6 ms·

I think pessimizer was saying that the relative return to the labour at the bottom end is low. It is like (to be hyperbolic) living a life of luxury, but on gi

by mrow84 13y ago

I think pessimizer was saying that the relative return to the labour at the bottom end is low. It is like (to be hyperbolic) living a life of luxury, but on giving the starving man who labours for you a bit of food, suggesting that that is ample reward for his efforts, because of how much value that bit of food has for him. Then, you can top that off by saying that it doesn't matter how much food he produces for you, it isn't of much value because you have so much already. People reject the labour theory of value, probably correctly in fundamental terms, but the marginal and subjective theories of value both seem to promote (and justify) this kind of structural inequality. An example from the relatively recent NPR Planet Money t-shirt project [0] suggests that for that product just under 12% of the cost (6% of the sale price) went to the people who made the yarn, cut the cloth, and sewed it all together. [0] http://www.npr.org/blogs/money/2013/12/13/250747279/episode-503-adding-up-the-cost-of-the-planet-money-t-shirt http://www.npr.org/blogs/money/2013/12/13/250747279/episode-...

crusso 13y ago
I think pessimizer was saying that the relative return to the labour at the bottom end is low At which end of the economic ladder do you think improvements occur for there to be a dramatic reduction in poverty within a whole society?
- mrow84 13y ago
  That's simply a rhetorical question, because it is obvious that poverty can only be reduced by providing more wealth to those in poverty. Your rhetoric doesn't address the point though, which is simply that there are (quite dramatic) unequal returns to labour which in turn persist poverty.
  - crusso 13y ago
    You call it "rhetoric", I call it "evidence that what you're focusing on isn't important". All this focus on economic inequality is misguided. The focus should be upon breaking chains of economic mobility.
    - mrow84 13y ago
      Why do you think it is misguided? You "break the chains of economic mobility" by providing people with enough wealth and time to allow self-improvement; if you withhold that wealth and time by dictating terms from the powerful side of an economic relationship then that absolutely is significant. You state "all this focus on economic inequality is misguided" very brazenly, but what evidence do you have that the two aren't linked? From my position they intuitively are linked, and pretty strongly - sure, intuitions can be wrong, but why are you so confident that we can ignore the effects of inequality on poverty? At the most basic level, wage growth for those in poverty provides better housing, better nutrition, better healthcare, and better education, which all in turn lead to better economic prospects, because those things make you significantly more employable in all sorts of ways (you're more reliable, you're not weak, you're more healthy, and you're not stupid).
      - pdonis 13y ago
        > those things make you significantly more employable It's interesting that you use the word "employable" instead of the more general term "capable of creating wealth". Someone who thinks of themselves primarily as an employee is always going to be less wealthy than someone who thinks of themselves primarily as a wealth creator. That's because having employees is not necessary for wealth creation, but wealth creation is necessary for having employees. So if you're an employee, you're in a relationship that is always going to be fundamentally asymmetric. So if you really want to focus on economic inequality, you need to focus on getting people to stop thinking "how employable am I?" and start thinking "how much wealth can I create?" Ultimately, the only way to get real economic equality is for everyone to be an entrepreneur. And even then you won't have complete economic equality because people differ in entrepreneurial skills. Which is why focusing on economic inequality is misguided; what we should be focusing on is wealth creation.
        mrow84 13y ago
        I did wonder about elaborating, because I agree with your point about employees necessarily making less, but I didn't think it really necessary. Your final statement "focusing on economic inequality is misguided; what we should be focusing on is wealth creation" is disingenuous, unless you mean focusing on how to improve wealth creation for those people in poverty. Otherwise, it is just a false equivalence - you are suggesting that by focusing on wealth creation for ourselves, we improve their chances for wealth creation, for which there is no evidential route beyond trickle down economics. If you do mean promoting wealth creation for people in poverty, or indeed people who are 'merely' poor, then that is a form of alleviating inequality that I wholly support.
marcosdumay 13y ago
> People reject the labour theory of value, probably correctly in fundamental terms, but the marginal and subjective theories of value both seem to promote (and justify) this kind of structural inequality. Economics is (at least most of it) a science. It doe not promote or justify anything; it tries to describe the real world, and tell you what consequences any input would have. The Labor Theory of Value is just not real.
- mrow84 13y ago
  I agree with you, which is why I think that "People reject the labour theory of value, probably correctly in fundamental terms". Your claim that economic theory "does not promote or justify anything" is clearly wrong, because theories are co-opted as policy, and then have enormous impacts on people's lives. Would you claim that the economic theory contained within communism did not promote or justify particular courses of action in the Soviet Union? My point was that the marginal and subjective theories of value, taken narrowly, promote structural inequality, by claiming that when a price is accepted it is fair. I don't think that real economists are so dogmatic, but people who cling on to that idea doctrinally, forgetting the caveats that must be applied (i.e. lack of any kind of coercion, perfect information, etc.) can end up saying that equality of value is all that is necessary for fairness.
pdonis 13y ago
> just under 12% of the cost (6% of the sale price) went to the people who made the yarn, cut the cloth, and sewed it all together. And what about the people who took the completed T-shirts and moved them to where they were wanted? That somehow has no value? People who ordered the T-shirts didn't order T-shirts sitting piled up in a factory; they ordered them so they could wear them. That means making the product is only the first step: then you have to move the product to the end user (shipping and handling), but before you can do that you have to figure out where the end user is and make sure he has paid for the product (order fulfillment). For those three activities (production, order fulfillment, and shipping/handling), I get, respectively, $2.00, $1.79, and $2.36 (note that I've included both stages of shipping in the shipping/handling cost)--i.e., all roughly equal. That seems fair to me. In fact, if we include "printing" in production (which seems reasonable--people ordered a T-shirt with a design printed on it, not a plain one), that cost goes up to $2.90, more than the total shipping/handling cost. (Note, btw, that graphic design was only $0.12 per shirt, basically negligible.) The real message of the cost breakdown, to me, is how much overhead there is: $1.21 per shirt in Kickstarter fees, $1.04 per shirt in Amazon payment fees, $0.33 per shirt in tariff, and $2.67 per shirt in "jockey costs" (presumably meaning company overhead for Jockey itself). That adds up to $5.25 per shirt in overhead, or about 42% of the cost.
- mrow84 13y ago
  I didn't say that the other parts of the process had no value, I said that the relative return to people at the bottom of the labour chain is low. My claim is that they are getting paid proportionally less for the work that they do. I don't really see why it is contentious - poor people have less bargaining power, because they have less to bargain with (e.g. poorer health, less education, less to fall back on), so will come off worse in trades, including trades for their labour. It makes economic sense, but that doesn't make it good. Also note that overall efficiency can become irrelevant if the returns on efficiency gains are unequally distributed. Addressing those problems, which are structural not individual, will improve the lives of people who are under-compensated by the current system. Claiming those problems don't have any effect on outcomes requires explanation.
  - 13y ago

by mrow84 13y ago

crusso 13y ago

I think pessimizer was saying that the relative return to the labour at the bottom end is low At which end of the economic ladder do you think improvements occur for there to be a dramatic reduction in poverty within a whole society?

mrow84 13y ago
That's simply a rhetorical question, because it is obvious that poverty can only be reduced by providing more wealth to those in poverty. Your rhetoric doesn't address the point though, which is simply that there are (quite dramatic) unequal returns to labour which in turn persist poverty.
- crusso 13y ago
  You call it "rhetoric", I call it "evidence that what you're focusing on isn't important". All this focus on economic inequality is misguided. The focus should be upon breaking chains of economic mobility.
  - mrow84 13y ago
    Why do you think it is misguided? You "break the chains of economic mobility" by providing people with enough wealth and time to allow self-improvement; if you withhold that wealth and time by dictating terms from the powerful side of an economic relationship then that absolutely is significant. You state "all this focus on economic inequality is misguided" very brazenly, but what evidence do you have that the two aren't linked? From my position they intuitively are linked, and pretty strongly - sure, intuitions can be wrong, but why are you so confident that we can ignore the effects of inequality on poverty? At the most basic level, wage growth for those in poverty provides better housing, better nutrition, better healthcare, and better education, which all in turn lead to better economic prospects, because those things make you significantly more employable in all sorts of ways (you're more reliable, you're not weak, you're more healthy, and you're not stupid).
    - pdonis 13y ago
      > those things make you significantly more employable It's interesting that you use the word "employable" instead of the more general term "capable of creating wealth". Someone who thinks of themselves primarily as an employee is always going to be less wealthy than someone who thinks of themselves primarily as a wealth creator. That's because having employees is not necessary for wealth creation, but wealth creation is necessary for having employees. So if you're an employee, you're in a relationship that is always going to be fundamentally asymmetric. So if you really want to focus on economic inequality, you need to focus on getting people to stop thinking "how employable am I?" and start thinking "how much wealth can I create?" Ultimately, the only way to get real economic equality is for everyone to be an entrepreneur. And even then you won't have complete economic equality because people differ in entrepreneurial skills. Which is why focusing on economic inequality is misguided; what we should be focusing on is wealth creation.
      - mrow84 13y ago
        I did wonder about elaborating, because I agree with your point about employees necessarily making less, but I didn't think it really necessary. Your final statement "focusing on economic inequality is misguided; what we should be focusing on is wealth creation" is disingenuous, unless you mean focusing on how to improve wealth creation for those people in poverty. Otherwise, it is just a false equivalence - you are suggesting that by focusing on wealth creation for ourselves, we improve their chances for wealth creation, for which there is no evidential route beyond trickle down economics. If you do mean promoting wealth creation for people in poverty, or indeed people who are 'merely' poor, then that is a form of alleviating inequality that I wholly support.

marcosdumay 13y ago

> People reject the labour theory of value, probably correctly in fundamental terms, but the marginal and subjective theories of value both seem to promote (and justify) this kind of structural inequality. Economics is (at least most of it) a science. It doe not promote or justify anything; it tries to describe the real world, and tell you what consequences any input would have. The Labor Theory of Value is just not real.

mrow84 13y ago
I agree with you, which is why I think that "People reject the labour theory of value, probably correctly in fundamental terms". Your claim that economic theory "does not promote or justify anything" is clearly wrong, because theories are co-opted as policy, and then have enormous impacts on people's lives. Would you claim that the economic theory contained within communism did not promote or justify particular courses of action in the Soviet Union? My point was that the marginal and subjective theories of value, taken narrowly, promote structural inequality, by claiming that when a price is accepted it is fair. I don't think that real economists are so dogmatic, but people who cling on to that idea doctrinally, forgetting the caveats that must be applied (i.e. lack of any kind of coercion, perfect information, etc.) can end up saying that equality of value is all that is necessary for fairness.

pdonis 13y ago

> just under 12% of the cost (6% of the sale price) went to the people who made the yarn, cut the cloth, and sewed it all together. And what about the people who took the completed T-shirts and moved them to where they were wanted? That somehow has no value? People who ordered the T-shirts didn't order T-shirts sitting piled up in a factory; they ordered them so they could wear them. That means making the product is only the first step: then you have to move the product to the end user (shipping and handling), but before you can do that you have to figure out where the end user is and make sure he has paid for the product (order fulfillment). For those three activities (production, order fulfillment, and shipping/handling), I get, respectively, $2.00, $1.79, and $2.36 (note that I've included both stages of shipping in the shipping/handling cost)--i.e., all roughly equal. That seems fair to me. In fact, if we include "printing" in production (which seems reasonable--people ordered a T-shirt with a design printed on it, not a plain one), that cost goes up to $2.90, more than the total shipping/handling cost. (Note, btw, that graphic design was only $0.12 per shirt, basically negligible.) The real message of the cost breakdown, to me, is how much overhead there is: $1.21 per shirt in Kickstarter fees, $1.04 per shirt in Amazon payment fees, $0.33 per shirt in tariff, and $2.67 per shirt in "jockey costs" (presumably meaning company overhead for Jockey itself). That adds up to $5.25 per shirt in overhead, or about 42% of the cost.

mrow84 13y ago
I didn't say that the other parts of the process had no value, I said that the relative return to people at the bottom of the labour chain is low. My claim is that they are getting paid proportionally less for the work that they do. I don't really see why it is contentious - poor people have less bargaining power, because they have less to bargain with (e.g. poorer health, less education, less to fall back on), so will come off worse in trades, including trades for their labour. It makes economic sense, but that doesn't make it good. Also note that overall efficiency can become irrelevant if the returns on efficiency gains are unequally distributed. Addressing those problems, which are structural not individual, will improve the lives of people who are under-compensated by the current system. Claiming those problems don't have any effect on outcomes requires explanation.
- 13y ago