More than that, I have no need of name calling anyway. There’s a pit thread open for you, justifiably, but I didn’t bother with it. I can just quote your arguments. I don’t need to push you into a hole when you’re happy to dig yourself deeper without any help. You’re harming your own credibility, and you can stop any time you like. That’s always possible. I never write off any human being permanently. What it would take at this point is your acknowledge that there is work that owners must do that cannot be delegated to managers. It’s inaccurate to call this a dual-role, because these particular decisions can’t be made by managers on their own. You might think they are management-ish decisions, yet only owners can make them. And the owner’s profit, their rate of return, depends directly on how good their decisions are, along with a healthy dose of luck on top. I doubt you’ll be able to admit this. It undercuts what you’ve been trying to argue from the OP. Too much pride is at stake. But hey, I’m open to being surprised. ---
**Author:** ![QuickSilver](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quicksilver/32/7832_2.png) [@QuickSilver](https://boards.straightdope.com/u/QuickSilver)\ **Post date:** [July 30, 2013, 10:37am UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/331 "2013-07-30T10:37:07Z")
> [@SlackerInc](#): > > So Brezhnev and his geriatric pre-Gorbachev successors did a poor job. Okay, stipulated. How is that supposed to dissuade me from my view that Gorbachev made great strides in a short (far too short) period of time, and that he was really on to something if he would have been given more of a chance? I have not subsequently been back, but I suspect I would not be impressed with Putin’s Russia, nor would I likely have been with Yeltsin’s. No doubt that Gorbachev was much more progressive. Yet, as you admited earlier, the biggest indictament of a failed system was the coup of Gorbachev’s enlightened form of communism. So the question returns to you. Why do you think that people, having suffered through some of the worst that communism had to offer, chose to rebel when they were being presented with a much more progressive alternative? Why were they not grateful to Gorbachev for his leadership and vision? Why did they support a coup and put in power the first loud mouthed, drunken opportunist like Yeltsin? ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [July 30, 2013, 5:42pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/332 "2013-07-30T17:42:04Z")
It’s a valid point: they were too jaded by that point. But that does not mean his brand of socialism couldn’t work in a situation where the party implementing it was not carrying all that baggage. ETA: There also remains the issue that Soviet citizens had a completely unrealistic notion of the US and thought they could all live like exurban bohos if they got rid of the Communist Party. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 30, 2013, 5:54pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/333 "2013-07-30T17:54:54Z")
> [@SlackerInc](#): > > It’s a valid point: they were too jaded by that point. But that does not mean his brand of socialism couldn’t work in a situation where the party implementing it was not carrying all that baggage. > > ETA: There also remains the issue that Soviet citizens had a completely unrealistic notion of the US and thought they could all live like exurban bohos if they got rid of the Communist Party. Isn’t it funny how all the planned economies of the world are just about to succeed, when something comes along to ruin it? Drat the luck! Reminiscent of the Soviet explanation for their agricultural problems - seventy consecutive years of bad weather. Regards, Shodan ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [July 30, 2013, 6:24pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/334 "2013-07-30T18:24:21Z")
Because they were doing so well feeding their people in 1917. ---
**Author:** ![Human\_Action](https://avatars.discourse-cdn.com/v4/letter/h/ac91a4/32.png) [@Human\_Action](https://boards.straightdope.com/u/Human_Action)\ **Post date:** [July 30, 2013, 6:37pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/335 "2013-07-30T18:37:42Z")
> [@SlackerInc](#): > > Because they were doing so well feeding their people in 1917. Well, that’s one way to rationalize the failures of socialism: only compare socialist nations to autocracies like Czarist Russia or Haiti, and ignore the elephant in the room that is Western liberal democracy, founded on Enlightenment values of individual political and economic freedom. ---
**Author:** ![SlackerInc](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/slackerinc/32/275_2.png) [@SlackerInc](https://boards.straightdope.com/u/SlackerInc)\ **Post date:** [July 30, 2013, 7:37pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/336 "2013-07-30T19:37:21Z")
Russia was a Western liberal democracy under Kerenski before Lenin et al took over. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 30, 2013, 8:06pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/337 "2013-07-30T20:06:22Z")
> [@SlackerInc](#): > > Because they were doing so well feeding their people in 1917. Better than [1932](http://www.historyplace.com/worldhistory/genocide/stalin.htm). Regards, Shodan ---
**Author:** ![QuickSilver](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/quicksilver/32/7832_2.png) [@QuickSilver](https://boards.straightdope.com/u/QuickSilver)\ **Post date:** [July 30, 2013, 8:09pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/338 "2013-07-30T20:09:49Z")
> [@SlackerInc](#): > > Russia was a Western liberal democracy under Kerenski before Lenin et al took over. You mean the [provisional government](https://en.wikipedia.org/wiki/Russian_Provisional_Government) that lasted all of six months and accomplished nothing but go through three reorganizations and to eventually end in the October revolution? Calling it a “western liberal democracy” is a lofty reach even for the most wild eyed optimist. ---
**Author:** ![Shodan](https://avatars.discourse-cdn.com/v4/letter/s/9f8e36/32.png) [@Shodan](https://boards.straightdope.com/u/Shodan)\ **Post date:** [July 30, 2013, 8:12pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/339 "2013-07-30T20:12:50Z")
> [@SlackerInc](#): > > Russia was a Western liberal democracy under Kerenski before Lenin et al took over. For about twenty minutes. (Okay, it was eight months.) Then the Bolsheviks took over, and in 1921 they had another famine. What was your point again, exactly? Regards, Shodan ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [July 30, 2013, 8:20pm UTC](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283/340 "2013-07-30T20:20:51Z")
> [@SlackerInc](#): > > Russia was a Western liberal democracy under Kerenski before Lenin et al took over. Seriously? Seriously? He was the nominal Prime Minister from July 1917 to October 1917. Kerensky himself might have been a western-style liberal democrat, but Russia was not any sort of western, liberal, or democratic state at any time in 1917. Oh wait, he proclaimed Russia a republic on Sept 15, and by October 17 was fleeing for his life from the Bolsheviks. Might I suggest that naming a country a republic does not make it a western liberal democracy? Especially where there were no actual, you know, elections? Yeah, if Kerensky had had any support from anyone at all in Russia, then Russia might have lurched from absolute monarchy to some form of non-totalitarian republic. Except they would have had to defeat the Bolsheviks for that to happen. [Previous page](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283.md?page=16) [Next page](https://boards.straightdope.com/t/profits-are-a-tax-on-labor/663283.md?page=18)