5 ms·

Interesting what you've given us to consider, in regards to "charity benefiting its owner", to suggest these two things as comparable: (1) insufficient wag

by rskar 11y ago

Interesting what you've given us to consider, in regards to "charity benefiting its owner", to suggest these two things as comparable: (1) insufficient wages (per Adam Smith) as set by private enterprise (2) private enterprise usage of services/infrastructure as provided by government above and beyond their share of taxes Walmart was in the news recently enough (http://www.msnbc.com/martin-bashir/mcdonalds-employee-resource-advice http://www.msnbc.com/martin-bashir/mcdonalds-employee-resour... and http://www.bloombergview.com/articles/2013-11-13/how-mcdonald-s-and-wal-mart-became-welfare-queens http://www.bloombergview.com/articles/2013-11-13/how-mcdonal...) about their low wages and their advice to employees to avail themselves of government assistance programs (a.k.a. "handouts" - that's not a mean word, is it? http://dailysignal.com/2011/03/18/welfare-reform-self-reliance-not-government-handouts/ http://dailysignal.com/2011/03/18/welfare-reform-self-relian...). So, between Walmart (or MacDonald's, etc.) and such employees, who is the beneficiary of charity here (at least in the Adam Smith sense)?

ikeboy 11y ago
My point was the reverse, actually. We're fine with companies benefiting off roads, because they pay taxes. Roads are a public good funded with public funds. I think we should be just as fine with companies benefiting from the public good of welfare. If we don't think it's a public good, we shouldn't fund it. Now, if they were directly contributing to an increase in public funding, then we might wish to discourage that. But if they wouldn't hire the worker, they would necessarily be paid less or not at all (else they would quit; abstracting away from inefficiencies which may make this inaccurate). So Walmart's decision to offer a wage that's the best the worker will get, yet is not livable by itself, still benefits the government, because otherwise the entire cost falls on the government. Mandating a minimum wage, and letting those workers become unemployed, just makes things worse. Of course, this assumes that increasing the minimum wage leads to a decrease in jobs, which is itself controversial.
- rskar 11y ago
  > Mandating a minimum wage, and letting those workers become unemployed, just makes things worse. I'm not sure what you mean by "My point was the reverse" - "public good" is not charity I guess? I'm trying to wrap my head around how a less-than-living wage is a necessity for certain kinds of industry to function profitably, and that, furthermore, indirect government subsidies to them via handouts are essential enablers. Is it that consumers perpetually undervalue the products of retailers and restaurants? Or is it that without the subsidies many retailers and restaurants would face much "pent-up demand" (as economists may call it)? Frankly, for money to have any meaning to it, this situation must somehow have a cash-flow that at minimum breaks even. I.e., if these industries are gainful, that gain should somehow be reflected in the tax revenue back to government, the compensations to executives, the dividends to shareholders, etc. Which means if this is a good deal for the government, does it at least breakeven on the handouts it has made? Not sure if that is happening - there's certainly plenty of think-tank whitepapers available that declare social programs as unsustainable (e.g. http://budget.house.gov/uploadedfiles/rectortestimony04172012.pdf http://budget.house.gov/uploadedfiles/rectortestimony0417201...). But here are some fun factoids: From http://www.marketwatch.com http://www.marketwatch.com, I get for McDonald's a net income about $5 billion on revenue over $25 billion; for Walmart it's a net of $15 billion on revenue over $480 billion. marketwatch.com also shows revenue per employee of $60,507 for McDonald's, and $209,622 for Walmart. So there's money to be made in cheap food and cheap goods. So, let's see, a $5/hr increase for a 35 hr workweek and 50 workweeks in a year comes to a $8,750 hit to the revenue per employee amount. So maybe a 14% increase in the price of fast-food burgers and 4% increase in white socks? So in light of growing government deficits, growing corporate profits (well, we'll see about 2016 - http://www.bea.gov/newsreleases/national/gdp/2016/gdp4q15_3rd.htm http://www.bea.gov/newsreleases/national/gdp/2016/gdp4q15_3r...), and reasonable (whitepaper-ishly anyway) suggestions on the unsustainability of the "public goods" collectively known as the "Welfare State", in this discussion on whether wages need to have some sort of mandatory minimum - well, what are we to make of this? Too many economically useless people?
  - ikeboy 11y ago
    You'd need to increase profits, not revenue. If profit margins are around 3%, you'd need to more than double revenue per employee for Walmart. And of course, doubling prices makes less sales, so doesn't double revenue, it might even reduce revenue. Re reverse: you said "above taxes paid" for roads, which I didn't mean to imply. Regarding your "break even" idea: suppose the most someone's labor is worth is $22500 a year. Suppose the minimum required to live is $30000. The government has decided that nobody should starve, and so any outcomes where this person starves are not to be considered. There are two options: allow them to work for $22500 or less, whatever the market will pay, and pay $7500 from welfare, or forbid them from working, and pay them $30000. I don't see how the second is preferable to the first. So if you believe that raising minimum wage hurts jobs (an empirical question that has economists on both sides), then you shouldn't support. The other model you could have is: Value of labor is $30000, but there's so much labor available that the market will only pay $22500. Then, mandating a minimum wage does raise the amount paid, although it can still have negative effects elsewhere. Probably both models are correct for different jobs, and the question is which one is more often correct. I'm also neglecting inflation, part time, disincentives to work, and so on. As I understand it deficits have been shrinking. Where are you getting the growing stat from?
    - deleted 11y ago
      [deleted]
    - rskar 11y ago
      >You'd need to increase profits, not revenue. I wonder if we're starting to talk past one another. I'm just a layperson here, but I believe I got the meaning of revenue (http://www.investopedia.com/terms/r/revenue.asp http://www.investopedia.com/terms/r/revenue.asp) and net income (http://www.investopedia.com/terms/n/netincome.asp http://www.investopedia.com/terms/n/netincome.asp) right. So, revenue is all the money coming in, and revenue per employee really is all money coming in divided by the number of employees. If more money is needed to cover a wage increase, one needs an increase in revenue. Apparently, profit is sometimes synonymous with net income, and sometimes it means what's left of net income after taxes and dividends are paid. In any case, it is not impossible for profit to stay about the same while revenue is increased; that all is dependent on where you're at on your supply-and-demand curve on whether sales are terribly affected by a price increase. E.g., remember when gasoline approached $3.50/gal (http://www.statista.com/statistics/204740/retail-price-of-gasoline-in-the-united-states-since-1990/); http://www.statista.com/statistics/204740/retail-price-of-ga... didn't effect sales by much (http://www.statista.com/statistics/189424/us-alternative-and-traditional-fuel-consumption-of-highway-vehicles-since-1992/ http://www.statista.com/statistics/189424/us-alternative-and...). I'm willing to bet that burgers and white socks will move about the same. >As I understand it deficits have been shrinking I get where you're coming from, in the past few years deficits have decreased, and considering the mess that revealed itself months before President Obama's inauguration, one would certainly hope dramatic decreases would come and soon. However, I've been around long enough (ok, alive in the 1970's) to remember when deficits began to be so on the minds of people generally and be a general concern. Check out https://www.whitehouse.gov/omb/budget/Historicals https://www.whitehouse.gov/omb/budget/Historicals, and http://mediamatters.org/research/2015/10/19/new-data-debunks-years-of-fox-news-paranoia-abo/206262 http://mediamatters.org/research/2015/10/19/new-data-debunks.... Aside from several good years in the Clinton administration, it's been mostly deficits at substantial or significant levels. Pick a reasonable window of time between now and 10 years or 20 years or 30 years ago, and fit a trend line. You'll find the trend is still highly suggestive of increasing deficits (no matter if Obamacare makes these future increases smaller, https://www.cbo.gov/publication/50252 https://www.cbo.gov/publication/50252 and https://www.cbo.gov/publication/49892 https://www.cbo.gov/publication/49892 and https://www.cbo.gov/sites/default/files/51118-2016-03-BudgetProjections.xlsx https://www.cbo.gov/sites/default/files/51118-2016-03-Budget...). >Regarding your "break even" idea Yep, it's just my conjecture. But your counterpoint conveniently side steps on just how the government produces the $7500 in your example. Raising taxes? Issuing more Treasury bonds? Perhaps you could elaborate on this?
- specialist 11y ago
  Which companies pay taxes comparable to the benefit they receive from society?
  - ikeboy 11y ago
    You're missing the point. If the benefit was equal to the taxes paid, there's be no point in having taxes. Taxes should produce a net gain, so the benefit needs to be, on average, worth more than the taxes. We need to look at the amount the government spends on them. And yes, this will automatically be around as much as the average company pays in taxes. If the total spent is equal to the total collected in taxes, then the average company has as much spent on it as it pays in taxes. The differentiation among companies/individuals is government picking winners and losers. Just like the fact that the wealthy pay more in taxes and the poor receive more means the government is picking certain individuals to have more spent on them. There's nothing wrong with that, of course, it's just what society decides.
    - specialist 11y ago
      there'd be no point in having taxes "Taxes" is just the revenue column for society's ledger. You're missing the point. I also didn't make my point very well: For the last 40 years, society's tax burden had steadily shifted from corporate profits to labor. In other words, people now subsidize business. Now that corporations are people (too), it's unfair to exclude them from the opportunity to subsidize business.
      - ikeboy 11y ago
        >"Taxes" is just the revenue column for society's ledger. Yes, and if the societal benefit to sociatal spending was less than the cost of revenue, then it's a net loss to society to have such a thing.
        specialist 11y ago
        Okay. I'll consider that viewpoint. My local peeps discussing policy (eg tax breaks for job creators) ask similar questions, like if current policies achieve the desired outcomes. I'm all about pragmatic incentives; aka what ever works. Meanwhile, I'm still chewing on two other notions. "Taxes" is the government's way to stimulate demand for money. Kinda flips the model on its head, reversing the flow of information, which is not yet intuitive for me. Taxes and procurement are just means to transfer wealth.
brightball 11y ago
The thing is that it's easier for a large business to do that than a small one...which is the type that can't afford to pay people so much more.

by rskar 11y ago

ikeboy 11y ago

My point was the reverse, actually. We're fine with companies benefiting off roads, because they pay taxes. Roads are a public good funded with public funds. I think we should be just as fine with companies benefiting from the public good of welfare. If we don't think it's a public good, we shouldn't fund it. Now, if they were directly contributing to an increase in public funding, then we might wish to discourage that. But if they wouldn't hire the worker, they would necessarily be paid less or not at all (else they would quit; abstracting away from inefficiencies which may make this inaccurate). So Walmart's decision to offer a wage that's the best the worker will get, yet is not livable by itself, still benefits the government, because otherwise the entire cost falls on the government. Mandating a minimum wage, and letting those workers become unemployed, just makes things worse. Of course, this assumes that increasing the minimum wage leads to a decrease in jobs, which is itself controversial.

rskar 11y ago
> Mandating a minimum wage, and letting those workers become unemployed, just makes things worse. I'm not sure what you mean by "My point was the reverse" - "public good" is not charity I guess? I'm trying to wrap my head around how a less-than-living wage is a necessity for certain kinds of industry to function profitably, and that, furthermore, indirect government subsidies to them via handouts are essential enablers. Is it that consumers perpetually undervalue the products of retailers and restaurants? Or is it that without the subsidies many retailers and restaurants would face much "pent-up demand" (as economists may call it)? Frankly, for money to have any meaning to it, this situation must somehow have a cash-flow that at minimum breaks even. I.e., if these industries are gainful, that gain should somehow be reflected in the tax revenue back to government, the compensations to executives, the dividends to shareholders, etc. Which means if this is a good deal for the government, does it at least breakeven on the handouts it has made? Not sure if that is happening - there's certainly plenty of think-tank whitepapers available that declare social programs as unsustainable (e.g. http://budget.house.gov/uploadedfiles/rectortestimony04172012.pdf http://budget.house.gov/uploadedfiles/rectortestimony0417201...). But here are some fun factoids: From http://www.marketwatch.com http://www.marketwatch.com, I get for McDonald's a net income about $5 billion on revenue over $25 billion; for Walmart it's a net of $15 billion on revenue over $480 billion. marketwatch.com also shows revenue per employee of $60,507 for McDonald's, and $209,622 for Walmart. So there's money to be made in cheap food and cheap goods. So, let's see, a $5/hr increase for a 35 hr workweek and 50 workweeks in a year comes to a $8,750 hit to the revenue per employee amount. So maybe a 14% increase in the price of fast-food burgers and 4% increase in white socks? So in light of growing government deficits, growing corporate profits (well, we'll see about 2016 - http://www.bea.gov/newsreleases/national/gdp/2016/gdp4q15_3rd.htm http://www.bea.gov/newsreleases/national/gdp/2016/gdp4q15_3r...), and reasonable (whitepaper-ishly anyway) suggestions on the unsustainability of the "public goods" collectively known as the "Welfare State", in this discussion on whether wages need to have some sort of mandatory minimum - well, what are we to make of this? Too many economically useless people?
- ikeboy 11y ago
  You'd need to increase profits, not revenue. If profit margins are around 3%, you'd need to more than double revenue per employee for Walmart. And of course, doubling prices makes less sales, so doesn't double revenue, it might even reduce revenue. Re reverse: you said "above taxes paid" for roads, which I didn't mean to imply. Regarding your "break even" idea: suppose the most someone's labor is worth is $22500 a year. Suppose the minimum required to live is $30000. The government has decided that nobody should starve, and so any outcomes where this person starves are not to be considered. There are two options: allow them to work for $22500 or less, whatever the market will pay, and pay $7500 from welfare, or forbid them from working, and pay them $30000. I don't see how the second is preferable to the first. So if you believe that raising minimum wage hurts jobs (an empirical question that has economists on both sides), then you shouldn't support. The other model you could have is: Value of labor is $30000, but there's so much labor available that the market will only pay $22500. Then, mandating a minimum wage does raise the amount paid, although it can still have negative effects elsewhere. Probably both models are correct for different jobs, and the question is which one is more often correct. I'm also neglecting inflation, part time, disincentives to work, and so on. As I understand it deficits have been shrinking. Where are you getting the growing stat from?
  - deleted 11y ago
    [deleted]
  - rskar 11y ago
    >You'd need to increase profits, not revenue. I wonder if we're starting to talk past one another. I'm just a layperson here, but I believe I got the meaning of revenue (http://www.investopedia.com/terms/r/revenue.asp http://www.investopedia.com/terms/r/revenue.asp) and net income (http://www.investopedia.com/terms/n/netincome.asp http://www.investopedia.com/terms/n/netincome.asp) right. So, revenue is all the money coming in, and revenue per employee really is all money coming in divided by the number of employees. If more money is needed to cover a wage increase, one needs an increase in revenue. Apparently, profit is sometimes synonymous with net income, and sometimes it means what's left of net income after taxes and dividends are paid. In any case, it is not impossible for profit to stay about the same while revenue is increased; that all is dependent on where you're at on your supply-and-demand curve on whether sales are terribly affected by a price increase. E.g., remember when gasoline approached $3.50/gal (http://www.statista.com/statistics/204740/retail-price-of-gasoline-in-the-united-states-since-1990/); http://www.statista.com/statistics/204740/retail-price-of-ga... didn't effect sales by much (http://www.statista.com/statistics/189424/us-alternative-and-traditional-fuel-consumption-of-highway-vehicles-since-1992/ http://www.statista.com/statistics/189424/us-alternative-and...). I'm willing to bet that burgers and white socks will move about the same. >As I understand it deficits have been shrinking I get where you're coming from, in the past few years deficits have decreased, and considering the mess that revealed itself months before President Obama's inauguration, one would certainly hope dramatic decreases would come and soon. However, I've been around long enough (ok, alive in the 1970's) to remember when deficits began to be so on the minds of people generally and be a general concern. Check out https://www.whitehouse.gov/omb/budget/Historicals https://www.whitehouse.gov/omb/budget/Historicals, and http://mediamatters.org/research/2015/10/19/new-data-debunks-years-of-fox-news-paranoia-abo/206262 http://mediamatters.org/research/2015/10/19/new-data-debunks.... Aside from several good years in the Clinton administration, it's been mostly deficits at substantial or significant levels. Pick a reasonable window of time between now and 10 years or 20 years or 30 years ago, and fit a trend line. You'll find the trend is still highly suggestive of increasing deficits (no matter if Obamacare makes these future increases smaller, https://www.cbo.gov/publication/50252 https://www.cbo.gov/publication/50252 and https://www.cbo.gov/publication/49892 https://www.cbo.gov/publication/49892 and https://www.cbo.gov/sites/default/files/51118-2016-03-BudgetProjections.xlsx https://www.cbo.gov/sites/default/files/51118-2016-03-Budget...). >Regarding your "break even" idea Yep, it's just my conjecture. But your counterpoint conveniently side steps on just how the government produces the $7500 in your example. Raising taxes? Issuing more Treasury bonds? Perhaps you could elaborate on this?
specialist 11y ago
Which companies pay taxes comparable to the benefit they receive from society?
- ikeboy 11y ago
  You're missing the point. If the benefit was equal to the taxes paid, there's be no point in having taxes. Taxes should produce a net gain, so the benefit needs to be, on average, worth more than the taxes. We need to look at the amount the government spends on them. And yes, this will automatically be around as much as the average company pays in taxes. If the total spent is equal to the total collected in taxes, then the average company has as much spent on it as it pays in taxes. The differentiation among companies/individuals is government picking winners and losers. Just like the fact that the wealthy pay more in taxes and the poor receive more means the government is picking certain individuals to have more spent on them. There's nothing wrong with that, of course, it's just what society decides.
  - specialist 11y ago
    there'd be no point in having taxes "Taxes" is just the revenue column for society's ledger. You're missing the point. I also didn't make my point very well: For the last 40 years, society's tax burden had steadily shifted from corporate profits to labor. In other words, people now subsidize business. Now that corporations are people (too), it's unfair to exclude them from the opportunity to subsidize business.
    - ikeboy 11y ago
      >"Taxes" is just the revenue column for society's ledger. Yes, and if the societal benefit to sociatal spending was less than the cost of revenue, then it's a net loss to society to have such a thing.
      - specialist 11y ago
        Okay. I'll consider that viewpoint. My local peeps discussing policy (eg tax breaks for job creators) ask similar questions, like if current policies achieve the desired outcomes. I'm all about pragmatic incentives; aka what ever works. Meanwhile, I'm still chewing on two other notions. "Taxes" is the government's way to stimulate demand for money. Kinda flips the model on its head, reversing the flow of information, which is not yet intuitive for me. Taxes and procurement are just means to transfer wealth.

brightball 11y ago

The thing is that it's easier for a large business to do that than a small one...which is the type that can't afford to pay people so much more.