Further, that money is being transferred voluntarily. People buy things like iPhones because they think it enriches their life more than having the $600 it costs. Hundreds of millions of people believe this, so Apple has a ton of money. There were no victims in the transactions.
Wealth may not be a complete 0-sum game, but for at least a couple decades virtually all the economic gains in the US have gone to the top 10%. So when people are cheering that wealth is (finally) starting to flow from the investor-class to the wage-earning class, it feels disingenuous to me, or at least willfully naive, to blithely argue "why are you rooting for someone else's income to go down?"
Just because one went up when the other went doesn't mean that there's a causal relationship.
If we assume it is causal and the trend continues, you can expect belts to start tightening. I don't know if you've ever worked at a company that wasn't turning a profit (and isn't living on the borrowed time of VC money), but I have, and it sucks. Hiring freezes, wage freezes, wage reductions, staffing reductions. All kinds of fun.
Just to show that the example doesn't prove much: millions of people voluntarily spent money on narcotics too. Entertainment products aren't making consumers richer in the long run.
Correcting income and wealth inequality will help ensure the long term health of the economy, and once that's done, we can have another debt-financed consumption binge, but the current binge can't last forever without consequences.
Wealth inequality is productivity inequality, not having-less of a fixed amount.
"Fixing" wealth inequality by decreasing the productivity of the wealthy is madness.
"Inequality" is a feature of exchange and production, it cant be "fixed". The lives of those who suffer most can be improved by helping them be more productive. Not by hobbling everyone else. That fails to improve anything.
EDIT:
To clarify, the inequality is in what you can do with your total current assets: including time/effort, but CURRENT WEALTH.
Yes, Jeff Bezos can do more with $100B than you can with $100. And yes, you with 100$ can do more than a person with 1$.
People in poor countries produce things at a rate and with such general demand that their current assets (including their time/effort) arent very productive.
Bezos can make another billion without taking it from anyone, just by deploying his assets better than you cna.
>"Fixing" wealth inequality by decreasing the productivity of the wealthy is madness.
Really? Because the system itself is fixed guaranteeing Capital of the rich is much more productive than wages of the poor, through taxation. That is an employee of Company abc has their wages taxed to a much greater extent than the company owners profits are taxed.
It’s definately not “hobbling” everyone else if we “fixed” the system such that workers wages were taxed less than the capital profits of business owners. In fact the current system is so unfairly weighted only a small percentage benefit from capital gains taxes whereas the masses of the working class are hobbled by greater taxes on their wages making up the difference. Ever wonder why it’s pretty easy to find CEO’s taking a $1 salary (it’s because they take the rest in capital so they are taxed less than their own workers).
Those who suffer the most don’t need to be more productive, they working class is already more productive than anytime through history it’s time their wages reflect that fact and for good measure it’s time wages become more productive by flipping the wage/capital tax paradigm.
You are advocating getting the state out of the way of its citizens productivity by redressing the ways by which most people are taxed.
That's exactly the sort of thing i'm talking about.
If you want people in the developing world to improve their lot, get rid of authoritarian gov.s holding them back.
People wish to do things for other people, and wish to provide for themselves. It is institutions, and esp. states, which almost-everywhere and almost-everywhen have got in the way of that.
Fixing institutions is exactly the sort of thing which will help people who suffer needlessly.
But it won't change inequality: the distribution of productivity is necessarily unequal by the nature of productivity (those a little better off now will be able to multiply faster, exponentially).
The US has the most productive workers in the world. You cannot feasibly make them more productive without harming our ability to be disruptive. The fact that they've been as productive as they've been for years, through massive economic changes and yet the gap between the top .01 percent of Americans and the entire rest of the country has still grown. Supply side economics are a laughable farce. Just because wealthy people have more money doesn't mean that they invest or spend it in any way that helps the economy, what is provable though is that it harms democracy by limiting the voices of the middle class, and has created a poor class that has become nearly impossible to get out of as economic ladder climbing is effectively nil.
The only way to save our democracy is by putting in policies that will harm the wealthy aristocracy of the US. The other alternative is war and death that impacts the wealthy, as history has shown time and again. Blood or money, it's their choice.
Yeah our democracy is just fine. Evidenced by the fact that the lower classes were able to elect a president that the upper middle and upper classes most definitely did not want elected. It may not be a popular choice among the elite but it is evidence of a healthy democratic society where decisions aren't being made exclusively by the wealthy.
> Evidenced by the fact that the lower classes were able to elect a president that the upper middle and upper classes most definitely did not want elected.
Those who earned more than $50k a year were more likely to vote for Trump[1].
There's also this[2]:
> During the primaries, Trump supporters were mostly affluent people.
> Trump voters weren’t majority working class in the general election, either.
There is more to class than just income. A plumber can out earn a journalist for instance. If you look at the education numbers you can see that the highly educated greatly favored Clinton. You can also look at media influence, technology influence...
There are huge problems with that data. It equates a degree in physics with a degree in romance novels. I feel strongly that the physicist is far more educated. Somebody with a pilot's license or a welding certification is considered to be less educated ("non-college") than a person with a college degree of negative market value. What the data actually counts is years spent in a bookish classroom.
Class is more than just individual earning potential. I think a lot of people here (myself included) know that the scientist is more educated than the romance novel degree holder. The part we don't talk about though is that the people with degrees of "negative market value" often have those degrees because their families are rich enough that they don't have to work for a living and can do things like pay to study romcoms.
This is one of the arguments people make against unpaid internships in media and fashion industries. Only rich kids can live in NY for peanuts so these internships effectively filter out poor people (as they were designed to do).
In the US, we don't have any other social stratifications that would justify your response. Typically when we speak of class in the US we are talking exclusively about economic class. The problem with your argument is that our democratic institutions aren't fine. (Sure, sure Representative Republic). For instance in nearly every single state we have a group of people that are underrepresented by their electorate. In blue states it's typically conservative viewpoints and in red states it's liberal voices. Because of gerrymandering, in some cases unlawful, we've lost most of our moderate representatives that have led to the gridlock and partisanship we have today.
Proportional voting or a move to a parliamentary type of electorate would help these issues and allow for more voices to be heard. There's also the fact that more populous states have less representation in the House than do less populous states due to the limits imposed on the number of Representatives due to space requirements. This is problematic. Add to that the Citizen's United verdict that lifted campaign contribution limits on corporations while still enforcing them on individuals and I think I've made my point that our Democracy is in trouble without even touching the malfeasance by the actual political actors of either party.
The real problem though is that the middle class, the foundational aspect of a functional democratic process is being hollowed out.
When you look at the fact that money is considered speech and the top .001 of the US makes as much every year as the bottom 80% of the country there is no way that even the amalgamated voices of the bottom 80% could hope to have the same political sway as those with money and this divide is only getting worse.
Education is a poor classification of Americans, except for the fact that it generally correlates that the higher education you achieve the more likely you are to have higher income. Obviously your position of negative value degrees are the exception, however I'd be less likely to think that the wealthy are getting these poor degrees as are the poor. The wealthy can just write/ghost write their books and have them immediately be New York Times bestsellers without a single person other than themselves buying the book.In fact this is a common trick. The poor are generally less educated than the wealthy and this leads to an information imbalance that would prevent people from going into poor degrees instead of fields in demand like nursing, math, computer science, etc.
I'm sure many people on this board know someone stuck in a poorly paid IT helpdesk job because they got a Bachelors in IT or something else that didn't lead to money.
"In the US, we don't have any other social stratifications that would justify your response."
We do have this. Have you ever tried to raise money or interacted with VCs? Or dealt with the CEO of a large company? There is definitely a class divide. Look at all of the high end liberal arts students that monopolize the media industries. These aren't people from the trailer park.
"When you look at the fact that money is considered speech and the top .001 of the US makes as much every year as the bottom 80% of the country there is no way that even the amalgamated voices of the bottom 80% could hope to have the same political sway as those with money and this divide is only getting worse"
Except they were able to do this as per my example with Trump. Your theory sounds very valid, but the reality of it was the upper classes and all of their media empires couldn't stop someone from being elected. I think we can thank the internet for giving voice to those who historically wouldn't have it.
First of all let me just say, I love HN because of these conversations. It's so rare that we can have a place for rational discourse. This has been a great conversation.
Dealing with VCs/CEOs typically involves having the money in the first place. You have numerous cases of people without degrees at all getting VC money and building platforms. I deal with CEOs of large companies on a fairly regular basis. While the Alma Mater matters it's typically a stand in for economic class. People who can afford to not work for a few years to go the HBS aren't typically in the lower echelons. Also workplaces are more conducive to taking time out of your regular schedule for educational advancement the higher up you go, especially since you're usually always working. So the degrees come back to money.
Of the people who voted for President Trump almost all of that lies with white, male voters and that was regardless of whether they were college educate or not, and most of that was in the South. Take from that what you will as neither candidate was a PoC so race wouldn't apply as a divisor. What might have had an impact was the border security discussion. The President's election was as much a fluke as a response to disaffected Sanders voters as a weak Democratic candidate.
I'd argue that income and wealth are two very different things. Your numbers didn't say anything about wealth, just income. Again, the plumber earns a lot but the journalist inherits wealth far beyond the earnings of the plumber. There are a lot of other things to take into account such as access to network, parental influence, ability to mingle with upper class people... Blue collar roles can out earn white collar but blue collar people can't be upper or even upper middle class as the upper classes have many effective gating mechanisms to keep them out.
Pedigree and social class aren't economic class. Just because you won't be let into someone's club despite having considerable wealth does not mean the two of you are in different economic classes.
If I earn 300k a year maybe I can pay for club membership (if they let me in) but I would in no way have comparable wealth to members that were going to inherit 100M from their families. You're very focused on income, but people in the upper classes are not. In fact, high earning professions are often looked down upon because when you have family money, it's seen as gauche to work hard for what would be scraps compared to the real family fortune.
It seems to me that worker productivity gains come primarily from better technology and processes - from business investments - rather than from workers themselves. The rewards flow accordingly. Workers who enhance their own productivity actually do provide more value and hence gain a competitive advantage. Plenty of individuals could improve their productivity and value.
I've never understood the claim that higher productivity somehow entitles workers to the surplus. The key component of actually being substantially responsible for productivity gains is missing.
Amazon wouldn’t exist without Bezos. It’s kind of a stretch to say he’s leeching off his employees when his vision and drive literally gave rise to Amazon.
Also I’m pretty sure Bezos doesn’t collect much salary. His wealth is tied to how much Amazon is worth. He’s essentially taking nothing from his workers because his net worth is based pretty much entirely on how much someone else is willing to pay for his shares.
Amazon also wouldn't exist in their current capacity without all their warehouse workers. I think the idea is that Bezos could have either sold some of Amazon stock over the years and paid his warehouse workers a better wage or he could have put some of his shares into an options pool for his warehouse workers. If he did that maybe he would only have $10B in wealth today, but many warehouse workers would be better off.
Instead, he kept all those shares and has more money than he could ever spend and many warehouse workers have worked incredibly hard and been unable to build any wealth over the years.
Is it unproductive spending? What makes you think that workers who want to live a decent life are spending unproductively? Why is it more productive to spend money on space flight initiatives?
> I think the idea is that Bezos could have either sold some of Amazon stock over the years and paid his warehouse workers a better wage or he could have put some of his shares into an options pool for his warehouse workers.
The board of directors can allocate stock to warehouse workers and/or pay them more. For that matter, you could send your money to these warehouse workers and yet you don't. This idea that Bezos should personally give up his fortune to increase warehouse worker compensation is a bit absurd. Amazon isn't a charity and its employees are not a registered 503c, either.
Yes, the board could have absolutely done that. And Bezos could have asked the board to do that as well, but chose no to. If the company did that, I argue it would have been just as successful (if not more) and many of their low wage workers would be more loyal and would have more wealth. The primary difference would be Jeff Bezos having a smaller fortune.
For profit companies can pay their workers better and still prosper. No one is suggesting Amazon should have been a non-profit. The suggestion is just that their CEO could have shared the wealth more with his workers. Workers who helped him build his fortune.
Microsoft wouldn't exist without Bill Gates, but that doesn't mean he's entitled to any and all benefit derived therein to divide up between his employees. It's funny how justifications for the wealth of these people usually fall to unquantifiable metrics like "vision" rather than concrete labour, which is the sole standard ordinary workers are judged by.
To use a metaphor, a slave owner having the "vision" for a palaestra including all its designs does not mean that he does not exploit the slaves (who, remember, wouldn't have a job if it weren't for him, nor would the palaestra exist). In the philosophy of exploitation, exploitation can occur even in mutually beneficial relationships.
I don't think anyone proposes that Bezos is "entitled to any and all benefit" that Amazon produces, either. Indeed his wealth is tied merely to his initial ownership with almost no additional wealth flowing to him in terms of cash or stock from Amazon. Whether or not warehouse workers should get paid more seems to be a very different issue than whether Bezos deserves to continue to own the stock he literally created.
Also your metaphor sucks. If you think that wage workers are on par with slaves, I suggest you look a bit more into what slavery actually is.
The metaphor is not formally equating wage labourers to slaves, it's an illustration of the principle of exploitation in relationships where, in a technical sense, both parties benefit. That's why it's a metaphor, not a simile.
You’re defending your absurd metaphor by turning to pedantry about definitions.
You metaphor still sucks because it doesn’t say anything useful. It’s purely an emotional appeal. You could apply your metaphor to literally any employment relationship and it’s no different. The CEO is (over)compensated for vision and so everyone else is exploited, from the Executive Vice Presidents down to the receptionists.
>The CEO is (over)compensated for vision and so everyone else is exploited, from the Executive Vice Presidents down to the receptionists.
The argument is not that employees are exploited because the CEO is over-compensated for vision, but rather that it follows naturally for such relationships to work at scale. Nevertheless, it's useful as a thought experiment, since it ought to make people consider the nature of modern work and life in capitalism. Indeed, some philosophers do apply this to all employment relationships[0], the most extreme argue that they are exploitative, the less extreme only inquire to the nature of our desires in the employment relationship[1].
If that's where the argument leads then that's where it goes.
The argument doesn't lead there. You started it there. Your initial premise is that wage work is akin to slavery. I disagree, and your response is "well, that's where the argument leads". No, not at all.
I'm a bit confused by your statement that "it [exploitation] follows naturally for such relationships to work at scale". If this is how it naturally works, then is there a viable alternative? I also don't agree that this is (necessarily) exploitative. Perhaps we have differing opinions of what "exploitation" means. If we have a business partnership that is mutually beneficial, but you profit from it more than me, is that exploitative?
I'd argue this is how it "naturally" works for the current epoch with the current division of productive resources, that is to say, it is a historically conditioned state of affairs, and like any historical period it is overcome. As in, the current distribution of property is to blame, but it's not clear that simply switching to a different model of distribution would overcome exploitation at large.
I think that exploitation can, in general, be defined as when A exploits B, A takes "unfair" advantage of B. In order for this to be the case, there must be some mechanism by which A has the ability to exploit B, which I see as defined by the distribution of productive assets necessary to live. It gets more complex speaking of how we define productive assets, and whether exploitation exists as a matter of class (neo-Marxian sense) or as a matter of profit (the Marxian sense).
> Microsoft wouldn't exist without Bill Gates, but that doesn't mean he's entitled to any and all benefit derived therein to divide up between his employees.
More people have become millionaires by being Microsoft employees than by any other mechanism. Via stock options, Microsoft very much shared the gains with their employees.
This is HN - home of wannabe Bezoses. It's a hard sell to try to tell a forum of founders and hopefuls that they aren't special and instead largely a result of circumstance and opportunity.
Income inequality would be, in an idealized state where you both had a perfect market (with all the ideal rational choice theory attributes like perfect information and perfect utility maximization) andp erfectly equal initial distribution of wealth. Or, at least, the instantaneous income differential at the first moment would be, as well as the resulting wealth inequality; once you are past that you have wealth inequality which means that differences in market clearing price even in a perfect market no longer perfectly reflect differences in utility produced, because the interests of the wealthier participants are favored, so neither income inequality nor it's resulting wealth inequality reflect productivity, and with mortality and inheritances wealth inequality is even farther from a reflection of income inequality after the first generation.
Being born a Trump—or even a member of the first world middle class—puts you pretty high on the world distribution of wealth from day one, and your personal productivity has no contribution to that.
Wealth isn't something that be quantified objectively, so at some point you need to put hard parameters on what qualifies wealth or thresholds of wealth. At some level, "money" (which is the representation of wealth) is at any given point finite. This makes it inherently a zero sum game.
The "any given point" allows us to avoid arguments about fiat and monetary policy. At any given point if I get $1, that value comes from someone else (or elses) down the chain.
You are confusing money for wealth. If I gave you back 3000 years in a time machine with a trillion dollars worth of gold (gold being money 3000 years ago) you would be much poorer than you are today despite having most of the world's money in your new era. Someone taking a log and turning it into a chair increases the world's wealth even if no money changes hands. Someone who prints money (via inflation or counterfeiting) has changed the amount of money in the world but has not changed the amount of wealth.
That's the point though, it's inaccurate to do so. Money is a finite resource, but its value constantly fluctuates. It's just a unit of exchange that exists for convenience. The total supply of money does not correlate to the amount of 'wealth' in the world, such as it is.
I know this makes it a pain in the ass for you to make / explain your point, because there's no unit of measurement for wealth (hence why you used money at any given point in time). It just doesn't work that way though.
If you create a new good or or perform a service, you have created new wealth. (building a log cabin created wealth)
wealth is not zero sum.
Even money is not zero sum. Anytime someone creates credit, new money is created and the money supply is expanded. And money is not representation of wealth. It is a unit of account and transfer.
The victims are the employees of Apple who receive a tiny percentage of the value they create, while a huge percentage of it goes to the corporate owners.
Edit: by extension, all the consumers are likely in the same position. Employees are all exploited by their employers, who steal most of the value created which they had little to no hand in.
|Employees are all exploited by their employers, who steal most of the value created which they had little to no hand in.
I'm sorry, but this is bog-standard communist clap-trap. Even if you don't like the current arrangement, the use of the word steal is absurd. Individual wealth, regardless of which income quintile you're in, has risen exponentially since the industrial revolution. There's lots of room for criticism of the world as it stands (crony capitalism and printing a sea of money being favorites of mine), but words like exploit and steal are crazy. And to say that an employer had little hand in the value of the products created is just silly. Even if we ignore everything else, you can't just disregard the massive capital expenses that go into building the infrastructure to make an iPhone. Somebody had to come up with that money to even make the company possible, long before the profits started rolling in.
I've had the dubious pleasure of working for companies that were posting little or no profit vs others that were making lots of money. Personally, I'd be happy to be 'exploited' by the wages Apple pays.
Well I am a communist, so that makes sense. Crony capitalism is just capitalism, by the way. It's designed to work that way.
In Apple's case, the "massive capital expenses" have been paid for many times over in profit; when does the compensation shift back to the people creating the day-to-day value? Never, I guess?
And by the way, I'm not talking about the $300k engineers in Cupertino. I'm talking about the people who were throwing themselves of factory roofs until they set up nets to take even that measure of freedom away.
Wow, an actual communist. OK, I need to ask you a few questions.
Why should we risk it? You might say that previous attempts were "not real communism", but that is what we end up with when we try. We've killed 160 million people trying to implement communism, or at least following leaders who tell us they will implement communism. It doesn't seem wise to try again, does it? Why would things go down differently? It's awfully risky to take the gamble, don't you think?
What motivation would there be for start-up founders? If that just isn't needed because the state owns all business, how do we ensure that unproductive business doesn't uselessly stay funded while productive business is never initiated?
If there is no legitimate way to obtain great wealth, don't you think people might turn to methods that are not legitimate, such as the corruption? History shows that communism quickly turns the culture toward corruption, and that this dissipates very slowly once communism is removed.
Your complaints about capitalism can mostly be handled without giving up all the benefits. Poverty exists everywhere, especially under communism, but right now a good deal of the source is competition from immigrants and outsourcing, both of which can simply be restricted. The fact that corporate profits skyrocket isn't something for most people to directly care about (jealousy is a nasty emotion) but FWIW this goes away if anti-monopoly laws are enforced and if corporations are prohibited from becoming huge.
Before you blame climate change on capitalism, please note the coal mines in North Korea and in China.
Nothing could be more equitable than people keeping whatever share of the pie they have earned.
I also truly do not give a fuck about start up founders... but if they aren't well-rewarded then they won't bother. What replaces them? Do you think that instead the government would operate all businesses? Without the possibility of bankruptcy, bad businesses (operating as government agencies) will continue sucking up subsidies. New ones will not be created unless the dictator is convinced that they would be useful to him.
The corruption problem we now have with politicians is indeed bad, but clearly this hasn't become universal throughout our culture. In a communist society, one might pay the store clerk a bit of extra cash to have him hide a bit of meat in order to save it for you. It all becomes totally habitual with all of the ordinary people you interact with every day. It's not just a matter of politicians.
I agree that the situation in the Scandanavian countries is unsustainable. Freeloaders are an increasing problem. The workload (taxes) have reduced the birthrate, and the low birthrate means that fewer workers will be sharing the load of supporting the old, each problem leading to the other problem and thus these countries are in a death spiral.
|Employees are all exploited by their employers, who steal most of the value created which they had little to no hand in.
Didn't that turn out to be bullshit? Like, years ago. Pretty sure that guy made the story up. Also, those people weren't employees of Apple.
And I'll take crony capitalism and wealth inequality over gulags and the tens of millions of people who have been killed by their communist overlords (who were also hoarding all the wealth).
I'm sorry, this is bog-standard capitalist clap-trap. Capitalism has killed many more, and will continue to kill millions and millions as the effects of climate change worsen, than the concept of equitable distribution of wealth.
If wages are up and investment income is down, money is being transferred from the 1% to the 99% for a change.