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Author Topic:   Trickle Down Economics - Does It Work?
Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


Message 361 of 404 (660615)
04-27-2012 3:01 PM
Reply to: Message 359 by Rahvin
04-27-2012 2:46 PM


Re: Productivity Gains Vs Productivity Contributions
Well said.
And with reference to our much cited graph - How productive would the nation be without 95% of it's workforce?
Yet - According to our graph combined with Percy's ideas about attributing wealth - 95% of the population are responsible for less than 20% of the 100% increase in productivity over the last 30 years.
As long as the wealthiest receive more wealth than they create we have trickle-up rather than trickle-down.
This seems pretty inarguable.

This message is a reply to:
 Message 359 by Rahvin, posted 04-27-2012 2:46 PM Rahvin has not replied

  
Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


Message 362 of 404 (660617)
04-27-2012 3:06 PM
Reply to: Message 360 by Percy
04-27-2012 2:59 PM


Re: Productivity Gains Vs Productivity Contributions
You can phrase it however you like.
But if the wealthiest receive more wealth than they are responsible for creating then we have trickle-up rather than trickle-down don't we?
This seems essentially inarguable.
But you seem to be disputing it.
Please clarify your position on this specific point.

This message is a reply to:
 Message 360 by Percy, posted 04-27-2012 2:59 PM Percy has replied

Replies to this message:
 Message 366 by Percy, posted 04-27-2012 3:35 PM Straggler has replied

  
dronestar
Member
Posts: 1407
From: usa
Joined: 11-19-2008


Message 363 of 404 (660618)
04-27-2012 3:09 PM
Reply to: Message 356 by Percy
04-27-2012 1:39 PM


Re: Productivity Gains Vs Productivity Contributions
Percy writes:
In my early posts in this thread I wrote a great deal about the ability of the rich to influence legislation for their own benefit.
Percy writes:
The reason the wealth a company creates belongs to the company and not to workers is because the company takes on all the risk to capital.
Percy, how do you maintain both positions in your head? "the company takes on all the risk"? "ALL"? Are you kidding?
Buffalo NY is one of the smallest NFL franchise teams. The owner wants $200+ of TAXPAYER money for another 15 years or he is pulling the team outta Buffalo. Jacksonville, Cinncinnatti, Tampa Bay, St Louis, Baltimore; TAXPAYERS recently paid 85%.
Oil corporations get massive tax breaks on top of massive profits. Year after year.
Deregulations are a gift to corporations. We just addressed the financial institutions loan bailout. That included bonuses for CEOs. All loans over $# are gauranteed by the government. Risk?
The auto manufacturers bailout by the TAXPAYER two years ago? "Hey america, we can produce crappy cars that catch on fire, no problem if nobody buys them, TAXPAYERS will bail us out."
ALL of the pentagon vendors. We might as well pay blacksmiths the same zillion dollar contracts with TAXPAYER money.
We addressed the topic of nuclear facilities recently in the forum. Contracts stipulate that the corporation's responsibility will be capped if tragedy happens and the taxpayers will foot the excess costs. How is that "taking on the risks"?
I previously mentioned many ideas come from universities and government agencies that business take advantage. From the lowly velcro invention to high tech machinery. Product development, courtesy of taxpayer support. Where is the risk from simply taking "free" ideas from TAXPAYER supported initiatives?
Drug companies have a government supported monopoly on prices. Where is the free market and its associated "risks" here?
Health insurance companies now have a mandatory usage stipulation from the government. Where is the risk?
Farming subsidies? Where is the risk to NOT growing something in return for subsidies?
Percy writes:
The reason the wealth a company creates belongs to the company and not to workers is because the company takes on all the risk to capital.
"the company takes on all the risk"? Just wow. What country are you living in?

This message is a reply to:
 Message 356 by Percy, posted 04-27-2012 1:39 PM Percy has replied

Replies to this message:
 Message 365 by Percy, posted 04-27-2012 3:24 PM dronestar has replied

  
Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 364 of 404 (660620)
04-27-2012 3:14 PM
Reply to: Message 359 by Rahvin
04-27-2012 2:46 PM


Re: Productivity Gains Vs Productivity Contributions
I'm sorry, Rahvin, I sympathize, but it's just business. Living paycheck to paycheck is a grindingly hard road, I know, but building economic fantasies isn't the answer. A glaringly objective understanding of reality will serve you much better. The sooner you stop thinking that your company should treat you like family and start seeing the world the way it really is the better off you'll be, especially since it will allow you to much more meaningfully examine your options. Whining that the world isn't as nice a place as it should be is pointless.
--Percy

This message is a reply to:
 Message 359 by Rahvin, posted 04-27-2012 2:46 PM Rahvin has replied

Replies to this message:
 Message 369 by Rahvin, posted 04-27-2012 3:46 PM Percy has replied

  
Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 365 of 404 (660622)
04-27-2012 3:24 PM
Reply to: Message 363 by dronestar
04-27-2012 3:09 PM


Re: Productivity Gains Vs Productivity Contributions
Hi Dronester,
A litany of complaints can't rebut the simple mechanics of how capitalism actually works. It's no secret that there's abuse out there, but the general reality is that companies do go bankrupt and stockholders do lose their money. It is the companies, or more accurately the owners of the companies (usually the stockholders), who risk their capital. Employees are not risking their capital.
--Percy

This message is a reply to:
 Message 363 by dronestar, posted 04-27-2012 3:09 PM dronestar has replied

Replies to this message:
 Message 367 by dronestar, posted 04-27-2012 3:36 PM Percy has replied

  
Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 366 of 404 (660624)
04-27-2012 3:35 PM
Reply to: Message 362 by Straggler
04-27-2012 3:06 PM


Re: Productivity Gains Vs Productivity Contributions
Straggler writes:
You can phrase it however you like.
The phrasing is irrelevant. Capitalism works the way it works regardless of the words used to describe it. If you feel there's something lacking in my description then point it out.
But if the wealthiest receive more wealth than they are responsible for creating then we have trickle-up rather than trickle-down don't we?
By definition people receive compensation equal to the wealth they created. If a company is willing to pay a CEO $20 million in salary then that's what he's worth, because the value of something is what someone is willing to pay. His salary is equal to the wealth he created just as your salary is equal to the wealth you create.
--Percy

This message is a reply to:
 Message 362 by Straggler, posted 04-27-2012 3:06 PM Straggler has replied

Replies to this message:
 Message 370 by Straggler, posted 04-27-2012 3:48 PM Percy has replied

  
dronestar
Member
Posts: 1407
From: usa
Joined: 11-19-2008


Message 367 of 404 (660625)
04-27-2012 3:36 PM
Reply to: Message 365 by Percy
04-27-2012 3:24 PM


Re: Productivity Gains Vs Productivity Contributions
I think you already addressed the simple mechanics of how "capitalism" actually works . . .
Percy writes:
In my early posts in this thread I wrote a great deal about the ability of the rich to influence legislation for their own benefit.
If you concede that employees are taxpayers, then are you not already conceding that employees risk their "capital".
(I noted Goldman Sachs Group, Inc. did NOT go bankrupt)
Edited by dronester, : added Goldman Sachs Group, Inc.

This message is a reply to:
 Message 365 by Percy, posted 04-27-2012 3:24 PM Percy has replied

Replies to this message:
 Message 377 by Percy, posted 04-27-2012 5:01 PM dronestar has not replied

  
Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


(1)
Message 368 of 404 (660626)
04-27-2012 3:36 PM
Reply to: Message 350 by Percy
04-27-2012 11:03 AM


Re: Flat?
Percy writes:
What was keeping the rich from appropriating the productivity gains to themselves before? Gee, what could it be?
Does this have anything to do with it?
Wiki on Reaganomics writes:
This legislation expanded the AMT from a law for untaxed rich investors to one refocused on middle class Americans who had children, owned a home, or lived in high tax states. This parallel tax system hit middle class Americans the hardest by reducing their deductions and effectively raising their taxes. Meanwhile, the highest income earners (with incomes exceeding $1,000,000) were proportionately less affected, thereby shifting the tax burden away from the richest 0.5% to poorer Americans.
Edited by Admin, : Fix quote.

This message is a reply to:
 Message 350 by Percy, posted 04-27-2012 11:03 AM Percy has replied

Replies to this message:
 Message 371 by Percy, posted 04-27-2012 3:48 PM Straggler has replied

  
Rahvin
Member
Posts: 4032
Joined: 07-01-2005
Member Rating: 9.2


(1)
Message 369 of 404 (660629)
04-27-2012 3:46 PM
Reply to: Message 364 by Percy
04-27-2012 3:14 PM


Re: Productivity Gains Vs Productivity Contributions
"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." - John Rogers
I'm well aware of how the world actually works, Percy. I'm perfectly aware of my own position as a disposable resource. And, of course, the lack of loyalty companies show to me is why I feel no outstanding loyalty to them. The only way I can ever move up the ladder or get a meaningful raise (even enough to keep up with my healthcare costs!) is to jump ship and seek other employment...which is exactly what I do, around every three years or so.
It occurs to me that if I were in management, I would do more to try to retain my employees so that I wouldn't need to spend massive amounts of wasted money finding, hiring, and training replacement workers. Instead, I would want to keep my workers at real market wages commensurate with their current experience and value, instead of losing them continually to my competitor who will actually pay them what they're worth, at least at first. I would give bonuses for good ideas that make or save the company money, and I wouldn't play asinine games like increasing salary but also increasing the cost of benefits by even more.
Then I might actually be motivated, and might spend more time working at my current job, instead of hunting for new jobs and posting on web forums.
After all...as you've said, my productivity doesn't matter. Whether I produce a little or a lot, I see none of it. I don't get raises or bonuses. I'm paid little enough that I only own a piddly, tiny amount of stock. My company regularly increases profits by 10% or more every year, even during the recent crisis...and after my low-raise-huge-healthcare-increase, I make less money, every year.
So now I'll find another job making 150% or more of my current salary, because that's how much my skills are actually worth in the marketplace, and there's no way my employer will make my salary competitive to keep me.
Businesses, Percy, should also objectively look at the way the world actually is. If you treat your employees like disposable resources, they'll be less productive, and eventually they'll quit, and find an employer who will pay them what they're worth. And then the employer has to find and train a replacement, which will cost tens of thousands of dollars. Sometimes, they even have to pay the replacement the market salary that they refused to pay their previous employee!

The human understanding when it has once adopted an opinion (either as being the received opinion or as being agreeable to itself) draws all things else to support and agree with it.
- Francis Bacon
"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." - John Rogers
A world that can be explained even with bad reasons is a familiar world. But, on the other hand, in a universe suddenly divested of illusions and lights, man feels an alien, a stranger. His exile is without remedy since he is deprived of the memory of a lost home or the hope of a promised land. This divorce between man and his life, the actor and his setting, is properly the feeling of absurdity. — Albert Camus
"...the pious hope that by combining numerous little turds of
variously tainted data, one can obtain a valuable result; but in fact, the
outcome is merely a larger than average pile of shit." Barash, David 1995.

This message is a reply to:
 Message 364 by Percy, posted 04-27-2012 3:14 PM Percy has replied

Replies to this message:
 Message 373 by Percy, posted 04-27-2012 4:00 PM Rahvin has replied

  
Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


(3)
Message 370 of 404 (660630)
04-27-2012 3:48 PM
Reply to: Message 366 by Percy
04-27-2012 3:35 PM


Re: Productivity Gains Vs Productivity Contributions
Straggler writes:
But if the wealthiest receive more wealth than they are responsible for creating then we have trickle-up rather than trickle-down don't we?
Percy writes:
By definition people receive compensation equal to the wealth they created.
What definition?
Percy writes:
If a company is willing to pay a CEO $20 million in salary then that's what he's worth, because the value of something is what someone is willing to pay.
And if as a result of his risk taking that company (e.g. a "too big to fail" bank) ends up being a significant factor in a global recession and the effective destruction of huge amounts of national wealth who pays?
Him? No.
The taxpayer. Yes.
Because as a result of trickle-down policies we have socialised risk and privatised profit for the very few.
So even on a risk/reward basis trickle-down economics has been shown to fail dismally by recent banking events.

This message is a reply to:
 Message 366 by Percy, posted 04-27-2012 3:35 PM Percy has replied

Replies to this message:
 Message 374 by Percy, posted 04-27-2012 4:23 PM Straggler has not replied

  
Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 371 of 404 (660631)
04-27-2012 3:48 PM
Reply to: Message 368 by Straggler
04-27-2012 3:36 PM


Re: Flat?
Straggler writes:
Does this have anything to do with it?
Not that I can see. If you see a chain of cause/effect whereby the effect of productivity gains on salaries is influenced by tax policy then please share it.
--Percy

This message is a reply to:
 Message 368 by Straggler, posted 04-27-2012 3:36 PM Straggler has replied

Replies to this message:
 Message 372 by Straggler, posted 04-27-2012 3:57 PM Percy has replied

  
Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


(1)
Message 372 of 404 (660632)
04-27-2012 3:57 PM
Reply to: Message 371 by Percy
04-27-2012 3:48 PM


Re: Flat?
Well the tax burden has shifted onto the middle classes from the top and the middle classes gains from increased productivity have decreased whilst those of the wealthiest have increased.
Percy writes:
If you see a chain of cause/effect whereby the effect of productivity gains on salaries is influenced by tax policy then please share it.
The more wealth the wealthy have the more they gain from increased productivity and the less wealth the middle classes have the less they gain from increased productivity.
Wealth breeds wealth. The question here is why we think concentrating wealth in the hands of the already wealthy as per trickle-down economic policy is a superior method of wealth generation than placing it in the hands of others.
You have yet to provide any reason for this to be the case.

This message is a reply to:
 Message 371 by Percy, posted 04-27-2012 3:48 PM Percy has replied

Replies to this message:
 Message 376 by Percy, posted 04-27-2012 4:51 PM Straggler has not replied

  
Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 373 of 404 (660633)
04-27-2012 4:00 PM
Reply to: Message 369 by Rahvin
04-27-2012 3:46 PM


Re: Productivity Gains Vs Productivity Contributions
Rahvin writes:
Businesses, Percy, should also objectively look at the way the world actually is. If you treat your employees like disposable resources, they'll be less productive, and eventually they'll quit, and find an employer who will pay them what they're worth. And then the employer has to find and train a replacement, which will cost tens of thousands of dollars. Sometimes, they even have to pay the replacement the market salary that they refused to pay their previous employee!
I don't understand it either, although in the current job market there's not much opportunity. My company doesn't have to worry how badly they treat employees because there's nowhere for us to go (comparatively tiny specialized software market niche), and most of us are just happy to be employed.
Anyway, sometimes there's nothing to be done except vote with your feet, and if you can get a 50% salary bump then stop posting messages to me and get crackin'!
--Percy
Edited by Percy, : Prudence dictated removal of substantial content. Apologies, but it wasn't germane to the topic and shouldn't hurt the thread.

This message is a reply to:
 Message 369 by Rahvin, posted 04-27-2012 3:46 PM Rahvin has replied

Replies to this message:
 Message 379 by Rahvin, posted 04-27-2012 6:28 PM Percy has seen this message but not replied

  
Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 374 of 404 (660634)
04-27-2012 4:23 PM
Reply to: Message 370 by Straggler
04-27-2012 3:48 PM


Re: Productivity Gains Vs Productivity Contributions
Straggler writes:
Percy writes:
By definition people receive compensation equal to the wealth they created.
What definition?
As I explained before, value is what someone is willing to pay, so your work is worth what someone is willing to pay. You can increase your wealth by working, and you increase your wealth by the amount of the value of your work.
This definition works anywhere in an economy, not just for employees like us or like CEOs. For example, someone finds a nice piece of wood in the woods. They take it home, dry it out, then from it whittle a handsome duck. They take it to a craft show and sell the duck for $20. The person's labor was worth $20, and his wealth has increased by $20 (minus expenses, of course). The GDP of the nation has just risen by $20, as has the total wealth of the nation.
That governments in some cases decide that a business must be bailed out because its failure would have too severe an impact on the economy does not nullify simple economic principles. Wealth is still created by labor, and labor is still worth what someone is willing to pay.
Maybe you could consider postponing the bald assertions about trickle down economics until we've reached some common ground on wealth creation.
--Percy

This message is a reply to:
 Message 370 by Straggler, posted 04-27-2012 3:48 PM Straggler has not replied

Replies to this message:
 Message 375 by dronestar, posted 04-27-2012 4:42 PM Percy has replied

  
dronestar
Member
Posts: 1407
From: usa
Joined: 11-19-2008


Message 375 of 404 (660635)
04-27-2012 4:42 PM
Reply to: Message 374 by Percy
04-27-2012 4:23 PM


Re: Productivity Gains Vs Productivity Contributions
Percy, I'd like you to reconcile this hypothesis:
Percy writes:
As I explained before, value is what someone is willing to pay, so your work is worth what someone is willing to pay. You can increase your wealth by working, and you increase your wealth by the amount of the value of your work.
with this actuality:
Percy writes:
In my early posts in this thread I wrote a great deal about the ability of the rich to influence legislation for their own benefit.
Until you can, I'll beleive that "trickle down economics" is a misnomer used to fool taxpayers for what one gets from influenced legislation.

This message is a reply to:
 Message 374 by Percy, posted 04-27-2012 4:23 PM Percy has replied

Replies to this message:
 Message 378 by Percy, posted 04-27-2012 5:07 PM dronestar has not replied

  
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