[ IMAGE ] Trickle-Down Economics Illustrated.
25 Sep 2020, 2:13 am
I’ll admit that I didn’t predict Fnord would become a communist this year.
The Labour theory of value has been well and truly debunked. Workers are not paid to work, they are paid a market value. Hence why elite footballers are paid millions of pounds a month while nobody is paid to dig holes and fill them in again, even though one is much harder.
(Interestingly the infographic doesn’t include taxes which genuinely do take a share of the employee’s earned wages)
25 Sep 2020, 4:45 am
Some Employee owned companies are quite successful. But the vast majority of successful companies are not employee owned.
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25 Sep 2020, 5:19 am
The Labour theory of value has been well and truly debunked. Workers are not paid to work, they are paid a market value. Hence why elite footballers are paid millions of pounds a month while nobody is paid to dig holes and fill them in again, even though one is much harder.
(Interestingly the infographic doesn’t include taxes which genuinely do take a share of the employee’s earned wages)
Agreed. Tesco for instance has a gross profit margin of roughly 6%. Most companies, even the behemoths don't have a secret goldmine that the share holders and directors can squander to their hearts content. The reason tesco workers are paid so poorly is because the market value of their jobs really does dictate they need to be paid minimum wage as that's all stacking shelves is worth.
Companies house is a great website. It tells everything you need to know about even the biggest businesses in the UK. While profit margins of 6% for a large company leaves a couple of directors with a huge paycheck every year, if it was spread out to the workers all it will do is just bankrupt the company (or at least ruin it's competitive edge) for a barely noticable pay rise for all the workers.
Bradleigh
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25 Sep 2020, 5:42 am
On the question of how do the businesses even start in the first place without someone putting in the large initial investment, I think it is worth looking where that person got the initial capital for that investment in the first place. Sure, it sounds like a nice story to say that they all came about from hard work, savings and loans, but I think that we can all also agree that a lot of it comes from inheritance, the likes of people who claim that they are self made while just receiving a small loan of a million dollars from dear old dad.
There is not full economic freedom that just anyone has the same opportunity reach big financial success, because a lot of that money is stuck in the higher class of society that has parents giving their wealth to their kids, often which they themselves got from their parents, and sometimes they or their parents might have gotten that fortune from unscrupulous means. Looking at the history of especially people of colour who were treated as second class citizens, and even born into their part of the economy from being treated like property.
What really does landowner help produce because they happened to be lucky enough to buy more land they need to survive, and force other people to pay them for needing a place to stay? In all honesty I am not actually totally sold on worker coop model that people like Vaush are especially vocal about, it sounds nice, but my business studies, especially that I studied finance, kind of say that it is all theoretical and perhaps kind of scary in hoping that it would just work. It would be easier without the huge wealth inequality, but trying to put coops into practice as things are now are at great risk of failing due to inequality, and then used as an example to further fairness to success.
It is a nice idea though, that employees can have a stake in the fruits of their work, more than just the bottom amount a business can get away with paying them, and not having much of a say in something that their life relies on. While I also agree that often people have no idea about certain things and might be just as able to tank something together over someone who might be a studied expert on the subject and might bring innovation from taking a well calculated risk. I do recognise some hypocrisy in myself.
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25 Sep 2020, 6:10 am
There is not full economic freedom that just anyone has the same opportunity reach big financial success, because a lot of that money is stuck in the higher class of society that has parents giving their wealth to their kids, often which they themselves got from their parents, and sometimes they or their parents might have gotten that fortune from unscrupulous means. Looking at the history of especially people of colour who were treated as second class citizens, and even born into their part of the economy from being treated like property.
What really does landowner help produce because they happened to be lucky enough to buy more land they need to survive, and force other people to pay them for needing a place to stay? In all honesty I am not actually totally sold on worker coop model that people like Vaush are especially vocal about, it sounds nice, but my business studies, especially that I studied finance, kind of say that it is all theoretical and perhaps kind of scary in hoping that it would just work. It would be easier without the huge wealth inequality, but trying to put coops into practice as things are now are at great risk of failing due to inequality, and then used as an example to further fairness to success.
It is a nice idea though, that employees can have a stake in the fruits of their work, more than just the bottom amount a business can get away with paying them, and not having much of a say in something that their life relies on. While I also agree that often people have no idea about certain things and might be just as able to tank something together over someone who might be a studied expert on the subject and might bring innovation from taking a well calculated risk. I do recognise some hypocrisy in myself.
I think that most companies start from money that hasn't been inherited. My boss remortgaged his house to start his.
Owning property/land is perfectly fine as long as it was bought legitimately. All renting is is making use of a product without paying for the capital of it. Houses and factories are very expensive to build and a lot of start ups or first timers in particular will need to rent.
The legal issues of coops aside, the infighting and bickering that will go on behind the scenes over what contracts to get and what direction to take the company will probably put it in a permanent state of administrative paralysis if they make a product more complex than pencils.
25 Sep 2020, 6:20 am
The Labour theory of value has been well and truly debunked. Workers are not paid to work, they are paid a market value. Hence why elite footballers are paid millions of pounds a month while nobody is paid to dig holes and fill them in again, even though one is much harder.
(Interestingly the infographic doesn’t include taxes which genuinely do take a share of the employee’s earned wages)
Employees are paid as little as employers can get away with paying them. It has very little to do with how "valuable" said work is.
I got paid less as an EMT than I do now as a dishwasher even though the former is arguably more valuable than the latter.
But I'm hard-pressed to imagine many good things in store for a system where most people are one or two paychecks away from homelessness just so a small minority of people can be obscenely wealthy.
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25 Sep 2020, 6:22 am
I would like to see the following measures to shift the balance of power between employers and employees:
- Scrap corporation tax and replace it with dividend tax. Corporation tax is mostly paid for through the wages of employees and through increasing prices for consumers. Scrap corporation tax and instead tax dividends more heavily to encourage shareholders to keep money in the business.
- Some form of unconditional payment to all adults. I don’t care if this is a UBI or an NIT. Adults should be paid a very basic amount to help cover the cost of living, allowing them to work shorter hours or giving them the opportunity to walk away from an unpleasant job.
To ensure tax fairness, I’d like to see:
Land Value Tax and similar Georgist taxes. LVT for example taxes then economic rent on the unimproved value of the land. This encourages productive use of land, high-density housing in particular, and discouraged property speculation. Unlike existing property taxes, landowners would not be punished for improving their properties.
Higher inheritance tax: above a threshold, allowing people to pass on a little something to their children, I don’t think being born rich should entitle you to everything your parents made. My view is that a tax of say 75% of everything over (maybe half a million) is fair. You could even put it up to 100% over 2 million but I worry that would incentivise tax avoidance too much.
Incentivising investment is how we got most of the good things in our lives, and we shouldn’t get rid of that.
25 Sep 2020, 6:28 am
In order for many companies to remain competitive in a global market, they constantly need to consider the relative merits of producing stuff "in-house" by their own employees or by:
- Subcontracting
- Automation/digitalization
- Offshoring to another country
It would be significantly more difficult for a company to make such decisions if owned by the employees: They would likely not go quietly into the night when faced with the above proposals - all of which involve reducing the number of employees within the company itself.
As such, an employee-owned company may have a competitive disadvantage against the "standard" private company.
25 Sep 2020, 6:45 am
The Labour theory of value has been well and truly debunked. Workers are not paid to work, they are paid a market value. Hence why elite footballers are paid millions of pounds a month while nobody is paid to dig holes and fill them in again, even though one is much harder.
(Interestingly the infographic doesn’t include taxes which genuinely do take a share of the employee’s earned wages)
Employees are paid as little as employers can get away with paying them. It has very little to do with how "valuable" said work is.
I got paid less as an EMT than I do now as a dishwasher even though the former is arguably more valuable than the latter.
But I'm hard-pressed to imagine many good things in store for a system where most people are one or two paychecks away from homelessness just so a small minority of people can be obscenely wealthy.
An EMT does work which directly saves lives. This is obviously hugely valuable because we’re willing to pay millions to save a statistical life.
That said, if you insisted on only working when someone shelled out first, you’d probably make more money but you would not be happy about it.
We as a society make the decision to pay for EMTs and similar through either taxation or insurance, both of which pool the risk and mean that people shouldn’t have to fork up when they need medical treatment. But this has the effect of suppressing the wages of low-ranking medical professionals in order to ensure that everyone can buy insurance and put tax money goes far enough.
The only way EMTs and people like them - firefighters, police officers, social workers, nurses, carers - would be paid what they are worth is if they started pricing people out of treatment. But obviously if you go into those sorts of public service roles, you want people to be able to afford your help.
Having said that - I know how much restaurant workers get paid. If an EMT is really getting paid less then something is wrong. In this country we only really have paramedics who are paid about the same as a head chef. Maybe EMTs shouldn’t exist, and we should instead be training those people up to paramedic level, or instead paying people a supplement to be a part-time EMT on top of a different role.
25 Sep 2020, 6:59 am
Market value of a job (how much employers / customers / contractors are willing to pay for it) and social value of a job (how useful it is) are two separate things.
I find it unfortunate how divergent they sometimes turn out to be.
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<not moderating PPR stuff concerning East Europe>
25 Sep 2020, 8:15 am
About two years ago, there was a thread on another website that developed into a heated discussion regarding the alleged merits of a Communist economy versus a Capitalist economy. Rather than simply repeat a few Wikipedia definitions, I started an independent study of what the various economic systems are really all about, and what I learned surprised me.
For instance, the Socialist, Capitalist, and Communist systems are more economic than political -- they are more about who owns/controls the means of production than anything else (there's a lot more to than that, but it's important to make the distinction).
Thus, I see economic theories as a kind of spectrum, an over-simplification of which follows...
Family Business: The Mom-and-Pop stores and the family farms the simplest forms of Socialist structures, wherein the workers own the means of production.
Community Cooperative: When the business owners agree to pool their financial and physical resources to benefit everyone involved, it creates a higher form of Socialism -- remember that the next time you buy your farm-fresh, non-GMO, organic eggs laid by free-range chickens from your local Farmers' Co-Op store.
Capitalism: Where the means of production are owned by outside investors who hire people to produce the goods, people to manage the workers, and more people to manage the business. The investors (like me) may never see the inside of the production facility or even know where it is; but those dividend checks sure do add up!
Communism: The means of production are owned by the State, which reaps all the profits, gives the major share of those profits to the State Leaders, and then gives back a much smaller share to each of the workers.
The political aspect of Communism is Feudalism, with the wealthy Nobles at the top, the less-wealthy
Ministers below the Nobles, The lesser-wealthy Gentry below the Ministers, and the serfs/slaves doing all the work.
I hate Communism.
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Bradleigh
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25 Sep 2020, 8:21 am
That is why we should try to have other things hold value other than what a "free market" demands. Which starts with things like livable minimum wages, taxes to prevent the hoarding of wealth, and protections that might not just naturally appear via profit motives.
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25 Sep 2020, 8:23 am
While I like the idea of a Business Cooperative, I also see that scaling up is often impractical.
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25 Sep 2020, 8:26 am
Community Cooperative: When the business owners agree to pool their financial and physical resources to benefit everyone involved, it creates a higher form of Socialism -- remember that the next time you buy your farm-fresh, non-GMO, organic eggs laid by free-range chickens from your local Farmers' Co-Op store.
Capitalism: Where the means of production are owned by outside investors who hire people to produce the goods, people to manage the workers, and more people to manage the business. The investors (like me) may never see the inside of the production facility or even know where it is; but those dividend checks sure do add up!
Communism: The means of production are owned by the State, which reaps all the profits, gives the major share of those profits to the State Leaders, and then gives back a much smaller share to each of the workers.
The political aspect of Communism is Feudalism, with the wealthy Nobles at the top, the less-wealthy
Ministers below the Nobles, The lesser-wealthy Gentry below the Ministers, and the serfs/slaves doing all the work.
I hate Communism.
In these definitions, you equate capitalism to stock economy.
You claim small businesses to be socialist.
Interesting.
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<not moderating PPR stuff concerning East Europe>
25 Sep 2020, 8:29 am
While I like the idea of a Business Cooperative, I also see that scaling up is often impractical.
Yep, it's usually quite inefficient - you spend more resources on managing that enormous decision body than on doing anything useful.
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Let's not confuse being normal with being mentally healthy.
<not moderating PPR stuff concerning East Europe>
