Tax is the wrong word. It’s an expense. It is a cost. Taxes are imposed by governments. Profits and re-investment and dividends are not “taxes.” If you keep using the wrong word in a discussion, people will hold less respect for you.
Note, though, that, as you phrased it, the work might have been in the past. Take any ordinary investor: they’ve done some “work” for the company by buying company stocks, thus providing start-up money to buy the factory building, machines, supplies, etc. But, now, having done that, they can sit back and let the dividends roll in. They are now completely inert with respect to the factory; they now do no work.
As well all know, there’s nothing wrong with this. It’s part of the process. I lend you money, you pay me money back. If I lent out enough, I can then live on the interest coming in, without having to lift a finger the rest of my life. That’s one of the functions of money.
This really pissed off the Abrahamic ancients, who put together strict rules against lending money. Well, more fools them: it crippled their ability to produce wealth through mercantile ventures! Our OP seems to be mirroring their reasoning. People should only eat bread in the sweat of their brow. And, okay, yeah, maybe that is a better moral position. Just, most of us don’t agree, so we have repealed the laws (whether man-made or God-given) against lending.
I like living in an industrialized democracy rather than a subsistence theocracy. That’s the nice thing about freedom. We get to choose.
LinusK, where do you think ownership comes from? Does a stork just show up and drop a factory on your doorstep?
Ownership comes about as a direct result of making a meaningful contribution - it’s just another form of compensation. A potentially more rewarding form of compensation, but also a much riskier one. It’s kind of like getting paid in lottery tickets - for 1 hour of unskilled labor, I could pay you $8, or I could give you a lottery ticket that has a 50/50 chance of being worth $0 or $16. Did they guy who chose the lottery ticket and happen to get lucky and win not earn it? Is the winner’s extra $8 a tax on the rest of the workers?
You seem to think that if ownership is not directly earned, that it is some kind of burden on society. Granted, the folks who inherited Steve Jobs’s shares of Apple didn’t directly earn that ownership, any more than I earned the $5 my grandfather gave me for my 5th birthday. But is that $5 a burden on society? Does Steve Jobs have any less of a right to pass on the compensation for his contributions than my grandfather does? And most importantly, is it wrong for that compensation to still be providing ongoing value when you take into consideration that his contribution is still actively providing value? Even after Steve Jobs passed on and left his earned compensation to whoever he left it to, society still has IPads. The employees of Apple still have jobs. The offices and production facilities are still there making a meaningful contribution to society.
People who invest in VC funds are effectively owners of large parts of startups. Investors, as opposed to the venture capitalists themselves, are hands off. Do you think their return from successful startups is immoral? If you do, lots of people in Silicon Valley would like a word with you.
I look at it in a more historical way. In order for the firm to originally arise, you needed mechanisms of capitalism ranging from hard word to availability to fund via an initial public offering, which requires hope of profits. But now that the firm is solidly established, there are a lot of people, including in top management, who may be just coasting. Such coasting can be somewhat addressed by a mechanisms like inheritance tax, but you never will have a world in which there are no rich ne’er-do-wells.
This isn’t to say that capitalism is always the best way to build productive organizations. Capitalism’s track record with school and hospitals is not all that good. The University of Chicago is better than the University of Phoenix. And I’d rather be treated in the average Veterans Affairs hospital than in the average for-profit US hospital. But there are other types of organizations – think computers – where the capitalist model seems to work best.
There doesnt need to be “justification” when its your money on the line. If there should be then it seems reasonable that an investor would be able to have financial recourse against an employee by making them be financially responsible to the corporation in the event of losses. I noticed also you used the term “able bodied”. Even ib this@day and age its interesting how many equate work with manual labor.
My point was very simple, and the fact you’ve tried to dodge it here suggests to me you are not debating in good faith.
But anyway, I will respond:
Clothing for the workers could indeed be considered a start-up cost. However, it’s only a necessary, not sufficient, prerequisite. You still need a factory, offices, equipment and probably other costs like advertising space.
That takes a lot of capital, and if the hypothetical group of workers don’t have it, they need the help of one or more people that do.
It comes from law. If the law says you have a life estate, a life estate is what you own. If it says you have a copyright for 7 years, on the 8th year it’s no longer yours. If it says you own a factory, you do. Otherwise, you don’t.
Historically it came from the use of force. So when William conquered England, all the land of England became his. Everyone who lived on the land, therefore, owed him rent. A part of all the production of all the people who lived in England went to the King, and they were that much poorer for it. He could have called it a tax, if he wanted, rather than rent. It would have made no difference.
Over time, what started as a matter of conquest became a matter of law.
Some people seem to think ownership comes from having created a thing. But that’s not the case. If it’s a resource, like land, or oil, or air, or water, it’s never the case. If I’m shootin’ for some food, and find oil, I might get very rich. But it’s not because I created anything. It’s happenstance. If I move to a mansion in Beverly Hills, after selling my land to Exxon, then the fact is I’m living off the efforts of others. (Not that there’s anything wrong with that - I’d it myself, if I could.)
A conclusory statement. You seem to be stuck in a Horatio Alger story.
Money itself is never a burden on anyone. It’s the consumption of goods and services, which have to be produced by someone, that constitutes a burden. So, for example, caring for the aged is a burden, not because of Social Security, but because of the food and medicine and health care and everything else they require. Those things have to be produced by someone, which means everyone else must either produce a little more (work a little harder) or consume a little less.
The same thing is true of children. On order to raise children, somebody somewhere has to either produce a little more, or consume a little less.
Now, in practice, there are people who clearly haven’t ever done anything productive: toddlers, people who are permanently disabled from birth, Paris Hilton. They consume more than they produce.
There are others that have been astonishingly productive. Jonas Salk comes to mind.
The value consumed by the first group comes from the value produced by the second.
And among the second group are those who are rich because they own things, but don’t do anything productive themselves. They constitute an extra special burden, because they consume so much more than the people who produce what they consume.
Or, he could be my uncle (mother’s sister’s husband), a man I admire very much, who saved his pennies and eventually bought out a couple of owners in the construction company he worked for, and now owns the company outright and agonizes over any layoffs or firings- he did have to lay people off in 2008/2009 for the first time in nearly 35 years.
He didn’t come from money- he earned it the hard way, and every dime he invests is literally out of his own pocket. There’s no family money or scams or even extraordinary luck- about the only leg up he got was to have his folks pay for college in the 1950s and early 1960s, and I’m not even sure that happened.
Or… that investor could be my grandfather (father’s father) who literally started out as a bank teller before WWII, and after his wartime service, went back to the bank and worked his way up to Senior VP and Chief Loan Officer of one of the biggest privately owned banks in Galveston, TX. He didn’t come from family money either; his father (my great-grandfather) was a child runaway who worked as a laborer and eventually ended up a union longshoreman on the Galveston docks.
Just because people have money to invest and can start businesses, it doesn’t necessarily follow that they got that money through crooked or unethical ends. There are an awful lot of people out there who get their money the old-fashioned way and earn it, and save it up. I’ve always found it more than a little offensive when jerkwads make the assumption that anyone who’s anything other than middle-middle class has to have done something crooked or to have screwed someone in the process, or that they don’t deserve their money. That isn’t the case. Sure there may be some luck involved in someone becoming wealthy, but that’s not something they have control over any more than you or I do. The vast majority of their success is due to hard work, frugality and smart decisions.
If we look at Paris Hilton vs. Jonas Salk, isn’t it the opposite? She gets money from inheritance and television/film income, then paying taxes, and, googling shows, donating to children’s health charities. Salk worked in the non-profit sector which requires people like Hilton, or at least the legal structure Hilton thrives in, to have a large-scale existence. Salk did his most important work at the University of Pittsburgh, which was heavily subsidized by the Commonwealth of Pennsylvania and dependent on federal research money. That means taxes. And Salk developed the Salk vaccine at Children’s Hospital of Pittsburgh. Guess what? Hilton’s main object of charity seems to be children’s hospitals!
Then, Salk founded a biological research institute in La Jolla California that, like a top university, gets its money from government and donations (maybe drug companies as well, although Wikipedia doesn’t mention it). More taxes needed, and only a wealthy capitalist country brings in tax revenue on the needed scale.
Without an inventive for accumulation and investment of capital, noone would take pure investment risk. The problem isn’t that the returns on capital are a tax on labor, the problem is that historically increases in productivity have been mirrored by increases in the wage level.
Sometime in the 1980’s the correlation between increases in productivity and increases in the wage level became disconnected and a larger and larger share of the product of labor and capital ended up in the hands of capital without an attendant increase risk being shifted to capital (in fact it seems the risk has been shifting the other way).
What you’re doing is called making a strawman argument. Your frustration comes from the fact that you keep demanding I defend your strawmen, and I keep not doing it.
I’ve never said that workers should do their work with no one above them, or without leaders, or that they should be deprived of tools or buildings - or land or water or air, for that matter.
It may be that you’re confusing managers with owners. Managers are people who do the work of managing things. Sometimes managers own the things they manage. Oftentimes they don’t. For example, in corporate America, the managers and the owners are generally two different groups of people.
Or maybe you’re confusing owners with the things they own: maybe you think that if owners disappear, the things they own will disappear as well.
No, it’s called taking your amorphous, detached examples and putting them in a concrete setting rather than trying to answer without using a single factual point of reference.
So you’re a 20yo who has discovered Marxist dialectic - in fact or in effect. Hooray for you; consider me done here.
Right, and often the workers are the partial owners as well if they are stock holders in they company they work for whether it is public or private (I have certainly been in that situation several times myself as have millions of other people). They may or may not be managers as well.
That is the part where your argument and all Marxist-type arguments break down quickly. There aren’t any clearly defined separate groups that can be labeled things like ‘worker’, ‘manager’, and ‘owner’. Each category overlaps and each role has its own set of responsibilities. Any given person can have more than one of those roles simultaneously and those roles are not stagnant either. Almost everyone who is an ‘owner’ (in your terms) has also been a worker and probably also a manager at some point as well.
One big problem here is that you’ve never said doodly. You’ve asked some questions – questions I consider to be valid – but you keep on asking after they’ve long been answered. This makes it appear that you disagree with the answers, and yet you never actually say anything. Anything! We don’t know what your actual position is, because you never say. You just keep asking, over and over.
Either learn from the answers you’re given, or debate them openly and honestly. What you’re doing now is passive-aggressive game-playing.
Tell us what you believe, so we don’t have to guess. If we’re attacking a straw man, it’s because the real man won’t come out on the playing field.
I am led to believe the OP is very young and impossibly idealistic in some contaminated way. However, we have had a number of those come through here over the years and none of them maintained their Marxist idealism for very long so I suggest we give him some patience and fight fire with fire when it comes to simplistic arguments.
What about a military analogy? What if someone said that Generals only benefit off of the efforts of their soldiers because Generals aren’t generally under direct fire? It would be true in a way but someone else could point out that Generals are soldiers too and started out at much lower ranks and they were the ones that worked their way up to the rank they have because unusual talents, heroism, and dedication. That would be a better point.
You might say that doesn’t apply to corporate settings because it isn’t the military. Fair enough. What is the difference? Someone could claim that you can just buy your way in and never do a thing in terms of running the company itself. That is true. That is what millions of stockholders do when they contribute to their 401K plan or buy shares of discounted stock through employee stock purchase plans. Even the lowest employee can be a partial owner in the company they work for as well as hundreds of others that they don’t.
Let’s look at the scenario where you have $10 million dollars to plop down on a smaller company and you own 51% of it. Can you sit back and just reap those rewards for life? Absolutely not. You are a manager at a detailed level at that point and it better be fairly hands on or you will lose everything you put into it. This isn’t a money machine we are talking about. At the very least, you have to manage your leadership team and be prepared to replace them if they aren’t doing what they should be.
I have seen all of these scenarios in action in real life. It isn’t for the faint of heart. It is like high-stakes gambling but with skill and talent and involved. All of the pieces are necessary from the workers to the managers to the people that lay down serious money earned in other ventures to make it possible at all.
It is a 19th century child’s understanding of the world that leads people to believe that only human capital measured in raw muscle-power output is the primary measure that is important. That is where Marxism breaks down fatally. It views some groups of people like draft animals and that doesn’t apply very much in the modern Western world.