Is the frame "Income Inequality" gonna fly?

[Loren Pechtel]

Well, where's your evidence that a living wage of $10-$15/hr will hurt the people that need it?

I mean ballooning CEO pay packages hasn't seemed to hurt the CEO market much at all.

You've got the cart before the horse. What's really going on is mergers. We have far fewer CEOs of substantial firms now than in times past. An awful lot of the lower-paid CEOs aren't CEOs anymore.

 

[Loren Pechtel]

Which is a great idea. Use ridiculous hyperbole in order to make a reasonable idea (affordable wages that makes welfare less necessary, we are paying one way or the other) into a ridiculous idea that no one ever even came close to suggesting in the first place.

- - - Updated - - -

Income inequality? Here is the rub for those panzy communistic liberals. The scabs on welfare have jobs that pay crap. If we don't allow that and force companies to pay more, costs on services and goods increases. That would be the worst thing that could ever happen!

Sure, instead of having a more livable wage, we have to help pay for their housing, health care, utility bills, food, college, etc... And in the process, working hard to strip them of dignity, by accusing them of being a race that hasn't held jobs for three or four generations and are simply the victims of themselves. And despite of all their alleged laziness, getting all this free stuff like cell phones and food and the best housing money can buy and cable and refrigerators.

Sure, stripping them of dignity and paying all that welfare is expensive and hard work relative to a more livable wage, but I don't want to spend $2 on a hamburger.

What do we want?
We want to pay the lowest possible price on goods and services!
Even if that means higher welfare costs on our tax bills?
We can hand wave that away by calling for welfare cuts because we can say people on welfare are lazy!

You want to clarify the point I bolded?

That people demonize what people receive on welfare, especially the working poor.

And you are making the bad assumption that creating the living wage won't hurt the people that need it. If raises costs to business have no impact, then we should have no problems raising the living wage to a million dollars.

That is ridiculous. We aren't talking about increasing wages to increase costs and there is no reason that increasing wages slowly over time would have any harmful effects to employment. What we are talking about is increasing wages and cutting profits, that is all. Increasing the amount of income that goes to the 99% by decreasing the amount of income that goes as profits to the 1%.

Profits and wages are both costs of production. We simply want more money to go to wages and less to go to profits. All of the inflation that we have had since 2009 has been due to increased profits.

Strawman. He's not saying the purpose of raising wages is to increase costs, but rather that the effect of raising wages is to increase costs.

And you're not going to accomplish your objective in most markets. When you shift money away from profits the field looks less inviting--more players leave, fewer enter. Eventually profits come back to the normal level. (And the reverse also happens--when a field has too much profit you get new players driving down the price. You can only sustain excess profit if you have a monopoly.)

 

[Loren Pechtel]

And that's making a huge mistake that all businesses are profitable, and they aren't. A politician has to worry about all his businesses in his or her community, not just the few that have one of the big ones. It's funny. People complain about how large retailers are now the only option of where to buy things.

Nonprofitable businesses go out of business to make room for businesses that can turn a profit. It's called creative destruction and used to be a thing that conservatives praised about the free market.

The normal business market chops off the tail and replaces it with new companies. As you say, a good thing.

While government can change the profitability of business it can't move the point where the market chops the tail, though. When you shift the curve down there's now more that are below the chop point and thus who get destroyed. There are also fewer new entrants. The pool shrinks.

 

[Loren Pechtel]

Except that it goes down the line and in the end most if not all the prices passed along the chain are related to labor, it's just a question of whose labor is it.

I'm glad you have finally seen the beauty of the Labor Theory of Value.

The problem with the labor theory of value is that it puts the cart before the horse.

The labor that goes into something says nothing about it's value. The labor that goes into something says what it's minimum price will be. Absent a monopoly the market will force the price down to this value + a reasonable profit margin.

The big difference is that Marx ignores the demand side of things--if the price people are willing to pay for it is less than the cost to produce the price doesn't come down, the product simply isn't on the market, or is only on the market as a specialty item for those few willing to pay the cost.

 

[SimpleDon]

I have thought about this question for a long time now. The 1% have over the last seventy years since the end of World War II, worked tirelessly to achieve the single goal of increasing income inequality.

The 1% hold all of the cards right now.

They own the media. It is not a liberal or a conservative media, it is a pro-wealth media.

They fund the schools of economics and they fund economic research. This means that they have groomed the orthodox economics to an economics that is more 1% friendly than the much more descriptive, much more effective Keynesian economics.

The 1% own the dialog right now. The free market is good. Regulations are an unnecessary evil that increases costs. Profits are the lifeblood of the economy. Wages are costs which must be minimized. Government is incompetent and unnecessary. Greed is good. Unions are evil, they reduce workers freedom. Investment is required for growth. Investment in the stock market is an investment in the economy and in the US. Etc. All are false, are lies.

It is hard to argue against the orthodoxy when they get to define the terms that are used.

The wealthy created movement conservatism with the sole purpose of creating income inequality. They crafted a limited set of principle for their movement conservatism, but always at its core was to create and then to maintain income inequality which naturally leads to wealth inequality.

They now provide most of the very life blood of politics, the soft blackmail of campaign contributions.

 

[Jimmy Higgins]

I'm glad you have finally seen the beauty of the Labor Theory of Value.

The problem with the labor theory of value is that it puts the cart before the horse.

The labor that goes into something says nothing about it's value. The labor that goes into something says what it's minimum price will be. Absent a monopoly the market will force the price down to this value + a reasonable profit margin.

The big difference is that Marx ignores the demand side of things--if the price people are willing to pay for it is less than the cost to produce the price doesn't come down, the product simply isn't on the market, or is only on the market as a specialty item for those few willing to pay the cost.

Maybe Marx liked his Apple products and realize your claim was full of bunk seeing a premium is added to the price that has absolutely nothing to do with the cost of the product production.

- - - Updated - - -

Which is a great idea. Use ridiculous hyperbole in order to make a reasonable idea (affordable wages that makes welfare less necessary, we are paying one way or the other) into a ridiculous idea that no one ever even came close to suggesting in the first place.

- - - Updated - - -

Income inequality? Here is the rub for those panzy communistic liberals. The scabs on welfare have jobs that pay crap. If we don't allow that and force companies to pay more, costs on services and goods increases. That would be the worst thing that could ever happen!

Sure, instead of having a more livable wage, we have to help pay for their housing, health care, utility bills, food, college, etc... And in the process, working hard to strip them of dignity, by accusing them of being a race that hasn't held jobs for three or four generations and are simply the victims of themselves. And despite of all their alleged laziness, getting all this free stuff like cell phones and food and the best housing money can buy and cable and refrigerators.

Sure, stripping them of dignity and paying all that welfare is expensive and hard work relative to a more livable wage, but I don't want to spend $2 on a hamburger.

What do we want?
We want to pay the lowest possible price on goods and services!
Even if that means higher welfare costs on our tax bills?
We can hand wave that away by calling for welfare cuts because we can say people on welfare are lazy!

You want to clarify the point I bolded?

That people demonize what people receive on welfare, especially the working poor.

And you are making the bad assumption that creating the living wage won't hurt the people that need it. If raises costs to business have no impact, then we should have no problems raising the living wage to a million dollars.

That is ridiculous. We aren't talking about increasing wages to increase costs and there is no reason that increasing wages slowly over time would have any harmful effects to employment. What we are talking about is increasing wages and cutting profits, that is all. Increasing the amount of income that goes to the 99% by decreasing the amount of income that goes as profits to the 1%.

Profits and wages are both costs of production. We simply want more money to go to wages and less to go to profits. All of the inflation that we have had since 2009 has been due to increased profits.

Strawman. He's not saying the purpose of raising wages is to increase costs, but rather that the effect of raising wages is to increase costs.

And you're not going to accomplish your objective in most markets. When you shift money away from profits the field looks less inviting--more players leave, fewer enter. Eventually profits come back to the normal level. (And the reverse also happens--when a field has too much profit you get new players driving down the price. You can only sustain excess profit if you have a monopoly.)

Or they just raise the price of the service / product in order to adjust to the increase in Labor costs. You keep talking as if this isn't an option. If all low wage corps have to do this, the increase will be across the board.

 

[ksen]

Well, where's your evidence that a living wage of $10-$15/hr will hurt the people that need it?

I mean ballooning CEO pay packages hasn't seemed to hurt the CEO market much at all.

You've got the cart before the horse.

No, no I don't.

What's really going on is mergers. We have far fewer CEOs of substantial firms now than in times past. An awful lot of the lower-paid CEOs aren't CEOs anymore.

cite?

 

[SimpleDon]

Which is a great idea. Use ridiculous hyperbole in order to make a reasonable idea (affordable wages that makes welfare less necessary, we are paying one way or the other) into a ridiculous idea that no one ever even came close to suggesting in the first place.

- - - Updated - - -

Income inequality? Here is the rub for those panzy communistic liberals. The scabs on welfare have jobs that pay crap. If we don't allow that and force companies to pay more, costs on services and goods increases. That would be the worst thing that could ever happen!

Sure, instead of having a more livable wage, we have to help pay for their housing, health care, utility bills, food, college, etc... And in the process, working hard to strip them of dignity, by accusing them of being a race that hasn't held jobs for three or four generations and are simply the victims of themselves. And despite of all their alleged laziness, getting all this free stuff like cell phones and food and the best housing money can buy and cable and refrigerators.

Sure, stripping them of dignity and paying all that welfare is expensive and hard work relative to a more livable wage, but I don't want to spend $2 on a hamburger.

What do we want?
We want to pay the lowest possible price on goods and services!
Even if that means higher welfare costs on our tax bills?
We can hand wave that away by calling for welfare cuts because we can say people on welfare are lazy!

You want to clarify the point I bolded?

That people demonize what people receive on welfare, especially the working poor.

And you are making the bad assumption that creating the living wage won't hurt the people that need it. If raises costs to business have no impact, then we should have no problems raising the living wage to a million dollars.

That is ridiculous. We aren't talking about increasing wages to increase costs and there is no reason that increasing wages slowly over time would have any harmful effects to employment. What we are talking about is increasing wages and cutting profits, that is all. Increasing the amount of income that goes to the 99% by decreasing the amount of income that goes as profits to the 1%.

Profits and wages are both costs of production. We simply want more money to go to wages and less to go to profits. All of the inflation that we have had since 2009 has been due to increased profits.

Strawman. He's not saying the purpose of raising wages is to increase costs, but rather that the effect of raising wages is to increase costs.

And you're not going to accomplish your objective in most markets. When you shift money away from profits the field looks less inviting--more players leave, fewer enter. Eventually profits come back to the normal level. (And the reverse also happens--when a field has too much profit you get new players driving down the price. You can only sustain excess profit if you have a monopoly.)

What is a normal level of profit that is always returned to? But excess profits drive down the price. You contradict yourself in a single paragraph. Congratulations.

In 1970 the normal level of profit in the economy was about 5% of GDP. The latest level of profit is nearly 11% of GDP. The share of GDP that goes toward wages has dropped in the same time by, surprise, 6%. The level of business investment has actually dropped in that time. Which is the normal level of profits, 5% or 11%?

It doesn't look to me as if profits have returned to a normal level. To me profits have more than doubled by reducing wages.

 

[coloradoatheist]

Here's a paper that is related. It's argument is that wage inequality has been because our firm size has grown

http://people.stern.nyu.edu/hmueller/papers/inequality.pdf

 

[SimpleDon]

You've got the cart before the horse.

No, no I don't.

What's really going on is mergers. We have far fewer CEOs of substantial firms now than in times past. An awful lot of the lower-paid CEOs aren't CEOs anymore.

cite?

I don't doubt that you believe this, you repeat it often enough. But it isn't true. In another thread I gave you a link to the census bureau data that the number of companies have increased over the years in all size categories.

Besides the CEO's wages have increased ten times based on the average workers wages. You would have to show that the number of companies has been reduced by something on that order.

 

[ksen]

Here's a paper that is related. It's argument is that wage inequality has been because our firm size has grown

http://people.stern.nyu.edu/hmueller/papers/inequality.pdf

It's not that shocking that as businesses increase their leverage over workers they force wages down.

I don't know about you, but my side has been aware of this for quite awhile which is why we actually lament the fall of unions since they were a countervailing force to corporate power over wage negotiating.

 

[Axulus]

No, no I don't.

What's really going on is mergers. We have far fewer CEOs of substantial firms now than in times past. An awful lot of the lower-paid CEOs aren't CEOs anymore.

cite?

I don't doubt that you believe this, you repeat it often enough. But it isn't true. In another thread I gave you a link to the census bureau data that the number of companies have increased over the years in all size categories.

Besides the CEO's wages have increased ten times based on the average workers wages. You would have to show that the number of companies has been reduced by something on that order.

The industries with the highest average wages have much greater profit margins - think finance, internet companies, software, pharmaceuticals. Those industries with lowest wages tend to have far lower profit margins - think restaurants, retail, hospitality.

We are seeing much greater returns for companies holding intellectual property that are able to sell the product on a worldwide market. These firms pay great wages.

Therefore, I think you need a bit more evidence to support your claims.

 

[ksen]

No, no I don't.

What's really going on is mergers. We have far fewer CEOs of substantial firms now than in times past. An awful lot of the lower-paid CEOs aren't CEOs anymore.

cite?

I don't doubt that you believe this, you repeat it often enough. But it isn't true. In another thread I gave you a link to the census bureau data that the number of companies have increased over the years in all size categories.

Besides the CEO's wages have increased ten times based on the average workers wages. You would have to show that the number of companies has been reduced by something on that order.

The industries with the highest average wages have much greater profit margins - think finance, internet companies, software, pharmaceuticals. Those industries with lowest wages tend to have far lower profit margins - think restaurants, retail, hospitality.

We are seeing much greater returns for companies holding intellectual property that are able to sell the product on a worldwide market. These firms pay great wages.

The paper coloradoatheist linked to above found that the largest firms also have the highest level of wage inequality. So if you work for one of those companies and you have high skills that's great for you. If you have mid to low skills you'd probably be better off working for one of those other companies.

 

[SimpleDon]

The problem with the labor theory of value is that it puts the cart before the horse.

The labor that goes into something says nothing about it's value. The labor that goes into something says what it's minimum price will be. Absent a monopoly the market will force the price down to this value + a reasonable profit margin.

The big difference is that Marx ignores the demand side of things--if the price people are willing to pay for it is less than the cost to produce the price doesn't come down, the product simply isn't on the market, or is only on the market as a specialty item for those few willing to pay the cost.

Maybe Marx liked his Apple products and realize your claim was full of bunk seeing a premium is added to the price that has absolutely nothing to do with the cost of the product production.

- - - Updated - - -

Which is a great idea. Use ridiculous hyperbole in order to make a reasonable idea (affordable wages that makes welfare less necessary, we are paying one way or the other) into a ridiculous idea that no one ever even came close to suggesting in the first place.

- - - Updated - - -

Income inequality? Here is the rub for those panzy communistic liberals. The scabs on welfare have jobs that pay crap. If we don't allow that and force companies to pay more, costs on services and goods increases. That would be the worst thing that could ever happen!

Sure, instead of having a more livable wage, we have to help pay for their housing, health care, utility bills, food, college, etc... And in the process, working hard to strip them of dignity, by accusing them of being a race that hasn't held jobs for three or four generations and are simply the victims of themselves. And despite of all their alleged laziness, getting all this free stuff like cell phones and food and the best housing money can buy and cable and refrigerators.

Sure, stripping them of dignity and paying all that welfare is expensive and hard work relative to a more livable wage, but I don't want to spend $2 on a hamburger.

What do we want?
We want to pay the lowest possible price on goods and services!
Even if that means higher welfare costs on our tax bills?
We can hand wave that away by calling for welfare cuts because we can say people on welfare are lazy!

You want to clarify the point I bolded?

That people demonize what people receive on welfare, especially the working poor.

And you are making the bad assumption that creating the living wage won't hurt the people that need it. If raises costs to business have no impact, then we should have no problems raising the living wage to a million dollars.

That is ridiculous. We aren't talking about increasing wages to increase costs and there is no reason that increasing wages slowly over time would have any harmful effects to employment. What we are talking about is increasing wages and cutting profits, that is all. Increasing the amount of income that goes to the 99% by decreasing the amount of income that goes as profits to the 1%.

Profits and wages are both costs of production. We simply want more money to go to wages and less to go to profits. All of the inflation that we have had since 2009 has been due to increased profits.

Strawman. He's not saying the purpose of raising wages is to increase costs, but rather that the effect of raising wages is to increase costs.

And you're not going to accomplish your objective in most markets. When you shift money away from profits the field looks less inviting--more players leave, fewer enter. Eventually profits come back to the normal level. (And the reverse also happens--when a field has too much profit you get new players driving down the price. You can only sustain excess profit if you have a monopoly.)

Or they just raise the price of the service / product in order to adjust to the increase in Labor costs. You keep talking as if this isn't an option. If all low wage corps have to do this, the increase will be across the board.

How do you think that prices are set? If the producers could raise their prices after the wage increases why didn't they raise them before to make more profits? Were they being magnanimous toward their customers?

I will ask you the same question I asked Loren. (no fair comparing answers.) In 1970 the profit level in the whole economy was 5% of GDP. The latest level is 11%. The share of GDP that goes to wages has dropped by 6%. It looks to me as if profits have more than doubled by reducing wages.

In 1980 we instituted economic policies to do that very thing, to increase profits by suppressing wages. It seems to me that those policies worked, they increased profits and decreased wages. This isn't a very big leap in reasoning, is it?

But all of a sudden the very same people who told us in 1980 that these economic policies would do this, increase profits and decrease wages, have seemingly forgotten it now and are off for any other possible reasons that profits have increased by reducing wages.

 

[Axulus]

No, no I don't.

What's really going on is mergers. We have far fewer CEOs of substantial firms now than in times past. An awful lot of the lower-paid CEOs aren't CEOs anymore.

cite?

I don't doubt that you believe this, you repeat it often enough. But it isn't true. In another thread I gave you a link to the census bureau data that the number of companies have increased over the years in all size categories.

Besides the CEO's wages have increased ten times based on the average workers wages. You would have to show that the number of companies has been reduced by something on that order.

The industries with the highest average wages have much greater profit margins - think finance, internet companies, software, pharmaceuticals. Those industries with lowest wages tend to have far lower profit margins - think restaurants, retail, hospitality.

We are seeing much greater returns for companies holding intellectual property that are able to sell the product on a worldwide market. These firms pay great wages.

The paper coloradoatheist linked to above found that the largest firms also have the highest level of wage inequality. So if you work for one of those companies and you have high skills that's great for you. If you have mid to low skills you'd probably be better off working for one of those other companies.

But the average wages are still much higher. The bulk of the profit is being made from these high skill workers.

Furthermore, what is the dividing line between profits and wages when one is a business owner or when one has an equity stake? Mark Zuckerburg and the other Facebook founders worked to develop Facebook. That labor contributed to a large portion of Facebook's current $200 billion market valuation. However, only a minuscule amount of this labor is reflected in actual wages they paid themselves. They were being paid through their equity stake in the company instead.

Or take the example of another billionaire like George Lucas. His writing, management, production and directing skills lead to the creation of Indiana Jones and Star Wars franchises. Yet he earned the vast majority of his wealth not through wages but through his company Lucasfilm. The wages he was paid do not reflect the full amount his labor earned him.

Or think of the multimillionaire (or even billionaire) hedge fund managers, who receive a large chunk of their compensation in the form of "carried interest", which is not classified as wages in the data, even though it relates to their fund management labor.

 

[dismal]

How are you going to differentiate yourself from the competition and get better employees by paying a little more if the competition is paying the same as you?

I don't feel like playing Socratic Method.

If you have a case you want to make go ahead and make it.

Hmm, I didn't think that point was hard to figure out.

Here it is in non-question form:

How are you You are not going to differentiate yourself from the competition and get better employees by paying a little more if the competition is paying the same as you?.

 

[coloradoatheist]

Maybe Marx liked his Apple products and realize your claim was full of bunk seeing a premium is added to the price that has absolutely nothing to do with the cost of the product production.

- - - Updated - - -

Which is a great idea. Use ridiculous hyperbole in order to make a reasonable idea (affordable wages that makes welfare less necessary, we are paying one way or the other) into a ridiculous idea that no one ever even came close to suggesting in the first place.

- - - Updated - - -

Income inequality? Here is the rub for those panzy communistic liberals. The scabs on welfare have jobs that pay crap. If we don't allow that and force companies to pay more, costs on services and goods increases. That would be the worst thing that could ever happen!

Sure, instead of having a more livable wage, we have to help pay for their housing, health care, utility bills, food, college, etc... And in the process, working hard to strip them of dignity, by accusing them of being a race that hasn't held jobs for three or four generations and are simply the victims of themselves. And despite of all their alleged laziness, getting all this free stuff like cell phones and food and the best housing money can buy and cable and refrigerators.

Sure, stripping them of dignity and paying all that welfare is expensive and hard work relative to a more livable wage, but I don't want to spend $2 on a hamburger.

What do we want?
We want to pay the lowest possible price on goods and services!
Even if that means higher welfare costs on our tax bills?
We can hand wave that away by calling for welfare cuts because we can say people on welfare are lazy!

You want to clarify the point I bolded?

That people demonize what people receive on welfare, especially the working poor.

And you are making the bad assumption that creating the living wage won't hurt the people that need it. If raises costs to business have no impact, then we should have no problems raising the living wage to a million dollars.

That is ridiculous. We aren't talking about increasing wages to increase costs and there is no reason that increasing wages slowly over time would have any harmful effects to employment. What we are talking about is increasing wages and cutting profits, that is all. Increasing the amount of income that goes to the 99% by decreasing the amount of income that goes as profits to the 1%.

Profits and wages are both costs of production. We simply want more money to go to wages and less to go to profits. All of the inflation that we have had since 2009 has been due to increased profits.

Strawman. He's not saying the purpose of raising wages is to increase costs, but rather that the effect of raising wages is to increase costs.

And you're not going to accomplish your objective in most markets. When you shift money away from profits the field looks less inviting--more players leave, fewer enter. Eventually profits come back to the normal level. (And the reverse also happens--when a field has too much profit you get new players driving down the price. You can only sustain excess profit if you have a monopoly.)

Or they just raise the price of the service / product in order to adjust to the increase in Labor costs. You keep talking as if this isn't an option. If all low wage corps have to do this, the increase will be across the board.

How do you think that prices are set? If the producers could raise their prices after the wage increases why didn't they raise them before to make more profits? Were they being magnanimous toward their customers?

I will ask you the same question I asked Loren. (no fair comparing answers.) In 1970 the profit level in the whole economy was 5% of GDP. The latest level is 11%. The share of GDP that goes to wages has dropped by 6%. It looks to me as if profits have more than doubled by reducing wages.

In 1980 we instituted economic policies to do that very thing, to increase profits by suppressing wages. It seems to me that those policies worked, they increased profits and decreased wages. This isn't a very big leap in reasoning, is it?

But all of a sudden the very same people who told us in 1980 that these economic policies would do this, increase profits and decrease wages, have seemingly forgotten it now and are off for any other possible reasons that profits have increased by reducing wages.

The profits have bounced around and now are higher than normal, but you can have a lot of contributing factors that explain it. The government has in recent decades put in a lot of supply-side deterrents that have slowed down growth and allowed profit margins to creep up, even though you want to blame tax rates.

 

[ksen]

I don't feel like playing Socratic Method.

If you have a case you want to make go ahead and make it.

Hmm, I didn't think that point was hard to figure out.

Here it is in non-question form:

How are you You are not going to differentiate yourself from the competition and get better employees by paying a little more if the competition is paying the same as you?.

Who has argued you can't differentiate yourself by paying a little more than your competitors? The above reads like you think we're arguing for Nixon-era wage controls when we're not.

 

[dismal]

Hmm, I didn't think that point was hard to figure out.

Here it is in non-question form:

How are you You are not going to differentiate yourself from the competition and get better employees by paying a little more if the competition is paying the same as you?.

Who has argued you can't differentiate yourself by paying a little more than your competitors?

Costco argues you can. But it requires competitors pay less than Costco.

 

[ksen]

Who has argued you can't differentiate yourself by paying a little more than your competitors?

Costco argues you can. But it requires competitors pay less than Costco.

Still not getting your point. No one has argued that companies can't differentiate themselves by paying higher wages than their competitors.