There is a vast middle ground between “not overplaying risk” and “just dismissing it.”
Because they have guns.
That’s generally how it works, isn’t it?
Why is Texas owned by Anglos, and not Mexicans?
I think you misunderstood my point. You seem to think I’m saying that the contractor should own the factory because he built it. That’s not what I’m saying.
What I’m saying is: whatever the owner’s profit is for, it’s not for having built a factory - because he didn’t build it.
It’s a simple point, but I have to keep coming back to it.
Many people seem to think that owning something is the same as creating it. It’s not. They’re two different things.
You agree that, right?
I’m not sure what you’re getting at. If you want me to concede that workers need tools, I’ve already done that. If you want me to concede they need money, I’m happy to do that as well.
But you’ve already agree that tools are made by other workers, not by capitalists. And I hope you’ll agree that money is made by workers as well. (Specifically, by bankers.)
It may be that you’re saying: Money and tools have to be owned by someone.
I agree.
You have said that Once owners own something, they won’t let anybody else use it, without getting paid.
I’ve told you that’s true.
None of that goes to my basic point: profit is payment for something the owner didn’t make or produce or create. It allows him to consume without producing anything in return. And when he does that, it means other people have to consume less or work more.
Not that there’s anything wrong with that. As you’ve said before, many people do it. And as I’ve said before, I’d do it too, if I could.
So:
- Workers need tools.
- Tools need to be owned by someone.
- When things are owned, owners demand payment for the use of the things that they own.
And:
4. That payment is a burden (a tax) on everyone else. In other words: a necessary evil, not a positive good.
Anyway, I know you don’t agree with #4. But that’s where our argument lies, not with one, two or three.
I don’t know why you keep coming back to it though, as no-one is disputing that.
The owner’s profit is a return on investment. And an investment means both risking capital and also tying up money for a particular time.
Who are these Capitalists?
I own plenty of things I couldn’t make myself, and so do you. However, I earned the capital to buy them by making stuff myself, and providing a service (consultancy).
This is true of the vast majority of people. There aren’t many families who can trace their wealth back to the Norman conquest of Britain, and have done sod all since then.
Having read this thread all the way through, I still can’t see how you keep getting to this point. It seems like a total non sequitur, yet you keep repeating it as though it has been established somewhere. It has never been established.
The owner did create the factory. This has been explained to you numerous ways, so I have little hope that explaining it yet another way will help, but I will try.
You seem to accept that the workers created the factory. But in what sense did they create it? They didn’t actually make the sheet metal, that was made for them. Nor did they make the bolts, nor the electrical wiring, nor the hydraulic fluid nor anything else. Nobody who has ever seen a factory actually made any part of it, in the sense of creating it from raw materials.
All that the workers did was assemble the parts that somebody else had already assembled to a slightly lesser degree. And the same was true of the people who made those parts, and the people who made those parts, and so forth. Nobody actually made anything. Even the people who smelted the steel didn’t actually mine the ore.
So clearly when you say that the workers created something, you mean that they used their skills to assemble it from prefabricated parts that were produced by somebody else.
And that is exactly what the factory owner did as well. He also took prefabricated material in the form of money, and he constructed a loan. And using that loan he fabricated a workforce, and using that workforce he fabricated a facroty. He built the factory every bit as much as any other person did.
Hopefully you can now see that the owner used prefabricated tools to build the factory, jut as much as anyone else did.
No, it does not. Nothing in the owner trading the the use of factory he built for the output of what somebody else has built means that people *have *to do anything.
This is another point you keep repeating that seems like a non sequitur. I can build a factory tomorrow using the money that I owned that was built by somebody else. And I can offer to trade the use of that factory to anybody who wants to for anything they are agreeable to trade. But thos epeople don;t have to do anything, as you put it.
If people wish to consume exactly the same as, they consume right now, they can do so. If they think they can consume more by trading the use of my factory for my use of their time, they can do that too.
There’s no compulsion here. Nobody has to do anything, despite you repeated protestations that they do.
Largely true, though not entirely.
Untrue.
That it is a burden is probably true, though the choice of the word burden makes it unclear precisely what you mean.
That it is a tax is patently untrue. An essential element of any definition of tax is that it must be compelled by a threat.
Nobody is compelled to use the owner’s factory, thus nobody is compelled to pay the owner a damn thing. Any payment that the owner demands for the use of his factory is entirely volountary, and thus can notbe a tax in any conceivable sense.
Unless you can provide a definition of tax that does not require compulsion by threat, your argument fails right here.
Untrue, on both counts.
Firstly, it is not necessary in any form. It is entirely volountary. Anybody is free to use the factory or not as they see fit.
Secondly, “Good” and “evil” are subjective terms.
If workers volountarily choose to pay to use the owner’s factory, they must be doing it because they believe it to be to their net benefit. Therefore the use and the payment are, by definition, good.
And if that is true, then you argument can be rebutted very simply by establishing three points:
-
A tax is a payment compelled by threat, and the payments to the owner are not compelled by force. So the payments are not a tax.
-
Payment to the owner is not necessary in any form. It is entirely volountary. As such it can not be a necessary evil.
-
Secondly, “Good” and “evil” are subjective terms. If workers volountarily choose to pay to use the owner’s factory, they must be doing it because they belive it to be good. Therefore it is good.
Thus #4 is proven to be false on all counts.
QED.
Compelling as it may be to make arguments by avoiding the glaring light of context, I suggest you take the same time frame and compare progress in Soviet Russia to economic, social and educational advances in the western world. Seems to me communism has done more to hold back social and economic improvements than promote them.
SlackerInc’s point is quite valid.
In the time frame under discussion, ~1915-~1955, Russia started out at about the same level of development as Brazil or China. And it did end up an industrial, military, and industrial superpower with one of the world’s best educated populations. And in the time period talked about Cuba was about on par with Guatemala, and did end up with the best educated, healthiest, longest-lived population in the Caribbean.
His claims really do stand up. Communism does seem to be a really good way to take a country from the bottom to the middle very, very fast. It’s probably no better than any other party-led totalitarian regime, but it’s no worse either.
Where Communism fails is in its inability to move beyond the lower middle ground. While literally chaining people to machines in factories and forcing them to dig potatoes at gunpoint as the Soviets did is a great way increase production in an illiterate population with a low standard of living , it fails completely as a means of managing a literate population with a tolerable standard of living.
IOW it works well when people are mentally and physically incapable of advancing themselves. It is worse than useless at making use of people who are capable of making their own advancements.
So Communism was a good choice for Russia in 1915 (not for the Russian people however). It was a poor choice in 1945, and by by 1975 it was actually worse than anarchy.
And Kerala?
I’d argue that it’s when you take away the totalitarian element that socialism has the most going for it. IOW Russians should have given Gorbachev’s approach more of a chance.
ETA: I think I meant to say “industrial, military, and technological superpower” (thinking of their achievements in space for instance).
He’s using the labor theory of value, as any good Marxist will. Anyone who gets anything not commensurate with the labor he put in is exploiting others according to this view. If you want to change his mind*, you’ll need to discredit the labor theory of value.
Marxists love the LTOV whereas most economists switched to the marginal utility theory of value within a few decades. The LTOV is the phlogiston of economics. If Marxist have stuck with the LTOV, it’s likely because it allows them to bitch in the particular way that they like so much.
*This is very unlikely. He’s a Marxist more than two decades after the fall of the USSR.
Nice imperious air from an economist(?) whose field only recently started to consider the possibility that psychological, behavioral factors other than pure rational logical choice may be involved in economic actions. Or which seeks to justify enormously higher pay for owners and executives than for labourers on the flimsy grounds that the former are “job creators” despite that not holding up well to scrutiny as I have shown.
In fact, I may as well just reverse it and call labourers (and consumers) “profit creators”. It is simplistic, but holds up better than supply-side voodoo.
Nope, not an economist.
I don’t remember Smith, Ricardo, Pigou, Keynes, Krugman or even Milton Friedman arguing that owners and executives should get enormously higher pay than laborers because they’re job creators. That’s the sort of lowbrow silliness that’s common among GOP candidates. Can you point me where those well-established economists made such an argument specifically on the grounds that owners and executives are job creators? You seem to conflate “economists” with “people who disagree with you” and treat them as interchangeable.
As for the idea that the field only recently started to consider psychological and behavioral factors, that’s simply ignorance talking. Smith and Keynes are two notable examples of economists who incorporated such factors. Unless you consider 1759 and 1936 recent.
Perhaps you could point us to the economic research and work that claims executives are “job creators” that should be paid a lot. Rush Limbaugh isn’t an economist.
Fine, I withdraw any attempt to characterise the paradigm of the Chicago School et al. But it strikes me as more relevant to grapple with the way “economics” is discussed in the public and political spheres, as these ultimately have at least as much effect on policy as does anything published in a scholarly journal.
And what I see is an ongoing argument between those who wish to mainly credit labour and consumer buying for economic growth, and on the other side those who wish to credit the capitalistic entrepreneurial and managerial class. It is clear that above the most rudimentary level of social organization, some kind of executive is needed within economic enterprises. And certainly until automation and robotics reach a higher level than it has up to now (see this thread), executives can’t accomplish much without labour.
What is not clear is that owners are needed, nor that executives must be compensated at a level many times greater than that of labourers.
You dispute the existence of a risk-free rate of return? Or that the risk-adjusted rate of return can be anything other than zero?
Suppose what I own is oil in the ground (maybe), and I charge someone a million dollars to look for it, and a dollar a barrel if they happen to find it. What risk am I taking?
I’ve never actually advocated lighting anyone on fire. For the record, I’m against it.
You can justify Social Security several ways: current recipients paid it when they were working (they supported their elders when it was their turn); taking care of the elderly is the right thing to do; they left us a store of capital (freeways, schools, laws) and we owe them something in return.
So I’m in favor of Social Security - I think it’s a good thing. Profit, on the other hand, is more a necessary evil.
The money you invested buying the land.
Even if you didn’t risk losing that money, it was at the least tied up, where you couldn’t spend it on material goods or other investments.
Of course, if we trace back far enough, all land was just seized by whoever had the biggest gun, sword or muscles. If you want to talk about the unfairness of that I’m pretty sure there have been many past threads.
But for the present day, most people that own factories or whatever are either “self-made”, or are only a couple of generations away from someone that did start from nothing.
Mijin, post #10: “As others have pointed out, the factory-owner is providing something: the factory.”
Sometimes profit involves taking a risk, and sometimes it doesn’t. If someone pays me for the right to look for oil on my land, I haven’t taken a risk. The money is paid purely because I’m the owner, and I have the legal right to stop him. (In fact, I can use the state’s resources to stop him: I can call the police.)
If I own part of the quota for Alaskan King Crabs, I can sell it, if I want. Again, I don’t have to take a risk. I get paid because the other guy can’t catch crabs, unless he pays me.
If I own a patent, I could sell or manufacture things myself. Or I could sell or lease the right to sell or manufacture things to somebody else. Either way, the point is that the mineral rights, the patent, and the share of the quota are valuable in themselves, entirely aside from any question of risk.
If I could get an even higher return for taking some risk, that doesn’t take away from the fact that some or all of the return, either way, comes purely from ownership.
To take it another step: where does the right to get paid for taking risks come from?
I mean lots of people take risks. Soldiers take risks when they enlist. Firefighters take risks when they fight fires. Police, cab drivers, and fishermen take risks. Where is it written that a rich man’s capital is worth more than a poor man’s life?
The answer is there is no such right. Owners are not entitled to certain level compensation for taking risks any more than a fisherman is entitled to a certain salary when he goes out to catch fish.
Providing isn’t the same as building.
Acquiring the land and patent requires an investment. It’s a calculated risk that the land or the patent will yield more than what it cost to acquire it. Certainly, windfalls exist: I’ve no idea how one becomes the owner of a crab-fishing quota, if it’s some sort of a lottery, then winning it is a windfall.
Becoming an owner involves taking a risk. Anything you can own can gain or lose value.
You’re mixing economic and moral judgments here, which is a common Marxist error. It doesn’t matter to us as citizens and policy makers whether there’s some natural right to profit. That’s a subjective, moral concern. What matters is simply: do we benefit from a system in which people can own capital, as opposed to only the state? And the answer is plainly yes.
Untrue. You took a risk simply by buying the land. The land could have turned out to be valueless, in which case you would have lost our money.
If you believe so strongly that there is no risk associated with buying land, then can you please explain how anybody ever loses money on real estate? If you accept that people do regularly lose money on real estate, then you accept that buying land is a risk.
If someone pays you to look for oil on your land, it is compensation for the fact that you took the risk of buying that land for its value, and they did not.
And what do you think would have happened if you had bought the quota for Alaskan King Crabs, and people had stopped eating crab? DO you think that somebody would have given your money back + interest?
If you don’t believe that, then you understand that there was a risk involve din the purchase. That fact that you *could *sell it today and eliminate that risk does not change the fact that if you keep it until tomorrow, it may become valueless.
Wrong. they are valuable in large part because they are risky things to produce. 99.99% of all patents are worthless and never make the owner a red cent. So how the hell can you say that producing a patent is risk free?
What you don’t understand is that the very act of acquiring ownership is a risk. If the real estate market collapses, or their is a mercury scare in seafood, or you patent turns out to be unworkable, then you have lost your investment. The profit fr ownership is realised precisely because acquisition of ownership represents a risk.
The same place that any right comes from: the human brina.
You do realise that rights are an entirely subjective human construct, right? You understand that you can resource the universe to quarks, and you won;t find a single molecule of a “Right to Free Speech” or “Right to Profit From Risk”? Those thinsg are created by, and exist in, the human brain.
That is where they come from.
It’s not written anywhere in a free market economy. Each and every one of us, including the soldier and the rich man, make that decision on a daily basis.
The US has a volounteer army. If a poor man doesn’t think that it is worth the risk to enlist in the army for the compensation he receives, then he doesn’t have to. He is the one who decides what compensation he requires for the risk to his life.
And in exactly the same way, a rich man can decide whether the risk he takes when he purchases land or a crab licence or a patent is worth the compensaion being offered for losing the use of those things.
Where does this absence of a right to get paid for taking risks come from?
And, inspired by this remark…
…it’s worth pointing out that the compensation that convinces the young man to enlist in the Army isn’t limited to the dollars of his paycheck. The social capital of being in the military in a pro-military nation is compensation. If the soldier is from a military family and will please them, that’s compensation. If he has a temperament where he enjoys order and discipline, that’s compensation. People take jobs every day where they’re willing to work for less money in exchange for doing work they genuine enjoy. Others take jobs where extra pay justifies doing work they genuinely hate.