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I think the thing that is at odds with this attitude is that more and more prevalently "The people who receive employment from the steel mill." don't actually b

I think the thing that is at odds with this attitude is that more and more prevalently "The people who receive employment from the steel mill." don't actually benefit from 500% growth. Instead they might have 6 additional months of job security with little to no raises. And that job security isn't a favor it's because that's the amount of time those workers are needed to get through whatever contract and not any further. In other words, the absolute maximum profit the steel mill can make. And of course your argument is on the side of the people that risked everything to start a steel mill. So yeah, it's a complex system - but that doesn't mean we have to shit on everyone else.

briffle 8y ago
More common, every other year or so, they will get a 'raise' that management loves to promote, that doesn't cover the cost of living adjustments the last 2 years.
weberc2 8y ago
It's not "shitting on" anyone; it's how (efficient) economics works. You don't earn more money unless you're producing more value. If a steel mill increases its output by way of some new automation, the accounting department and janitorial staff are unlikely to see a wage increase. The folks on the assembly line are also unlikely to see a wage increase because they're not more productive. The people who will be principally rewarded are the people who developed (including investing) the automation. In other words, as I understand it, economic rules aren't arbitrary--it's not like some cabal of mean rich guys is preventing us from flipping the switch that would make everyone obscenely rich (which is distinct from a cabal of mean rich guys _interfering_ with an economy to make themselves wealthy at the expense of the efficiency of the economy).
- TimJYoung 8y ago
  If you pursue "efficiency" to extremes like this, you're going to bump up against political and social realities that are going to ruin your efficiencies in ways that make giving pay increases seem like a no-brainer.
  - weberc2 8y ago
    1. I don't think this is true in any meaningful capacity; it just means we need to find ways to keep a critical mass of people involved in productivity. 2. This is a different argument than the one to which I was responding (which seemed to be something like, "it's mean to have the opinion that economic systems reward productivity").
    - TimJYoung 8y ago
      You cannot pursue "pure capitalism" to its logical end. Like "pure communism", it just ends in misery and suffering for everyone. "Productivity" cannot be re-defined so that those that do the actual labor are removed from the equation. If a company or firm produces more revenue, than it's a simple value judgement as to how that revenue is distributed, and, right now, those at the top of company management and investors are the only people making that decision. Organizations like unions simply change how that decision is made by re-balancing the power involved with the decision. You may want to keep all of the revenue gains from your automation to yourself and your investors, but you may not be able to if it means that most of your workforce walks off the job. Likewise, you can automate your entire operations with robots and computers, but good luck trying to sell whatever it is you're producing when everyone is (effectively) unemployed.
      - weberc2 8y ago
        Your comment seems to agree with mine. I’m not advocating for “pure capitalism”, and your “simple value judgment” (as described) is pure economic reasoning: > You may want to keep all of the revenue gains from your automation to yourself and your investors, but you may not be able to if it means that most of your workforce walks off the job. Which isn’t to say that it’s not a value judgment, but rather that an economy is made up of a sea of value judgments interoperating, though not all value judgments are sustainable or well-calculated.
- eiaoa 8y ago
  > It's not "shitting on" anyone; it's how (efficient) economics works. You don't earn more money unless you're producing more value. If a steel mill increases its output by way of some new automation, the accounting department and janitorial staff are unlikely to see a wage increase. The folks on the assembly line are also unlikely to see a wage increase because they're not more productive. The people who will be principally rewarded are the people who developed (including investing) the automation. In your example, all the steel mill owners have to do to make more money is to passively own the steel mill while their employees work to improve it. If "efficient economics" works by compensating the people who create value, why are the passive owners getting most of the compensation? They're not creating any value. By your logic they probably should get less than the janitors and assembly line workers, who at least create some value.
  - weberc2 8y ago
    Good question! That’s the “investment” part. They risked the funds to create the value in the first place in exchange for returns on their investment.
    - eiaoa 8y ago
      > Good question! That’s the “investment” part. They risked the funds to create the value in the first place in exchange for returns on their investment. That's not really an answer. You're just saying their entitled to the passive returns from ownership because they owned something else. It's circular. Anyone could take a risk with the funds if given access to them, even the janitors and line workers.
      - weberc2 8y ago
        Then I'm not sure what answer you're hoping for. > You're just saying their entitled to the passive returns from ownership because they owned something else. Not sure what you mean here, but I agree that investors are entitled to the returns stipulated in the investment agreement. Hopefully this isn't a controversial position. > Anyone could take a risk with the funds if given access to them, even the janitors and line workers. Yes, janitors and line workers can (and regularly do) invest their finances as well, frequently for the very company for which they work (although they are very likely not investing enough to be principal owners, because even very small companies tend to be very expensive relative to the average salary of a janitor or line worker).
- maxxxxx 8y ago
  I have a problem with calling people that have a lot of money to invest with as value creating. We should give more respect to the people who do the work instead of funneling all the benefits to people who just happen to have money.
  - weberc2 8y ago
    Sorry dude, that's how economies work. Investors agree to buy shares in exchange for the right to sell those shares later. Employees agree to work in exchange for a salary; if they can find a larger salary elsewhere, they're free to pursue it. If employees want to buy some part of a company, they can do that as well (assuming they can persuade someone with shares to sell them) and then they'll earn (or lose) RoI just like other investors.
    - maxxxxx 8y ago
      "Sorry dude, that's how economies work." There is no natural law that says things have to be that way. The economy is man made and when you look a different countries you'll see that there is a lot variation. There is no natural reason that for example investment income should be taxed lower than employment income. You could come up with a law that requires a certain share of the company's profits to be distributed to employees instead everything going to shareholders. There are lot of things that can be tweaked. In general I object to the idea that people who have a lot of money (earned or inherited) create more value than the people working for them. Both sides play a role in this economy and deserve to be respected as value creator.
      - weberc2 8y ago
        > In general I object to the idea that people who have a lot of money (earned or inherited) create more value than the people working for them. Both sides play a role in this economy and deserve to be respected as value creator. Right. Efficient economies do reward people according to the value they create. I'm pushing you toward one of the following arguments: 1. Returns on investment are artificially high (relative to wages) because of an inefficiency in the economy 2. We should introduce inefficiency in the economy in order to keep RoIs artificially low (relative to wages) If (1), then please describe the inefficiencies (you mentioned one possibility--taxes on investment income). If (2), what good could come of this?
- harimau777 8y ago
  Aren't the people running the new machines creating more value because the machines make them more productive? If not, doesn't that suggest that it would be virtually impossible for average people to meaningfully improve their economic condition since any meaningful increases in productivity are almost certainly going to be a result of advances in technology?
  - mactrey 8y ago
    Wages depend directly on the supply of and demand for labor, and only indirectly on the amount of value produced in an hour of labor. So if assembly line workers notice that coders are making tons of money, and so the assembly line workers move en masse away from assembly line work toward technical careers, then the factory owners would have to compensate the remaining assembly line workers higher since there is no longer a ready supply of competent labor ready to replace them. It would not even have to be that assembly line workers switch careers, just that the number of new workers entering the field declines as young people choose other, more lucrative career paths. Unfortunately, it is quite difficult to make your way into a technical career without a significant investment in education and (I would argue) a certain personality type. So we aren't seeing thousands of people moving away from low-skill jobs into technical careers. The supply of labor for jobs like "warehouse worker" simply hasn't declined enough to offset the decline in demand (due to increased automation, outsourcing, structural changes, or whatever). The result is that those workers see lower wages. At the same time, compensation in technical careers seems a bit ridiculous: $200k to write Python for 35 hours a week? I've heard numbers like that thrown around - but companies still complain of a lack of qualified workers for those roles. This is all just to say that the owners of capital aren't going to pass excess profits on to labor out of the goodness of their hearts, just as labor isn't going to work harder than the bare minimum required to keep getting their paycheck. But they might be forced to pay higher wages if they can't find good workers. If the structure of the economy changes so that some sectors are more productive, then the supply and demand of labor should shift to keep things from getting out of whack. That hasn't been happening in recent decades.

briffle 8y ago

More common, every other year or so, they will get a 'raise' that management loves to promote, that doesn't cover the cost of living adjustments the last 2 years.

weberc2 8y ago

It's not "shitting on" anyone; it's how (efficient) economics works. You don't earn more money unless you're producing more value. If a steel mill increases its output by way of some new automation, the accounting department and janitorial staff are unlikely to see a wage increase. The folks on the assembly line are also unlikely to see a wage increase because they're not more productive. The people who will be principally rewarded are the people who developed (including investing) the automation. In other words, as I understand it, economic rules aren't arbitrary--it's not like some cabal of mean rich guys is preventing us from flipping the switch that would make everyone obscenely rich (which is distinct from a cabal of mean rich guys _interfering_ with an economy to make themselves wealthy at the expense of the efficiency of the economy).

TimJYoung 8y ago
If you pursue "efficiency" to extremes like this, you're going to bump up against political and social realities that are going to ruin your efficiencies in ways that make giving pay increases seem like a no-brainer.
- weberc2 8y ago
  1. I don't think this is true in any meaningful capacity; it just means we need to find ways to keep a critical mass of people involved in productivity. 2. This is a different argument than the one to which I was responding (which seemed to be something like, "it's mean to have the opinion that economic systems reward productivity").
  - TimJYoung 8y ago
    You cannot pursue "pure capitalism" to its logical end. Like "pure communism", it just ends in misery and suffering for everyone. "Productivity" cannot be re-defined so that those that do the actual labor are removed from the equation. If a company or firm produces more revenue, than it's a simple value judgement as to how that revenue is distributed, and, right now, those at the top of company management and investors are the only people making that decision. Organizations like unions simply change how that decision is made by re-balancing the power involved with the decision. You may want to keep all of the revenue gains from your automation to yourself and your investors, but you may not be able to if it means that most of your workforce walks off the job. Likewise, you can automate your entire operations with robots and computers, but good luck trying to sell whatever it is you're producing when everyone is (effectively) unemployed.
    - weberc2 8y ago
      Your comment seems to agree with mine. I’m not advocating for “pure capitalism”, and your “simple value judgment” (as described) is pure economic reasoning: > You may want to keep all of the revenue gains from your automation to yourself and your investors, but you may not be able to if it means that most of your workforce walks off the job. Which isn’t to say that it’s not a value judgment, but rather that an economy is made up of a sea of value judgments interoperating, though not all value judgments are sustainable or well-calculated.
eiaoa 8y ago
> It's not "shitting on" anyone; it's how (efficient) economics works. You don't earn more money unless you're producing more value. If a steel mill increases its output by way of some new automation, the accounting department and janitorial staff are unlikely to see a wage increase. The folks on the assembly line are also unlikely to see a wage increase because they're not more productive. The people who will be principally rewarded are the people who developed (including investing) the automation. In your example, all the steel mill owners have to do to make more money is to passively own the steel mill while their employees work to improve it. If "efficient economics" works by compensating the people who create value, why are the passive owners getting most of the compensation? They're not creating any value. By your logic they probably should get less than the janitors and assembly line workers, who at least create some value.
- weberc2 8y ago
  Good question! That’s the “investment” part. They risked the funds to create the value in the first place in exchange for returns on their investment.
  - eiaoa 8y ago
    > Good question! That’s the “investment” part. They risked the funds to create the value in the first place in exchange for returns on their investment. That's not really an answer. You're just saying their entitled to the passive returns from ownership because they owned something else. It's circular. Anyone could take a risk with the funds if given access to them, even the janitors and line workers.
    - weberc2 8y ago
      Then I'm not sure what answer you're hoping for. > You're just saying their entitled to the passive returns from ownership because they owned something else. Not sure what you mean here, but I agree that investors are entitled to the returns stipulated in the investment agreement. Hopefully this isn't a controversial position. > Anyone could take a risk with the funds if given access to them, even the janitors and line workers. Yes, janitors and line workers can (and regularly do) invest their finances as well, frequently for the very company for which they work (although they are very likely not investing enough to be principal owners, because even very small companies tend to be very expensive relative to the average salary of a janitor or line worker).
maxxxxx 8y ago
I have a problem with calling people that have a lot of money to invest with as value creating. We should give more respect to the people who do the work instead of funneling all the benefits to people who just happen to have money.
- weberc2 8y ago
  Sorry dude, that's how economies work. Investors agree to buy shares in exchange for the right to sell those shares later. Employees agree to work in exchange for a salary; if they can find a larger salary elsewhere, they're free to pursue it. If employees want to buy some part of a company, they can do that as well (assuming they can persuade someone with shares to sell them) and then they'll earn (or lose) RoI just like other investors.
  - maxxxxx 8y ago
    "Sorry dude, that's how economies work." There is no natural law that says things have to be that way. The economy is man made and when you look a different countries you'll see that there is a lot variation. There is no natural reason that for example investment income should be taxed lower than employment income. You could come up with a law that requires a certain share of the company's profits to be distributed to employees instead everything going to shareholders. There are lot of things that can be tweaked. In general I object to the idea that people who have a lot of money (earned or inherited) create more value than the people working for them. Both sides play a role in this economy and deserve to be respected as value creator.
    - weberc2 8y ago
      > In general I object to the idea that people who have a lot of money (earned or inherited) create more value than the people working for them. Both sides play a role in this economy and deserve to be respected as value creator. Right. Efficient economies do reward people according to the value they create. I'm pushing you toward one of the following arguments: 1. Returns on investment are artificially high (relative to wages) because of an inefficiency in the economy 2. We should introduce inefficiency in the economy in order to keep RoIs artificially low (relative to wages) If (1), then please describe the inefficiencies (you mentioned one possibility--taxes on investment income). If (2), what good could come of this?
harimau777 8y ago
Aren't the people running the new machines creating more value because the machines make them more productive? If not, doesn't that suggest that it would be virtually impossible for average people to meaningfully improve their economic condition since any meaningful increases in productivity are almost certainly going to be a result of advances in technology?
- mactrey 8y ago
  Wages depend directly on the supply of and demand for labor, and only indirectly on the amount of value produced in an hour of labor. So if assembly line workers notice that coders are making tons of money, and so the assembly line workers move en masse away from assembly line work toward technical careers, then the factory owners would have to compensate the remaining assembly line workers higher since there is no longer a ready supply of competent labor ready to replace them. It would not even have to be that assembly line workers switch careers, just that the number of new workers entering the field declines as young people choose other, more lucrative career paths. Unfortunately, it is quite difficult to make your way into a technical career without a significant investment in education and (I would argue) a certain personality type. So we aren't seeing thousands of people moving away from low-skill jobs into technical careers. The supply of labor for jobs like "warehouse worker" simply hasn't declined enough to offset the decline in demand (due to increased automation, outsourcing, structural changes, or whatever). The result is that those workers see lower wages. At the same time, compensation in technical careers seems a bit ridiculous: $200k to write Python for 35 hours a week? I've heard numbers like that thrown around - but companies still complain of a lack of qualified workers for those roles. This is all just to say that the owners of capital aren't going to pass excess profits on to labor out of the goodness of their hearts, just as labor isn't going to work harder than the bare minimum required to keep getting their paycheck. But they might be forced to pay higher wages if they can't find good workers. If the structure of the economy changes so that some sectors are more productive, then the supply and demand of labor should shift to keep things from getting out of whack. That hasn't been happening in recent decades.