4 ms·

> OK, so what is the flaw in the current setup that prevents workers from receiving their share of the wealth created? How do you think the system should be cha

> OK, so what is the flaw in the current setup that prevents workers from receiving their share of the wealth created? How do you think the system should be changed? I have no problem with that and I agree with you (but you don't seem to think so). I think it works very well. It's brilliant that many companies have ESOPs. Early employees that take on risk by joining fledgling companies get huge rewards when things pan out. Even workers who come into the business at later stages can get huge gains of they are deemed to bring in proportional value. >government supplies an implied safety net (Too Big to Fail). I am very much against this myself. I despise it even. Socialised losses and privatised gains are evil.

webmaven 10y ago
> I think it works very well. This seems to be the crux of our disagreement. I don't think the current setup works very well, at least not for the bottom 3/4 of the US population. Basically, it was working OK until circa 1975, after which point any gains in improved productivity started accruing to owners of capital almost exclusively. And the more capital you have, the larger your share of those gains, in a superlinear fashion. Meanwhile worker compensation (as measured in constant dollars) has stagnated and even shrunk somewhat recently.
- _andromeda_ 10y ago
  >the more capital you have, the larger your share of those gains, in a superlinear fashion This is the essence of capitalism and why it works well. Gains exponentiate and as well they should. Capitalism favours retention of capital goods as opposed to the consumption of said capital. What has happened is that many folks have engaged in consumerism and the savings rate has gone down immensely. This phenomenon has negatively affected the middle class and working class more than any misconstrued notion of increased productivity without corresponding increase in compensation. If you're to address the culprit, start there. You cannot invest into a better future if you consume everything and this is exactly what has happened. Nobody cares about savings anymore. Such high time preference, it's horrible! Here's an excerpt from an Austrian (school) blog: Low time preference people value present use of their money less than a certain higher future quantity of money. High time preference people, in contrast, are willing to forego higher future quantities of money for sake of enjoying a certain lower present quantity of money. The low time preference people will therefore be inclined to lend to the high time preference people. That last part is extremely vital. It explains the perpetual cycle we seem to be in. The middle class and working class engaging in excessive consumerism will at some point need to borrow money from the fiscally disciplined to engage in even more consumerism. It has been claimed that the current savings rate is only comparable to that of medieval peasants (more validation needed on this but if it is the case, this is terrible). If all this is true, why would those gains you mention above fail to grow in a superlinear fashion? I think it is a case of eroded values more than anything else.
  - webmaven 10y ago
    > Gains exponentiate and as well they should. Sure, over time. But what I'm talking about is that the more capital you have the greater your rate of return. > the savings rate has gone down immensely Well, no wonder. Have you looked at the interest rate you get on a savings' account? You can't even keep up with inflation that way. > why would those gains you mention above fail to grow in a superlinear fashion? You assume that all uses of borrowed capital are consumed with no ROI, when much of it is invested in present or future health (healthcare, better food, safer car), education (particularly through paying higher home costs to get kids into a better school), property improvements, cost savings (more fuel efficient vehicles) and the like. Sure, a chunk of it is spent on entertainment of various sorts that doesn't have a clear ROI, but this is actually the one area where the consumers' buying power has increased, even accounting for inflation, and the average % of income spent on entertainment has actually gone down considerably. So, while I certainly agree that compounding interest can account for some of the disparity, it doesn't account for all of it. Rather, we see that the top layers of society are raking in a greater and greater share of the total earned income, entirely aside from the compounding returns from renting out their accumulated capital. There is no real reason that the CEO of a corporation should receive 300x the salary of a lowly employee, except that the boards that set compensation are comprised solely of people from the same social class. > I think it is a case of eroded values more than anything else. Uh huh. So, being poor is a moral failing, is it? Next you'll be telling me that low incomes give poor people an incentive to work harder, but that we need to pay rich people more so that they have an incentive to work harder.

webmaven 10y ago

> I think it works very well. This seems to be the crux of our disagreement. I don't think the current setup works very well, at least not for the bottom 3/4 of the US population. Basically, it was working OK until circa 1975, after which point any gains in improved productivity started accruing to owners of capital almost exclusively. And the more capital you have, the larger your share of those gains, in a superlinear fashion. Meanwhile worker compensation (as measured in constant dollars) has stagnated and even shrunk somewhat recently.

_andromeda_ 10y ago
>the more capital you have, the larger your share of those gains, in a superlinear fashion This is the essence of capitalism and why it works well. Gains exponentiate and as well they should. Capitalism favours retention of capital goods as opposed to the consumption of said capital. What has happened is that many folks have engaged in consumerism and the savings rate has gone down immensely. This phenomenon has negatively affected the middle class and working class more than any misconstrued notion of increased productivity without corresponding increase in compensation. If you're to address the culprit, start there. You cannot invest into a better future if you consume everything and this is exactly what has happened. Nobody cares about savings anymore. Such high time preference, it's horrible! Here's an excerpt from an Austrian (school) blog: Low time preference people value present use of their money less than a certain higher future quantity of money. High time preference people, in contrast, are willing to forego higher future quantities of money for sake of enjoying a certain lower present quantity of money. The low time preference people will therefore be inclined to lend to the high time preference people. That last part is extremely vital. It explains the perpetual cycle we seem to be in. The middle class and working class engaging in excessive consumerism will at some point need to borrow money from the fiscally disciplined to engage in even more consumerism. It has been claimed that the current savings rate is only comparable to that of medieval peasants (more validation needed on this but if it is the case, this is terrible). If all this is true, why would those gains you mention above fail to grow in a superlinear fashion? I think it is a case of eroded values more than anything else.
- webmaven 10y ago
  > Gains exponentiate and as well they should. Sure, over time. But what I'm talking about is that the more capital you have the greater your rate of return. > the savings rate has gone down immensely Well, no wonder. Have you looked at the interest rate you get on a savings' account? You can't even keep up with inflation that way. > why would those gains you mention above fail to grow in a superlinear fashion? You assume that all uses of borrowed capital are consumed with no ROI, when much of it is invested in present or future health (healthcare, better food, safer car), education (particularly through paying higher home costs to get kids into a better school), property improvements, cost savings (more fuel efficient vehicles) and the like. Sure, a chunk of it is spent on entertainment of various sorts that doesn't have a clear ROI, but this is actually the one area where the consumers' buying power has increased, even accounting for inflation, and the average % of income spent on entertainment has actually gone down considerably. So, while I certainly agree that compounding interest can account for some of the disparity, it doesn't account for all of it. Rather, we see that the top layers of society are raking in a greater and greater share of the total earned income, entirely aside from the compounding returns from renting out their accumulated capital. There is no real reason that the CEO of a corporation should receive 300x the salary of a lowly employee, except that the boards that set compensation are comprised solely of people from the same social class. > I think it is a case of eroded values more than anything else. Uh huh. So, being poor is a moral failing, is it? Next you'll be telling me that low incomes give poor people an incentive to work harder, but that we need to pay rich people more so that they have an incentive to work harder.