3 ms·

This reminds me of the old political cartoon of the fat cat factory owner sitting on the table with the white worker and the immigrant, hoarding a huge pile of

by hnbad 4y ago

This reminds me of the old political cartoon of the fat cat factory owner sitting on the table with the white worker and the immigrant, hoarding a huge pile of cash and telling the white worker "careful, I think he wants to take your money". Wage inequality is a problem, but the entire economic system is built on underpaying workers, i.e. extracting "surplus value" aka "profit" and paying it out to the owners for merely owning the company. Likewise rent-seeking extracts rent from individuals for using something the rentier merely owns, on top of any cost of maintenance, improvement, or loans, which themselves pay interest on top of the actual value of the money provided. The foundation of the system is to make money from nothing by enforcing and thus manifesting the fiction of "property rights" and withholding the hoarded dead weight of "stuff" (or in intellectual property even just "ideas") from the society that could benefit from it unless allowed to leech on its actual productive effort in the form of rent, wage or interest. Societal progress in the past hundreds of years (especially in Europe) has been primarily defined by expanding this fiction (even the concept of land as such property is fairly new, see Enclosure). In essence even modern states live off this fiction except the property is the ability to exist within their sphere of influence and the rent is taxes, though the state's function is more of a tool to enable this system by providing a framework of violence to enforce it than as a beneficiary (although its higher officials often benefit immensely from it, they function more like the highly-paid C-level executives than the owners of a firm). So yes, wage inequality is an issue but the problem is less that some tech workers get paid too much but rather that most of the surplus value workers generate doesn't end up on their paychecks and this problem is essentially unsolvable under the economic system, at least within a traditional corporate structure (less so in a co-operative). Also your claim is actually wrong. Wage transparency (i.e. the right to talk to coworkers about each other's salary to help them better negotiate) is a big topic, although mostly framed as a solution to discrimination. And unionization is the easiest way to tackle wage inequality because it gives power to those unable to bargain for better wages on their own.

TheOtherHobbes 4y ago
I don't entirely agree with the Marxist analysis of surplus value. What happens in practice is that some people have unusual talents for inventiveness, imagination, and social organisation. They can invent and innovate and that's broadly a social good. It becomes exploitative when their talents are owned by rentier investors, whose sole contribution to a project is financial. Of course the money doesn't exist physically. The investment is really a political endorsement of the project and the individuals. This unlocks resources and creates social credibility. Sometimes this comes with an explicit personal message from the investor, sometimes it's just numbers. The problem is that stock markets support casual rent-seeking which disconnects investors from the projects they throw money at. Casual investors have zero interest in the long-term health of a company. All they want is the highest possible short-term return. And this culture is what forces corporations to aggressively devalue wages and worker comp, right from the initial seed round all the way through to the other side of IPO. The typical HN reader is somewhat insulated from this, because their skills are needed to make projects happen. But casual labour is considered a fungible expense that needs to be minimised. Politically this leaves most of the population disenfranchised. Some token electoral democracy doesn't change the fact that most people have almost no political power in their work environment, and have to accept top-down orders that undermine their own prosperity and welfare.
- hnbad 4y ago
  Oh, sure, I'm not saying founders or C-level executives don't contribute anything. A lot of entrepreneurs are extremely talented (although in practice finances are a much more important factor for success than exceptional talent). The problem is that because the system is set up on the principle of generating money from mere ownership, employees will always be exploited (i.e. be paid less than they produce, even after accounting for business expenses and operating costs). This ownership model inevitably poisons everything. A founder may be an active contributor to the company but they fulfill a dual role of owner and worker that is unique to them and alienates them from other workers in their company. This is most evident as companies grow and founders retreat into C-level roles isolating them from the day-to-day work via multiple layers of management or eventually phase out entirely, either retaining a seat on the board, transitioning to fully passive ownership of their shares or selling their stake entirely to cash out, at which point they will likely want to reinvest most of their money in ways that generate "passive income" (i.e. rent-seeking). I'm not a big fan of Marxist theory, especially in its Marxist-Leninist interpretations, but even from a capitalist lens I think what I said holds true even if one may disagree with the framing or the moral implications (capitalist theorists famously prefer framing the system is natural, innate and thus amoral and inevitable, despite the recency of its more recognizable modern iterations). But if you want to go into the political implications, the ability to generate income from property (whether it is a stake in a company, housing or just literal heaps of money) necessarily enables the unequal accumulation of wealth and in a capitalist system that wealth beyond a certain point directly translates into political power as this wealth represents an exclusive claim on resources (production, housing, finance) that can be withheld from society with state violence if necessary. This directly contradicts the abstract idea of a democracy by amending "every vote is equal" with "but you vote with your wallet" (and some wallets are bigger than others). I'm not proposing a solution. I think cooperatives are an interesting model though they are hard to bootstrap in this system as even without institutional biases (e.g. cooperatives allegedly find it harder to take out loans because banks prefer having a central individual representing the debtor) the incentives align against them: if you have the capital to start your own company, why pick a structure giving you less power by empowering those who can only bring in their labor? But cooperatives can't change this system and thus have to operate within the same system, feeding into and benefiting from the same exploitative system.
zozbot234 4y ago
> This reminds me of the old political cartoon of the fat cat factory owner sitting on the table with the white worker and the immigrant, hoarding a huge pile of cash and telling the white worker "careful, I think he wants to take your money". Then that cartoon should be reversed, because most of national income (GDP) is wages - profits and rents are a much smaller fraction. Wage inequality driven by skill differentials and technical change explains the bulk of income inequality since the 1980s. The literature is fairly unambiguous on that point. In fact, those market sectors where labor costs are pushed uniformly higher by distortionary policies without compensating gains in efficiency (such as education, healthcare and general administration) are the ones that exert the highest burden on the rest of the economy, leading to inflation and pushing real incomes down; this is what Baumol's cost disease is all about.
- RyanHamilton 4y ago
  >>Then that cartoon should be reversed, because most of national income (GDP) is wages You are arguing a different point AND entirely wrong. "The top 0.01% richest individuals now hold 11% of the world's wealth." https://fortune.com/2021/12/07/worlds-richest-inequality-richer-during-pandemic/ https://fortune.com/2021/12/07/worlds-richest-inequality-ric... "the bottom 80% owning 7%" Can you provide sources for your belief?
  - Jensson 4y ago
    That is wealth, he is talking about the derivative of wealth or income. Most companies pays out way more in salaries than they pay out in profits, so more money goes to workers than to owners. Giving all profits to workers would increase their income by maybe 10-20% in most cases, modern capitalism don't exploit workers that hard. Average workers are worse off today since more and more money is going to relatively small (in terms of employment) high value companies like hospitals, tech companies etc. So it isn't that low skill workers are giving up more and more to capitalists, it is that more and more money is going to other parts in the economy and never even going to the company the low skill worker is working for.
    - 4y ago
bjornsing 4y ago
If you say so comrade Lenin. ;) But have you tried investing in shares? If you have then maybe you’ve realized the fact that they don’t always go up.

by hnbad 4y ago

TheOtherHobbes 4y ago

I don't entirely agree with the Marxist analysis of surplus value. What happens in practice is that some people have unusual talents for inventiveness, imagination, and social organisation. They can invent and innovate and that's broadly a social good. It becomes exploitative when their talents are owned by rentier investors, whose sole contribution to a project is financial. Of course the money doesn't exist physically. The investment is really a political endorsement of the project and the individuals. This unlocks resources and creates social credibility. Sometimes this comes with an explicit personal message from the investor, sometimes it's just numbers. The problem is that stock markets support casual rent-seeking which disconnects investors from the projects they throw money at. Casual investors have zero interest in the long-term health of a company. All they want is the highest possible short-term return. And this culture is what forces corporations to aggressively devalue wages and worker comp, right from the initial seed round all the way through to the other side of IPO. The typical HN reader is somewhat insulated from this, because their skills are needed to make projects happen. But casual labour is considered a fungible expense that needs to be minimised. Politically this leaves most of the population disenfranchised. Some token electoral democracy doesn't change the fact that most people have almost no political power in their work environment, and have to accept top-down orders that undermine their own prosperity and welfare.

hnbad 4y ago
Oh, sure, I'm not saying founders or C-level executives don't contribute anything. A lot of entrepreneurs are extremely talented (although in practice finances are a much more important factor for success than exceptional talent). The problem is that because the system is set up on the principle of generating money from mere ownership, employees will always be exploited (i.e. be paid less than they produce, even after accounting for business expenses and operating costs). This ownership model inevitably poisons everything. A founder may be an active contributor to the company but they fulfill a dual role of owner and worker that is unique to them and alienates them from other workers in their company. This is most evident as companies grow and founders retreat into C-level roles isolating them from the day-to-day work via multiple layers of management or eventually phase out entirely, either retaining a seat on the board, transitioning to fully passive ownership of their shares or selling their stake entirely to cash out, at which point they will likely want to reinvest most of their money in ways that generate "passive income" (i.e. rent-seeking). I'm not a big fan of Marxist theory, especially in its Marxist-Leninist interpretations, but even from a capitalist lens I think what I said holds true even if one may disagree with the framing or the moral implications (capitalist theorists famously prefer framing the system is natural, innate and thus amoral and inevitable, despite the recency of its more recognizable modern iterations). But if you want to go into the political implications, the ability to generate income from property (whether it is a stake in a company, housing or just literal heaps of money) necessarily enables the unequal accumulation of wealth and in a capitalist system that wealth beyond a certain point directly translates into political power as this wealth represents an exclusive claim on resources (production, housing, finance) that can be withheld from society with state violence if necessary. This directly contradicts the abstract idea of a democracy by amending "every vote is equal" with "but you vote with your wallet" (and some wallets are bigger than others). I'm not proposing a solution. I think cooperatives are an interesting model though they are hard to bootstrap in this system as even without institutional biases (e.g. cooperatives allegedly find it harder to take out loans because banks prefer having a central individual representing the debtor) the incentives align against them: if you have the capital to start your own company, why pick a structure giving you less power by empowering those who can only bring in their labor? But cooperatives can't change this system and thus have to operate within the same system, feeding into and benefiting from the same exploitative system.

zozbot234 4y ago

> This reminds me of the old political cartoon of the fat cat factory owner sitting on the table with the white worker and the immigrant, hoarding a huge pile of cash and telling the white worker "careful, I think he wants to take your money". Then that cartoon should be reversed, because most of national income (GDP) is wages - profits and rents are a much smaller fraction. Wage inequality driven by skill differentials and technical change explains the bulk of income inequality since the 1980s. The literature is fairly unambiguous on that point. In fact, those market sectors where labor costs are pushed uniformly higher by distortionary policies without compensating gains in efficiency (such as education, healthcare and general administration) are the ones that exert the highest burden on the rest of the economy, leading to inflation and pushing real incomes down; this is what Baumol's cost disease is all about.

RyanHamilton 4y ago
>>Then that cartoon should be reversed, because most of national income (GDP) is wages You are arguing a different point AND entirely wrong. "The top 0.01% richest individuals now hold 11% of the world's wealth." https://fortune.com/2021/12/07/worlds-richest-inequality-richer-during-pandemic/ https://fortune.com/2021/12/07/worlds-richest-inequality-ric... "the bottom 80% owning 7%" Can you provide sources for your belief?
- Jensson 4y ago
  That is wealth, he is talking about the derivative of wealth or income. Most companies pays out way more in salaries than they pay out in profits, so more money goes to workers than to owners. Giving all profits to workers would increase their income by maybe 10-20% in most cases, modern capitalism don't exploit workers that hard. Average workers are worse off today since more and more money is going to relatively small (in terms of employment) high value companies like hospitals, tech companies etc. So it isn't that low skill workers are giving up more and more to capitalists, it is that more and more money is going to other parts in the economy and never even going to the company the low skill worker is working for.
  - 4y ago

bjornsing 4y ago

If you say so comrade Lenin. ;) But have you tried investing in shares? If you have then maybe you’ve realized the fact that they don’t always go up.