It seems to me that the developments of our culture that have benefitted our civilisation throughout the centuries have all been based on fairness. Our laws are made to prevent an individual, or group of individuals, taking unfair advantage of another. We pay for a police force to prevent it amongst ourselves and a armed force to prevent it from outside.
We create fair trade rules, consumer rights and contract law; we invent and enforce democracy so that we each get a chance to elect our government and we create laws around human rights that prevent government itself from abusing us.
But so far, we haven't found a way to protect society from the rabid unfairnesses of trade, finance and employment when it comes up against personal greed.
We've made some attempts, with trade unions, minimum wages and employment law but the top earners and multinational corporations are now essentially unregulated. Paying tax for them is mostly a matter of choice.
Needs more work
Life, don't talk to me about life - Marvin the Paranoid Android
The video shows that the gap between the most and least wealthy is wide and widening. It also shows that the majority believe that it is very far from what would be fair and equitable.
I doubt many here would argue against the creation of a fair society, that seems to be the goal of all democracies.
We know that those countries that have the least gap between the highest and lowest wealth are the happiest and that having an awful lot of money doesn't actually create happiness.
It seems to me that happiness is being sacrificed to the God of Capitalism:
"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness."
Edited by Tangle, : No reason given.
Life, don't talk to me about life - Marvin the Paranoid Android
As you say, we can't "reach concrete conclusions about the effects." You're argument boils down to, "We don't know for sure that something bad will happen if we do this, so let's do this."
Ignoring for the moment, what the something is that might or might not work, are you content with the current situation shown in the video?
Do you regard the ever widening gap between the have and have-nots as a consequence of captialism that we shouldn't attempt to moderate?
Life, don't talk to me about life - Marvin the Paranoid Android
My points were that recognition of these dangers does not make true such nonsensical claims as that wages aren't set by market forces
I agree, but there's no pure market force economy on the planet, all economies are regulated one way another.
But I'm with you much of the way, market forces obviously set wages, it's just that market forces aren't as pure as we often make them out to be; all societies intervene somewhere, either with trade barriers, corruption, regulation or with welfare systems and unionisation but often with all and more.
The question is how do advanced societies create fair societies whilst still remaining internationally competitive?
Life, don't talk to me about life - Marvin the Paranoid Android
There's an undercurrent of belief in this thread that businesses exploit their workers by paying them less than they're worth. That's why people keep arguing against the notion that the value of a job is the wage paid for that job. They want to believe that the job is worth more than the job's wage, and to support this they must also believe that the contribution to a company's value of an individual job is quantifiable, but it's not.
It's simply a truism that businesses will pay the market rate to get a job done, I really don't see what all the bickering is about. Not many businesses will pay twice what it needs to to hire a janitor and not many janitors will work for half the rate he can get.
The issue is more about what influences the market rates and, in my mind more importantly, what can be done when market rates are corrupt - which is pretty much the case with top end earners. CEO salaries are voted for by other directors who have an interest in making sure that director's salaries rise out of proportion to their 'real' value. Shareholder's - ie the company's owners - influence on this process is minimal to zero.
Majority shareholder owners can, and do, pay themselves whatever they like - there is no limit except what the company can afford.
Meanwhile both the Directors and the companies themselves hide their income behind tax shelters and contrivances so that their proportionate contribution to the society that they depend upon is negligible.
So that now, we have the situation in the video, where the wealthy get to be better off year on year and the rest get to pay for it.
Life, don't talk to me about life - Marvin the Paranoid Android
This sure looks to me like an argument that wages should factor in value created and not be just a function of the market (which includes the regulatory environment, unions, etc.). But the diamond cutter example falsifies this view.
And if it was true, most CEOs in the USA would be paid a fraction of what they are now.
Life, don't talk to me about life - Marvin the Paranoid Android
It's not the being wealthy part that I object to. It's that at a time when western economies are struggling, governments are starved for cash and can't provide assistance programs or maintain infrastructure while the wealthiest fail to pay their fair share.
Part one of the problem require our tax laws to change so that the wealthy pay their fair share. That should be non-controversial - but of course it will be.
But even more contentious is the claim that because the pay differentials between the least paid employee and the highest paid are now so extreme - in the private sector at least - it's harming the societies that we live in.
There have recently been discussions here in the UK around what the optimum pay differential might be - many say x20 - that is, the highest paid employee should get no more than 20 times the lowest. (It's currently x262 for the FTSE 100 UK companies; I imagine that it is much higher in the USA)
More unequal societies have worse health and lower life expectancy, more people suffering from drug problems and mental illness, rates of teenage births, obesity and violence are higher, and more people are in prison It is hard to escape the conclusion that the high levels of inequality in our societies reflect the concentrations of power in our economic institutions. The institutions in which we are employed are, after all, the main source of income inequality.
Kate Pickett & Richard Wilkinson, social epidemiologists and authors of The Spirit Level.
The other issue is about transparency. In Sweden, the tax affairs of individuals are publicly available. This seems to have a controlling effect all of its own - though it's not something I'd be terribly happy about.
Life, don't talk to me about life - Marvin the Paranoid Android
Nonsense. If an employee's actions generate $10/hour in revenue for the company, then the company will be non-profitable unless it pays that employee less than (= a fraction of) that $10/hour. It's always a fraction; if not, he's out of a job.
A large proportion of jobs are overhead. They're just necessary expenses that don't contribute directly to any profitable activity.
The bigger the company the less chance there is of attributing profitable activity to individual employees - generally, where that can be done, the individuals work on bonus.
Business cases are rarely, if ever, compiled to recruit an individual. Normally recruitment is done on a replacement basis. When firms downsize, they go for overhead related people first.
Percy is totally correct, the sort of calculation that is being argued over is naive.
Life, don't talk to me about life - Marvin the Paranoid Android
Businesses are responsible to the societies that make their existence possible
No they're not, they're responsible to their shareholders and to the laws of society. If you want to change how they relate to society, you need to change your laws.
Life, don't talk to me about life - Marvin the Paranoid Android
Re: Businesses Are Not Instruments of Economic Engineering
RAZD writes:
Some people invest money in a company. They are little different than a loan from a bank. They don't create any product nor do they create any revenue for the company.
And without the cash, the company can't exist. The investment makes it possible for the company to have a go at making something work. The investor stands to lose his investment or make a return. It's how capitalism works.
Many companies operate without shareholders -- they are not necessary for a company to operate
The companies that have no shareholders tend to be tiny. It's quite rare for a small company to grow into a large one organically from its own internal resources and even rarer to do it without bank loans.
Some people invest time and energy -- sweat equity -- in a company.
We call those people employees and they are paid for their sweat at the rate for the job they do.
The ones investing the time and energy are the ones responsible for making the company profitable. They are the ones that create the product/s and the revenue for the company. Without them there would be no company.
It takes many kinds of people to make a successful company - but what is your point?
Life, don't talk to me about life - Marvin the Paranoid Android
Increasing the wage-value for a job does not add to the bottom-line-value for the company.
The question we're trying to discuss here is whether or not something needs to be done to change wealth distribution. One tool iis minimum wage legislation which is supposed to reduce poverty. Left to their own devices, businesses, with very few exceptions, will always attempt to drive down wages (except for those that set the wages of course.)
Any minimum wage in a developed country is likely to be higher than that in the undeveloped world so if the work is relatively unskilled and not location dependant, jobs will effectively be exported. There are counter arguments of course, but essentially we see that happening in manufacturing.
But is the overall effect beneficial to both economies? It seems so to me. It floats all boats; the devoped world gets cheaper products, high profits, becomes more skilled in service industries, intellectual property and high end design, the undeveloped world find a new economy, new skills and an export market. (It's often very unequal, but....).
What I think is missing is some restraint on 'excessive' profit and global tax reform so that both companies and individuals can't game the system and create massive inequalities which harm society as a whole.
Life, don't talk to me about life - Marvin the Paranoid Android
The analysis in the video shows that there is vastly unequal distribution of wealth in the USA. It also says that it's not what the majority of US citizens feel is fair. The goal therefore would be to distribute wealth more fairly.
Meh, you can end up driving yourself out of workers and that'd be bad for business. And realize that the min-wage jobs are the ones that have low value to the workforce, too.
In those industries that do not require skilled workforces - of which there are many - there is a downward pressure on wages, the minimum wage at least provides protection for the most vulnerable to this activity.
If something needs to be done, what's it going to be? How do you restrain profit without hurting business?
The first step really must be to crack down on off-shore accounting which allows mega companies like Google, Amazon, Starbucks and the like to pay very little corporation tax on their profits. This actually damages competition by creating uneven playing fields (eg the UK company Costa Coffee pays full UK tax whilst Starbucks pays nothing yet their shops compete side by side on the high street.)
Then you need progressive personal taxation that allows individuals to get wealthy but also to be taxed proportionally. And again - cut out all the artificial tax avoidance schemes that the wealthy are able to use to get out of paying their dues.
If the economic benefits of filling particular positions cannot be estimated how can economic arguments be made for hiring and firing people for specific positions? This is not a rhetorical question.
I've worked in various businesses - both very large and very small - including a 10 year stint doing investment appraisals for major investments but I've never seen a business case for an employee and would find it very difficult to know where to start.
It is, of course, possible to build a reasonably objective case for an additional employee, but I've never seen anyone attempt a real cost benefit analysis - in almost all cases the post is justified on work load.
In your network engineer example, if the new employee is justified on the possible damage that could be done in a disaster, his value to the company could be measured in positive billions or negative thousands, depending on whether it happened or not. In this case he's an insurance policy and an overhead. Either way, he gets paid the same.
If the network engineer is part of a production platform, his work can be exceedingly valuable but his salary is not set by the wealth he might generate - which is the property of the businesses owners - but the value that the market has put on that group of people with that degree of knowledge.
Generally, a network engineers pay is within a fairly narrow range which is only very indirectly if at all linked to the contribution he is likely to make to the business.
The more directly an employee is involved with the income generating part of a business the easier it is to probe worth - this is why most sales people have relatively low salaries but high bonuses. They are, with various degrees of difficulty, able to say that they personally brought is xm business this year. (And often he wins the business at a loss - but that's another story.)
As soon as you get down to those jobs that are further away from the operational side of a business, it becomes impossible to make any real cost benefit analysis at all. These kind of support jobs - receptionists, janitors, HR, finance, transport, logistics, sysadmin, maintenance, and so on are pure overhead.
Life, don't talk to me about life - Marvin the Paranoid Android
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