What advantages should wealth convey?

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That is... a misconception. Owners and shareholders invest wealth into companies in order to get a return at a later date. Take the tree into chair example.

You find someone who has the skills to chop down a tree and turn it into a chair, only they don't have any of the tools necessary to do so. You ask them how much they need to get the tools they need. They say 100 dollars. You say "ok I will give you 100 dollars now if you can pay me back 120 dollars after you've sold the chair." They agree to it, buy the necessary tools, and sell the chair for 140 dollars, 120 of which they give to you and 20 of which they keep for themselves. Net profit for both parties is 20 dollars.

But you did none of the work and got paid 6 times as much, complains an observer! Well actually, you provided the resources necessary for the work to get done and bore the risk. If the person you give 100 dollars to instead wastes the money, you lose that money, because you invested poorly.

Fundamentally the idea that laborers provide all the value is based in a belief that management and investment decisions don't matter. Nothing could be further from the truth.

That's a fine iteration on my example and thanks for your reply. However, the key point that differs between your example and the real world is that in the real world, the person who built the chair has no legal ownership of the tools they used. If they want to make more chairs, they have to keep paying their corporate masters a huge percentage of the value because the tools belong to the company.

In the example you gave, the worker purchased the tools from you for 120 dollars, even though the value of the tools was only 100 dollars. Giving you a 20% bonus for being kind enough to take the risk of providing the funding up front seems fair, at least in this abstract example. But giving you 6/7 of the profit from all the chairs subsequently made by this worker is absurd, and that's what's going on in most cases in real life.

You're right the analogy was flawed. I'll correct it.

You want to start a chair business, but don't have the requisite skills to make or sell chairs. You do have $100 for tools. You find someone with the skills for making chairs. You find another person with the skill for selling chairs. You buy $100 worth of tools. Chairs sell for $140. You tell the chairmaker you will provide them with $53 for each chair they make, and provide them with the tools to do so. You tell the salesman you will provide them with $53 for each chair they sell, and provide them with the chairs to do so. You make $14 dollars off each chair. You are making a 10% profit on every chair (this number was not chosen randomly). You retain ownership of the $100 in tools you bought at the beginning.

By the way in this example the company owner nominally makes $140 per chair, while each of their employees make $53. However, due to their expenses they only make $14 per chair, while each of their employees make $53. If this were a real company, the employees would quickly overtake the owner in personal wealth, but real companies don't have 3 people where 1 of them does only management. In a real company, the owner/manager hires 100 chairmakes and 100 salesmen, and has to invest $10,000 in tools. They make $1400 for all the chairs, while each employee makes $53 for each chair THEY MAKE. The owner is still only making $14 per chair but produces 100x the chairs of each individual employee. The owner/manager's contribution is the initial investment $10,000 in tools, the hiring savvy of getting productive workers, and the market savvy of making sure 100 chairs can actually be sold.

@Antrax

Excellent progress, thanks for engaging in this exercise with me, it's fun!

Since we are now getting more detailed, my reply will take me a few minutes to compose and unfortunately I checked back here just after taking my sleeping pill, so that's not going to happen tonight. I'll be back in like 10 hours with my next adjustment. Cheers!

Closer to Reality:

I hire someone to cut down a tree on my property. Cost: $100

I hire two other people to cut the tree into 10 sections, load it on a flatbed and haul it to the sawmill: $1000

The sawmill cuts it into lumber and gives it back to me: $1000

(So far, $2100. Still with me?)

I take the lumber to my workshop, and for the next few months (in addition to other income-generating labors), I use the wood to turn out hand-made "Artisanal" furniture, which I then sell direct to the customer from my rustic workshop in the woods.

Trestle Table & 6 Chairs: $2000

Bedframe & Headboard: $2500

Matching side-tables: $400 each.

Deacon's Bench: $600

Checker/Chess Boards: $50 each.

Miscellaneous decorative Knick-Knacks: Variable.

So far, I have been paid $5500 (plus whatever the knick-knacks bring in)

Minus the initial cost plus 20% for electricity (Total: $2520), I have made a profit of $2980. Not bad.

Do I owe any of my profit to the tree-cutter, the sawmill operator, or the flatbed drivers?

No.

Why?

They were paid for the services they performed, in accordance with the contracts arranged in situ. There is no need for me to go back and equalize their alleged "share" of my wealth, since they have already completed the tasks they were paid to do.

This Marxist idea of sharing the wealth long after the labor is done is pure bovine manure. Now, if the tree-cutter, the drivers, or the mill operator had instead had agreed on a cooperative deal for payment "on spec" instead of money up front, then I would owe them their fair share from the total profits after I had sold the finished goods. But no, they wanted their payment right away, and did not want to invest in my business.

Generally speaking, it's the desire of production workers to be paid on a regular basis, and it's the desire of business owners to defer immediate payment for increased future profits.

I own the business. After material costs, overhead, wages, benefits, and taxes, all profit is mine.

The workers can either deal with it or leave my employ and start their own businesses.

Fnord, while this is indeed how contracting goes, it does not address the point of "how do shareholders make money when they do none of the work." The answer being "they take all the risk, by providing the upfront capital."

I'm trying to demonstrate with my examples why shareholders/management are not as a whole leaches on society.

One thing I find the need to clarify is that I have no problem with people being rich. For example, you're obviously smarter and more capable than me, so I feel you should definitely reap the benefits of that.

My issue is with rich people who feel they can treat poor people like crap simply because they have more money than them. Look, I wash dishes for a living, and I don't think I should get paid as much as a manager (actually, you couldn't pay me enough to be a manager) for my menial job. What DOES irritate me is that the company I work for doesn't give raises. Theoretically, I could work there for twenty years and still only be making $10/hour.

If CEOs can vote themselves raises every year, then they can at least give me a 25 cent raise. Most of our current economy is just a race to the bottom, and we're eventually going to reach a point where there is a small population of the extremely rich, while the rest of us are dirt poor.

CNN released an article today on income inequality. As usual it made no acknowledgement of the glaring fact that poor people and middle class people are richer than they were when things were "more equal"

https://www.cnn.com/interactive/2019/09 ... index.html

From their own data:

The middle class had 7.1 trillion dollars in assets in 1989. In 2019 they had 29.3 trillion dollars in assets. Inflation calculations indicate that 100 dollars in 1989 is worth $197.68 in 2017. That adjusts the 1989 figure to ~14.03 trillion dollars in 2019.

So the middle class has gained 15 trillion dollars since 1989

I think you're doing a good job of it.

Shareholders assume all of the long-term corporate risks in exchange for long-term corporate profit, and generally re-invest some of their dividends back into in the company.

Workers assume personal risks for personal profit, and generally re-invest little (if any) of their wages back into the company.

Maybe if more workers would re-invest more of their wages back into the company, they too could eventually become "fat-cat capitalists".

A yearly cost-of-living increase in wages should be mandatory for every worker.

Exceptional workers should receive bonuses to that.

Thank you.

I don't think I should be paid $20/hour for washing dishes, but I do think I should get a raise.

Locally, I met a SUBWAY restaurant night manager.

He works a lot of hours, manages deliveries, manages workers, manages cash, has a huge keyring with keys for closing the store.

He told me makes $9/HOUR.

OMG.

Low skill labor is cheap.

The figure you quote only mentions the middle class, which includes the upper middle class.

"low skilled labor is cheap" and the GOP intends to keep it that way.

The right to be left alone. Wealth should not attract envious looks over the fence to size up what can be stolen.

Wealth lets you avoid working until you're near death.

I feel sad when I see really old people working low wage jobs.

I'm 85 and I want to go home ...