# Why has so much power/influence left labor and gone to capital, at least in the US **URL:** \ **Category:** Great Debates\ **Created:** [March 22, 2011, 10:25pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656 "2011-03-22T22:25:52Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 29, 2011, 9:57pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/81 "2011-03-29T21:57:39Z")
> [@Whack-a-Mole](#): > > I thought the absurd numbers would make it clear it was outrageous and merely meant to denote an idea. > > As I recall in the tax debate Obama just gave the republicans what they wanted on the Estate Tax. Except as I recall John Boehner had already said he would extend unemployment benefits. > > No negotiation. No trade. Just, “Here ya go.” > > Were republicans suitably impressed and become nicer or less recalcitrant? Nope. > > As I said, if the other side refuses to negotiate at all and does nothing but be as obstructionist as possible why would your side continue to negotiate? It takes two to negotiate and I see precious little coming from the republicans. Yes and if I found myself negotiating with someone like that in private practice, i would tell my client “this guy is a pig, you should see if there isn’t someone else you can do business with” and if my client insisted on getting raped, then I would try to make the terms as favorable as possible. Most of the time you have a choice. Obama didn’t and he gambled that he could win some Republican support by showering them with concession that they couldn never have extracted and they responded by asking for concession that they knew Obama could never give, WTF did they have to lose. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 29, 2011, 10:11pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/82 "2011-03-29T22:11:39Z")
> [@bump](#): > > Their job didn’t really change much They’re making a lot more sandwiches, there is more to what they do that slicing the deli meat, that was just the most time consuming part. > [@](#): > > but if the company does something to improve productivity, or sales just increase, then no, workers don’t get a share, unless they increased the value that they add. My point is that they have increased the value that they added because their labor has now been leveraged by that automation. There are two reasons that Americans are the most productive workers in the world. We work longer hours than MOST other countries and we are highly automated so that the hours we do work are leveraged to be more productive. Your point seems to be that ALL of that increased productivity should be attributed to the new deli slicer and whoever paid for that deli slicer. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 29, 2011, 10:22pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/83 "2011-03-29T22:22:13Z")
> [@emacknight](#): > > Here’s a fun experiment for you to try: > > Go into a casino and stand next to someone betting. When they win, ask for part of it. I don’t see how this analogy makes any sense. You’ve used it a couple of times now and I don’t get the analogy. Labor is doing more than standing next to you in a casino and capital does more than bet on black or red. > [@](#): > > If you consider “entering a casino” to be “risk” then you’d think you were entitled to a share of the winnings. You showed up that day, where is your reward? I still don’t get your analogy. You are saying that labor is merely a specator while capital is the active component. The opposite seems more true to me. > [@](#): > > The guy that bought the machine risked his capital. If the business fails he loses his capital. The guy that pushes the button risked nothing. He is making more sandwiches. > [@](#): > > A skilled athlete takes a risk when he signs on with his first team, he only has a couple of years to make a name for himself. The guy that works in a Deli does not have an infinite supply of hours with which to make sandwiches. > [@](#): > > The guy working hourly at the concession stand makes money regardless of the team’s success. So it doesn’t matter where he works. If he loses his job he doesn’t lose his ability to earn. Are you able to see that distinction? Neither does the owner of capital. They can go pour beer for a living as well. I’m not saying the guy pouring beer at teh concession stand should be profitsharing. this thread is about the shift in relative power between capital and labor, not whether we should operate corporations as collectives. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 29, 2011, 10:29pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/84 "2011-03-29T22:29:19Z")
> [@emacknight](#): > > Here’s another example where you fail to understand risk. You define risk differently than I do. > [@](#): > > A neurosurgeon invested time and capital going to school, and then years training. His earning potential doesn’t kick in until his late thirties. What makes a neurosurgeon valuable is the value of his labor, not his risk of loss. > [@](#): > > What does the cashier risk? Starving? Homelessness? These are the factors taht may drive them to take that really really shitty job with teh really really shitty boss. They don’t do it because that is what they choose to do, they do it becauser that is what they must do. And that is fine. They don’t add enough value to warrant more pay, then fine but your obsession of attributing value only to those who risk monetary loss seems a bit myopic. > [@](#): > > If, on the other hand, that cashier is **skilled** things change. If the cashier has **talent** as a salesmen he as responsible for profits as the designer. We reward that by paying commissions. Sell more, earn more. And then quarterly bonuses. Oh so labor can be compensated based on productivity. > [@](#): > > In that case, where skill is involved, a salesman takes a risk. Is he better off working for a Toyota dealership or Saturn? Now he doesn’t just lose a job, he loses earning potential. Bullshit. If saturn goes out of business, why can’t he get a job at toyota? > [@](#): > > Labour has never had power or influence as long as labour has never taken risk. Perhaps you can clarify your definition of risk. ---
**Author:** ![Algher](https://avatars.discourse-cdn.com/v4/letter/a/3d9bf3/32.png) [@Algher](https://boards.straightdope.com/u/Algher)\ **Post date:** [March 29, 2011, 10:53pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/85 "2011-03-29T22:53:58Z")
> [@Damuri\_Ajashi](#): > > You define risk differently than I do. > > What makes a neurosurgeon valuable is the value of his labor, not his risk of loss. > > Starving? Homelessness? These are the factors taht may drive them to take that really really shitty job with teh really really shitty boss. They don’t do it because that is what they choose to do, they do it becauser that is what they must do. And that is fine. They don’t add enough value to warrant more pay, then fine but your obsession of attributing value only to those who risk monetary loss seems a bit myopic. > > Oh so labor can be compensated based on productivity. > > Bullshit. If saturn goes out of business, why can’t he get a job at toyota? > > Perhaps you can clarify your definition of risk. Risk in this context of business is putting money or effort on the table for some hope of future payout. The surgeon risked borrowing money for tuition and the opportunity cost of the time in school to go to medical school in hopes of the later payout of high wages. The bar owner risked personal capital to purchase the bar in hopes that he would sell enough drinks to someday make more money. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 30, 2011, 1:57pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/86 "2011-03-30T13:57:20Z")
> [@septimus](#): > > There are also mindset differences between Americans and, say, Europeans. In discussions of public-financed health-care, Europeans often advocate altruism. When the topic comes up at SDMB, I’ve yet to hear a Doper who has health insurance discuss anything but whether his/her own health insurance situation will be improved by a government program. I have health insurance and I support universal health care in much the same way that I support universal education. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [March 30, 2011, 2:13pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/87 "2011-03-30T14:13:59Z")
> [@Damuri\_Ajashi](#): > > There are two reasons that Americans are the most productive workers in the world. We work longer hours than MOST other countries and we are highly automated so that the hours we do work are leveraged to be more productive. You forgot a third reason. We have an extremely flexible economy. The downside of that is that your job or industry is not as secure. However, the loss of unprofitable companies or jobs has the benefit of freeing up labor and capital to be used elsewhere in the economy. It is that “creative destruction” that lets our economy quickly adapt to changing economic conditions, relative to other nations. We also happen to be a large country with a lot of natural resources as well. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 30, 2011, 3:34pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/88 "2011-03-30T15:34:05Z")
> [@Susanann](#): > > A more difficult question, is “why are American workers so stupid as to continually vote to get rid of their own jobs”? Other countries, like Canada, China, Mexico, some European countries, etc actually WANT to keep jobs and have policies to attract jobs. People vote Republican for all sorts of reasons, mostly because they’re scared. ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 30, 2011, 3:53pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/89 "2011-03-30T15:53:14Z")
> [@Algher](#): > > Risk in this context of business is putting money or effort on the table for some hope of future payout. The surgeon risked borrowing money for tuition and the opportunity cost of the time in school to go to medical school in hopes of the later payout of high wages. The bar owner risked personal capital to purchase the bar in hopes that he would sell enough drinks to someday make more money. That is an investment or deferred gratification. There isn’t a whole lot of risk associated with becoming a doctor. its not the “hopes” of a later payout that makes peopel become neurosurgeons, its the near certainty of it. Their labor has simply gotten more valuable. In the context of investments, assuming rational investors, returns are always adjusted for risk. So if you had a million dollars you could avoid all risk and buy treasury inflation protected securities and get a 5 year yield of somewhere around 2.25% adjusted for inflation which would yield $47,500 in real interest every eyar for the next 30 years or you could buy GM bonds that yield around 10% over the next ten years and take a significantly higher risk that you will lose your principal. Or you can invest the money in a restaurant. Capital has all sorts of choices about the risk/reward it want’s to subject itself to. The question is how much of the profits from the enterprise should go to the dishwasher/waittress/chef in the form of compensation for their time and how much should go to the shareholder in the form of risk adjusted return on capital. Considering that these days capital can diversify and tehreby reduce its risk, it is nto clear that investors should be able to command so much of the added value associated with increased productivity over the last 30 years. ---
**Author:** ![Steve\_MB](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/steve_mb/32/5339_2.png) [@Steve\_MB](https://boards.straightdope.com/u/Steve_MB)\ **Post date:** [March 30, 2011, 4:08pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/90 "2011-03-30T16:08:25Z")
> [@New\_Deal\_Democrat](#): > > In Chain Reaction: The Impact of Race, Rights, and Taxes on American Politics, Thomas and Mary Edsall argue that **the Democrat Party** lost dominance in the United States because it was associated with the defense of black interests. If you claim to be a Democrat, why do you use the language of partisan Republicans? :dubious: ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [March 30, 2011, 4:13pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/91 "2011-03-30T16:13:52Z")
He’s an old school Democrat obviously…look at his board name. Remember that the way things are today is not the way they have always been, and that the Democratic party hasn’t always been ‘associated with the defense of black interests’. -XT ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 30, 2011, 5:26pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/92 "2011-03-30T17:26:53Z")
> [@msmith537](#): > > You forgot a third reason. We have an extremely flexible economy. The downside of that is that your job or industry is not as secure. However, the loss of unprofitable companies or jobs has the benefit of freeing up labor and capital to be used elsewhere in the economy. It is that “creative destruction” that lets our economy quickly adapt to changing economic conditions, relative to other nations. > > We also happen to be a large country with a lot of natural resources as well. I think you mean we have a flexible LABOR market. Capital is just as free in other industrialized nations as it is in ours. Its a balancing act. I think the French labor system is counterproductive (you keep paying 60% of the salary for the people you fire for up to two years after you fire them (three years if you fire anyone over 50). The high cost of firing people makes people reluctant to hire people. But I think the US system is approaching or has already reached the point where the system no longer serves the citizens best interests, it serves the system’s best interests. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [March 30, 2011, 10:30pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/93 "2011-03-30T22:30:24Z")
> [@Damuri\_Ajashi](#): > > I think you mean we have a flexible LABOR market. Capital is just as free in other industrialized nations as it is in ours. > > Its a balancing act. I think the French labor system is counterproductive (you keep paying 60% of the salary for the people you fire for up to two years after you fire them (three years if you fire anyone over 50). The high cost of firing people makes people reluctant to hire people. But I think the US system is approaching or has already reached the point where the system no longer serves the citizens best interests, it serves the system’s best interests. My understanding is they use temp labor to get around those restrictions in Europe. But in Europe, unlike the US, many job benefits are guaranteed by the state (paid sick days, paid vacation days, health care, etc). So it wouldn’t be as bad as it is here. ---
**Author:** ![Wesley\_Clark](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wesley_clark/32/20581_2.png) [@Wesley\_Clark](https://boards.straightdope.com/u/Wesley_Clark)\ **Post date:** [March 30, 2011, 10:39pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/94 "2011-03-30T22:39:40Z")
> [@bump](#): > > The question really comes down to whether the employee added that value themselves, or was just there using better tools. > > For example, let’s say a sandwich shop owner moves to a big rotary Hobart slicer from having his employees use knives to slice their meat and cheese. > > He’s increased his productivity and his quality, hopefully translating into greater sales and more money. > > The employees making the sandwiches haven’t added one penny of that value; if anything, their value has been reduced, because slicing meat thinly and accurately with a knife is a skill, while just manning a semi-automated slicer doesn’t take any skill. > > Why should the employees share in any of that money? Their job didn’t really change much, they didn’t put any money into the slicer cost, and they’re ultimately not as valuable as they’d been before. They’re still making the compensation they agreed to when they took the job, so I’m not sure where the grounds to bitch are, other than sour grapes that the boss is making more money and they’re not. > > If they’d hired a special Japanese sandwich chef or something crazy like that, and he improved the profits of the restaurant through better recipes, etc.., then sure, he should share in the profits, but if the company does something to improve productivity, or sales just increase, then no, workers don’t get a share, unless they increased the value that they add. Because before the mid 70s workers did share in the increased wealth created by automation. Automation and the increased standard of living has been pretty much constant since the 18th century. In the 40s-70s, productivity led to higher wages, then it stopped. You seem to be implying that skilled vs. unskilled labor makes a difference. My understanding is that skilled labor has seen its share of wealth decline the same as unskilled labor has. Fundamentally I think it is just oversupply of labor in the US. We have legal and illegal immigration, outsourcing and union busting. All take any ability of labor to demand better treatment away. People are treated as nicely as you are forced to treat them (more or less). If they can’t force you, you don’t have to. Labor lost the ability to use clout to demand more wealth in the market 30 years ago. Not only that but automation usually requires a whole new set of skills in many cases. ---
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [March 30, 2011, 10:54pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/95 "2011-03-30T22:54:34Z")
> [@Damuri\_Ajashi](#): > > That is an investment or deferred gratification. There isn’t a whole lot of risk associated with becoming a doctor. its not the “hopes” of a later payout that makes peopel become neurosurgeons, its the near certainty of it. Their labor has simply gotten more valuable. > > In the context of investments, assuming rational investors, returns are always adjusted for risk. > > So if you had a million dollars you could avoid all risk and buy treasury inflation protected securities and get a 5 year yield of somewhere around 2.25% adjusted for inflation which would yield $47,500 in real interest every eyar for the next 30 years or you could buy GM bonds that yield around 10% over the next ten years and take a significantly higher risk that you will lose your principal. Or you can invest the money in a restaurant. Capital has all sorts of choices about the risk/reward it want’s to subject itself to. > > The question is how much of the profits from the enterprise should go to the dishwasher/waittress/chef in the form of compensation for their time and how much should go to the shareholder in the form of risk adjusted return on capital. > > Considering that these days capital can diversify and tehreby reduce its risk, it is nto clear that investors should be able to command so much of the added value associated with increased productivity over the last 30 years. The dishwasher can diversify just as easily and thereby reduce his risk. How? He isn’t just locked into working at a restaurant. He is capable of working in all sorts of industries that need unskilled general labour. Pushing a mop is pretty consistent from one floor to the next. Not so for the neurosurgeon. He is so highly specialized that he doesn’t have options. Each city needs maybe a couple. If a hospital closes he has no choice but to search the entire country for the few neurosurgeon jobs available. _“The question is how much of the profits from the enterprise should go to the dishwasher/waittress/chef in the form of compensation for their time and how much should go to the shareholder in the form of risk adjusted return on capital.”_ The answer is none, flat out, zilch. The employees are paid from the revenue, and are compensated for their time and efforts. As I said several times in the other thread, they get paid independently of profits. That means, if the business is a success they get paid, if it is a failure they get paid (assuming enough solvency to pay debts). One more time for those at home: Profit = revenue - costs Employee salaries are part of the costs, just like gas and supplies. They get paid, and then the investors get what ever is left. Some people are paid hourly, some as a function of sales. The investor is paid from the profits. ---
**Author:** ![Susanann](https://avatars.discourse-cdn.com/v4/letter/s/7ab992/32.png) [@Susanann](https://boards.straightdope.com/u/Susanann)\ **Post date:** [March 31, 2011, 1:07am UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/96 "2011-03-31T01:07:20Z")
Originally Posted by Susanann workers so stupid as to continually vote to get rid of their own jobs"? Other countries, like Canada, China, Mexico, some European countries, etc actually WANT to keep jobs and have policies to attract jobs. > [@Damuri\_Ajashi](#): > > People vote Republican for all sorts of reasons, mostly because they’re scared. Actually, it was **the Democrats** who most wanted/want NAFTA, CAFTA, trade with Communist China, unequal trade agreements with Japan, outsourcing, continued record immigration, and the end of trade tariffs that used to protect American workers. For example, Clinton signed the NAFTA agreement. Furthermore, it was Teddy Kennedy who was most responsible for the Immigration Act of 1965 which flooded our labor markets and ended high wages. .. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [March 31, 2011, 7:52am UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/97 "2011-03-31T07:52:28Z")
> [@Nobody](#): > > Are you saying that not being able to pay your bills isn’t a big deal? Losing your job means not being able to pay your bills? Haven’t you heard? Losing your job means you can take a trip to Spain! (Really, that has been said around here.) ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [March 31, 2011, 1:00pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/98 "2011-03-31T13:00:54Z")
> [@Damuri\_Ajashi](#): > > I think you mean we have a flexible LABOR market. Capital is just as free in other industrialized nations as it is in ours. Actually it isn’t. Capital isn’t completely free here - we have a lot of regulations around it (tax, SEC, et. al) - especially when and if you take your company public - but even with a private investment you’ll face tax regulations. Other countries have other regulations - some more free, some less (there are countries where only citizens of that country can own capital, for example, no foreign investment - or the corporation must be majority held by citizens). And some countries have little or no free capital (of course, they aren’t exactly economic powerhouses - Cuba, North Korea). ---
**Author:** ![Damuri\_Ajashi](https://avatars.discourse-cdn.com/v4/letter/d/898d66/32.png) [@Damuri\_Ajashi](https://boards.straightdope.com/u/Damuri_Ajashi)\ **Post date:** [March 31, 2011, 1:58pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/99 "2011-03-31T13:58:41Z")
> [@emacknight](#): > > The dishwasher can diversify just as easily and thereby reduce his risk. How? He isn’t just locked into working at a restaurant. He is capable of working in all sorts of industries that need unskilled general labour. Pushing a mop is pretty consistent from one floor to the next. The ability to choose between different investments is not diversification. SIMOULTANEOUSLY investing in uncorrelated investments is diversification. IOW, for investors, risk means something different than the “all-in” situation of a small business owner who is going for broke with their new small business. > [@](#): > > Not so for the neurosurgeon. He is so highly specialized that he doesn’t have options. Each city needs maybe a couple. If a hospital closes he has no choice but to search the entire country for the few neurosurgeon jobs available. A neurosurgeon can’t push a mop? > [@](#): > > The answer is none, flat out, zilch. The employees are paid from the revenue, and are compensated for their time and efforts. You’re missing the point. HOw much should they get compensated from revenue? I am saying that the wage level reflects a shift of how revenue (if you prefer that word to profit) is split between labor and capital. > [@](#): > > Some people are paid hourly, some as a function of sales. The investor is paid from the profits. OK, I see what’s going on, you are focusing on the right of owners to profit (i.e. whatever is left after everyone else gets paid) rather than how the revenue gets split to determine the owners profits. ---
**Author:** ![Le\_Jacquelope](https://avatars.discourse-cdn.com/v4/letter/l/e0b2c6/32.png) [@Le\_Jacquelope](https://boards.straightdope.com/u/Le_Jacquelope)\ **Post date:** [March 31, 2011, 2:01pm UTC](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656/100 "2011-03-31T14:01:05Z")
> [@msmith537](#): > > You forgot a third reason. We have an extremely flexible economy. The downside of that is that your job or industry is not as secure. However, the loss of unprofitable companies or jobs has the benefit of freeing up labor and capital to be used elsewhere in the economy. It is that “creative destruction” that lets our economy quickly adapt to changing economic conditions, relative to other nations. You keep leaving out the fact that this “creative destruction” frees up a whole lot of labor to the unemployment line. It has also created a perpetual employer’s market. Were we any less dynamic and adaptive when we had job security? What was America’s standard of living back then, relative to the rest of the world? It was better. Far better. The unavoidable fact is, we gave the owners of capital too much leeway and got nothing out of it that we wouldn’t have gotten by keeping them in check like we did before the 1970s with things like fairer trade, higher taxes on the rich, etc. The inability to answer these basic problems is why you should do more than just \*memorize[and regurgitate/i] economic theory. Trickle-down economics is delivering truckloads of unintended and harmful consequences. [Previous page](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656.md?page=4) [Next page](https://boards.straightdope.com/t/why-has-so-much-power-influence-left-labor-and-gone-to-capital-at-least-in-the-us/575656.md?page=6)