U.S. income disparity [Archive]

Ranillon

23rd April 2007, 09:10 AM

I base this on very little theoretical knowledge of economics, but I would think we should expect something of a bell-curve from poor to wealthy. A few extremely poor, a few extremely rich and most of us somewhere in the middle.

Sure, you will always have such a bell-curve. The real questions are what are the real effective totals between various spots on the curve and how are they changing in relation to each other?

What we've seen over the last thirty years (in the US at least) is that wealth distribution and generation has been shifting toward the wealthy end of the bell-curve with the shift rising exponentially as you get close to the very end. So, it's dipped a bit for those on the poor end of the scale, stayed basically stagnant for those masses in the middle, increased nicely for those in the 90th percentile and increased fantastically for those at the very top 1%. This is in stark contrast to the thirty year period before this when wealth growth across the various percentiles rose at close to the same rate.

You can also see the difference when you compare wage growth (in real terms) to productivity growth. Again, for the first thirty year period the two went hand-in-hand to a remarkable degree. However, since that wages have lagged behind productivity growth anywhere from 40% to 20% (depends on what you count as "wage"). However, even at best that is a whole 5th of the wage increases the average would have otherwise expected going instead to fuel greater wealth disparity.

While I would agree that wealth inequality is a necessary evil of modern capitalism, rising inequality isn't. Over the past thirty years the government has been showering various tax breaks and advantages to business on the premise that it would generate more wealth. Indeed it has, but a disproportionate amount is clearly going to the elite top of the economic ladder.

The consequences of this are and can be dear, IMHO. I would argue -- as others already have -- that the greater the inequality the more social and political problems you have. This is because the stakes are getting higher and higher as a result, with success bringing you ever more, but failure being that much worse. That sort of environment just tends to bring out the worst in people and continuously chips away at the foundation of social compromise that makes any civilization viable.

jimtron

23rd April 2007, 09:10 AM

Politician: How awful! Shall I restrict his salary?

Common Yokel: Sure! I hate him thanks to your masterful rhetoric! How dare he?

Stern: I hereby pull myself off the air!

Politician: Good!

Common Yokel: Let's not get hasty here...

Politician: I've gotten rid of this evil guy who hogs all the money!

Stern: Yep, he did!

Politician: He lost his job!

Yokel: No, I think you shall lose your job instead.

Although why, in a free society, we have to go through these idiotic twists every once in awhile, I don't know.

I'm against idiotic twists too (like the above scenario). But what do you think about the questions I asked?

While I would agree that wealth inequality is a necessary evil of modern capitalism, rising inequality isn't. Yes, this is what I'm getting at. I'm not for communism, and of course a bell curve makes sense for a capitalist society. But what I'd like to hear from folks here, is how much is too much? Or is there no such thing as too much inequality? Can or should anything be done about mediocre performing CEOs making 400 or 1,000 times more than their average employee?

Is this a problem that the income gap is rising, and if so what should be done about it? Or is this a necessary evil of capitalism?

BPSCG

23rd April 2007, 09:13 AM

It would be a problem if the wealthy were getting that way at the expense of the poor.

Can anyone demonstrate that that is the case?

Alex Rodriguez makes $25 million a year playing baseball. If his salary were reduced to one-tenth of that, or $2.5 million, how would that help the guy working at the car wash?

If all baseball salaries were capped at $1 million a year, how would that help the waitress at the diner?

If the CEO of Home Depot were paid only $250,000 a year, instead of umpteen jillion, how would that help the guy selling Fords?

It's only a problem if you think the total wealth in the US is a fixed amount, and that the rich got that way by greedily gobbling up more of the pie than they deserve, at the expense of the poor. You have to demonstrate that that is the case before you can claim that being uber-rich is a bad thing.

jimtron

23rd April 2007, 09:27 AM

If the CEO of Home Depot were paid only $250,000 a year, instead of umpteen jillion, how would that help the guy selling Fords?

It wouldn't. But what if you had a set income ratio, like Ben & Jerry's used to have. What if Home Depot had a 1:50 set income ratio? That way, when the company was doing well, everyone would do well, and it would work to close the widening income gap.

You have to demonstrate that that is the case before you can claim that being uber-rich is a bad thing.
I don't necessarily think that being uber-rich is a bad thing. I do find it obscene to have many uber-rich people in a country where millions can't afford health insurance, and where TV stars and pro athletes often make hundreds or thousands times more than soldiers and teachers. In other words, if everyone working full time had health insurance and lived above the poverty line, making a fair living wage, at that point I don't have a problem with having super rich people. When the rich are getting richer and the poor are getting poorer, I'm concerned.

LawnOven

23rd April 2007, 09:35 AM

There should be a lottery, anyone that makes a million dollars or more in a year has a 1 in 3 chance to trade income with someone who makes less than a million.

Beerina

23rd April 2007, 09:40 AM

While I would agree that wealth inequality is a necessary evil of modern capitalism, rising inequality isn't.

Worker X earns $25,000. CEO Y earns $2,000,000. That's 80x.

Now they double their incomes. Still 80x, but the CEO is now earning $4,000,000. OH NOES! Income disparity has skyrocketted!

It's stunning the number of people around here who buy into the half-assed arguments about why income disparity is bad -- that kind of critical thinking gets laughed at in the other forums like CT, religion, or general paranormal.

The actual process is as follows:

1. Note of income disparity triggers trained emotional response -- how horrible it is! I've been told wealth is evil my whole life.

2. Brain back-fills with rationale to support this emotion, similarly to a religious person being told Piltdown Man was a fraud sits back, satisfied evolution is disproved.

Does anybody have any actual evidence society is worse off in measurable ways for "the common man"? Or is it all just anecdotes parallel to that which is studied on Quackwatch?

Ranillon

23rd April 2007, 09:43 AM

It would be a problem if the wealthy were getting that way at the expense of the poor.

Can anyone demonstrate that that is the case?

You need not look further than the gap between productivity and wages. The first has been rising substantially faster over the past thirty years than the second. To put this another way, the average worker has been worth more (e.g. more productive), but his average wage hasn't been keeping pace. That means that business ends up getting more for less. Now, add it the rising rates of inequality and it's rather obvious who has been benefiting at whose expense.

Alex Rodriguez makes $25 million a year playing baseball. If his salary were reduced to one-tenth of that, or $2.5 million, how would that help the guy working at the car wash?

The problem with this example (IMHO) is that is both right and wrong. It is right in that some heavy-handed government sponsored wealth transfer would at best a poor fix and could easily backfire. However, it is wrong ultimately in that is side-steps what I see as the real cause of the growing inequality -- namely, that over the past thirty years we as a culture has lost a lot of the self-inhibition that previously kept inequality levels in check. Basically, it's become okay to be filthy rich without caring about the social costs. That it turn makes it easy to justify and engage in practices dealings that transfer wealth from the less powerful to the more powerful.

For example, take the pension crisis. In the last ten years businesses have been scrambling to off-load their pension plans, despite the promises they had made. Sure, you can argue that they are too expensive for business, but a lot of that is doubtlessly because everyone's doing it. That is, it becomes expensive and counter-productive to play by the "rules" of pensions because other businesses are already breaking those "rules". It becomes a self-fulfilling prophecy.

More disturbing to me, however, is the attitude that business (e.g. the corportate elite) often takes in situations like these. Instead of being embarrassed and mortified at having to take back old promises and leaving pensioners holding the bag dumping pensions is if anything celebrated as a sound business tactic that can hurt stock price if not employed vigorously "enough".

If the average person made a large financial promise to a business (say, a person taking out a loan to a house) and then tried to dump the cost on to the government they'd be taken to court. Yet, when business dumps billions of $$ in pensions on to the government it's congratulated for its cleverness? That's just wrong -- not just in an ethical sense, but because in the long term such practices will destroy the social compact on which capitalism depends.

There is nothing wrong with getting rich, but I think the rich as a group have been progressively taking the rest of the system for granted as if they can do anything in the name of "good business" without having to worry about long term repercussions. Problem is that the "long term" eventually arrives.

Ocelot

23rd April 2007, 09:44 AM

Part of the issue is exaggerated because typically figures do not account for demographics. There's about the same number of households where the head is in their twenties and thirties, forties, fifties, sixties and over 70s. From twenty to sixty you're saving for retirement. From 60 ish onward you start spending those savings. Clearly one sixth of the population is at their peak wealth. However even adjusting for demographic skewing we still see the Pareto (http://en.wikipedia.org/wiki/Pareto_principle) effect: 80% of a population's wealth to be held by only 20% of the population.

The effect is natural. Here's (http://hbswk.hbs.edu/archive/2906.html) a description of how it happens in a fair simulation.

In the USA this Pareto curve is steeper than in many other cultures. The rich are proportionally more rich than the poor with whom they share a society. There is little doubt that this trend is increasing.

The question becomes "is this a problem"

On the one side are economists who tend toward thinking that large concentrations of wealth are of benefit to the economy and everyone prospers because of this due to a trickle down effect.

Often the figures will show that even if the rich are taking a larger proportion of the nation's wealth, it's not a zero sum game. The poor are not necessarily harmed by this. Even ihn real terms (adjusted for inflation) the poor get richer but the richer get richer faster. Who cares if everyone is getting richer?

Other times the figures show the poor getting poorer. In that instance there can be no doubt that this is a bad thing (tm)

Thankfully the overall trend is that the poor seem to be getting richer.

There are other effects though. There's a nice little fable (http://www.biblegateway.com/passage/?search=Matt%2020&version=9) which has a certain poetic validity separate from the disputed provenance. This warns against envy. So long as the poor are getting a fair compensation they shouldn't worry that others may be getting a better deal. However that's a little tricky to put into practice and is not the prevailing viewpoint, even amongst the many people who pay lip service to the supposed teller of these tales. Such a prevailing viewpoint can have a negative effect even if you don't share it.

Whilst it is fairly acknowledged that correlation is not causality, links between wealth disparity and many social ills such as crime, violence, social unrest and poor public health have been brought to light. If you're one of the lucky few 20% with 80% of the wealth then an increasing wealth gap appears to be bad for your own health - even if everybody is getting richer. The mechanism by which this might happen is unknown to me but it's certainly of interest.

BPSCG

23rd April 2007, 09:46 AM

It wouldn't. But what if you had a set income ratio, like Ben & Jerry's used to have. What if Home Depot had a 1:50 set income ratio? That way, when the company was doing well, everyone would do well, How? Under that scenario, if the lowest-paid clerk were making $20,000 a year, the CEO would make a million, instead of (I think it was) $43 million.

What happens to that extra $42 million? It becomes extra profit for the company, which enriches the stockholders. But it would do nothing to help the clerk; he's still making only $20,000 a year.

and it would work to close the widening income gap. You still haven't explained why the income gap is a bad thing.

I don't necessarily think that being uber-rich is a bad thing. I do find it obscene to have many uber-rich people in a country where millions can't afford health insurance, Emphasis mine. Why is it the rich person's fault that the poor person can't afford health insurance? Did the rich person use his wealth to corner the market on health insurance, so that there's none left? If he did, yes, that would be obscene. Careful with the overblown rhetoric; it doesn't help make your case.

In other words, if everyone working full time had health insurance and lived above the poverty line, making a fair living wage, at that point I don't have a problem with having super rich people. When the rich are getting richer and the poor are getting poorer, I'm concerned.Again, the poor are not getting poorer; you can't go below zero income and zero savings.

And again, the fact that the guy working at Home Depot for $20,000 a year (and if you've tried to get help in a HD store recently, you must agree that he would be grotesquely overpaid at even one-tenth the salary) can't afford health insurance has nothing to do with the fact that his boss makes $43 million; it has to do with the fact that his work is work that almost anyone can do, and is therefore not worth very much.

Ocelot

23rd April 2007, 09:46 AM

Does anybody have any actual evidence society is worse off in measurable ways for "the common man"? Or is it all just anecdotes parallel to that which is studied on Quackwatch?

Here's (http://www.health.nsw.gov.au/public-health/phb/HTML2002/june02html/wellbeing.html) something to chew on.

LawnOven

23rd April 2007, 09:47 AM

http://www.infoplease.com/ipa/A0778562.html

Most livable countries as ranked by the UN

Dr Adequate

23rd April 2007, 09:49 AM

Worker X earns $25,000. CEO Y earns $2,000,000. That's 80x.

Now they double their incomes. Still 80x, but the CEO is now earning $4,000,000. OH NOES! Income disparity has skyrocketted! But if you'd bothered to read the O.P. you'd have seen that we're discussing the ratio between pay scales, not the absolute difference. Doubling everyone's pay would leave the ratio the same.

Does anybody have any actual evidence society is worse off in measurable ways for "the common man"? I had thought it was evident that "the common man" would be better off if he had more money, but perhaps that's just the unreconstructed Maoist in me.

Beerina

23rd April 2007, 09:56 AM

I'm against idiotic twists too (like the above scenario). But what do you think about the questions I asked?

Turns out that American executive compensation rates are quite different from those of the rest of the developed world. In Japan a typical executive makes eleven times what a typical worker brings home; in Britain, 22 times. In America 475 times.
I don't have anything against people making a lot of money. But it seems obscene to have millions working full time without health care, barely scraping by, in one of the richest countries in the world.

A CEO earning 475x the wages of the average worker is probably in the lead of a corporation of 10s of thousands of workers. That's not enough to give health care benefits to the workers, and the company would lose quality CEOS if they didn't pay for them. Then the workers would start to lose jobs as the company starts collapsing.

Although an egalitarian distribution of wealth is simply not something the human race can do competently, trying to ensure some degree of equitable distribution is a battle worth fighting.

Please list historical cases where highly regulated business gave better results than in freer nations, before you talk about which policy is or is not the best friend of the common man. I assume that is what you mean by "worth fighting" for.

To me the problem is not that athletes and TV stars are paid a great deal, it's that many of them are paid many many times more than teachers and soldiers and policemen. Is this a bad thing? A necessary evil of capitalism? Do they deserve to get paid hundreds or thousands times more than policemen or teachers?

They bring in lots of money, which is why, in a free society, they earn a lot of money. In a business sense, yes, they do indeed deserve that much.

Howard Stern made over 300,000,000 in a year. That means (if my math is correct) that if you make $30,000 a year, Stern made 10,000 times more than you. Is this capitalism run amok, or no?

Somebody saw it to their business advantage to pay him that much to do his thing. He will bring in that much, they believe, or more (at least in the bigger picture.) The cast of "Friends" was earning more towards the end of the show than that popular show even earned, but in the bigger picture, it was to the network's benefit since it also lifted other surrounding shows up. Sirius was in a battle to the death with XM, and XM had already signed a lot of major radio players -- and was achieving a critical mass in attracting new ones. So nothing to do but continue a slow death or sign on their own juggernaut.

Worth it? Their decision, in a free society.

Dr Adequate

23rd April 2007, 09:57 AM

Beerina

23rd April 2007, 09:58 AM

But if you'd bothered to read the O.P. you'd have seen that we're discussing the ratio between pay scales, not the absolute difference. Doubling everyone's pay would leave the ratio the same.

I had thought it was evident that "the common man" would be better off if he had more money, but perhaps that's just the unreconstructed Maoist in me.

Yet a king 200 years ago lived a worse life than the average man today, with shorter life expectancy.

There's a lot more to quality of life than the amount of cash in your pocket -- cash is just half the equation -- the other half is what you can buy with it.

jimtron

23rd April 2007, 10:00 AM

How? Under that scenario, if the lowest-paid clerk were making $20,000 a year, the CEO would make a million, instead of (I think it was) $43 million.

What happens to that extra $42 million? It becomes extra profit for the company, which enriches the stockholders. But it would do nothing to help the clerk; he's still making only $20,000 a year.First of all, I have more questions than answers--I'm not claiming to have any workable solutions. I am curious to hear what you all think of my questions though. As for the Home Depot example, doesn't the company have enough revenue now so that (if the 1:50 ratio was implemented) the average employee could make more that 20k and the CEO could make more than a million?

You still haven't explained why the income gap is a bad thing.It's a bad thing in my opinion. Do you find no problem in a widening income gap? Is there any point where you think the gap could be too wide?

Why is it the rich person's fault that the poor person can't afford health insurance?I don't remember saying it was the rich person's fault. But it seems to me the U.S. has enough money for everyone to have health insurance. To me it's obscene to have multi-billionaires and 40 million (?) citizens without health insurance.

Again, the poor are not getting poorer; you can't go below zero income and zero savings.When the incomes of very poor people stagnate, they're getting poorer due to inflation, no?

...it has to do with the fact that his work is work that almost anyone can do, and is therefore not worth very much.What is your criteria for "worth" in the above quote? How are CEOs worth 300 times the average or lowest paid worker in their company? Do you think that the CEO is 300 times smarter, or harder working? Is a pro athlete 1,000 times more valuable to society than a teacher or police officer or soldier? (These questions are not meant rhetorically--I'm sincerely interested in hearing the opinions of everyone on this)

jimtron

23rd April 2007, 10:06 AM

They bring in lots of money, which is why, in a free society, they earn a lot of money. In a business sense, yes, they do indeed deserve that much.

I completely understand that in a business sense, some people "deserve" to make thousands of times more than others. But what about in a humanitarian sense? Again, is Howard Stern 5,000 or 10,000 times more valuable to society than a school teacher? Certainly money and business aren't the only measures of value.

Yet a king 200 years ago lived a worse life than the average man today, with shorter life expectancy.

I'm not sure what your point is here--care to elaborate?

There's a lot more to quality of life than the amount of cash in your pocket -- cash is just half the equation -- the other half is what you can buy with it.

True. And there's certainly much more to life than money. But lack of it can really suck, especially when it comes to health care and raising kids and education.

Mycroft

23rd April 2007, 10:08 AM

To me the problem is not that athletes and TV stars are paid a great deal, it's that many of them are paid many many times more than teachers and soldiers and policemen. Is this a bad thing? A necessary evil of capitalism? Do they deserve to get paid hundreds or thousands times more than policemen or teachers?

The problem is that you're comparing things that have nothing to do with each other. Athletes and actors are paid in terms of how large an audience they can draw in and thus how much money they can generate for their employers. Teachers, firemen, policemen and soldiers are all public servants, and while their contribution to society is valuable, they don't make money for their employers.

The issue is not how one group of people is compensated compared to another group, but if the group we the public are responsible for is compensated enough.

Tony

23rd April 2007, 10:08 AM

The gap should always be increasing in a prosperous society. The poverty line can't get any lower, but the wealth generates wealth. There is no cap.

Bwahahahahahahaha. Then countries like Mexico, Russia and Saudi Arabia must be the most prosperous in the world.

Ziggurat

23rd April 2007, 10:08 AM

You need not look further than the gap between productivity and wages. The first has been rising substantially faster over the past thirty years than the second.

That's to be expected, since the tax code favors non-wage compensation for employees, and non-wage compensation (especially health care benefits) have been growing quite fast.

To put this another way, the average worker has been worth more (e.g. more productive), but his average wage hasn't been keeping pace.

But it's not his wage alone that matters, it's the total compensation he recieves, and I think that HAS pretty much kept pace with productivity increases.

Another problem with most analyses of income disparity is that these aren't fixed groups of people. Wages (and non-wage compensation) generally increase significantly as you age, and we now have an older demographic than ever before. There are a whole lot of people who start out their working life in the bottom 20% of the income bracket but end up in the top 20%. Were they poor when they started working and rich when they retired? Not exactly. If you don't account for how people move through (and generally UP) income brackets throughout their lives, you're not going to get an accurate picture of what people's economic lives are really like.

Ziggurat

23rd April 2007, 10:11 AM

Bwahahahahahahaha. Then countries like Mexico, Russia and Saudi Arabia must be the most prosperous in the world.

The problem isn't wealth disparity, or even growing wealth disparity. The problem is when the rich get richer and the poor DON'T get any richer - which is not the case in the US (though immigration can make it look like the poor aren't progressing by adding new poor to the bottom of the economic ladder).

BPSCG

23rd April 2007, 10:13 AM

You need not look further than the gap between productivity and wages. The first has been rising substantially faster over the past thirty years than the second. To put this another way, the average worker has been worth more (e.g. more productive), but his average wage hasn't been keeping pace. Most of the gains in productivity come from automation, not from people working harder or faster or more efficiently. So drawing a link between wage increases and productivity increases is meaningless.

That means that business ends up getting more for less.Yeah. Should the businesses pay the extra money derived from the extra productivity it got from automation to the machines responsible for the extra productivity?

Now, add it the rising rates of inequality and it's rather obvious who has been benefiting at whose expense.Okay, so I see you belong to the "the size of the economic pie never changes, and the more the rich take, the less there is left for the poor." If that were indeed true, the net worth of this country would be the same as it as in 1607 when the first permanent settlement was founded in Jamestown, Virginia (happy 400th birthday, Virginia!) But if you haven't noticed, the US is far wealthier today than it was 400 years ago.

The problem with this example (IMHO) is that is both right and wrong. It is right in that some heavy-handed government sponsored wealth transfer would at best a poor fix and could easily backfire. That's like saying cancer can be an inconvenience.

However, it is wrong ultimately in that is side-steps what I see as the real cause of the growing inequality -- namely, that over the past thirty years we as a culture has lost a lot of the self-inhibition that previously kept inequality levels in check. You still have not explained why wealth and income inequality are bad. Shouldn't you do that before you decide to fix the "problem"?

Basically, it's become okay to be filthy rich without caring about the social costs. That it turn makes it easy to justify and engage in practices dealings that transfer wealth from the less powerful to the more powerful.Again, you're demonstrating you believe that the total wealth of a country is fixed. That is demonstrably a false premise.

For example, take the pension crisis. In the last ten years businesses have been scrambling to off-load their pension plans, despite the promises they had made. Sure, you can argue that they are too expensive for business, Well, yeah. If a business goes bankrupt, it not only stops paying pensions; it also stops paying salaries, not just to the guys on the assembly line, but to the guys in the gleaming corporate offices.

but a lot of that is doubtlessly because everyone's doing it. Evidence?

If the average person made a large financial promise to a business (say, a person taking out a loan to a house) and then tried to dump the cost on to the government they'd be taken to court. Yet, when business dumps billions of $$ in pensions on to the government it's congratulated for its cleverness? That's just wrong -- not just in an ethical sense, but because in the long term such practices will destroy the social compact on which capitalism depends.I won't argue with that point, but if it's a bad idea, then the taxpayers should demand the US Treasury (i.e., the taxpayers) get out of the business of guaranteeing pensions.

jimtron

23rd April 2007, 10:14 AM

The problem is that you're comparing things that have nothing to do with each other. Athletes and actors are paid in terms of how large an audience they can draw in and thus how much money they can generate for their employers. Teachers, firemen, policemen and soldiers are all public servants, and while their contribution to society is valuable, they don't make money for their employers.

I understand this. But let me ask you--do you think that a pro athlete deserves to make 1,000 times more than a police officer or a teacher? In terms of the value to society (not in terms of how much money they're making for their employer)? Should we pay teachers and soldiers a lot more? Do the 300:1 or 1,000:1 or 10,000:1 ratios bother you at all? Can we have super rich people in the U.S. without a lot of poor people?

Again, I get the economic sense of paying Stern 10,000 times a $30k salary. But am I the only one here who finds that something is wrong with this picture?

Tony

23rd April 2007, 10:14 AM

You still haven't explained why the income gap is a bad thing.

The onus is on you to explain why it's a good, or atleast, neutral thing.

Tony

23rd April 2007, 10:17 AM

The problem isn't wealth disparity, or even growing wealth disparity. The problem is when the rich get richer and the poor DON'T get any richer - which is not the case in the US (though immigration can make it look like the poor aren't progressing by adding new poor to the bottom of the economic ladder).

The poor, working class and middle classes aren't getting richer. But that's irrelevant to corplinx's statement, the countries with the increasing gap in wealth are demonstrably not the most prosperous societies.

Mycroft

23rd April 2007, 10:20 AM

It wouldn't. But what if you had a set income ratio, like Ben & Jerry's used to have. What if Home Depot had a 1:50 set income ratio? That way, when the company was doing well, everyone would do well, and it would work to close the widening income gap.

Home Depot got where it is by taking its proffits and expanding its business. If it was instead required to compensate its employees with its, it would never have grown to what it is.

One of the advantages to working for an outfit such as Home Depot is wage stability. You know exactly what your paycheck is going to be week after week, and unless you really mess up, you know you're going to keep your job year after year.

Compare that to being an actor, where most of the time you get paid very little, you don't know how long any given show will run, and there could be long gaps between jobs. The actor may have the potential of making a lot more money, but there is also a much greater degree of risk.

Tony

23rd April 2007, 10:21 AM

Yeah. Should the businesses pay the extra money derived from the extra productivity it got from automation to the machines responsible for the extra productivity?

This question is very revealing. In BPSCG's mind, workers, people, his fellow countrymen, have no more regard or worth to him than an assemblage of parts.

DaChew

23rd April 2007, 10:26 AM

I don't think it entirely makes sense to look at differences in dollar amounts and ratios between the highest paid and lowest paid. Our dollar is fiat money and so raw numbers don't mean alot in the terms that I think you are really concerned with. I suggest that quality of life and longevity are better guages of rich vs. poor.
Being poor today doesn't look very similar to being poor even 100 years ago. Starvation used to be a real concern of the poor in the U.S.. It really isn't anymore. Televisions, cars, phones, basic medical care - these are all things the poor have access to that would only be available to the rich previously. The adage is true - A rich man can have 100 cars, he can only drive one at a time. A rich man can have 10 houses, he can only sleep in one at a time. By these standards, I think the gap between rich and poor is actually shrinking.

Now, Alex Rodriguez deserves 25 million because he's Alex Rodriguez. He's not being payed only to play baseball. He's being payed to be Alex Rodriguez - a guy who plays baseball really well. What's the difference? His team owners know that having Alex Rodriguez on the team increases attendence and allows them to sell a lot more concessions. Major League Baseball uses Alex Rodriguez to help sell their games to the networks. So, the money is going to be made by somebody the question is, who should make money off of Alex Rodriguez? Team owners who've never played the game in their lives, Major League Baseball, or Alex Rodriguez? The answer is, all three. If A-Rod takes less money, owners are not going to decide to sell fewer jersey, hats, tickets and beer (or lower the cost to any of that - not as long as people will pay.) . The networks are not going to decide to sell less ad time.

Tony

23rd April 2007, 10:27 AM

Home Depot got where it is by taking its proffits and expanding its business. If it was instead required to compensate its employees with its, it would never have grown to what it is.

So? It's just one company. It's not like there wouldn't be others to satisfy consumer demand for tools. You're actually highlighting a good consequence of laws that state companies will fairly compensate their employees.

Tony

23rd April 2007, 10:31 AM

Mycroft

23rd April 2007, 10:31 AM

I understand this. But let me ask you--do you think that a pro athlete deserves to make 1,000 times more than a police officer or a teacher?

First of all, not every pro athlete is rich. For every one that makes the millions, there are a dozen others that make much less, and hundreds others that need to supliment their income with other jobs. Go to a minor league baseball game sometime and ask yourself if those athletes "deserve" their compensation, whatever it is.

But the real issue is we judge what they deserve on completely different scales which can't be compared to each other.

Dr Adequate

23rd April 2007, 10:32 AM

Yet a king 200 years ago lived a worse life than the average man today ... ... apart from the palaces, the servants, the short hours, and the whole life of opulent luxury in general.

... with shorter life expectancy.

Let's see, two hundred years ago was Mad King George, wasn't it?

George III: 1738 - 1820
George IV: 1762 - 1830
William IV: 1765 - 1837
Victoria: 1819 - 1901

There's a lot more to quality of life than the amount of cash in your pocket -- cash is just half the equation -- the other half is what you can buy with it. If your point is that technology has improved the quality of life, there's no question of that.

On the other hand, Britain and Japan have both contributed and profited from technological development, so evidently the pay ratios in the United States are neither a necessary precondition nor a necessary consequence of so doing.

Tailgater

23rd April 2007, 10:32 AM

Home Depot just came here a few years ago. I'm glad. The little hardware stores here sucked. I would have to go to like 3 different places and drive around all afternoon only to find out I had to have it special ordered. F that.

jimtron

23rd April 2007, 10:33 AM

Home Depot got where it is by taking its proffits and expanding its business. If it was instead required to compensate its employees with its, it would never have grown to what it is.
That very well may be true. But I'm not questioning the effect of income inequality on growth or profits. I understand that paying a CEO 1,000 times more than the lowest worker can work out well for the bottom line. But is there a point where, regardless of profits and growth and corporate success, the income disparity is too much?

BPSCG

23rd April 2007, 10:37 AM

First of all, I have more questions than answers--I'm not claiming to have any workable solutions. I am curious to hear what you all think of my questions though. As for the Home Depot example, doesn't the company have enough revenue now so that (if the 1:50 ratio was implemented) the average employee could make more that 20k and the CEO could make more than a million? HD has 364,000 employees. Let's assume 300,000 of them are the clerks walking the floors and not helping you. Now let's assume you want to give them all a raise from $20,000 to $25,000 - a 25% raise. The cost of that raise? $1.5 billion.

HD has had net income after taxes of between $5.0 billion and $5.8 billion the last three years. That raise would cost the company about 25 to 30 percent of its profits.

It's a bad thing in my opinion. Do you find no problem in a widening income gap? Is there any point where you think the gap could be too wide?No.

I don't remember saying it was the rich person's fault. But it seems to me the U.S. has enough money for everyone to have health insurance. To me it's obscene to have multi-billionaires and 40 million (?) citizens without health insurance. But whatever the number of people without health insurance, nobody here has demonstrated that it's because of the wealth/income gap, so the point is irrelevant.

When the incomes of very poor people stagnate, they're getting poorer due to inflation, no?If you have zero income, you can't buy anything, no matter what the price.

What is your criteria for "worth" in the above quote?Labor - actually, anything - is worth exactly what a buyer and seller (AKA, the free market) agree it is worth. The market decides that the clerk is worth $20,000 a year (here in the DC suburbs, that works out to about double the minimum wage, because you literally can't hire someone to walk your dog for minimum wage here), and the market decides the CEO is worth a lot more.

How are CEOs worth 300 times the average or lowest paid worker in their company? What the CEO is worth has absolutely nothing to do with what his lowest-paid worker is worth.

Do you think that the CEO is 300 times smarter, or harder working? Both irrelevant measures. He's worth 300 times more because the people who are willing to hire him are willing to pay him 300 times more and he's willing to work for 300 times more. In the case of HD, the present CEO has increased the company's earnings by 57% in the past four years, from $3.7 billion to $5.7 billion. That's why he's worth so much.

Mycroft

23rd April 2007, 10:37 AM

So? It's just one company. It's not like there wouldn't be others to satisfy consumer demand for tools. You're actually highlighting a good consequence of laws that state companies will fairly compensate their employees.

Define "fair".

Tailgater

23rd April 2007, 10:38 AM

I think it's unfair to compare athletes, and actors with business CEO's who make millions while their workers go without healthcare. In their own respective contexts, actors and athletes are the workers and they are perhaps some of the most fairly compensated workers in our country. How much money does an actor or athlete make in comparison to the CEO of the studio or the owner/manager of the team?

Umm, when owners threaten to move a team from a city unless they build mega-million dollar stadiums from taxpayer pockets so they can "afford" to pay the players, and then turn around and raise ticket prices anyway, I would hardly call that fair. More like extortion.

Tony

23rd April 2007, 10:39 AM

Home Depot just came here a few years ago.

What backwater part of America do you live in?

Dr Adequate

23rd April 2007, 10:39 AM

A CEO earning 475x the wages of the average worker is probably in the lead of a corporation of 10s of thousands of workers. That's not enough to give health care benefits to the workers, and the company would lose quality CEOS if they didn't pay for them. Then the workers would start to lose jobs as the company starts collapsing. And yet Britain is not a-ring with the sound of collapsing companies. Maybe you guys should think of hiring some cheap British executives. Free markets and all that. Jolly good show.

jimtron

23rd April 2007, 10:40 AM

First of all, not every pro athlete is rich. For every one that makes the millions, there are a dozen others that make much less, and hundreds others that need to supliment their income with other jobs. Go to a minor league baseball game sometime and ask yourself if those athletes "deserve" their compensation, whatever it is.

But the real issue is we judge what they deserve on completely different scales which can't be compared to each other.

Would you mind answering the question? I agree that not every pro athlete is rich.

The fact is that there are TV stars and pro athletes etc. who make 1,000 times more than soldiers and police officers and teachers. I understand that this makes sense in terms of corporate profitability. Is there something disturbing about a system that allows our soldiers to make 1,000 times less than athletes, or 5-10,000 times less than Howard Stern? I think Stern's OK, but I find teachers and soldiers more valuable to society (or at least certainly not 10,000 times less valuable).

Tony

23rd April 2007, 10:41 AM

Umm, when owners threaten to move a team from a city unless they build mega-million dollar stadiums from taxpayer pockets so they can "afford" to pay the players, and then turn around and raise ticket prices anyway, I would hardly call that fair. More like extortion.

I agree, but I'm not talking about owners lying to and blackmailing cities to get new stadiums.

WildCat

23rd April 2007, 10:43 AM

And yet Britain is not a-ring with the sound of collapsing companies. Maybe you guys should think of hiring some cheap British executives. Free markets and all that. Jolly good show.
How much does Richard Branson make compared to, say, a flight attendant on one of his airlines?

Tony

23rd April 2007, 10:43 AM

Define "fair".

A situation where the worker gets the same monetary benefit from the company's success as the CEO.

Tailgater

23rd April 2007, 10:44 AM

I agree, but I'm talking about owners blackmailing cities to get new stadiums.

You said athletes are paid fairly, but many are overpaid to stay by passing other costs to the taxpayer.

Ziggurat

23rd April 2007, 10:45 AM

But is there a point where, regardless of profits and growth and corporate success, the income disparity is too much?

Too much for what? Your question isn't answerable until you define what you mean by that.

Cho Seung-hui thought that people could be too rich. But jealousy isn't exactly the best basis on which to found economic policy OR advance anyone's welfare. You could cut the sallaries of CEO's as much as you wanted and it wouldn't change the income disparity which exists.

BPSCG

23rd April 2007, 10:46 AM

The onus is on you to explain why it's a good, or atleast, neutral thing.No it's not. The OP suggested it's a bad thing (http://forums.randi.org/showthread.php?postid=2543563#post2543563). That's the claim; now we need to see the evidence to back it up, else it's simply an unsupported claim.

Bodhi Dharma Zen

23rd April 2007, 10:46 AM

When CEOs make hundreds of times more than the average worker, is that because they're hundreds of times smarter and/or harder working than the lower level workers? Is 500 times too much? 1,000 times? 100 times?

When a TV star or athlete makes a thousand times more than a school teacher or soldier, is that a necessary evil of capitalism? Or do they deserve to make that much more money? Or something else?

Things would be a lot better if a limit to what an individual can earn is set. Say, no one in the country (no matter what they do) can earn less than 12,000 bucks (year figures) or more than 1,200,000.

There you go. I said it. Not that it will happen nor that people will start to think about it.

Tony

23rd April 2007, 10:47 AM

You said athletes are paid fairly, but many are overpaid to stay by passing other costs to the taxpayer.

Evidence?

Mycroft

23rd April 2007, 10:47 AM

That very well may be true. But I'm not questioning the effect of income inequality on growth or profits. I understand that paying a CEO 1,000 times more than the lowest worker can work out well for the bottom line. But is there a point where, regardless of profits and growth and corporate success, the income disparity is too much?

The issue should be if the lowest paid worker is compensated enough. This has absolutely nothing to do with the compensation of the CEO.

BPSCG

23rd April 2007, 10:48 AM

One of the advantages to working for an outfit such as Home Depot is wage stability. You know exactly what your paycheck is going to be week after week, and unless even if you really mess up, you know you're going to keep your job year after year.
Fixed. :biggrin: Home Depot, the store I love to hate to love.

jimtron

23rd April 2007, 10:50 AM

Too much for what? Your question isn't answerable until you define what you mean by that.

Cho Seung-hui thought that people could be too rich. But jealousy isn't exactly the best basis on which to found economic policy OR advance anyone's welfare. You could cut the sallaries of CEO's as much as you wanted and it wouldn't change the income disparity which exists.

I'm not talking about "too rich." I'm talking about too wide a gap between rich and poor. In your opinion, can you imagine a level of income disparity that you would find disturbing?

I understand that many CEOs work very hard, and are very brilliant, and can make their corporations very profitable. But to me there's something wrong when full time workers get 1,000 times less money than the CEO. IMHO.

jimtron

23rd April 2007, 10:53 AM

The issue should be if the lowest paid worker is compensated enough. This has absolutely nothing to do with the compensation of the CEO.

To me it does. Do you see no problem in a CEO making 1,000 times more than the average worker?

Tony

23rd April 2007, 10:55 AM

No it's not.

Actually. You're both making claims. Do you have any evidence that a large wealth gap is a good thing?

The OP suggested it's a bad thing (http://forums.randi.org/showthread.php?postid=2543563#post2543563).

It is a bad thing, especially if you value democracy, freedom, civil rights, prosperity and stability, and history is full of lessons highlighting the perils to those goals when there is a large and unequal wealth distribution.

That's the claim; now we need to see the evidence to back it up, else it's simply an unsupported claim.

Contrary to your ignorance of it, there is a lot of evidence. Or perhaps not, perhaps you're well aware of the evidence and simply you like autocracy, monoarchy, corruption and tyranny. We already know you're perpared to consign your fellow americans to a status no better than a hunk of metal, so neither would really surprise me.

Ziggurat

23rd April 2007, 10:56 AM

Say, no one in the country (no matter what they do) can earn less than 12,000 bucks (year figures)

The only minimum wage that exists is $0. "Minimum wage" laws don't actually increase this minimum wage, all they do is outlaw jobs for anything BETWEEN this real minimum wage (which ALWAYS exists) and some arbitrary level.

rikzilla

23rd April 2007, 10:56 AM

The poor, working class and middle classes aren't getting richer.
Easy for you to say in a knee-jerk, but do you have any facts? If the "poor" are not getting any richer then why do they continue to stream across our borders?

But that's irrelevant to corplinx's statement, the countries with the increasing gap in wealth are demonstrably not the most prosperous societies.

Give examples and we'll discuss. Absent that you are just blowing the smoke that you are rather infamous for obscuring debate with.
-z

DaChew

23rd April 2007, 10:56 AM

You said athletes are paid fairly, but many are overpaid to stay by passing other costs to the taxpayer.

Don't forget that Cities make a tremendous amount of revenue off of Sports teams themselves. Parking and taxes, including the increased revenue and resulting taxes from surrounding businesses. And, of course, more than one group of taxpayers have voted down stadium proposals. I don't think that "extortion" is the right word.

Detroit made a huge amount of money off of the Superbowl last year but none of that has been shared with the taxpayers. You could suggest that the city used the money to improve the city for its citizens but you'd be hard pressed to find an example of that.

Mycroft

23rd April 2007, 10:57 AM

A situation where the worker gets the same monetary benefit from the company's success as the CEO.

So if the company I work for loses money one quarter, should I not get a paycheck for three months?

One could argue that that’s “fair”, but if I were willing to take that kind of risk I would rather work for myself where I would have more direct control over the success or failure of my endeavor.

The value of a welder or a clerk is the same regardless of the profitablity of the company they work for.

WildCat

23rd April 2007, 11:02 AM

Detroit made a huge amount of money off of the Superbowl last year but none of that has been shared with the taxpayers.
Unless you factor in that every dollar Detroit made from the Super Bowl is a dollar they don't have to take from the taxpayers.

Tailgater

23rd April 2007, 11:03 AM

Evidence?

I'm in one of the "doughnut" counties.

Groundbreaking for the stadium took place on September 20, 2005. The anticipated stadium project cost is approximately $675 million. The estimate includes $500 million for actual construction, $125 million in "soft" costs and $50 million in contingencies. The stadium is being financed with funds raised by the State of Indiana and the City of Indianapolis, with the Indianapolis Colts providing $100 million. Marion County has raised taxes for food and beverage sales, auto excise taxes, innkeeper's taxes and admission taxes for its share of the costs. Meanwhile, a small increase in food and beverage taxes in the eight surrounding doughnut counties and the sale of Colts license plates completes the total. [2] It is also worth noting that Winfred Lucas and Charles Marsh were friends of Lyndon Baines Johnson (See Power Beyond Reason, by Hershman pg 50 and 57).

In August 2006, a problem was discovered concerning operating costs of the new stadium. The city's Capital Improvement Board estimates that the new stadium could cost an additional $10 million more a year to operate than the RCA Dome. Because most of the revenue from games, parking, concessions, etc. goes directly to the Colts, finding a solution to the anticipated shortfall will need to come quickly. [3]

Local government officals are looking at increasing taxes again to help eliminate this shortfall. The taxpayers of Marion County and the surrounding counties are funding a large portion of the building.

This is on top of a tax still being paid for the RCA dome that is being rolled over. This is all after Jim Irsay wasn't sure if he could stay here and keep a "championship" team.

Dr Adequate

23rd April 2007, 11:06 AM

How much does Richard Branson make compared to, say, a flight attendant on one of his airlines? Richard Branson is the owner or majority shareholder of some two hundred companies, not an executive working for one company.

You read the O.P., right?

Average British ratio, 22:1, average US ratio, 475:1.

I still maintain, on that basis, that British executives are better value for money.

Tony

23rd April 2007, 11:07 AM

Easy for you to say in a knee-jerk, but do you have any facts?

Do you?

If the "poor" are not getting any richer then why do they continue to stream across our borders?

This is like a creationist asking the question "If evolution is true, how come there are still monkeys today?". There is just so much fundamentally wrong with the question that you don't know where to start.

Instead of doing your thinking for you, I'll tell you to start with the fact that the US and Mexico are two different countries with different living conditions. Any learning you do beyond this is up to you.

Give examples and we'll discuss. Absent that you are just blowing the smoke that you are rather infamous for obscuring debate with.

I did give examples. Try reading the thread before you mouth off.

Mycroft

23rd April 2007, 11:08 AM

Would you mind answering the question? I agree that not every pro athlete is rich.

I did answer it. You just don't like the answer.

The fact is that there are TV stars and pro athletes etc. who make 1,000 times more than soldiers and police officers and teachers. I understand that this makes sense in terms of corporate profitability. Is there something disturbing about a system that allows our soldiers to make 1,000 times less than athletes, or 5-10,000 times less than Howard Stern? I think Stern's OK, but I find teachers and soldiers more valuable to society (or at least certainly not 10,000 times less valuable).

You just said you agreed that most athletes are not rich, yet you persist in claiming that they're paid 1000 times as much as soldiers. Very few athletes are paid that much.

Nobody is paid according to "their contribution to society", so that's a completely unrealistic standard to judge anything.

Tailgater

23rd April 2007, 11:08 AM

Don't forget that Cities make a tremendous amount of revenue off of Sports teams themselves. Parking and taxes, including the increased revenue and resulting taxes from surrounding businesses. And, of course, more than one group of taxpayers have voted down stadium proposals. I don't think that "extortion" is the right word.

Detroit made a huge amount of money off of the Superbowl last year but none of that has been shared with the taxpayers. You could suggest that the city used the money to improve the city for its citizens but you'd be hard pressed to find an example of that.

I agree with that. When the state/city branches out and hits up the smaller surrounding areas, we don't see the "benefits" as much.

Tony

23rd April 2007, 11:09 AM

So if the company I work for loses money one quarter, should I not get a paycheck for three months?

Actually. A better question would be "If a company you work for loses money, should you get a mulitmillion dollar bonus?".

BPSCG

23rd April 2007, 11:09 AM

A situation where the worker gets the same monetary benefit from the company's success as the CEO.That would be true if the clerk and the CEO were equally responsible for the company's success, a claim that is ridiculous on its face.

I did a little math. Francis S. Blake, who's been HD's CEO since this past January, was the Executive VP for Business Development and Corporate Operations since 2002. He is widely credited for HD's rapid profit growth the last five years.

HD's net earnings for the year ending 2/03 were $3.664 billion. Net earnings for the year ending 1/07 were $5.761 billion. That's an increase of 57.23% over that period.

Let's say HD had hired someone else for the job, almost as good. That guy would have increased HD's profit by only 56.23% - just one percentage point off Blake's number. What would that have amounted to in actual dollars? It would have meant HD's year ending 1/07 profit would have been only $5.724 billion. That one percent translates into a single year difference of $37 million profit.

But in Tony-land, "the worker gets the same monetary benefit from the company's success as the CEO." As if the worker had anything to do with all that extra profit.

Dr Adequate

23rd April 2007, 11:10 AM

So if the company I work for loses money one quarter, should I not get a paycheck for three months? Is that what happens to the CEO?

Mycroft

23rd April 2007, 11:10 AM

To me it does. Do you see no problem in a CEO making 1,000 times more than the average worker?

If you see a problem with that, why don't you tell us what the problem is?

Ziggurat

23rd April 2007, 11:11 AM

I'm not talking about "too rich." I'm talking about too wide a gap between rich and poor.

There are (and always will be) poor people who are poor because of bad choices. And nothing anyone can do will keep such people from being poor. Which means that if you want to limit the gap between the rich and the poor, you ARE saying that there's such a thing as being too rich, even if that's not what you intended to say. It is an unavoidable consequence.

In your opinion, can you imagine a level of income disparity that you would find disturbing?

No. Why should I be disturbed because someone else makes a huge amount of money? I don't see any intrinsic reason to be disturbed other than jealousy.

I understand that many CEOs work very hard, and are very brilliant, and can make their corporations very profitable. But to me there's something wrong when full time workers get 1,000 times less money than the CEO. IMHO.

And yet, this problem would persist if the workers and the CEO both had their sallaries doubled. And it would be worse if the workers doubled their sallary but the CEO had his trippled. The latter event should be infinitely preferable to the status quo, but by the reasoning you've used, it would be worse. Even more damning, your reasoning suggests it's preferable to halve the sallaries of workers as long as the CEO gets his sallary reduced to 1/3rd, rather than double the sallary of workers but tripple the sallary of the CEO.

There is such a thing as being paid too much, and I'm sure it happens sometimes with CEO's. But the question of pay only ever makes sense in terms of the sallary someone else would accept, and how well they would perform, for the same job. Trying to impose limits like CEO's not being able to earn more than a fixed ratio of the lowest employee income just leads to absurdities like the hypotheticals above (another example: just contract out any low-paying job and you can raise the CEO sallary - the regulation doesn't prevent raising the CEO's sallary, it just forces a change in the employment status of the low-pay workers which might actually harm them).

rikzilla

23rd April 2007, 11:11 AM

Actually. You're both making claims. Do you have any evidence that a large wealth gap is a good thing?

Did anyone actually say that, or are you gathering hay once again?

It is a bad thing, especially if you value democracy, freedom, civil rights, prosperity and stability, and history is full of lessons highlighting the perils to those goals when there is a large and unequal wealth distribution.

Not really...those conditions of inequity needed to exist in order to bring forth all those lovely things you listed....of course it also helped to feed the great machine of equalitie:
http://upload.wikimedia.org/wikipedia/en/thumb/f/f5/Guillotine_model_1792.jpg/298px-Guillotine_model_1792.jpg

...those French....so inventive!

Contrary to your ignorance of it, there is a lot of evidence. Or perhaps not, perhaps you're well aware of the evidence and simply you like autocracy, monoarchy, corruption and tyranny. We know you're already perpared to consign your fellow americans to a status no better than a hunk of metal, so neither would really surprise me.

Such demagogery Tony! Yes, you'd have looked fine atop Madame guillotine feeding the hated necks of the aristocracy to her. (Only now it'd be us neocons eh?) Autocracy, corruption, tyranny....they are not just the vices of the rich you know. The crazed mob, the great unwashed masses, are also quite capable of tyranny.

-z

egslim

23rd April 2007, 11:13 AM

Differences in economic power translate into differences in political and societal power. A basic example is the fact that someone wealthy is able to hire a far superior lawyer team compared to someone poor, who will therefore on average receive more punishment for the same crime. Another example is how wealthy people are far better able to influence politicians through donations and personal relations.

The concept that all people are equal under law is both basic to and essential for democracy. Yet the above examples show wealthy people in practice have an advantage under law. And as the difference in economic power grows, so do the differences in political and societal power. Hence the country becomes less democratic.

On the other hand, income disparities do have economic advantages. So the issue is to find a balance between economic growth and democratic equality. That means the ideal ratio between rich and poor income depends on which political and societal safeguards are in place to prevent abuse of economic power for political and societal purposes.

Mycroft

23rd April 2007, 11:14 AM

Actually. A better question would be "If a company you work for loses money, should you get a mulitmillion dollar bonus?".

I would say he shouldn't, but that's not an issue for the government to be concerned about. It's an issue between the CEO and the owners.

jimtron

23rd April 2007, 11:19 AM

I did answer it. You just don't like the answer. The question I'm referring to is below. Is your answer "yes"? I couldn't find your answer, but I may have overlooked it.

I understand this. But let me ask you--do you think that a pro athlete deserves to make 1,000 times more than a police officer or a teacher?
You just said you agreed that most athletes are not rich, yet you persist in claiming that they're paid 1000 times as much as soldiers. Very few athletes are paid that much.I haven't made a claim of what percentage of pro athletes make this kind of money. But the fact is that there are many who do make 1,000 times more than soldiers.

Nobody is paid according to "their contribution to society", so that's a completely unrealistic standard to judge anything.I agree that it may be unrealistic. However, IMHO it's an important question to ask--should people be paid based on their contribution to society? Is there anything wrong with TV stars making thousands of times more than police officers and teachers?

BPSCG

23rd April 2007, 11:21 AM

It is a bad thing, especially if you value democracy, freedom, civil rights, prosperity and stability, and history is full of lessons highlighting the perils to those goals when there is a large and unequal wealth distribution. No, history is full of lessons highlighting the perils to those goals when there are unfair barriers to getting out of poverty.

Contrary to your ignorance of it, there is a lot of evidence. Perhaps you'd like to share some of that evidence that rising wealth inequality (not just inequality, since we all have different amounts of wealth) is a bad thing...
Or perhaps not, perhaps you're well aware of the evidence and simply you like autocracy, monoarchy, corruption and tyranny. We already know you're perpared to consign your fellow americans to a status no better than a hunk of metal, so neither would really surprise me....rather than just making vague claims and ad hominem attacks.

jimtron

23rd April 2007, 11:22 AM

No. Why should I be disturbed because someone else makes a huge amount of money? I don't see any intrinsic reason to be disturbed other than jealousy.

I said in the OP I don't have anything against people making a lot of money. I'm talking about income disparity.

Ziggurat

23rd April 2007, 11:24 AM

I said in the OP I don't have anything against people making a lot of money. I'm talking about income disparity.

They aren't separable, as I already pointed out.

Dr Adequate

23rd April 2007, 11:27 AM

They aren't separable, as I already pointed out. Which is why the Japanese and the British don't make money.

Apart from Richard Branson, of course.

jimtron

23rd April 2007, 11:29 AM

They aren't separable, as I already pointed out.
Are you saying that you can't have very rich people without very poor people? Could you elaborate on why/how they are inseparable?

Tony

23rd April 2007, 11:40 AM

But in Tony-land, "the worker gets the same monetary benefit from the company's success as the CEO." As if the worker had anything to do with all that extra profit.

Without the worker, there would be no company and no profit. A company is nothing without the worker.

Brainster

23rd April 2007, 11:41 AM

Would you mind answering the question? I agree that not every pro athlete is rich.

The fact is that there are TV stars and pro athletes etc. who make 1,000 times more than soldiers and police officers and teachers. I understand that this makes sense in terms of corporate profitability. Is there something disturbing about a system that allows our soldiers to make 1,000 times less than athletes, or 5-10,000 times less than Howard Stern? I think Stern's OK, but I find teachers and soldiers more valuable to society (or at least certainly not 10,000 times less valuable).

But of course "society" isn't paying Howard Stern that money, a private company is (and a heck of a lot of that income I'm sure was in stock options, not in pay). If Howard Stern was a public employee, then I would certainly agree that he was wildly overpaid.

The important thing is not "income inequality", it's how the people at the bottom are faring. Suppose you have Country A, where everybody makes (US Equivalent) $20,000 a year, and you have Country B, where the incomes range from $45,000 to $50 million. Is Country A better off than Country B? Of course not; it's not hard to see that even the bottom workers in Country B are making quite a bit more than their counterparts in Country A.

What "income inequality" doomsayers really want is income leveling through government mandates or extraordinary tax rates on upper incomes.

Tony

23rd April 2007, 11:45 AM

I would say he shouldn't, but that's not an issue for the government to be concerned about. It's an issue between the CEO and the owners.

Since a corporation is given special rights by the government, I'd say the government does have a concern.

Tony

23rd April 2007, 11:46 AM

They aren't separable, as I already pointed out.

This is non-sense. As DrA pointed out, you don't need a giant wealth gap to make money.

BPSCG

23rd April 2007, 11:46 AM

Without the worker, there would be no company and no profit. A company is nothing without the worker.Fire HD store clerk. Replace him with Tony. Net effect on HD's profit: Negligible.

Fire HD CEO Francis S. Blake. Replace him with Tony. Net effect on HD's profit: Catastrophic.

Ziggurat

23rd April 2007, 11:47 AM

Are you saying that you can't have very rich people without very poor people? Could you elaborate on why/how they are inseparable?

I'm saying you'll always have poor people no matter what you do (because some people are poor because they make bad choices, and you can't keep everyone from making bad choices), and so limiting maximum disparity NECESSARILY means that you're limiting maximum wealth.

Tony

23rd April 2007, 11:48 AM

jimtron

23rd April 2007, 11:48 AM

If you see a problem with that, why don't you tell us what the problem is?

But of course "society" isn't paying Howard Stern that money, a private company is (and a heck of a lot of that income I'm sure was in stock options, not in pay). If Howard Stern was a public employee, then I would certainly agree that he was wildly overpaid.

So in your opinion Stern is not wildly overpaid? Regardless of the public/private issue, isn't it a little disturbing to have police officers and teachers and soldiers often barely getting by, while entertainers are making hundreds of millions a year?

The important thing is not "income inequality", it's how the people at the bottom are faring. Suppose you have Country A, where everybody makes (US Equivalent) $20,000 a year, and you have Country B, where the incomes range from $45,000 to $50 million. Is Country A better off than Country B? Of course not; it's not hard to see that even the bottom workers in Country B are making quite a bit more than their counterparts in Country A.

What "income inequality" doomsayers really want is income leveling through government mandates or extraordinary tax rates on upper incomes.I'm not sure if I would have a problem with a country where the incomes ranged from 45k to 50 million. My main concern is that we have many people in the U.S. who aren't getting adequate healthcare, and who live below the poverty line. As I've said before, I don't have a problem with people making a lot of money.

ETA: My main point is that I'd like to see those at the bottom, who are working full time, get their basic needs (such as health care) met, and get a fair living wage. IMHO that should be an important priority, before letting people become billionaires.

Ziggurat

23rd April 2007, 11:49 AM

Which is why the Japanese and the British don't make money.

Both countries may have smaller typical wealth disparities than the US. However, neither country actually limits wealth or income disparity, and that distinction is critical.

jimtron

23rd April 2007, 11:54 AM

I'm saying you'll always have poor people no matter what you do (because some people are poor because they make bad choices, and you can't keep everyone from making bad choices), and so limiting maximum disparity NECESSARILY means that you're limiting maximum wealth.

Yes, I think that's probably true. But my point is that limiting income disparity doesn't mean you can't have rich people. I was saying that I'm not against people making a lot of money; it's income disparity I have a problem with. Limiting maximum wealth may occur, but not wealth. I don't necessarily have an issue with a 1:20 or 1:50 ratio, but 1:1000 or 1:10,000 is disturbing to me.

I'm certainly not saying that everyone should get paid the same amount, or that wealth should be forbidden.

ETA:
If Howard Stern was a public employee, then I would certainly agree that he was wildly overpaid.
Should police officers and soldiers and school teachers be paid more?

Tony

23rd April 2007, 12:02 PM

I'm in one of the "doughnut" counties.

This is on top of a tax still being paid for the RCA dome that is being rolled over. This is all after Jim Irsay wasn't sure if he could stay here and keep a "championship" team.

I don't see how this supports your claim.

Ziggurat

23rd April 2007, 12:03 PM

I'm not sure if I would have a problem with a country where the incomes ranged from 45k to 50 million. My main concern is that we have many people in the U.S. who aren't getting adequate healthcare, and who live below the poverty line. As I've said before, I don't have a problem with people making a lot of money.

Considering how few CEO's there are, it's hard to imagine how limiting their income would have any real effect on alleviating poverty.

Furthermore, poverty is very often the result of bad decisions on the individual level. Most people who remain poor have failed to do one of the following rather simple things:
1) finish highschool or get a GED
2) don't do drugs
3) don't get married before you're 20
4) don't have children out of wedlock
Government only plays a significant enabling role in the first one - everything else is pretty much up to the individual, and government programs intended to alleviate poverty (such as increased welfare benefits to single mothers) can actually encourage bad decisions on the last one.

Lastly, of course, if the poverty rate or the number of poor in this country is really the main concern, there's a very easy step we could take to drastically cut it: halt immigration. That would, without a doubt, decrease the number of poor in this country. But that never really gets proposed (mind you, I'm not interested in doing that either, but then I don't put alleviating poverty in this country as my primary concern either).

Tony

23rd April 2007, 12:08 PM

and so limiting maximum disparity NECESSARILY means that you're limiting maximum wealth.

So? There are many things that limit maximum wealth. Why is this special?

BPSCG

23rd April 2007, 12:08 PM

So in your opinion Stern is not wildly overpaid? Frankly, I think he is, not to mention the fact that what little I've heard of him makes me think he's a loathesome excuse for a human being. I wouldn't give him thirty cents to save his life. But the market disagrees with me. Probably very few of his listeners, if they were to take a vote, would agree he's worth $300 million. But his employer does. So what business is that of mine?

Regardless of the public/private issue, isn't it a little disturbing to have police officers and teachers and soldiers often barely getting by, while entertainers are making hundreds of millions a year? You've asked that several times, so I'll give you the courtesy of an answer. IMHO, it speaks to terribly misplaced priorities. It says that when the tax man comes, we don't want to give him very much money to pay for essential services, but that we're willing to pay $25 for good seats at the ball park to enrich a few hundred people who are already very wealthy and whose importance to society isn't remotely on the same level as teachers, policemen, firemen, and soldiers.

I think there's a certain element of the visibility of the expense. You pay taxes for teachers, and you see the actual money go out of your bank account, and realize what it's going for.

You buy a six pack of beer and you know you're getting five dollars' worth of beer. But you don't see that 0.0003% of the money Miller Brewing company gets from each bottle goes to George Steinbrenner. And 0.0003% of a billion bottles is a lot of money.

I'm not sure if I would have a problem with a country where the incomes ranged from 45k to 50 million. My main concern is that we have many people in the U.S. who aren't getting adequate healthcare, and who live below the poverty line. As I've said before, I don't have a problem with people making a lot of money.Then you've answered your question in the OP.

ETA: My main point is that I'd like to see those at the bottom, who are working full time, get their basic needs (such as health care) met, and get a fair living wage. IMHO that should be an important priority, before letting people become billionaires.Oops. Maybe you haven't.

By what mechanism should people be prevented from becoming billionaires? Confiscatory taxation? Jail? Machete?

DaChew

23rd April 2007, 12:09 PM

Unless you factor in that every dollar Detroit made from the Super Bowl is a dollar they don't have to take from the taxpayers.

Well, that's kind of what I meant about improving the city for its citizens. But in any event, I bet if I looked at tax receipts for Detroit for this year vs. last I wouldn't see any decrease in the percentage of income taken. They certainly took at least as much from taxpayers this year as last. If you're saying that because of increased revenue from the Superbowl, the city doesn't have to raise taxes on its citizens, that's a separate issue because, of course, the city is constrained by those taxpayers on acount of them also being voters.

Lurker

23rd April 2007, 12:12 PM

It would be a problem if the wealthy were getting that way at the expense of the poor.

Can anyone demonstrate that that is the case?

Alex Rodriguez makes $25 million a year playing baseball. If his salary were reduced to one-tenth of that, or $2.5 million, how would that help the guy working at the car wash?

Perhaps if Baseball wages were smaller the person at the car wash could actually afford to go to a ballgame? Other than a general apathy towards professional sports, I am loath to spend the money to take my family to any games. Too expensive and I am solidly middle-class (although I am Scandinavian by descent and am too cheap to spend this sort of money).

If the CEO of Home Depot were paid only $250,000 a year, instead of umpteen jillion, how would that help the guy selling Fords?
It might make some products at Home Depot a tab more affordable, no?

I am not against rich people making their money. At the same time, in the past we have had much higher tax brackets and our coutry prospered. Why not today?

Lurker

Ziggurat

23rd April 2007, 12:13 PM

I don't necessarily have an issue with a 1:20 or 1:50 ratio, but 1:1000 or 1:10,000 is disturbing to me.

But why? And what would you be willing to do to stop such disparities?

And suppose that we all agreed that we should outlaw 1:10,000 income disparities. Why that number, though? It's arbitrary. Once we allow that we CAN outlaw disparities of some amount, why not just keep lowering that amount? Is there a fundamental difference between outlawing disparities of 1:10,000 versus disparities of 1:2? Other than the fact that many more people get affected by the latter than the former, I can see no fundamental difference. I see no place we could possibly set the line in any "fair" way that doesn't basically amount to tyranny of the (lower-income) majority. Which is why I don't think any such line SHOULD be set, nor can I concieve of any mechanism for doing so which wouldn't be a disaster.

Should police officers and soldiers and school teachers be paid more?

More than what? More than they're being paid now?

I can't speak for police officers, but I had school teachers who probably should have been paid more than they were. I also had a few who probably should have been paid less.

Tony

23rd April 2007, 12:16 PM

Not really...those conditions of inequity needed to exist in order to bring forth all those lovely things you listed....

Wrong. It was the people's realization of, anger at, and intolerance of those conditions of inequality that needed to exist in order to bring forth democracy, freedom and civil rights. It's telling that there are people here arguing for the tolerance of those very same conditions of inequality and tyranny. I guess the right's support of monarchy really hasn't much changed in 200 years.

Ziggurat

23rd April 2007, 12:17 PM

So? There are many things that limit maximum wealth. Why is this special?

No, actually there aren't. Not in the US, anyways.

Tony

23rd April 2007, 12:26 PM

No, actually there aren't. Not in the US, anyways.

Yes there are. You just agree with them and take them for granted.

Tailgater

23rd April 2007, 12:27 PM

I don't see how this supports your claim.

I don't see how it doesn't. When owners can't afford to pay for a building for their employees to work in because they are paying their employees the equivalent within 1-2 years salary? So when I am paying taxes for a building over an hour and a half away there is no disparity? You stated they were not overpaid because they were the "workers". Those workers are indirectly being overpaid to play by new taxes implemented over multiple counties surrounding the city. Not all of which will benefit from the team staying.

Ziggurat

23rd April 2007, 12:28 PM

Yes there are. You just agree with them and take them for granted.

Name them, then.

Ocelot

23rd April 2007, 12:29 PM

Sulk: no-one's commented on my post. :sour:

Maybe the points I made were unassailable and so you all prefer ripping strips off each other :)

However to say that no-one's sugested a reason why a larger than natural wealth gap is bad for everyone, even the rich, even if the poor are also getting richer - that just makes me feel I'm being ignored.

So repeating myself...

Whilst it is fairly acknowledged that correlation is not causality, links between wealth disparity and many social ills such as crime, violence, social unrest and poor public health have been brought to light. If you're one of the lucky 20% with a disproportionate 80% of the wealth then an increasing wealth gap appears to be bad for your own health - even if everybody else is also getting richer. The mechanism by which this might happen is unknown to me but it's certainly of interest.

http://www.health.nsw.gov.au/public-health/phb/HTML2002/june02html/wellbeing.html

To sum up a wealth gap is natural however the US wealth gap is unaturally large. This may have positive economic benefits for everyone but a negative utility (which is measured in terms of satisfaction and wellbeing rather than finance)

Now that I have suggested at least one reason why an abnormally large wealth gap may be undesirable. Shall we stop pretending that it's not necessarily a bad thing and move the discussion on?

BPSCG

23rd April 2007, 12:34 PM

It's telling that there are people here arguing for the tolerance of those very same conditions of inequality and tyranny. I guess the right's support of monarchy really hasn't much changed in 200 years.Ah, you tipped your hand earlier when you said the guy walking the floor at Home Depot should share equally in the success of the company with the CEO. And you finally show your cards here. It is not sufficient for you that everyone have equal rights under the law: they must have equal wealth, too. Yes, inequality is the scourge of mankind and must be wiped from the Earth.

Kurt Vonnegut was on to you half a century ago: (http://instruct.westvalley.edu/lafave/hb.html)

THE YEAR WAS 2081, and everybody was finally equal. They weren’t only equal before God and the law. They were equal every which way. Nobody was smarter than anybody else. Nobody was better looking than anybody else. Nobody was stronger or quicker than anybody else. All this equality was due to the 211th, 212th, and 213th Amendments to the Constitution...

I saw a bumper sticker the other day: "Houses: Nobody gets two until everybody has one." Was that you?

BPSCG

23rd April 2007, 12:38 PM

To sum up a wealth gap is natural however the US wealth gap is unaturally large. This may have positive economic benefits for everyone but a negative utility (which is measured in terms of satisfaction and wellbeing rather than finance)
Could you state for the record how large a naturally large wealth gap would be? Our cave-dwelling ancestors probably had a very tiny wealth gap. Since they lived in much more of a state of nature than we do today, does that mean that their tiny or nonexistent wealth gap was natural?

Tailgater

23rd April 2007, 12:39 PM

Well, that's kind of what I meant about improving the city for its citizens. But in any event, I bet if I looked at tax receipts for Detroit for this year vs. last I wouldn't see any decrease in the percentage of income taken. They certainly took at least as much from taxpayers this year as last. If you're saying that because of increased revenue from the Superbowl, the city doesn't have to raise taxes on its citizens, that's a separate issue because, of course, the city is constrained by those taxpayers on acount of them also being voters.

Another problem is alot of this income is "projected". It's great that Indianapolis just won the superbowl, but it was not always this way. They revamped downtown when the team first arrived, remodeling Union Station as an attraction. This team sucked for two decades and never sold out. They would practically give tickets away and begged people to come to the city. Now suddenly, a few years before the legislation to do something about the RCA dome comes up, we have a winning team and the owners "not sure" if he wants to stay. Now that this stadium is going up, after some of these players move on, I predict the Colts will suck for another 20 years. It happens all over pro sports, and not all the smaller markets can handle it.

Dr Adequate

23rd April 2007, 12:53 PM

By what mechanism should people be prevented from becoming billionaires? Confiscatory taxation? Jail? Machete? This is one of those "either-or" questions, right?

rikzilla

23rd April 2007, 12:59 PM

Wrong. It was the people's realization of, anger at, and intolerance of those conditions of inequality that needed to exist in order to bring forth democracy, freedom and civil rights. It's telling that there are people here arguing for the tolerance of those very same conditions of inequality and tyranny. I guess the right's support of monarchy really hasn't much changed in 200 years.

You do a mighty fine impression of Robespierre Tony. But at the last he fed Madame guillotine as well. The Terror (http://en.wikipedia.org/wiki/The_Terror) was hardly an improvement over Louis XVI. It was 1984 in 1793 and if your politics weren't just so, or your clothes too nice or clean you were done for.

Utopia doesn't exist Tony. All efforts to bring it about have brought horror and death instead. In the end the only constant is the human tendency to gather power. I rather prefer that the power that people seek in this capitalist society of ours is just money instead of blood.

Sic Semper Tyrannis

-z

jimtron

23rd April 2007, 01:00 PM

By what mechanism should people be prevented from becoming billionaires? Confiscatory taxation? Jail? Machete?

I don't know; as I mentioned before, I have questions at this point, not solutions. But I don't suggest taxation, jail, or machete. The idea of an income ratio limit seems interesting to me (ie, 50:1), though I realize it's likely unrealistic.

And suppose that we all agreed that we should outlaw 1:10,000 income disparities. Why that number, though? It's arbitrary. Once we allow that we CAN outlaw disparities of some amount, why not just keep lowering that amount? Is there a fundamental difference between outlawing disparities of 1:10,000 versus disparities of 1:2?

Of course there's a fundamental difference between 1:10,000 and 1:2. I agree that CEOs deserve to make much more money than their workers. Maybe 1:50. But 1:1,000 is too much, in my opinion. Is there a fundamental difference in sentencing a criminal to 1 year vs. 100 years?

Now that I have suggested at least one reason why an abnormally large wealth gap may be undesirable. Shall we stop pretending that it's not necessarily a bad thing and move the discussion on?

Yes, and thanks for your posts.

But why?

Because I find it disturbing that Paris Hilton makes a ton of money, while arguably offering more harm than good to society, while soldiers are paid a relative pittance. I understand that Paris in the private sector, and makes money for her corporate bosses, while the soldier is in the private sector. I still say it stinks.

Dr Adequate

23rd April 2007, 01:12 PM

You do a mighty fine impression of Robespierre Tony. Yeah, he was big on "democracy, freedom and civil rights", and against "inequality and tyranny", wasn't he?

No, wait, I'm mixing him up with Martin Luther King.

Tsk, silly me.

Ocelot

23rd April 2007, 01:16 PM

Could you state for the record how large a naturally large wealth gap would be? Our cave-dwelling ancestors probably had a very tiny wealth gap. Since they lived in much more of a state of nature than we do today, does that mean that their tiny or nonexistent wealth gap was natural?

I thought I already had suggested the natural levels and asserted a logical methodology for deducing them.

the Pareto (http://en.wikipedia.org/wiki/Pareto_principle) effect: 80% of a population's wealth to be held by only 20% of the population.

The effect is natural. Here's (http://hbswk.hbs.edu/archive/2906.html) a description of how it happens in a fair simulation.

By my assesment the US wealth gap is significantly steeper.

Here's (http://myreality.churchofreality.org/index.php?s=&showtopic=2102&view=findpost&p=20453) the assement I made in another forum I frequent where we had a very similar discussion.

Furthermore I find nothing nonsensical about the idea that in our past 20% of the tribe controlled 80% of the wealth. It seem roughly in keeping with what little I know of "primitive" tribal society.

However if you have further information please enlighten us however I do know enough to know that the description of our ancestors as cave dwelling is a somewhat inaccurate fallacy. Our hominid ancestors may have occassionally temporarily made taken shelter in caves but this would not typically have been anything like a permanent settlement. Thier habits are thought to be more consistent with extant hunter gatherer tribes and consequently nomadic.

If the pareto principle did apply to our nomadic ancestors however then it would be for more fundamental reasons than the methodology I've linked to. This methodology clearly assumes the presence of currency, trade and investment.

So to restate: Given the establishment of the pareto principle as a natural effect in wealth networks where transactions and investment are modelled, the US wealth gap exceeds what would be predicted from such models.

I hope that makes things clearer for you.

Tony

23rd April 2007, 01:25 PM

I don't see how it doesn't. When owners can't afford to pay for a building for their employees to work in because they are paying their employees the equivalent within 1-2 years salary? So when I am paying taxes for a building over an hour and a half away there is no disparity? You stated they were not overpaid because they were the "workers". Those workers are indirectly being overpaid to play by new taxes implemented over multiple counties surrounding the city. Not all of which will benefit from the team staying.

You dont? No where in the report you cited does it support the claim:

...but many are overpaid to stay by passing other costs to the taxpayer.

All your report supports is that the costs were passes to the taxpayer, not that the players are overpaid, and it definately doesn't support the notion that the costs were passed to the tax payer because the players are overpaid.

slingblade

23rd April 2007, 01:27 PM

Thankfully the overall trend is that the poor seem to be getting richer.

Can you introduce me to some of them? Maybe if I hang with a better class of poor people....

;)

Ranillon

23rd April 2007, 01:30 PM

But it's not his wage alone that matters, it's the total compensation he recieves, and I think that HAS pretty much kept pace with productivity increases.

Sorry, I was specific enough -- the 20% I mentioned does include all compensation. It's more like 40% if you don't include things like the higher cost of health care.

There are a whole lot of people who start out their working life in the bottom 20% of the income bracket but end up in the top 20%.

Actually, not from the information I've seen. In fact, this information is usually used in the reverse manner (usually by conservatives/libertarians) to suggest that there is a good amount of economic mobility when it fact they are just using the example of a kid with a minimum wage job who by the time he is forty has a real job. But, that is at best pseudo-mobility. Usually, once people hit their early thirties they stay in their current economic bracket for the rest of their life.

Ziggurat

23rd April 2007, 01:35 PM

The idea of an income ratio limit seems interesting to me (ie, 50:1), though I realize it's likely unrealistic.

It's completely unrealistic.

Of course there's a fundamental difference between 1:10,000 and 1:2.

Really? What is that fundamental difference? And where's the dividing line regarding that difference? Is it at 1:1000? 1:2000? 1:3,472?

I agree that CEOs deserve to make much more money than their workers. Maybe 1:50. But 1:1,000 is too much, in my opinion. Is there a fundamental difference in sentencing a criminal to 1 year vs. 100 years?

For a generic criminal? No, there actually isn't any fundamental difference. For a particular criminal? Yes, indeed there is a fundamental difference. Which is why it's decided on an individual basis. Just as CEO pay is decided on an individual basis, and what may be too much for one CEO may not be for another. CEO's can certainly be paid too much, but the people who are in the position to know that best, AND the people who are entitled to make that decision, are the people who own the company, not some legislators or even voters. It's their money, after all. If they give more of their own money to someone than they ideally should, I have a hard time seeing that as one of the great injustices of this world.

Because I find it disturbing that Paris Hilton makes a ton of money, while arguably offering more harm than good to society, while soldiers are paid a relative pittance.

I do too, but the problem there is with why anyone would choose to give Paris Hilton lots of money, not with the fact that the law doesn't forbid it. But 1) Paris' wealth is a symptom, not the disease, and 2) that disease is not a problem government is capable of solving, even if we empower it to keep money out of Paris Hilton's pocket.

Ocelot

23rd April 2007, 01:36 PM

Can you introduce me to some of them? Maybe if I hang with a better class of poor people....

;)

Unfortunately I've observing the US system from the outside. I can introduce you to some poor people in the UK if you like. Here we go.

Hello, My name is Matt. I have a median income for my age, which is signicantly more in real terms than the median income of my father's generation when they were my age.

I'd love to tell you how we achieved that but really it was all down to wiser and more economically minded folk than me, who still managed to make enormous cock ups on the way.

jimtron

23rd April 2007, 01:41 PM

Really? What is that fundamental difference? And where's the dividing line regarding that difference? Is it at 1:1000? 1:2000? 1:3,472?

One is much greater than the other.

I don't know exactly where the line should be drawn. But in my opinion 1:100 or less sounds a lot more fair than 1:1,000.

Brainster

23rd April 2007, 01:44 PM

So in your opinion Stern is not wildly overpaid? Regardless of the public/private issue, isn't it a little disturbing to have police officers and teachers and soldiers often barely getting by, while entertainers are making hundreds of millions a year?

I'm not sure if I would have a problem with a country where the incomes ranged from 45k to 50 million. My main concern is that we have many people in the U.S. who aren't getting adequate healthcare, and who live below the poverty line. As I've said before, I don't have a problem with people making a lot of money.

ETA: My main point is that I'd like to see those at the bottom, who are working full time, get their basic needs (such as health care) met, and get a fair living wage. IMHO that should be an important priority, before letting people become billionaires.

I doubt that Stern is wildly overpaid. You or I may not value what he does, but his employers appear to be looking at the fact that he can get millions of people to listen to advertisements on his radio show. He and his employers negotiated an agreement presumably attempting to get the best terms for their respective sides.

I would suggest that if you want to tackle subjects like adequate healthcare, that you tackle it directly rather than through the smokescreen of "some people are making too much money." What you really mean is that you want to raise taxes and use the money for healthcare, and raise salaries of teachers and policemen and soldiers and others to your "fair living wage". I suspect you'll find that there's not enough money in the wallets of Stern and Bill Gates, and inevitably you'll need to raise taxes on the middle class.

Alt+F4

23rd April 2007, 01:45 PM

CEO's can certainly be paid too much, but the people who are in the position to know that best, AND the people who are entitled to make that decision, are the people who own the company, not some legislators or even voters. It's their money, after all.

Agreed but why do some corporations continue to pay their CEO's elaborate salaries even when the price of the companies stock continues to tank?

Ziggurat

23rd April 2007, 01:49 PM

Agreed but why do some corporations continue to pay their CEO's elaborate salaries even when the price of the companies stock continues to tank?

Because a lot of owners (read: stockholders) don't exercise very good control over the companies they own. But government isn't going to solve that problem, even with bandaids on just one of the symptoms.

Ziggurat

23rd April 2007, 01:54 PM

One is much greater than the other.

That's not a fundamental difference. That's only a relative difference, with NO dividing line.

I don't know exactly where the line should be drawn.

Exactly: so why draw the line at all?

But in my opinion 1:100 or less sounds a lot more fair than 1:1,000.

And you want to base economic policy and restrict economic freedom on the basis of what "sounds a lot more fair"? That's not a recipe for success. And any mechanism you come up with to try and force the issue is going to have loopholes, and the exploitation of those loopholes is probably going to do more harm than the original inequality.

jimtron

23rd April 2007, 01:55 PM

I doubt that Stern is wildly overpaid. You or I may not value what he does, but his employers appear to be looking at the fact that he can get millions of people to listen to advertisements on his radio show. He and his employers negotiated an agreement presumably attempting to get the best terms for their respective sides.

Again, I understand the logic of paying Stern 300 million a year. His bosses can pay him that and still turn a profit. In that sense he is not wildly overpaid. But in my personal opinion he is wildly overpaid, because although he can be entertaining, he doesn't deserve to be paid 10,000 (approx.) times more than a teacher or soldier or police officer. I do get that he is "worth" that much in a corporate sense.

I would suggest that if you want to tackle subjects like adequate healthcare, that you tackle it directly rather than through the smokescreen of "some people are making too much money."

I don't intend to secretly discuss health care issues in the guise of income disparity. I'm mainly interested in the topic of income disparity for this thread, but lack of health care among full time workers is relevant to the issue. And once again, it's not so much that "some people are making too much money" (which I don't believe I ever said), but that IMHO the disparity in incomes is too great.

What you really mean is that you want to raise taxes and use the money for healthcare, and raise salaries of teachers and policemen and soldiers and others to your "fair living wage".

No. Are you a mind reader? I've said at least twice on this thread that I have questions more than solutions. The only solution I've tossed out (with caveats) is limiting income ratios.

Do you think U.S. soldiers and police officers make enough money?

23rd April 2007, 02:00 PM

The problem to me isn't the disparity of wealth, per se, though at one time I thought otherwise. The problem is that the lowest paid worker often can't pay his bills on a 40-hour work week at a regular minimum wage job.

What I would propose is that minimum wages be calculated by local costs of living, and adjusted accordingly; and any apparent inflationary effects be offset through reducing the salaries of the affected executives accordingly - not JUST the CEO, but the entire upper levels of any given business.

If a company stands to lose $1.5 billion in increased wages for its employees, then take that proportionally out of the salaries of the executives, managers, etc, or out of the spare profits of the company. If it has the profits anyway - like HD - it should be able to absorb the increase without too much pain for anyone. And if it doesn't, then it's obviously doing something wrong and would most likely suffer as it is.

But once the entry level worker is being compensated enough that they can meet the cost of living without suffering or resorting to second jobs or welfare lines, then I say good for whatever CEO can make 10,000 times their lowest employees' base pays!

If business had honest and decent CEOs, their base wages would already compensate for the cost of living.

What the current minimum wage tells our people is that the basic entry-level worker's value is lower than the value of reasonable survival within our society.

Now, I agree that a teenager living with mom and dad, or a college kid in a dorm paid for by her parent's money, probably can manage fine on minimum wage. But the harsh reality is that a LOT of people are out there right now struggling to get by, single, adult, no kids, living in slum housing and eating ramen, and still having to get government assistance - and that with working two jobs! And it's not always due to bad decisions or poor budgeting. If your budget requires you to earn a minimum of $1500 a month, but your minimum wage job only gives you $1000 a month, where should that extra money come from?

At the moment, our government tells us that extra should come from welfare... but only until you earn a little more money. Once you get CLOSE to earning enough, all welfare is pulled. NOT once you earn OVER that amount, but just UNDER.

So for a while - until you can earn more money - you're working at deficit once again.

So I'm all for Bob Bulnose making a half-million dollars a year as head of Bulnose Industries. I'm just not for Bjorn Svenhalten, the newly-hired delivery boy, who is 22, fresh out of college, living in an apartment between the crack house and the abandoned sausage factory, eating ramen to survive, having to ask for food stamps and rent assistance just to make it - when his job is vital to the company as well.

And any company that looks at Bjorn as 'disposable' or 'replacable' - is a dispicable and vile company anyway.

Ranillon

23rd April 2007, 02:06 PM

Most of the gains in productivity come from automation, not from people working harder or faster or more efficiently. So drawing a link between wage increases and productivity increases is meaningless.

I think you if think through this response for a moment you'll see it makes no sense.

One, using this logic a person shouldn't be paid more than what he can do using brute physical force. It completely ignores the benefits to skill or education (after all, machines for all their usefulness don't run or fix themselves). The productivity measuring gives us what the average person produces -- the idea that using machines to improve his productivity is somehow in effect "cheating" that deserves no extra recompense is obscene.

Two, the same argument could be used for anyone who makes a wage, including CEOs. It also negates any ethical or moral concerns relating to economics, something you just can't do when you're talking about human beings (or, at least, can't do without ultimately paying for it in the end).

Okay, so I see you belong to the "the size of the economic pie never changes, and the more the rich take, the less there is left for the poor."

That isn't what I said nor what I believe. As I previously stated I have nothing against getting rich. It is the possible means and consequences of doing so that concern me. All growing wealth inequality means is that the gap between rich and poor is growing, not necessarily that absolute totals for either or both are dropping (or increasing).

That's like saying cancer can be an inconvenience.

Ah, but if something is not done about growing inequality eventually you might just get a heavy-handed government solution. It's not as if it hasn't happened before or isn't still happening, after all.

You still have not explained why wealth and income inequality are bad. Shouldn't you do that before you decide to fix the "problem"?

I think you are confusing me with someone else. This is the first go-around for my participation on this topic.

As for why "weath and income inequality are bad" I didn't per se say that. In fact, as I said I think some measure of inequality is necessary for modern capitalism to work. My worry is that the increasing gap and the means by which it's occuring is making the capitalism train slowly run off the tracks.

Look at history -- what was a basic characteristic of the vast majority of civilizations? Massive inequality. In fact, things like repression and lack of freedom are the end result of an inequality of power -- those with power used it against the masses without it. To suggest therefore that growing inequality carries with it no real risks is akin to the notion that somehow if we give people massive amounts of power today they won't misuse it like everyone did in the past. That strikes me as utterly naive.

We hear a lot about the dangers of "big government", but it's all too easy to forget that for most of history it was the individual (in the form of a king or emperor) who was the ultimate source for repression.

Ziggurat

23rd April 2007, 02:21 PM

Look at history -- what was a basic characteristic of the vast majority of civilizations? Massive inequality. In fact, things like repression and lack of freedom are the end result of an inequality of power -- those with power used it against the masses without it.

Why do you say that it was wealth inequality which lead to power inequality, and not the other way around?

We hear a lot about the dangers of "big government", but it's all too easy to forget that for most of history it was the individual (in the form of a king or emperor) who was the ultimate source for repression.

Kings and emperors WERE government. "L'etat, c'est moi", not "La nation, c'est moi".

FarmallMTA

23rd April 2007, 02:28 PM

Unfortunately I've observing the US system from the outside. I can introduce you to some poor people in the UK if you like. Here we go.

Hello, My name is Matt. I have a median income for my age, which is signicantly more in real terms than the median income of my father's generation when they were my age.

I'd love to tell you how we achieved that but really it was all down to wiser and more economically minded folk than me, who still managed to make enormous cock ups on the way.

Great, Matt! You've dangled the bait, we've bit. Now reel us in and tell us what you're seeing in the US and what happened in the UK. Sounds interesting. And entertaining, too, in true Brit fashion.

Alt+F4

23rd April 2007, 02:28 PM

So I'm all for Bob Bulnose making a half-million dollars a year as head of Bulnose Industries. I'm just not for Bjorn Svenhalten, the newly-hired delivery boy, who is 22, fresh out of college, living in an apartment between the crack house and the abandoned sausage factory, eating ramen to survive, having to ask for food stamps and rent assistance just to make it - when his job is vital to the company as well.

And any company that looks at Bjorn as 'disposable' or 'replacable' - is a dispicable and vile company anyway.

Works well for Walmart.

Tailgater

23rd April 2007, 02:28 PM

You dont? No where in the report you cited does it support the claim:

All your report supports is that the costs were passes to the taxpayer, not that the players are overpaid, and it definately doesn't support the notion that the costs were passed to the tax payer because the players are overpaid.

Having the best team in pro sports means paying out. If teams can't pay out to the players, they can't compete. It has been common for years for teams to ask the taxpayers for indirect support. I'm very surprised you don't know this or are just being purposely difficult. I'm looking for exact quotes, but I'm looking after the kids and just skimming.

http://money.cnn.com/2007/03/30/commentary/sportsbiz/index.htm?postversion=2007033015

But the growing disparity is there, and it has teams in cities like San Diego and New Orleans pushing for new taxpayer bailouts, in addition to asking the league's richer owners for a few more million dollars a piece. And if they don't get what they want at home, they'll likely get it somewhere else.

So even if the NFL's economics don't end up playing out in the win/loss columns of a team, fans of poor teams could end up paying higher taxes or even see their team leave town for greener pastures.

And the fact that this baseball season begins with little talk about competitive balance at the same time it is getting more attention in the parity-minded NFL suggests that all the unlevel playing field talk is really about dollars and cents more than it's ever been about wins and losses.

If Home Depot had a gross salary to employees of 450 million for one superstore and claimed it needed the local governments to fund the building they were using, would you still not make a connection?

Ranillon

23rd April 2007, 02:34 PM

Why do you say that it was wealth inequality which lead to power inequality, and not the other way around?

I don't say that as such. What I will say is that one sort of inequality will eventually lead to all others.

Kings and emperors WERE government. "L'etat, c'est moi", not "La nation, c'est moi".

Is this agreement or disagreement with my point?

Darth Rotor

23rd April 2007, 02:34 PM

To me the problem is not that athletes and TV stars are paid a great deal, it's that many of them are paid many many times more than teachers and soldiers and policemen. Is this a bad thing?
Is this a rhetorical question, or do you want an answer? :p

To address your Howard Stern point, it's hardly the same job as a 9-5 widget making job. His market is measured in billions served. Howard Stern found a niche where he makes money in a new venture, he is like the first guy who sold oil: being first in a market tends to have dispoportinate benefit (along with the risks of cocking it up, which Howard Seems to have mitigated, along with his partners.) The next gang into satellite radio I suspect will make less.

When a TV star or athlete makes a thousand times more than a school teacher or soldier, is that a necessary evil of capitalism? Or do they deserve to make that much more money? Or something else?
Deserve isn't the issue.

He gets what he (or she, in the case of Serena Williams for example) and his agent can negotiate, and any (player's associatin, like NFL or ATP) collective bargaining unit can weasel out of the owners of the business, and the sponsors. This question was often raised of union employees with seniority: did so and so deserve 27 dollars per hour to paint the side of a car? The Union helped get him that wage.

Why not ask whether or not a trial lawyer (who settles tort claims) deserves to be paid more than a college professor? It is just as (in)valid a question.

"Society" does not control that area of income and compensation. To presume that it should demands that you first answer the question of what sort of social setting, what social contract, works.

Now there's no more oak oppression
For they've passed a noble law
And the trees are all kept equal
By hatchet, axe, and saw.

- Lee, Liefson and Pert -

The "capitalism run amok" argument seems to ignore that a permissive environment for capitalism must first exist for it to function in the "amok" mode.

How did that environment come about?

How do you intend to change it?

What cost in blood are you willing to pay to make that change? Social revolutions are rarely without cost, though maybe blood need not be spilled.

What are you willing to sacrifice to change the social model? What knock on effects have you considered, and what, in some detail, is the structure that you feel "society" must be changed to.

Complain about what is, sure, we can all do it. Tell me your vision, Jimtron, the vision of what will be, how it will be better, and how we get there from here.

While sharing your vision, remember that Marat was murdered in his bath, his vision having come a cropper.

DR

Roswell-Perseis

23rd April 2007, 02:44 PM

I understand that Stern may very well be worth his salary in terms of making money for his bosses. And the cast of Friends made a million dollars an episode, which they deserved in the sense that their show (I assume) remained profitable. But isn't there something disturbing about paying a shock jock or TV star thousands of times more than a police officer of soldier or teacher? They don't make money for their bosses, but they do an incredibly valuable, necessary job (art and entertainment are hugely important too of course).

Are pro athletes or TV stars thousands of times more valuable to society than teachers? Is Howard Stern 10,000 times more valuable to society than a teacher?
Nope, but I do not get to decide the market forces. If you are looking for a solution in form of government forced salary caps, we begin to erode the free-market. I don't mean that to be ideological B.S., I say this because my limited education in economics and sociology (and it is limited) shows that this has failed in the past.

Aren't there alternatives? . . .

To me the widening and sometimes enormous gap between rich and poor is disturbing.

It is disturbing. I thought I mentioned this . . . one of the causes of the Great Depression was the high concentration of wealth among a few individuals. As the inequality of wages rises, so does the high concentration of wealth amongst the very rich.

I am not trying to say that we are on the verge of such an economic collapse, but this is a sensitive time and we need to deal some social issues now and not later. But you do not find the answers in alternative economic systems.

We need to levy bigger taxes on the rich and then spend the money on social programs. A government that fools with economy is not your friend. A government that uses its money to build schools and roads is, at least, not intolerable.

I'm a pretty hard core bleeding heart socialist, so if you want to know what I would do- free college educations for those whose families make under $100,000, better funding of all existing social programs, National Health Care . . . I could go on forever.

Once again- there is a breaking point at which taxing the rich leads them to flee (with their money) for a nicer country. If we tax too heavily, then we lose the tax base. If we tax too little, we lose the social safety net that creates and stabilizes the middle class and gives hope to the lower class- whose buying power drives our consumer economy.

Ziggurat

23rd April 2007, 02:49 PM

Is this agreement or disagreement with my point?

It's disagreement to the extent that the very rich can't really oppress the poor without using the government. And in that sense, the best defense for the poor is not to grant the government additional powers to prevent the accumulation of wealth (communism being the extreme end of that path, and a total disaster for the poor), but rather strong civil liberties and limitations on the power of government (for example, restricting the power of emminent domain does more to protect poor property owners than rich property owners) so that nobody can use government to oppress anybody, rich OR poor.

jimtron

23rd April 2007, 02:59 PM

If you are looking for a solution in form of government forced salary caps, we begin to erode the free-market. We don't have a free market, do we? What about corporate welfare and farm subsidies and trade tariffs, etc?

The problem to me isn't the disparity of wealth, per se, though at one time I thought otherwise. The problem is that the lowest paid worker often can't pay his bills on a 40-hour work week at a regular minimum wage job.

That's what I mean by income disparity. It doesn't seem right to have full time workers making peanuts while working for a profitable company with a CEO making hundreds of millions a year. I agree with Z's post for the most part.

Ranillon

23rd April 2007, 03:13 PM

It's disagreement to the extent that the very rich can't really oppress the poor without using the government.

I don't agree -- this only works if one assumes that somehow economic power means nothing next to political power. That is, as long as my vote is not denied or the courts treat me fairly then it somehow doesn't matter if I can't otherwise pay my bills. Economic oppression would still be oppression even if ultimately it had no effect on politics.

But, I think this is minor point -- in practice I don't see how inequal economic power wouldn't inevitably lead to political inequality. That's just how the real world works. Not only may the uber-rich just plain old manipulate the system, but all that is really required is that they be human prone to typical human failings.

There is a basis behind the idea that "power corrupts" -- it means that instead of having to deal fairly with frustration and limitation with enough power you can just ignore such things, if at a cost to others. Most of what happens that is "evil" in the world is not committed by truly evil people, but rather by otherwise normal people driven by fear, desire, or ignorance. Mind you, the rich are no worse in this regard than the rest of us; it's just that their power makes the potential consequences of their immaturity far greater. These possible consequences become exponentially worse the worse inequality becomes.

And in that sense, the best defense for the poor is not to grant the government additional powers to prevent the accumulation of wealth (communism being the extreme end of that path, and a total disaster for the poor), but rather strong civil liberties and limitations on the power of government (for example, restricting the power of emminent domain does more to protect poor property owners than rich property owners) so that nobody can use government to oppress anybody, rich OR poor.

Nice idea, but I think it is naive. The worse that inequality gets -- which, in all that ways that really matter, means power becoming concentrated in progressively fewer hands -- the more influence a few have over the many. Eventually, any system is going to break down.

Ziggurat

23rd April 2007, 03:28 PM

What about corporate welfare and farm subsidies and trade tariffs, etc?

All harmful. We should get rid of them.

Ocelot

23rd April 2007, 03:28 PM

Great, Matt! You've dangled the bait, we've bit. Now reel us in and tell us what you're seeing in the US and what happened in the UK. Sounds interesting. And entertaining, too, in true Brit fashion.

I'm sorry to say that it was a relatively tongue in cheek response to slingblade's presumably equally glib comment.

The unerlying point remains that the poor are not getting any poorer - in fact over the last generation slightly richer. This is true both in the UK and the USA

http://www.census.gov/hhes/www/income/mednhhld/t4.html

Whilst we all know that the richer are getting significantly and disproportionately richer (in the UK and more so in the US) they are not doing so at the expense of the poor in their own country. You can check these facts for yourself rest assured that I can google up some figures to support my claim but you'll be more convinced if you do so yourself and if you find contrary informetion I'd be interested to see it.

So if the poor aren't suffering any more than before - why should anyone care?

That's the question I've attempted to answer. That's where I think the interesting debate is. However it seems this thread is to be stuck in the minutae of particular celebrities' and ceos' pay packets.

Ziggurat

23rd April 2007, 03:43 PM

I don't agree -- this only works if one assumes that somehow economic power means nothing next to political power. That is, as long as my vote is not denied or the courts treat me fairly then it somehow doesn't matter if I can't otherwise pay my bills. Economic oppression would still be oppression even if ultimately it had no effect on politics.

What the hell is "economic oppression"? I can see no sense in which the word has any real meaning absent some enforcement with the power of law. If you can't pay your bills, that means you're poor, but it doesn't mean you're oppressed unless someone is actually PREVENTING you from getting a job and earning the money to do so. If you can't get a job because there are none to be had, that's not oppression, because nobody is doing it to you. That's just hard times.

But, I think this is minor point -- in practice I don't see how inequal economic power wouldn't inevitably lead to political inequality.

Political inequality isn't really the problem. We've had political inequality from day one, and we'll probably always have it. Socialist countries sure as hell haven't eliminated it. But there's a difference between political inequality and legal inequality (the latter being the real problem). And the less power government has, the less any such political inequality matters. Bill Gates may be ten million times richer than me, but there's also nothing he can do to me.

There is a basis behind the idea that "power corrupts" -- it means that instead of having to deal fairly with frustration and limitation with enough power you can just ignore such things, if at a cost to others.

Sure, power corrupts. All the more reason not to let governments have powers to redistribute wealth or prevent its accumulation. "A government able to give you everything you want can also take everything you have". And unlike the rich, government doesn't have to eventually die.

Eventually, any system is going to break down.

Extrapolate any trend out to infinity and you'll likely find some crisis. Doesn't mean that there is or will be one in the real world. Maybe there is some breaking point, but I don't see any signs of it being imminent or inevitable under the current system.

Ranillon

23rd April 2007, 03:44 PM

Whilst we all know that the richer are getting significantly and disproportionately richer (in the UK and more so in the US) they are not doing so at the expense of the poor in their own country.

Actually, I don't think you can say this -- at least not as a given. Just because that the poor are not actually getting poorer doesn't necessarily mean that they aren't getting less than what they might deserve (in moral and/or economic terms). To take a generic example, if the rich manipulate the system so that the poor receive a 5% raise in a given period instead of the 10% they'd otherwise receive the second group is still benefiting at the expense of the first.

Ranillon

23rd April 2007, 04:27 PM

What the hell is "economic oppression"?

One infamous example is slavery -- it was always primarily about economics, not political power. And, it was usually something enforced by individuals or groups rather than any government.

I can see no sense in which the word has any real meaning absent some enforcement with the power of law.

Which is my point -- economic and political power go hand-in-hand. This has really always been the case. The more inequal things become with the former the more they inevitably become with the latter. Now, this may very well not happen at the same rate. In fact, I would expect that political power would lag behind economic and then only increase in jumps. But, it wll happen in the end. Once the economic stakes become high enough political consequences are unavoidable.

If you can't pay your bills, that means you're poor, but it doesn't mean you're oppressed unless someone is actually PREVENTING you from getting a job and earning the money to do so.

No, oppression can come from the powerful manipulating the system for their benefit at the expense of the less powerful -- even if the less powerful still technically have a job. Just look at China today.

And the less power government has, the less any such political inequality matters.

Again, this is naive if you ask me. Take a look at barbarian Europe after the fall of the (Western) Roman Empire. Central government had all but collapsed, but that didn't make for a sudden paradise of freedom and opportunity for the former citizens of the Empire. Quite the opposite, it meant being vulnerable to an attacker who could come in and take whatever he liked without fear of retribution (except, of course, from the other competing warlords).

A lot of people seem to have this odd notion that "freedom" is just about being free to do whatever you like, but in a practical sense "freedom" means giving up some possibilities and taking on responsibilities for the sake of the group as a whole enjoying the most "freedom" possible. Taking away the system that helps guarantee this just turns society into "every man for himself" and "might makes right."

Bill Gates may be ten million times richer than me, but there's also nothing he can do to me.

Like I said, naive. The best check on Bill Gates' possible immoral excesses is Bill Gates' own moral code. But, that is something that best flourishes in a society that supports and champions such things -- e.g. that has a healthy appreciation for the social compact that makes civilization possible. Start "playing" the system, rationalizing success at other's expense, and generally taking it for granted and eventually the social fabric begins to fall apart. And, if its gets weak enough I wouldn't put much faith in your chances when going up against someone with vast economic (and therefore political) power.

Sure, power corrupts. All the more reason not to let governments have powers to redistribute wealth or prevent its accumulation.

We prevent power from being corrupting by taking away any limitations on a non-governental entity's ability to collect power? Riiiiight. With logic like that I can lose weight faster by eating more.

Maybe there is some breaking point, but I don't see any signs of it being imminent or inevitable under the current system.

That's the rub -- just how far to we let things go before the danger becomes suitable imminent? More to the point, things can surprise us at how fast they change. After all, if you were to predict on Jan 1, 1914 that the next thirty-one years would see the downfall of many of the most powerful regimes of the day, global economic disaster, the rise of totalitarianism, two horrible wars, the violent deaths of tens of millions, and all the rest you'd be instantly written off as insane.

Does that mean that all that will happen again in the next thirty years? I certainly hope not, but just how much do we want to help make it possible in the meantime? Wouldn't some modest adjustment now be a good insurance policy against paying a much higher cost later?

Ziggurat

23rd April 2007, 05:10 PM

One infamous example is slavery -- it was always primarily about economics, not political power.

I beg to differ. You think slavery would have lasted as long as it did if slaves could vote? Furthermore, slavery was possible because the law enforced the relationship between lave and master. Dollars alone could never compel that relationship.

And, it was usually something enforced by individuals or groups rather than any government.

Not in the west, it wasn't. It was the force of law which allowed masters to beat their slaves or execute them if they ran away. The only places where slavery is enforced on an individual level are places where governments don't really have a monopoly on the use of force.

Once the economic stakes become high enough political consequences are unavoidable.

That cuts multiple ways: if the poor are really being politically oppressed, then they'll vote en masse for candidates who relieve that oppression.

No, oppression can come from the powerful manipulating the system for their benefit at the expense of the less powerful -- even if the less powerful still technically have a job. Just look at China today.

China lacks precisely those things which I said were more important (strong civil liberties and protection of private property) and exactly what I said should be avoided (a large government with the power to take whatever it wants). It's not the low-paid factory workers who are really getting the shaft in China, it's the farmers who get kicked off land because they have no rights to it.

Again, this is naive if you ask me. Take a look at barbarian Europe after the fall of the (Western) Roman Empire. Central government had all but collapsed, but that didn't make for a sudden paradise of freedom and opportunity for the former citizens of the Empire.

Well, duh. I never advocated no government. But what you had there was neither any semblance of democracy, NOR any real enforcement of equitable laws. Those ARE rather obvious prerequisites for prosperity, and the fact that I don't want governments engaging in widespread wealth redistribution doesn't mean I don't want a government which will catch and punish thieves and murderers.

Does that mean that all that will happen again in the next thirty years? I certainly hope not, but just how much do we want to help make it possible in the meantime? Wouldn't some modest adjustment now be a good insurance policy against paying a much higher cost later?

Well, consider what major disasters have plagued humanity in the last 100 years. Has rampant, unchecked capitalism been anywhere near the top of the list? No, not even close. Time and time again, governments with too much power top the list, and they have ALL been anti-capitalist. So when discussing what potential risks we want to avoid taking, I'm MUCH more comfortable looking to smaller government than less capitalism.

Ranillon

23rd April 2007, 06:43 PM

Well, consider what major disasters have plagued humanity in the last 100 years. Has rampant, unchecked capitalism been anywhere near the top of the list? No, not even close. Time and time again, governments with too much power top the list, and they have ALL been anti-capitalist. So when discussing what potential risks we want to avoid taking, I'm MUCH more comfortable looking to smaller government than less capitalism.

Your arguments about the effectiveness of capitalism and the apparent ease with which someone can partner it with social justice strike me as akin to the Pope saying that if we'd all just be good Catholics all our social and political ills would go away. They are unrealistic and seemingly blind to how for the vast majority of Western history it is has been the case of individuals manipulating government to their own ends rather than the other way around. While out-of-control "big government" is hardly a good thing, so is out-of-control concentration of power in a relatively small group of people or even single individual. Or, more to the point, the second has a tendency to lead to the first. After all, if there is one aim pretty much all powerful men have had through history it is to make sure the government could be used as a tool to keep that power.

If we want to make sure the freedoms we enjoy stay healthy what we need is power sharing -- which is the whole point of democracy, actually. While some measure of inequality is necessary, the more it is allowed to increase past a certain point the greater the chance that our system may spin out-of-control. The problem is that while our government may be a democracy (however imperfect) modern business is more akin to medieval duchies. By their very nature they encourage the concentration of wealth and (therefore) power. It has to have some of its own checks and balances -- and not just from "competition" as over the long term the concentration of power will kill it.

We shouldn't make the mistake of getting ahead of ourselves, however. My point is that there is a serious problem potentially developing, one already seen in a shift of economic (and, whether or not you want to admit it, some measure of political) power toward the top of the economic ladder. Rather than see it become an actual serious problem (not to mention better handling the immediate more modest problems) I'd rather we take appropriately restrained action now than run the risk of much worse later.

Ocelot

23rd April 2007, 07:06 PM

Actually, I don't think you can say this -- at least not as a given. Just because that the poor are not actually getting poorer doesn't necessarily mean that they aren't getting less than what they might deserve (in moral and/or economic terms). To take a generic example, if the rich manipulate the system so that the poor receive a 5% raise in a given period instead of the 10% they'd otherwise receive the second group is still benefiting at the expense of the first.

Using what we'd "otherwise recieve" as an arbitary baseline is somewhat problematic. Unless you have an objective way of establishing what we "might deserve in moral and or economic terms" I think the implied assumption in my statement that we measure expense against objective previous levels of income is the only reasonable measure.

Having said that perhaps some clarification is desirable in my statement.

Whilst we all know that the richer are getting significantly and disproportionately richer (in the UK and more so in the US) they are not doing so by dint of the less well off becoming any poorer than they were before.

Now can we move onto discussion of why a steeper pareto distruibution than that commonly observed in other societies might be a bad thing?

Links have been observed between wealth disparity and many social ills such as crime, violence, social unrest and poor public health have been brought to light. If you're one of the lucky few 20% with 80% of the wealth then an increasing wealth gap appears to be bad for your own health - even if everybody is getting richer. The mechanism by which this might happen is unknown to me but it's certainly of interest.

From http://www.health.nsw.gov.au/public-health/phb/HTML2002/june02html/wellbeing.html

The new indicators support a threshold hypothesis proposed by the Chilean economist Manfred Max-Neef.[6] In the late 1980s, he and his colleagues undertook a study of 19 countries, both rich and poor, to assess the things that inhibited people from improving their wellbeing. They detected among people in rich countries a growing feeling that they were part of a deteriorating system that affected them at both the personal and collective level. This led the researchers to propose a threshold hypothesis, which states that for every society there seems to be a period in which economic growth (as conventionally measured) brings about an improvement in quality of life, but only up to a point—the threshold point—beyond which, if there is more economic growth, quality of life may begin to deteriorate.

Any takers?

Schneibster

23rd April 2007, 07:37 PM

Your arguments about the effectiveness of capitalism and the apparent ease with which someone can partner it with social justice strike me as akin to the Pope saying that if we'd all just be good Catholics all our social and political ills would go away. They are unrealistic and seemingly blind to how for the vast majority of Western history it is has been the case of individuals manipulating government to their own ends rather than the other way around. While out-of-control "big government" is hardly a good thing, so is out-of-control concentration of power in a relatively small group of people or even single individual. Or, more to the point, the second has a tendency to lead to the first. After all, if there is one aim pretty much all powerful men have had through history it is to make sure the government could be used as a tool to keep that power.The problem you're having communicating is that some people (specifically those you're arguing with) don't get the fact that political and economic alignment aren't connected to one another. Try telling a Libertarian that socialized medicine works, and they'll tell you you're "endangering the free market." The "free market" isn't a political cause, but they make it so. It's economic. You can have socialism without authoritarianism, but every time you try to argue with them, they tell you that socialism is tantamount to authoritarianism. It's the old myth about anarchy meaning no rules again. Until we get past the idea that socialism is a political idea rather than an economic idea, this conversation is going nowhere. You and I can chat, and we'll understand each other, but if we try to talk to a Libertarian about it, they think we're talking about politics and insist on linking economic theories with politics.

Now, economics has profound effects on politics, and vice versa. But they are not intrinsically linked. For example, most people are surprised to find out that Adolph Hitler was considerably to the left of any current mainstream US politician, whereas he was considerably to the right of Joe Stalin. That wasn't the problem with Hitler. The problem with Hitler (and Joe Stalin too) was authoritarianism, not his (their) position(s) on socialism vs. capitalism. When Zig makes the argument he makes, he conflates socialism with authoritarianism, not realizing that they are different and that socialism need not be authoritarian.

Authoritarianism is an ongoing problem, and in the US, the authoritarians are not in the government, they're in the corporations. The problem isn't the way political power is used, it's the way economic power is used. Currently, economic power is being used to support political power, and vice versa, in the US, and this is creating a number of large problems. It appears now, however, that a large percentage of folks have realized which side of the bread the butter's on, and the guys doing this are (hopefully) on the way out (and hopefully won't be replaced by others who claim to be different but just wind up doing the same things, a distinct possibility). But until we deal with the economic authoritarianism now running rampant in this country, we will suffer the inequities touted here. And until a majority of the people decide to use their political power to rein in the economic power of the capitalists, it's not going to happen- and if they try to do that, watch for a fight as the capitalists try to get all their money out of the country before the politicians can do anything about it. That has already happened a few times; watch for it to happen some more.

Remember we had to fight a war to get the political freedoms we now enjoy- and we have never fought for economic freedom. Consider the implications of this carefully.

If we want to make sure the freedoms we enjoy stay healthy what we need is power sharing -- which is the whole point of democracy, actually. While some measure of inequality is necessary, the more it is allowed to increase past a certain point the greater the chance that our system may spin out-of-control. The problem is that while our government may be a democracy (however imperfect) modern business is more akin to medieval duchies. By their very nature they encourage the concentration of wealth and (therefore) power. It has to have some of its own checks and balances -- and not just from "competition" as over the long term the concentration of power will kill it. Precisely; and the presence of the capitalists makes them squelch the possibility for anyone else to attain the economic power they enjoy.

We shouldn't make the mistake of getting ahead of ourselves, however. My point is that there is a serious problem potentially developing, one already seen in a shift of economic (and, whether or not you want to admit it, some measure of political) power toward the top of the economic ladder. Rather than see it become an actual serious problem (not to mention better handling the immediate more modest problems) I'd rather we take appropriately restrained action now than run the risk of much worse later.Yes, but I'm not sure there is any action we can take that I would classify as "restrained." If you threaten their power, i.e., their money, these people will attack without any restraint whatsoever, using every weapon at their command, immediately, and without mercy. We have already seen this many times before, and not just in recent history. My advice is, don't open the box (or rather, don't be seen to open the box) until you're ready to respond in kind. They can be persuaded, I think, that it is a Bad Idea to have 300 million people who have political control over 7,000 nuclear weapons really, really angry at you. But it has to happen carefully. You'd rather not use more than just a few of those weapons.

Yes, I really said that. Ever read David Brin's Earth? He has a war with Switzerland, specifically a nuclear exchange, over precisely that, which is supposed to have happened sometime before the start of the story. Interesting idea.

Ziggurat

23rd April 2007, 08:58 PM

Authoritarianism is an ongoing problem, and in the US, the authoritarians are not in the government, they're in the corporations.

This is simply nonsense. You've twisted the word "authoritarianism" beyond recognition.

Remember we had to fight a war to get the political freedoms we now enjoy- and we have never fought for economic freedom. Consider the implications of this carefully.

"Taxation without representation"? That's economic AND political freedom. British control of the colonies' ability to trade was also central to the American revolution ("For cutting off our Trade with all parts of the world" is one of the grievances of the declaration of independence). And our first war after independence was fought to ensure the freedom to trade on the high seas, which very much IS an issue of economic freedom.

Schneibster

23rd April 2007, 11:23 PM

This is simply nonsense. You've twisted the word "authoritarianism" beyond recognition.Beyond your recognition, perhaps. Not beyond mine, or anybody else's who's not blinded by their ideology. I watched 3 million of the best this country has to offer get put on the unemployment lines because a bunch of your CEO buddies decided they didn't like them making the money they were worth, and they could afford to screw them. After that I had no questions about how this works. I put my head down and waited them out, and now they can whistle for their chances of ever getting anyone like me to come work for them. How is that good for US industry? It's not; but it's sure good for the guys with the money. If that ain't power, I don't know what is. Screw your artificial boundaries, when are we gonna talk about the real world?

"Taxation without representation"? That's economic AND political freedom. British control of the colonies' ability to trade was also central to the American revolution ("For cutting off our Trade with all parts of the world" is one of the grievances of the declaration of independence). And our first war after independence was fought to ensure the freedom to trade on the high seas, which very much IS an issue of economic freedom.Thanks for the lesson in 6th grade economics. Can we talk about the 20th century now, not to even mention the 21st? We can stay in the 19th if you like, but I really don't think you're going to want to talk about Haymarket or the Lattimer or Ludlow Massacres; you probably don't want to talk about the Wobblies, or more recently, the use of US National Guard in Arizona in 1982 to break a strike at the Phelps Dodge mines in Clifton and Morenci, AZ. Move along, nothing to see here.

Schneibster

23rd April 2007, 11:27 PM

Prediction: Zig goes looking for the Lattimer and Ludlow Massacres and the Haymarket hangings and finds out they're real people who were just looking for a living wage and dismisses it all because he doesn't have to work for a living. Sorry Zig, but you got nowhere to hide on this one. The majority of people out here have to make a living, and do so at the mercy of your corporate CEO buddies. If you think any of them have any illusions you have the least slightest clue what you're talking about, you better think again.

Skibum

23rd April 2007, 11:55 PM

Schneibster

23rd April 2007, 11:56 PM

While we're at this, hey WildCat, got any more snide remarks about anarchists? Do you know the difference between the kiddies and the real deal now? Can you tell me what happened to the Wobblies, or what happened at Haymarket, or why the Phelps Dodge strikebreaking was a watershed moment in US history? Have you ever heard of the Air Traffic Controllers' strike? Do you actually know any history, or do you just subsist on snide remarks without any substance behind them?

Schneibster

23rd April 2007, 11:58 PM

I've typed three different responses trying to figure out how to say this but it all boils down to this...

Grow a set, start your own company, be your own boss, write your own paycheck.

or

Get up tomorrow morning, go to work for your boss, collect your pittance and quit whining.Fine, as long as the people who have lots of money don't keep #1 from working to keep the competition down. That's my problem. Level playing field? No problem. Not level? Time to fight. Simple as that.

Mycroft

24th April 2007, 12:24 AM

So in your opinion Stern is not wildly overpaid? Regardless of the public/private issue, isn't it a little disturbing to have police officers and teachers and soldiers often barely getting by, while entertainers are making hundreds of millions a year?

If you think Howard Stern gets paid too much, stop listening to him. If enough other people do the same, he won't get paid so much any more.

I personally don't like the guy. I've seen a few of his shows and whild I'm not offended like some people are, neither do I find him entertaining. I think he's boring.

But enough people disagree with me that he has a huge audience, and with that audience he can command the big bucks.

It's also worth knowing that most radio personalities don't make very much money. You have to become very popular and be syndicated to make decent money in that field.

The thing is that what Howard Stern makes has nothing to do with what your teacher, soldier or fireman makes. If the teacher, soldier and fireman are not making enough money, that's a problem in itself, it's not a problem just because Howard Stern makes some arbitrary figure that's much higher than what they earn.

ETA: My main point is that I'd like to see those at the bottom, who are working full time, get their basic needs (such as health care) met, and get a fair living wage. IMHO that should be an important priority, before letting people become billionaires.

If you take out that last bit, I agree with you. The problem is that the pay of top athletes, CEOs and entertainers has absolutely nothing to do with the pay of teachers, soldiers and firemen.

jimtron

24th April 2007, 12:35 AM

If you take out that last bit, I agree with you.

OK, do you have any ideas about how we can make this a priority? And you think it can be done without affecting the income of the highest earners?

Schneibster

24th April 2007, 01:01 AM

Schneibster

24th April 2007, 01:02 AM

Just in the interest of a "free market," you understand.

Mycroft

24th April 2007, 01:12 AM

OK, do you have any ideas about how we can make this a priority? And you think it can be done without affecting the income of the highest earners?

Raising the wages of teachers, policemen and firemen is no great mystery, but this may be the part where you challenge your own assumptions. How much are these people paid where you live and how does that compare with how much you think they should be paid.

I happen to work in a field where I get to see the personal finances of a lot of different people, and where I live these people make a pretty comfortable wage. I don't know if that's true everywhere, but I certainly think it would be wise to find out before you launch your campaign.

And yeah, I think if you identify a problem then yes you can solve it without affecting the income of the highest earners. Why? Because they have nothing to do with each other.

Mycroft

24th April 2007, 01:16 AM

Ziggurat

24th April 2007, 06:47 AM

Oh, and speaking of a free market, how about a free labor market? Like, as in, we get to get together and sell our labor to the highest bidder and wait you out if we don't like what you're offering. Just like you get to do with the jobs. And you don't get to bring in the National Guard to break the strike.

Sounds a lot like market collusion to me. You know, as in the kind of thing companies are typically forbidden to do by law. Labor unions might be a good thing, but don't even try to pretend they're really just the free market in action. It betrays a deep inconsistency in your thought. Labor unions derive their power precisely from the fact that they restrict a free labor market.

Oh, and since you don't know me personally, don't presume to talk about who my friends are or what I do for a living.

Ranillon

24th April 2007, 08:23 AM

Sounds a lot like market collusion to me. You know, as in the kind of thing companies are typically forbidden to do by law. Labor unions might be a good thing, but don't even try to pretend they're really just the free market in action. It betrays a deep inconsistency in your thought. Labor unions derive their power precisely from the fact that they restrict a free labor market.

This seems like pure "up is really down" sophistry to me. The idea that unions are, in effect, cheating vis-a-vis the "free market" borders on obscene. The only way that this might be the case would be if somehow most every worker belonged to a single union that was impossibly unified in its goals. That just wouldn't happen in the real world. Even at its height union membership was still just a fraction of the whole labor market and was split across many organizations.

Consider this -- businesses are really just "unions" of people brought together to work toward a particular goal. I doubt you would argue that organizing people into businesses is cheating the "free market". Why then would traditional unions organized toward another business aim -- improving compensation and worker rights for its members -- be any different?

Worker organizations are also the best and perhaps really only way for the average person to guarantee that he can employ what economic power he has effectively (which is not to suggest he would necissarily be screwed otherwise, only that he'd be at the mercy of business' good graces). A basic characteristic of any business is that it naturally concentrates power. This gives management a built-in advantage over labor. Before the latter can even get in the game they have to first organize. Unions are, generally speaking, a necessary just to level the playing field between management and labor. Otherwise -- as history and modern events show -- management can in effect play one worker against another and artificially (at least in strict economic terms) lower their individual bargaining power.

Ziggurat

24th April 2007, 08:45 AM

This seems like pure "up is really down" sophistry to me. The idea that unions are, in effect, cheating vis-a-vis the "free market" borders on obscene. The only way that this might be the case would be if somehow most every worker belonged to a single union that was impossibly unified in its goals. That just wouldn't happen in the real world. Even at its height union membership was still just a fraction of the whole labor market and was split across many organizations.

Markets are segmented, both geographically and by product. Labor unions have a low fraction of the total workforce as members, that's true. But in particular markets, they can dominate. Take public school teachers, for example. Labor unions cover pretty much all the teachers in many areas. I'm not claiming that they're "cheating" the free market, because that carries a particular value judgment I'm not trying to make here. But they damned sure are restricting the labor market - that's the WHOLE POINT of the union. When schools are not free to hire or fire whoever they choose because the threat of union strikes have forced them into certain contracts, the schools are NOT employing teachers out of a free market labor pool. The whole bloody point of the threat to strike is that the employer cannot meet their labor requirements through non-union sources, and that rather requires that the union be at least a major, if not dominant, supplier of labor in that market. It's precisely by restricting supply that you can drive up price for a product (in this case labor). Unions work by restricting the labor market. It really is that simple. And it's true whether that restriction is a good thing or not.

Consider this -- businesses are really just "unions" of people brought together to work toward a particular goal. I doubt you would argue that organizing people into businesses is cheating the "free market". Why then would traditional unions organized toward another business aim -- improving compensation and worker rights for its members -- be any different?

Because you can quit a business any time you want, and compete against it. The union equivalent on the business side is non-compete clauses (which are generally unenforceable) or businesses which threaten their customers with not serving them if they buy from a new startup business founded by former employees. Both of those things are anti-free market, and both of them are generally illegal for businesses.

Worker organizations are also the best and perhaps really only way for the average person to guarantee that he can employ what economic power he has effectively (which is not to suggest he would necissarily be screwed otherwise, only that he'd be at the mercy of business' good graces).

Well, no. As you yourself indicated, the average person isn't a union member at all. And union membership is declining. Which indicates that most people do quite fine without union protection, and don't see any benefit in joining a union. The best protection ANY employee has comes from having marketable skills that other employers would be willing to pay for - and that's true whether you're a union member or not.

A basic characteristic of any business is that it naturally concentrates power. This gives management a built-in advantage over labor. Before the latter can even get in the game they have to first organize. Unions are, generally speaking, a necessary just to level the playing field between management and labor. Otherwise -- as history and modern events show -- management can in effect play one worker against another and artificially (at least in strict economic terms) lower their individual bargaining power.

Just as consumers play one company off another to "artificially" lower their bargaining power. Sorry, but that's not artificial lowering at all: that's what markets do, that's NATURAL lowering of bargaining power. Now, you may conclude that there are reasons to prefer a non-free labor market, and you could even be correct about that. But to claim that unions represent a free labor market, rather than a restriction on a free labor market, is simply nonsense.

Ranillon

24th April 2007, 11:13 AM

Markets are segmented, both geographically and by product. Labor unions have a low fraction of the total workforce as members, that's true. But in particular markets, they can dominate. Take public school teachers, for example.

I'd say you are both right and wrong on this point. Right because -- just like any other person or group -- Unions do indeed have the potential to abuse their power. But, wrong because of the implicit double-standard you are using -- everything you say about Unions can be just as true for business. Your argument really only works if you assume that Unions will inevitably lead to a misuse of power, yet somehow business will conveniently always remain in check. Take that away and what you have are competing organizations trying to work out the best deal between them. Isn't that capitalism?

Well, no. As you yourself indicated, the average person isn't a union member at all. And union membership is declining. Which indicates that most people do quite fine without union protection, and don't see any benefit in joining a union.

Technically, all it means is that Unions are declining. There are different possible reasons. A big possibility -- that I've seen many argue -- is that the decline in Union membership is primarly due to persistent Union busting and the weakening of laws to prevent such. That, and a long-term campaign to sway opinion against Unions. How much this is true is open to debate, but certainly we can't just jump automatically to the conclusion that declining Union membership means less need for them.

The best protection ANY employee has comes from having marketable skills that other employers would be willing to pay for - and that's true whether you're a union member or not.

If the powerful never use their power to gain an unfair (in economic terms) advantage against the less powerful, then sure. I don't think we quite live in that world, however.

There is also another subtle point to be made here -- the power of "marketable skills" is really just a way of saying "having something sufficiently rare to be in higher demand." Problem is this is a relative measure that depends on a suitable (usually a high percentage of the available workforce) amount of people not having those skills. Which in turn means in practice that your security is better guaranteed only at some expense to those of others.

This makes good sense for the individual, but it basically useless for an entire population (at least in terms of wages) -- which is why I think all these calls for more education to combat stagnant pay and rising inequality is something of a crock. Think about it -- if someone came up with a pill that instantly gave people any level of skill they wanted it's not as if it the world would suddenly become a worker's paradise. All it would mean is that the economic benefit of knowledge and skill would be reduced to zero.

So, saying that the best defense against unfair businesses practices is to have "marketable skills" is sort of like telling a passenger on the Titanic that the best way to say alive is to be first in line for a lifeboat. You're right -- for that single passenger it makes perfect sense. But given there aren't lifeboat seats for everyone that is hardly a useful solution for passengers as a whole.

jimbob

24th April 2007, 11:28 AM

A CEO earning 475x the wages of the average worker is probably in the lead of a corporation of 10s of thousands of workers. That's not enough to give health care benefits to the workers, and the company would lose quality CEOS if they didn't pay for them. Then the workers would start to lose jobs as the company starts collapsing.

What about the UK's GEC (http://en.wikipedia.org/wiki/George_Simpson,_Baron_Simpson_of_Dunkeld)?

When the CEO takes more salary than the company's profit then something isn't right..

Ziggurat

24th April 2007, 11:40 AM

I'd say you are both right and wrong on this point. Right because -- just like any other person or group -- Unions do indeed have the potential to abuse their power. But, wrong because of the implicit double-standard you are using -- everything you say about Unions can be just as true for business.

You're missing my point entirely. This is NOT ABOUT me making a judgment about unions, or whether what they do is an "abuse". It's about whether or not unions expand or restrict free labor markets. The whole argument for unions is that the benefits to employees from a restriction of the labor market is more important than the cost to employers (the consumers of labor). But whether or not you accept that argument in favor of unions, it is still quite plainly a restriction of the free labor market. And that's true even if unions are just the best thing sinced sliced bread.

And yes, businesses can also get together to engage in price fixing just like workers can. When they do that, it becomes a restriction of the free market for goods or services. I never said anything to the contrary.

Your argument really only works if you assume that Unions will inevitably lead to a misuse of power, yet somehow business will conveniently always remain in check.

Once again, NO. My argument isn't about whether unions misuse power: my argument is what that power is to begin with. Recognizing that doesn't condemn unions to being bad, but not recognizing it is simply blindness.

Think about it -- if someone came up with a pill that instantly gave people any level of skill they wanted it's not as if it the world would suddenly become a worker's paradise. All it would mean is that the economic benefit of knowledge and skill would be reduced to zero.

Well, no: there's still the small matter of people's willingness to do certain jobs. Yes, wages would decrease for quite a few jobs, but think of the benefits: COSTS would drop too. Isn't the high cost of health care one of the big complaints for low-income workers? Well, if anybody could potentially be a doctor, then the cost of obtaining health care would be cheap. Productivity would go through the roof, and so much more wealth would be created that we'd all be much better off. But that's not what interests you about this scenario: it's not the benefits that would accrue, but only the drawbacks, which you seem interested ins. I think that's rather telling about your outlook on economics.

So, saying that the best defense against unfair businesses practices is to have "marketable skills" is sort of like telling a passenger on the Titanic that the best way to say alive is to be first in line for a lifeboat. You're right -- for that single passenger it makes perfect sense. But given there aren't lifeboat seats for everyone that is hardly a useful solution for passengers as a whole.

Lump theory of labor. And it's simply wrong. Unlike lifeboats on the titanic, there IS no fixed, finite demand for labor. The potential demand for labor is, and always will be, infinite.

Darth Rotor

24th April 2007, 11:45 AM

Fine, as long as the people who have lots of money don't keep #1 from working to keep the competition down. That's my problem. Level playing field? No problem. Not level? Time to fight. Simple as that.
So, an anarchist wants a level playing field, and he ensures that this level playing field happens . . . how? Care to help me out? ;)

As to unions, and guilds, they tend to be pro protectionist, it is in their interest to be so, and thus anti level playing field as a standard practice.

Care to address that?

Note: unions happened for a good reason. They were needed as a balance to other forces. I'd say they are still needed, though some of their function have been subsumed by legislation, which unions sponsored and fought for. (A mild irony there.) The question is, where is the balance point between two diverging interests?

DR

Beerina

24th April 2007, 12:03 PM

On the other hand, Britain and Japan have both contributed and profited from technological development, so evidently the pay ratios in the United States are neither a necessary precondition nor a necessary consequence of so doing.

Nor a degredation of it. It is pure, silly rhetoric. And it's arguable whether heavier socialism detracts from the rate of technological development. Very heavy clearly does.

Beerina

24th April 2007, 12:13 PM

Things would be a lot better if a limit to what an individual can earn is set. Say, no one in the country (no matter what they do) can earn less than 12,000 bucks (year figures) or more than 1,200,000.

There you go. I said it. Not that it will happen nor that people will start to think about it.

So much for a free country. I didn't realize life was about people angrily threatening each other with violence for stepping on a sacred cow.

It's astounding how people around here reject this kind of argumentation in any other realm.

Things would be a lot better if a limit to what an individual can believe in is set. Say, no one in the country (no matter what they do) can believe any less than an anthropomorphic god exists, nor any more than that Jesus is his reborn son.

Things would be a lot better if a limit to what an individual can offer as health care is set. Say, no one in the country (no matter how sick) can use a medical practicioner other than a chiropracter, herbalist, new age guru, or holistic but nonconventional medicine specialist.

Things would be a lot better if a limit to what an individual can perform in sexual activities is set. Say, no one in the country (no matter how horny) can engage in homosexual acts, self-abuse, nor any heterosexual position outside standard missionary or doggy style, in a committed, loving, and legally recognized marriage.

In all cases, why do people have such a tough time learning to leave other people the hell alone?

Ziggurat

24th April 2007, 12:16 PM

So, an anarchist wants a level playing field, and he ensures that this level playing field happens . . . how?

By leveling it. That's what the dynamite is for.

jimtron

24th April 2007, 02:35 PM

So much for a free country. I didn't realize life was about people angrily threatening each other with violence for stepping on a sacred cow.

Yes, it's been happening since the dawn of man. Ever read the Bible?

But has anyone on this thread threatened violence? I've been away from the thread, so maybe I missed this?

Meadmaker

24th April 2007, 02:55 PM

and the company would lose quality CEOS if they didn't pay for them.

That's what the CEO's want you to think, anyway, but there really isn't a great deal of evidence to support it.

I've only seen brief articles on the subject, but the outrageously paid CEOs don't have a better track racord for corporate growth, corporate profits, or share price.

When I buy stock, I look at CEO salaries. I figure if the guy at the top isn't willing to get out of bed for less than two million, he isn't very ambitious. I think there are plenty of people who could do just as well, and are willing to work for a million. If I see a set of executive salaries that are really high, I figure the board of directors obviously is working for the CEO, not for me, and some other sucker can buy that stock.

I don't favor government salary limits on CEOs. I do think shareholders are to blame for the situation.

ETA: I also favor progressive taxation. That way the highly paid CEOs end up paying for guns and butter for the rest of us anyway.

24th April 2007, 03:15 PM

I just skimmed over an article in our local newspaper, which apparently quoted some Congressman as stating something to the effect of, 'if it's a choice between giving unnecessary tax breaks to ridiculously overpaid CEOs, versus fixing the retirement situation, I'll choose the latter any day.'

So apparently even some politicians think CEOs make too much money.

Of course, some politicians think a lot of silly things - like laying off teachers and closing librarys in schools is somehow a good thing.

Ranillon

24th April 2007, 05:40 PM

You're missing my point entirely. This is NOT ABOUT me making a judgment about unions, or whether what they do is an "abuse".

Then why did you make the comment in the first place? In the context of this discussion your original comment was clearly meant as a criticism of Unions -- e.g. they are anti-free market. Honesty, it looks a lot like you are trying to have it both ways here -- insist it is not a criticism even as your presentation of the idea is obviously meant to suggest it is.

But whether or not you accept that argument in favor of unions, it is still quite plainly a restriction of the free labor market. And that's true even if unions are just the best thing sinced sliced bread.

Modern capitalism is full of such "restrictions", many of which many seem to take as given foundations of "free trade". For instance, copyright. The whole basis of copyright is to restrict the free use of ideas. Is copyright "anti-free trade?"

Well, no: there's still the small matter of people's willingness to do certain jobs. Yes, wages would decrease for quite a few jobs, but think of the benefits: COSTS would drop too. Isn't the high cost of health care one of the big complaints for low-income workers? Well, if anybody could potentially be a doctor, then the cost of obtaining health care would be cheap. Productivity would go through the roof, and so much more wealth would be created that we'd all be much better off.

Please note that you are responding to something I didn't actually say. I was only talking about the narrow question of whether education is a fix for wage inequality in general. I made no mention pro or con about the other possible effects that such a wonder pill would have for society. Therefore, your comments above are entirely beside the point.

But that's not what interests you about this scenario: it's not the benefits that would accrue, but only the drawbacks, which you seem interested ins. I think that's rather telling about your outlook on economics.

Be careful with such amateur psychoanalysis when based on erroneous information. Not only are your conclusions about the other person likely to be wrong, you are also liable to reveal your own psychology by mistake.:D

Lump theory of labor. And it's simply wrong. Unlike lifeboats on the titanic, there IS no fixed, finite demand for labor. The potential demand for labor is, and always will be, infinite.

What the heck does that supposedly mean? That there is an infinite demand for labor right now? That if I develop a certain skill that somehow by definition a job for that skill will appear? Could you ground that statement in real life?

Dr Adequate

24th April 2007, 06:03 PM

Nor a degredation of it. I never said that the pay differentials were a "degredation" of technological development, partly because I don't know what you wish to mean by that phrase, and partly because I can spell it. What I actually said was that the pay differentials were "neither a necessary precondition nor a necessary consequence" of technological development.

It is pure, silly rhetoric. I am not responsible for the oratorical standards of the voices in your head.

And it's arguable whether heavier socialism detracts from the rate of technological development. Very heavy clearly does. Arguable, but not with me, since I have never advocated socialism in any way, shape, or form.

balrog666

24th April 2007, 06:08 PM

One is much greater than the other.

I don't know exactly where the line should be drawn. But in my opinion 1:100 or less sounds a lot more fair than 1:1,000.

Life isn't fair. Legislation can't make it that way.

Dr Adequate

24th April 2007, 06:19 PM

Then why did you make the comment in the first place? In the context of this discussion your original comment was clearly meant as a criticism of Unions -- e.g. they are anti-free market. Schneibster was clearly saying that a unionised labor market is a free labor market. Whether or not you think that unionisation is a good thing, this just isn't true. The whole point of a union is to establish a cartel (as it were) of workers.

Meadmaker

24th April 2007, 06:20 PM

Dr Adequate

24th April 2007, 06:20 PM

Life isn't fair. Legislation can't make it that way. And yet there are thousands of pieces of legislation that make it fairer.

balrog666

24th April 2007, 06:25 PM

And yet there are thousands of pieces of legislation that make it fairer.

At what cost?

jimtron

24th April 2007, 06:31 PM

At what cost?

It depends on the situation; we need to strike a balance between cost and benefit. I think some drug laws are unfair. With legislation we ended some forms of discrimination against women and blacks. Should we try to make things fair, or throw up our hands and say, "life isn't fair"?

ETA: I'm not saying civil rights laws are necessarily comparable to the issues we're discussing on this thread; the main point of this post is to respond to this:
Life isn't fair. Legislation can't make it that way.

ETA 2:

I think legislation has helped to make things more fair; in the fight against corruption, monopolies, abuse of power; raising min. wage, etc.

Schneibster

24th April 2007, 07:04 PM

Schneibster was clearly saying that a unionised labor market is a free labor market. Whether or not you think that unionisation is a good thing, this just isn't true. The whole point of a union is to establish a cartel (as it were) of workers.In a truly free market, everyone is free to do what they want. If they want to form a union, they're free to do that. Your idea of a "free market" is that everyone does what's best for themselves; but a company isn't a "self," it's a bunch of people working to make a product or provide a service. Therefore, by your logic, there can be no free market if there are companies. Collusion to set prices is not necessary by this criterion.

What we have here is a situation in which workers are fired during the voting period; this is supposed to be illegal in the US, and is supposed to be administered by the NLRB. The problem is that the penalties for doing it are ludicrously small compared to the penalty (having to pay people a reasonable wage) of not doing it; therefore, it gets done. If you don't believe it, read this (http://www.cepr.net/documents/publications/unions_2007_01.pdf).

So we go a couple basic problems here: first, what does "free market" mean? If it means that you can make a company, it means you can make a union. If not, not. But you can't have your cake and eat it too. Second, there apparently never has been a free market, and the people running the companies use every advantage they can get, fair or unfair, and will do anything they can get away with to push salaries down. Why they do that is immaterial; that they do it is unquestionable; and the only meaningful response is to refuse them workers.

Ziggurat

24th April 2007, 07:12 PM

Then why did you make the comment in the first place?

Look at posts 163 and 164. I was responding to Schneibster's nonsensical notion that unions (which he seems to assume I oppose) represent the ultimate expression of free labor markets, when they clearly do not.

In the context of this discussion your original comment was clearly meant as a criticism of Unions -- e.g. they are anti-free market.

They are a restriction of the free labor market (I do not use the term anti-free market quite deliberately because I think the meaning of that word goes beyond mere restrictions). That you took this as inherent criticism of unions is not something I intended, nor do I think it's something to blame me for. I was responding to an assertion by Schneibster which made no sense, and the merits or faults of unions was not an integral part of my criticism of Schneibster's assertion.

Honesty, it looks a lot like you are trying to have it both ways here

That's because you keep trying to read more into what I'm saying than I'm actually saying. It's an easy mistake to make, and it appears you think I made the same mistake with one of your posts.

Modern capitalism is full of such "restrictions", many of which many seem to take as given foundations of "free trade". For instance, copyright. The whole basis of copyright is to restrict the free use of ideas. Is copyright "anti-free trade?"

No, it is not anti-free trade. It is, however, quite definitely a restriction of free trade (again, I do not think the two terms are equivalent). And I think copyrights are a good thing. Which demonstrates not that I'm inconsistent, but that you have extrapolated a position for me beyond what I've actually expressed, and different from what I actually believe.

What the heck does that supposedly mean? That there is an infinite demand for labor right now?

Infinite is probably not quite the right word. Unlimited is a little more precise, but let me try to phrase it in a way that's more relevant to the present discussion: the amount of work for which there is at least some demand will ALWAYS exceed the amount of labor available.

Dr Adequate

25th April 2007, 12:28 AM

At what cost? At what cost? Well, for example, murderers and rapists have to spend time in jail, but I guess that's a price I'm willing to pay.

No, it doesn't make life fair, but you've got to admit it evens things out a little.

Dr Adequate

25th April 2007, 12:33 AM

In a truly free market, everyone is free to do what they want. If they want to form a union, they're free to do that. But that is not the definition of the technical term "free market".

Your idea of a "free market" is that everyone does what's best for themselves; but a company isn't a "self," it's a bunch of people working to make a product or provide a service. Therefore, by your logic, there can be no free market if there are companies. Do not presume to tell Dr Adequate what his ideas are, for he is unsubtle and quick to anger.

I am sympathetic to your left-wing views; nonetheless, an effectively unionised market in labor is not a free market in labor --- which is the whole damn point of unionising.

Ocelot

25th April 2007, 12:51 AM

One theme of a lot of responses in this thread is that the CEO salaries don't affect the salaries of regular workers. The implication is that the truck drivers and teachers shouldn't worry about outrageous salaries, because their own salaries aren't affected.

That's probably true. However, the lower classes are, in fact, adversely impacted when wealth concentrates at the top.

The economic production of a society is constrained by the labor pool, and the resources available to produce goods and provide services. If the wealth of a society is concentrated in the hands of a few, that will drive demand for luxury goods. Those goods require larger amounts of labor and/or resources to produce, which leaves fewer available resources to produce the staple goods of the lower class. The concentration of wealth in the upper classes can create inflation on necessities.

I'll elaborate if anyone cares to challenge the assertion.

Interesting. I've also been trying to push the discussion towards ways in which increased wealth disparity is harmful to society.

Your model sounds feasable. However inflation figures are based upon standards iof living indexes which in turn are based upon the prices of staples. It appear that the median wage remains mostly constant with a slight upward trend in real terms (adjusted for inflation) That is to say that the average worker can buy just as many staples today as he could ten years ago when the income gap was less.

I'm not certain therefore that increased demand for luxury goods has the effect you describe - perhaops because the worker pool which provides such staples is often international.

Francesca R

25th April 2007, 01:02 AM

Modern capitalism is full of such "restrictions", many of which many seem to take as given foundations of "free trade". For instance, copyright. The whole basis of copyright is to restrict the free use of ideas. Is copyright "anti-free trade?" Copyright and patent are the extension of legal property ownership to ideas, methods, inventions, compositions and so on. Restricting their "free" use is analagous to restricting free appropriation of others' property. No it is not at all "anti-free trade". It is "anti-theft". Theft is the antithesis of trade. The concept of copyright is "pro-trade"—to benefit from something you need to pay for it.

Ocelot

25th April 2007, 02:28 AM

Copyright and patent are the extension of legal property ownership to ideas, methods, inventions, compositions and so on. Restricting their "free" use is analagous to restricting free appropriation of others' property. No it is not at all "anti-free trade". It is "anti-theft". Theft is the antithesis of trade. The concept of copyright is "pro-trade"—to benefit from something you need to pay for it.

Free trade implies that I have a right to buy anything at a fair price as determined by the market without protectionist forces impeding the transaction.

Sure Disney own the sole rights to licence the Image of Mickey Mouse but if they're prepared to licence that image to Mac Donalds to decorate Happy Meals then should they be allowed to refuse to sell a similar licence to the Electric Blue porn fanchise. If they are allowed to refuse to sell their product then surely that protectionism. That's an impediment to the free market.

Francesca R

25th April 2007, 02:53 AM

Free trade implies that I have a right to buy anything at a fair price as determined by the market without protectionist forces impeding the transaction.Which is an argument for copyright IMO, not against it. Without copyright the price is not market-determined because the seller has no say in what the price is—people simply get the good for free "because they can", not because the seller thinks free is sufficient compensation.

Sure Disney own the sole rights to licence the Image of Mickey Mouse but if they're prepared to licence that image to Mac Donalds to decorate Happy Meals then should they be allowed to refuse to sell a similar licence to the Electric Blue porn fanchise. If they are allowed to refuse to sell their product then surely that protectionism.No that's not protectionism. (http://dictionary.reference.com/browse/protectionism)

That's an impediment to the free market.No it's about whether a seller is able to discriminate over who he/she sells to. In a free market, as far as I'm aware, that is fine.

Ocelot

25th April 2007, 03:18 AM

No it's about whether a seller is able to discriminate over who he/she sells to. In a free market, as far as I'm aware, that is fine.

It is? Oh well I stand corrected. Seems like the freedoms in this market stack up more with the sellers and less with the buyers. Remind me again - what so good about free markets?

Francesca R

25th April 2007, 03:31 AM

Seems like the freedoms in this market stack up more with the sellers and less with the buyers.How so?

Ocelot

25th April 2007, 04:03 AM

Given the context how do you think?

Jaggy Bunnet

25th April 2007, 04:19 AM

Given the context how do you think?

I have no idea.

You seem to be arguing that if Disney license to McDonalds, but decide not to license to Electric Blue this is in some way a restriction on the free market. In other words that there should be some compulsion on them to sell.

As there is no similar compulsion on buyers (and I assume you agree that simply because someone agrees to buy a Disney licensed product from McDonalds they would not be compelled to buy one from Electric Blue) then I fail to see how this is stacking freedoms in favour of sellers as opposed to buyers.

Sellers choose which buyers to sell to, buyers choose which sellers to buy from.

Francesca R

25th April 2007, 04:58 AM

Given the context how do you think?It's your assertion, not mine. And the answer is . . . ?

Ocelot

25th April 2007, 05:08 AM

I have no idea.

You seem to be arguing that if Disney license to McDonalds, but decide not to license to Electric Blue this is in some way a restriction on the free market. In other words that there should be some compulsion on them to sell.

Perhaps I can phrase it better.

I was indeed arguning that in a truly free market if Disney refused me a licence on Mickey Mouse's image I could buy the same licence from another source e.g Mac Donalds If they were willing to off load some of their licence that they'd allready bought. I wans't arguing that this is the state of affairs that should be in place - I was simply sugegsting that there is not a free amrket on copyright and nor should there be. The reason that there is not a free market in copyright is that each copyright holder is effectively a monopoly. The product (licences) they sell cannot be resold. Supply is infinite as incremental cost are negligable to the seller and demand is finite.

To me that means that the free market does not apply. Instead we have a highly regulated market where suppliers can effectively bar buyers from access to their product. The example I cited shows a good reason why this right is preserved. Disney have a reasonable desire to avoid the pollution of their brand with unsavoury connotations.

As there is no similar compulsion on buyers (and I assume you agree that simply because someone agrees to buy a Disney licensed product from McDonalds they would not be compelled to buy one from Electric Blue) then I fail to see how this is stacking freedoms in favour of sellers as opposed to buyers.

Sellers choose which buyers to sell to, buyers choose which sellers to buy from.

The freedom that the seller has it to sell elsewhere. In the case of copyright the buyer does not allways have that freedom. Therefore the copyright market is not free.

If I want to include visual basic in my product I have to licence that from microsoft. If my product competes with one of microsoft's shoudl they have the right to refuse me a licence (or price it out of the market). In this case anti competition law intervenes to enforce what I would call free market principles. However if your insistance is that the converse is the case (that their right to refuse me a fair price embodies free market principles) then in this instance, where they are forced to sell to me, the free market is not upheld.

Do you see what I'm getting at now?

Meadmaker

25th April 2007, 05:11 AM

Interesting. I've also been trying to push the discussion towards ways in which increased wealth disparity is harmful to society.

Your model sounds feasable. However inflation figures are based upon standards iof living indexes which in turn are based upon the prices of staples. It appear that the median wage remains mostly constant with a slight upward trend in real terms (adjusted for inflation) That is to say that the average worker can buy just as many staples today as he could ten years ago when the income gap was less.

I'm not certain therefore that increased demand for luxury goods has the effect you describe - perhaops because the worker pool which provides such staples is often international.

I think it's actually easiest to see the effects in the real world on the international scale. Internationally, the disparity is between rich nations and poor nations.

Consider the case of coffee. Coffee is very labor intensive to produce. Coffee takes up a lot of farmland. Coffee is often grown in countries where there are a lot of malnourished people. Why don't they switch that farmland over to food crop production? That's easy enough to answer. There's no money in it. The land owner can make more money selling coffee to rich first worlders than to poor third worlders (i.e. the people in his own country). The workers will accept the same wages to grow coffee or food, so their wages stay the same. However, the use of arable land for non-food crops means that there is less food on the local market. Same wages, less goods, higher prices.

(More to come)

Jaggy Bunnet

25th April 2007, 05:53 AM

Perhaps I can phrase it better.

I was indeed arguning that in a truly free market if Disney refused me a licence on Mickey Mouse's image I could buy the same licence from another source e.g Mac Donalds If they were willing to off load some of their licence that they'd allready bought.

Except that the licence McDonalds have bought will only permit them to use the image for a very carefully defined and very limited range of products. In other words McDonalds do not have a licence to use Mickey Mouse's image in promoting pornography, therefore they cannot sell such a licence. The fact that Disney choose to restrict the licences they sell is entirely within free market principles.

If I want to include visual basic in my product I have to licence that from microsoft. If my product competes with one of microsoft's shoudl they have the right to refuse me a licence (or price it out of the market). In this case anti competition law intervenes to enforce what I would call free market principles. However if your insistance is that the converse is the case (that their right to refuse me a fair price embodies free market principles) then in this instance, where they are forced to sell to me, the free market is not upheld.

What do you mean by "fair price"? If you and the owner of what you want to use do not agree that a price is fair, then no deal is done. What you seem to want is the right for you to decide on a price and impose it on the seller - seems to use an odd definition of "fair".

Francesca R

25th April 2007, 06:58 AM

I was indeed arguning that in a truly free market if Disney refused me a licence on Mickey Mouse's image I could buy the same licence from another source e.g Mac Donalds If they were willing to off load some of their licence that they'd allready bought. I wans't arguing that this is the state of affairs that should be in place - I was simply sugegsting that there is not a free amrket on copyright and nor should there be.
Copyright is an extension of legal property ownership. You seem to regard it as a restriction against markets clearing effectively. Licences are examples of legally binding contracts between private parties. You seem to regard them as interfering with markets' ability to operate. I don't agree on either of these counts. Property rights and legally binding contracts are prerequisites for markets to function well.

If I want to include visual basic in my product I have to licence that from microsoft. If my product competes with one of microsoft's shoudl they have the right to refuse me a licence (or price it out of the market). In this case anti competition law intervenes to enforce what I would call free market principles.Regulation intervenes to uphold the free-market?

Do you see what I'm getting at now?No

Ocelot

25th April 2007, 10:26 AM

I think it's actually easiest to see the effects in the real world on the international scale. Internationally, the disparity is between rich nations and poor nations.

Consider the case of coffee. Coffee is very labor intensive to produce. Coffee takes up a lot of farmland. Coffee is often grown in countries where there are a lot of malnourished people. Why don't they switch that farmland over to food crop production? That's easy enough to answer. There's no money in it. The land owner can make more money selling coffee to rich first worlders than to poor third worlders (i.e. the people in his own country). The workers will accept the same wages to grow coffee or food, so their wages stay the same. However, the use of arable land for non-food crops means that there is less food on the local market. Same wages, less goods, higher prices.

(More to come)

Hmmm. Yes working on a different scale to what I was thinking of but quite convincing. Not least because if fits with the much acclaimed "fair trade coffee" we hear so much about. So I guess we all know that this is happening.

Except...

The workers wages staying the same: if food is more scarce and more expensive, inflation means that those wages are actually worth less. So why do they accept what are effectively lower wages for the same day's work? Imagine if you will that they are innumerate peasants with little regard for currency. The farmer hires peasants and offers them a coin. They ask what it is and the farmer explains that you can exchange it for a chicken. The peasants then agree that a day’s work is worth a good meal for their families.

Food becomes more scarce. A chicken is now worth two coins. The farmer approaches our honest labourer and offers him a coin. This time the peasant hears that it's not worth a chicken so as far as he's concerned the value of his work is the same so he holds out for two coins. A chicken is still a chicken to him and that's the value of his days work. He doesn't care that the invisible hand of capitalism has dictated it be an imported chicken costing an extra coin. As far as he's concerned he's still bartering a chicken for a day's work.

Ideally we should see the workers being paid more so that they can afford to ship in food grown elsewhere. The rich coffee drinkers find that free market forces have pushed the price of coffee up a little, as the production process now involves food transport for the workers. Isn't the free market supposed to take care of all that naturally? What's going wrong?

Why is their labour valued less than when there was a little more food being produced locally

If I had to guess I'd assume that the chicken just didn't get imported. Our noble friend finds his two coins cannot be exchanged for something that's just not in the shop. His family make do with what they can scrape together that night and a hungrier peasant turns up for work the next day. This time when the farmer offer his coins he's prepared to agree to three days work for just two chickens worth of metal disks. The subjective value of a chicken just went up in his mind after a day's fasting. Is there a chicken producer and a chicken transporter losing out here?

I must confess economics is not my strong point. I have a rather simplified point of view of how capitalism is supposed to work. I imagine an ideal mesh of products, materials and labour that provides maximum utility. I see a command economy trying to approach this ideal mesh through deduction and administration. I see a free market attempting to find such a solution through an evolutionary process of trial and error combined with survival of the most efficient.

In such a process how have my assumptions on what a free market might be been deficient enough to produce a happy little world when reality is so different.

Ranillon

25th April 2007, 11:07 AM

Look at posts 163 and 164. I was responding to Schneibster's nonsensical notion that unions (which he seems to assume I oppose) represent the ultimate expression of free labor markets, when they clearly do not.

Given how your definition of "free" seems to be variable from post to post and that we're just going around in circles, let's just drop this.

Infinite is probably not quite the right word. Unlimited is a little more precise, but let me try to phrase it in a way that's more relevant to the present discussion: the amount of work for which there is at least some demand will ALWAYS exceed the amount of labor available.

To once again try to bring this into the real world, are you saying that there will always be a job for someone as long as they have skills at all in demand (though, what job skill wouldn't be in demand)? I suppose theoretically you are right -- assuming of course that a person was willing to lower his expectations to the point that he could be hired. But, considering that level could be painfully low or, at least, lower than what he needs to survive in a matter that the average person would agree is basic that doesn't make for good or even effective social policy. Remember that ultimately any economic system is meant to serve the needs of real human beings, not the other way around.

But, this doesn't yet really deal with my original point, namely that the current argument so popular in some corners that all we need is more education to raise wages for all is actually meaningless when applied to society as a whole. Can you provide a concrete argument about that?

Ocelot

25th April 2007, 11:27 AM

Except that the licence McDonalds have bought will only permit them to use the image for a very carefully defined and very limited range of products. In other words McDonalds do not have a licence to use Mickey Mouse's image in promoting pornography, therefore they cannot sell such a licence. The fact that Disney choose to restrict the licences they sell is entirely within free market principles.

I agree. However I would add that the fact that Electric Blue can't buy a licence to use Mickey Mouse from anyone else is a monopoly. Monopolies deny us the benefits of a free market. However in this case it seems to me the right thing to do. I'm not saying that Disney should behave any differently I'm just saying that there are differences between different markets and the copyright market is not what I'd call a free market: To me it is a regulated market as you demonstrate when you suggest that the image is provided "for a very carefully defined and very limited range of products."

What do you mean by "fair price"? If you and the owner of what you want to use do not agree that a price is fair, then no deal is done. What you seem to want is the right for you to decide on a price and impose it on the seller - seems to use an odd definition of "fair".

A price set by supply and demand in a competitive free market would be a fair price. A price set by an independent third party regulator with anti trust concerns would be a fair price. A price set by a buyer and then imposed on the seller would be unlikely to be a fair price. I don't know why you would assume that's what I want.

Let's offer up an example.

Here in the UK we have a Satellite TV carrier called BskyB owned by Rupert Murdoch. We also have a number of SKY TV channels also owned by Rupert Murdoch. We have a number of Cable TV Distributors not owned by Rupert Murdoch. They pay him for SKY TV channels.

One of these is called Virgin Media and is owned by Richard Branson. They too are a Cable TV carrier offering other people's channels. They are picking up market share from BSkyB with their "new and exiting range of interactive services"

BskyB see Virgin media as a competitor. Sky TV doubled the price it was asking Virgin Media for it's Sky TV offering. Virgin refused so no longer carry the Sky Channels. BskyB then launched a marketing campaign directed at Virgin Media Cable Customers to it's satellite network on the basis that they can no longer receive Sky TV channels on Virgin Media.

Virgin media then go crying off to the broadcasting regulator Offcom claiming that Rupert Murdoch is using monopoly powers, to interfere with the free market. Note that other cable carriers have not complained - presumably they still persist at the old pricing as they are not the ones picking up market share from BSkyB.

I don't think a price set by Richard Branson would be fair. Equally I don't think that the price set by sky can have been fair otherwise the transaction would have gone ahead. The price Sky is offering Virgin's cable competitors presumably that's fair. Perhaps that's the price the regulator may choose to impose in upholding the rights of Virgin's customers? In a competitive free market supply and demand could set the price every time. If Branson didn't like what Murdoch was charging he could by an exactly equivalent product of another supplier. With copyright an exactly equivalent product is not available from anyone else. Thus one of the Buyers freedoms - to buy elsewhere has been removed. To me that means it's not a free market and that's why we have a regulator. Maybe it doesn't mean that to you.

Would it help if I substituted "competitive free market" for each instance I'd used just "free market?"

Ocelot

25th April 2007, 11:46 AM

Copyright is an extension of legal property ownership.

Indeed.

However by necessity one doesn't sell the property but a licence to use it.

Furthermore the product yuo're selling has no functional equivalents.

Finally an unlimited number of cutomers can use the product at the same time with negligable incremental cost to the supplier.

We should not be supprised that this causes differneces in the ways the associated markets opperate.

You seem to regard it as a restriction against markets clearing effectively.

Do I? Can you be specific?

Licences are examples of legally binding contracts between private parties.

We are in agreement.

You seem to regard them as interfering with markets' ability to operate.

Do I? How so? I do think that there cannot be competitive free market in legally binding contracts in the same way as there is for other types of product. I don't think that stops the market operating though. It's just not a FREE market from the buyer perspective as they are by the very nature of the product denied the opportunity to shop around.

I don't agree on either of these counts.

I'm note sure I do either. Did I make either of those points?

Property rights and legally binding contracts are prerequisites for markets to function well.

Once again we are in agreement.

Regulation intervenes to uphold the free-market?

It happnes all the time. It's the buyer's freedoms they're protecting. The principles of the free market (competition) are upheld in the face of anti competitive conflicts of interests which in the case of copyright are an inevitable risk.

No

If that's still the case then I'm afraid I can do no more. I have reached the limits of my clarity of exposition. I have written long enough on the subject and if you would care to review my posts reading for comprehension maybe you will be able to comprehend what my perspective is.

Ziggurat

25th April 2007, 11:49 AM

But, this doesn't yet really deal with my original point, namely that the current argument so popular in some corners that all we need is more education to raise wages for all is actually meaningless when applied to society as a whole. Can you provide a concrete argument about that?

Increased education will not raise wages for everyone, but it most certainly is a net good, and will definitely help with the problem you want addressed.

Suppose everyone gets much better educations, especially those currently being under-educated. Yes, they can't all be doctors, someone still needs to be a janitor, and it's still going to be the smarter people who get to be doctors, and the doctors will still get paid more. But what happens to the balance between the two? If more people are qualified to be doctors, there will be more doctors, and the wages for doctors will go down (which is a good thing for consumers of medical services, especially the poor). But as the number of people working in high-skill jobs (it's not just doctors) increases because of this expanded pool of qualified people, the number of people available for low-skill jobs will likewise decrease. And what do you get with decreased supply? Increased prices. The price for low-skill labor will go up, just as the price for high-skill labor will go down, as more people become better educated. And overall, the economy becomes much more productive, which lifts standards of living across the board (consider, for example, that having a telephone was once a luxury for the rich but now even many "poor" people have cell phones).

Now consider the reverse: what happens if we CUT education? Fewer qualified people for high-skill jobs, prices for those jobs goes up, and increased competition for low-skilled jobs leads to lower pay for those jobs. And the economy slows down, hurting everyone.

Taken to an extreme, what happens if everyone is magically capable of doing any job equally well? In such a case, what distinguishes one job from another in terms of pay? The desirability of the work itself: if the work is fun, more people will want to do it, and will accept less money for doing it. If the job is unpleasant, fewer people will want to do it, and it will take more money to get someone to accept the job. So what would such a world look like? Well, marine biologists (what everyone wanted to be when I was in grade school) would be paid far less than tomato pickers. What are currently low-skilled jobs are typically unpleasant as well, and with better education, that component (versus the low-skill component) will become more important (than it is now) in determining the wage of such jobs, and such wages will go up.

Ranillon

25th April 2007, 11:53 AM

Copyright is an extension of legal property ownership. You seem to regard it as a restriction against markets clearing effectively. Licences are examples of legally binding contracts between private parties. You seem to regard them as interfering with markets' ability to operate. I don't agree on either of these counts. Property rights and legally binding contracts are prerequisites for markets to function well.

Excuse me while I cut in...

The criticizism I would make here is that "property" and "contract" law isn't like E=mc2 -- that is, some unchanging aspect of nature that we can only deal with on its own terms. Rather, social and legal "laws" are human constructs made to help make civilization work. But, being human creations they are open to not only change and development, but also inevitably come with their own biases. Biases in turn help influence who will be a "winner" and who will be a "loser" within any system.

For instance, copyrights can be applied in all sorts of different ways that in turn can greatly influence one or another's ability to succeed economically. Our current system in the US (which over time has given more and more power to the copyright holder at the expense of anyone else) not only gives rights to the owner of copyright for the actual item, but also any material derived from it. For example, not only can I not make a Star Wars film without the permission of George Lucas, I can't create anything tied to Star Wars explicitly and if I do so implicitly (say, by using borrowing heavily from its ideas) I might still easily end up breaking copyright law (at least according to a judge) if I am not careful. Likewise, unless I live to long past one-hundred I can't just wait until the copyright passes into public domain. Our system currently allows a copyright to at least be held over multiple lifetimes and, in all likely effect, indefinitely. So, in order to make sure George Lucas can enjoy the widest benefit over his ideas our law says that it is nigh impossible for me to gain any benefit (short of making a deal with him, of course).

Is that a good thing? Depends on your point of view. Things certainly don't have to be that way. We could have a law (which would be in better keeping with the practice in the more distant past) that says that I can't make a Star Wars movie or directly use principle characters, but that I can use the basic setting and ideas without penalty or transform them into a play or novel. Or, we could have a system where I am free to use any idea or character from Star Wars I'd like, but I have to automatically pay Mr. Lucas 10% of any of the money I make off doing so. Or, we could say that a copyright can only be held for a limited time -- say, fifteen years -- at which moment it automatically passes into public domain. At least then I could just wait to do my Star Wars movie or novel.

Every possible solution alters the balance between and type of potential "winners' and "losers". Which solution is best is a matter of debate. My point is that no matter what the law influences things economically to the benefit or detriment of those involved.

Funny thing is that often when someone brings up the notion of "Free Markets" or similar terms (although not necessarily in this case) they do so in a manner that automatically assumes a certain type and use of the law, but in a way that treats that particular application as if it were a law of nature we must all accept. This all too often reveals, I think, that the speaker is really conflating "free market" -- something usually associated with universal ideas like "freedom" and "liberty" -- with a particular flavor of capitalism he personally prefers.

If you want to know why a lot of people are suspicious or down right hostile of the term "Free Market" I think it's because they notice this self-serving aspect to many (if not most) arguments favoring it.

Francesca R

25th April 2007, 12:09 PM

I would add that the fact that Electric Blue can't buy a licence to use Mickey Mouse from anyone else is a monopoly.You can't buy a Big Mac from Wendy's. Or a Gucci purse from Reebok. Are you suggesting that a "freer" market is one in which trade secrets, brand value and inventions are completely unprotected? That would be to stifle competition and innovation.

Only Disney is allowed to choose which sellers can sell goods and services to the public through its stores. They can sell elsewhere but not from a Disney store. Do you think that Disney has a "monopoly" on the use of its real estate which thwarts a free market?

Monopolies deny us the benefits of a free market.Nothing I have ever understood about a free market includes the cessation of the ability to create (and thereafter enjoy the revenues from) something unique.

the copyright market is not what I'd call a free market: To me it is a regulated market as you demonstrate when you suggest that the image is provided "for a very carefully defined and very limited range of products."I agree it is regulated. Free markets are regulated. At its simplest, the regulation consists of protected property rights and legally binding contracts. This regulation pervades the freest market. What do you imagine would be the outcome if these principles were swept aside?

A price set by supply and demand in a competitive free market would be a fair price. A price set by an independent third party regulator with anti trust concerns would be a fair price. A price set by a buyer and then imposed on the seller would be unlikely to be a fair price.What do you mean "impose"? A seller is free to set any price, but not able to coerce a buyer to pay it (as opposed to not trading). That is not imposition in my book. If no trade takes place, then there is no price that clears the market, and the notion of "fair" is moot.

Ziggurat

25th April 2007, 12:24 PM

You can't buy a Big Mac from Wendy's. Or a Gucci purse from Reebok. Are you suggesting that a "freer" market is one in which trade secrets, brand value and inventions are completely unprotected?

I can't speak for Ocelot, but I would say yes. "Intellectual property" is not like physical property. It's not even like services. "Intellectual property" consists solely of artificial scarcity, and the term itself is an attempt to blur this rather fundamental distinction.

That would be to stifle competition and innovation.

It might stiffle innovation, but it would not stiffle competition.

Nothing I have ever understood about a free market includes the cessation of the ability to create (and thereafter enjoy the revenues from) something unique.

Getting rid of intellectual property does not preclude you from doing this. It might reduce incentives, but that's not the same thing. What it would do is prevent you from keeping other people from creating the same thing you'rve created.

"Intellectual property" is a restriction of the free market. I find it to be a generally worthwhile restriction because of the benefits it provides, but it's a restriction nonetheless.

I agree it is regulated. Free markets are regulated. At its simplest, the regulation consists of protected property rights and legally binding contracts.

Property rights need to be defended for a market to exist because they have intrinsic scarcity. "Intellectual property" has no inherent scarcity, and is unnecessary for a free market. Imposing them does not make the market freer, even if (as I think is the case) the benefits warrant the costs.

Francesca R

25th April 2007, 12:41 PM

Finally an unlimited number of cutomers can use the product at the same time with negligable incremental cost to the supplier.The cost is lost revenue, which the buyers would agree to pay if they were not able to obtain the product free. It is not negligible, nor imaginary.

Do I? Can you be specific?You seemed to.

We are in agreement.Then OK.

Do I? Again, you seemed to, to me.

How so? I do think that there cannot be competitive free market in legally binding contracts in the same way as there is for other types of product. I don't think that stops the market operating though. It's just not a FREE market from the buyer perspective as they are by the very nature of the product denied the opportunity to shop around.Buyers' interests are contrary to sellers interests and a free market is established when they make voluntary decisions. I think it is more appropriate if you said not "ideal" from the buyer's perspective. You have not made the market "free" from a buyer's perspective by compelling a seller to sell to them.

Once again we are in agreement.Fine.

Francesca R

25th April 2007, 12:43 PM

The criticizism I would make here is that "property" and "contract" law isn't like E=mc2 -- that is, some unchanging aspect of nature that we can only deal with on its own terms. Rather, social and legal "laws" are human constructs made to help make civilization work. But, being human creations they are open to not only change and development, but also inevitably come with their own biases. Biases in turn help influence who will be a "winner" and who will be a "loser" within any system.Agreed. Markets are human constucts too.

Ranillon

25th April 2007, 12:49 PM

Increased education will not raise wages for everyone, but it most certainly is a net good, and will definitely help with the problem you want addressed.

I certainly agree that it would be a "net good". Even if more education had no economic effect it would still have great for social and cultural reasons.

When it comes to economics, however, is that I don't see how education in practice would do more than just rearrange the economic pecking order. It does not strike me as an egalitarian answer to wage/wealth inequality. As to why....

Suppose everyone gets much better educations, especially those currently being under-educated. Yes, they can't all be doctors, someone still needs to be a janitor, and it's still going to be the smarter people who get to be doctors, and the doctors will still get paid more. But what happens to the balance between the two? If more people are qualified to be doctors, there will be more doctors, and the wages for doctors will go down (which is a good thing for consumers of medical services, especially the poor). But as the number of people working in high-skill jobs (it's not just doctors) increases because of this expanded pool of qualified people, the number of people available for low-skill jobs will likewise decrease. And what do you get with decreased supply? Increased prices. The price for low-skill labor will go up, just as the price for high-skill labor will go down, as more people become better educated.

This is all great in theory, but I don't think it works in practice -- or, at least, not in the effecient way you express here (and certainly not in a broad egalitarian manner).

The basic falicy at work here (IMHO) is that your example requires that no one have his finger on the balance to tip it in his favor. But, there are all sorts of ways people do so. For instance, many influential profession groups have as a group worked to make the process of certification and practice within the field as difficult as possible. This in turn artificially lowers supply -- it is already difficult and expensive to just be qualified as, for instance, a doctor or lawyer. Throwing additional barriers in the way of wannbes helps guarantee that more will be discouraged enough to try something else. Likewise, within a particular discipline politics and circumstance can have a great non-economic effect on wages.

Here is a good example from real life I read in the NY Times once (can't remember the business name, however). It was a story on how a particular financial institution restricted the number of new hires into a particular type of job. They did this because supposedly they only wanted the "elite" -- a (well-paid) elite, mind you, that existed because they were artificially limiting supply. And this is despite the fact they received a huge amount of applicants. Normal supply and demand theory tells us that such factors would quickly lower the wage associated with the job, but theory fails whenever human beings muck with the system for their own benefit.

But, even if one assumed that your example really did work perfectly in real life all you'd be arguing is that no matter what that most people need to end up more toward the "have not" end of the spectrum than "have". As you say, there can only be so many doctors, but the "education can save us" philosophy implicitly demands that, in effect, we can all be doctors (or, at least have high paying jobs). Remember, this notion is being used in part as a rhetorical justification for rising inequality -- since people aren't getting the education they need wages are falling. But, for that to be true for labor in general more education would have to raise wages regardless of supply and demand.

Of course, it doesn't work that way which is my whole point. What's being offered as an implicit egalitarian answer to problems of inequality really amounts to saying "make sure you get education so that you can beat the other guy." This not only offers a "solution" whose effect would in fact be limited, but justifies a "blame the victim" response to any criticism of inequality. The idea that there may be systemic social and economic problems at work gets completely ignored.

And overall, the economy becomes much more productive, which lifts standards of living across the board (consider, for example, that having a telephone was once a luxury for the rich but now even many "poor" people have cell phones).

The problem of inequality is about relative wealth levels, not absolute levels. Therefore, talking about the "luxuries" of the poor is utterly beside the point. The danger of inequality comes from a powerful elite/individual being able to use their power at the expense of everyone else. Stalin wasn't a tyrant because he deprived people of their cell phones; he was a tyrant because his massively disproportionate level of power allowed him to dominate an entire society.

Francesca R

25th April 2007, 12:54 PM

Property rights need to be defended for a market to exist because they have intrinsic scarcity. "Intellectual property" has no inherent scarcityI disagree with that. I think the unprotection of intellectual property would cause the creation of new intellectual property to become very scarce, just as the unprotection of physical property would cause that to become scarce. With legal defence, the scarcity of both is lower.

Ziggurat

25th April 2007, 01:45 PM

The basic falicy at work here (IMHO) is that your example requires that no one have his finger on the balance to tip it in his favor. But, there are all sorts of ways people do so. For instance, many influential profession groups have as a group worked to make the process of certification and practice within the field as difficult as possible.

And in this respect, professional organizations operate in a similar manner to unions: they try to drive up prices by limiting the free market for labor. Yes, they can slow the process I describe down, but they cannot halt it.

Here is a good example from real life I read in the NY Times once (can't remember the business name, however). It was a story on how a particular financial institution restricted the number of new hires into a particular type of job. They did this because supposedly they only wanted the "elite" -- a (well-paid) elite, mind you, that existed because they were artificially limiting supply. And this is despite the fact they received a huge amount of applicants. Normal supply and demand theory tells us that such factors would quickly lower the wage associated with the job, but theory fails whenever human beings muck with the system for their own benefit.

First off, all those applicants existed because the job paid so lucratively. If more positions were filled, the sallaries would necessarily drop, and the number of applicants would drop.

Second, if all those rejected applicants could really provide similar labor to the ones actually hired, then either 1) they could get a job at another company (though possibly at lower wages) or 2) there's an untapped market for another company to hire them at lower wages, provide their services at a lower price than the company mentioned, and compete with them in the market. I suspext both are probably happening to some degree. Unless this one company is the only employer for the job in question, then their decision to hire only a select few isn't really restricting the labor market for that job.

But, even if one assumed that your example really did work perfectly in real life all you'd be arguing is that no matter what that most people need to end up more toward the "have not" end of the spectrum than "have".

This is nothing more than a statement that some people will end up with more than others. Welcome to the real world. Every attempt at negating this reality has met with failure, usually disastrous.

As you say, there can only be so many doctors, but the "education can save us" philosophy implicitly demands that, in effect, we can all be doctors (or, at least have high paying jobs).

Well, no. Education can give us all higher paying jobs, and it can help increase prosperity such that everyone really is better off. The poor today have it much better than anyone could possibly have had it 1,000 years ago even if they had achieved a utopian equality.

Remember, this notion is being used in part as a rhetorical justification for rising inequality

Not by me, so I'm not sure your point. I'm not trying to justify rising inequality, nor do I think it's something that needs to or should be justified. Rather, my position is that any attempts to try to change the current system need to be justified, and the proposals I've seen aimed at reducing inequality aren't justified (and many aren't even effective).

Of course, it doesn't work that way which is my whole point. What's being offered as an implicit egalitarian answer to problems of inequality really amounts to saying "make sure you get education so that you can beat the other guy."

Well, not exactly. It's more get an education so you have something of value to offer the world. Beating the other guy does no one any good if neither you nor the other guy can do anything of use, but we're all better off if what you can do is useful and productive.

The problem of inequality is about relative wealth levels, not absolute levels.

Which is why I don't care very much about it, because it largely amounts to jealousy.

Stalin wasn't a tyrant because he deprived people of their cell phones; he was a tyrant because his massively disproportionate level of power allowed him to dominate an entire society.

He was a tyrant because he could use the power of the state arbitrarily against individuals, and because people bought into his class warfare rhetoric. As I said before, none of the great crimes of the 20th century involved too much capitalism, and none of the worst tyrants came to power via commercial success. NONE of them. Most of the great crimes involved too much government power (usually by people claiming to champion the downtrodden), and what you're advocating IS increased power of government. So stop trying to play the doomsday game: it's a loser for free market opponents.

jimbob

25th April 2007, 01:48 PM

That's what the CEO's want you to think, anyway, but there really isn't a great deal of evidence to support it.

I've only seen brief articles on the subject, but the outrageously paid CEOs don't have a better track racord for corporate growth, corporate profits, or share price.

When I buy stock, I look at CEO salaries. I figure if the guy at the top isn't willing to get out of bed for less than two million, he isn't very ambitious. I think there are plenty of people who could do just as well, and are willing to work for a million. If I see a set of executive salaries that are really high, I figure the board of directors obviously is working for the CEO, not for me, and some other sucker can buy that stock.

I don't favor government salary limits on CEOs. I do think shareholders are to blame for the situation.

ETA: I also favor progressive taxation. That way the highly paid CEOs end up paying for guns and butter for the rest of us anyway.

I have heard of studies showing that the CEOs who presided over major collapses are more likely to have been previously fêted in Forbes magazine compared to CEOs who weren't going to preside over collapses. There is an explaination for this: Gushing articles like "The magician does it again -how company x grew 1500% in three years?", imply smoke and mirrors, which is often the case. Conrad Black, Dennis Kowalski, Robert Maxwell (just from the top of my head) all had been celebrated for their acumen.

There are few direct ways that individual shareholders can influence the salaries of CEOs. Boycot the pension funds that hold a larg portion of the stock unless they vote against these? Would that make any practical difference, except to your pension?

I think there is a fundamental measure of a country's wealth, and the health of its society, and that is the life-expectancy distribution. This is not the same as the income distribution because it includes the chance for a safety net.

My definition of a socially healthy society is one that will look after the most vulnerable people and provide this safety net.

It is all very well wishing "to encourage the get up and go spirit", but some people are not able to. In 1985 in Britain, a 45-year old ex-coal miner, would have struggled to find another job. It could have been worse if he had actually bought his house, as to move somewhere else for work would have required him selling up in a locally stagnent market.

These people were not economically mobile.

What is wrong with allowing free association of unions? The original unions were an attempt to balance the power of the employers who used severe legal methods to fight this. Deporting the Tolpuddle Martyrs (http://en.wikipedia.org/wiki/Tolpuddle_Martyrs) was hardly supporting a free market in labour, which I believe is Schneibster's point.

Ocelot

25th April 2007, 02:29 PM

You can't buy a Big Mac from Wendy's. Or a Gucci purse from Reebok.

I can buy from any supplier who cares to make it two all beef patties, onions, sauce, lettuce, cheese, a pickled onion under a sessame seed bun. The recipe is not copyrighted. What they cannot do is call it a Big Mac. As for handbags the Gucci and the Rebook handbag can be functionally equivalent too.

Are you suggesting that a "freer" market is one in which trade secrets, brand value and inventions are completely unprotected? That would be to stifle competition and innovation.

I'm not suggesting that there's anything wrong in principle with protecting copyright. I'm suggesting that calling it a free market is wrong. I'm not suggesting that it not being a free market is wrong. I'm sugegsting that the type of market it has to be differs from a competitive free market in that the supplier has a monopoly and the supply of copyright licences is unaffected by demand.

Only Disney is allowed to choose which sellers can sell goods and services to the public through its stores. They can sell elsewhere but not from a Disney store. Do you think that Disney has a "monopoly" on the use of its real estate which thwarts a free market?

No of course I don't - what's the relavence here?

Nothing I have ever understood about a free market includes the cessation of the ability to create (and thereafter enjoy the revenues from) something unique.

Agreed. Nothing in the free market prevents a seller from doing this. And lets say that I want to create a unique telephone which avails itslef of an encryption algorithm copyrighted by someone else. Nothing in a free market should prevent me from doing so. In a free market I could buy rights for that encryption algorythm at a price dictated by the laws of supply and demand. The market we have is quite rightly not a free market. It can't be demand is finite, supply is unlimited. The copyright owner of the encryption algorithm can therefore prevent me from creating and enjoying thereafter the revenues from my telephone in favour of creating his own telephone and locking me out of the market. My freedom to buy is limited by there only being one supplier who may also choose to be my competition.

Once again, there's nothing intrinsically wrong with this. I'm not suggesting that the copyright holder be forced to sell me a licence. This would be no more of a freer market. The fact that is isn't a free market, that by it's very nature it cannot be a free market is not a problem. The sky daddie and his zombie bastard never structured the universe such that some comandment to have no other markets but competitive free markets was rewarded by eternal paradise and failure to obey was punished with eternal damnation and torture. Theer's not fundamental inviolate article of faith that says that free markets are the best option in all imaginable cases.

The fact is that the competitive free market model with prices being fixed by supply and demand does not describe the copyright market because the buyer is not free to shop around. I can imagine not way of correcting so that the buy does have that freedom nor can I think of a reason to do so.

I can see areas where current copyright regualtions seem to bias the copyright holders over the end users and harm that this does to society but free market principles are not the solution nor is pretiending that the current system represents a free market.

I agree it is regulated. Free markets are regulated. At its simplest, the regulation consists of protected property rights and legally binding contracts. This regulation pervades the freest market. What do you imagine would be the outcome if these principles were swept aside?

I don't want them swept asside. I recognise that they've been added to with anti trust regualtions that apply inherrently more to copyright where each product is effectively a monopoly.

I contest that if you cannot see that the copyright market does not fit the free market model without such regualtions then you must surely see the spirit of a command econmy in such addition regulations.

What do you mean "impose"? A seller is free to set any price, but not able to coerce a buyer to pay it (as opposed to not trading). That is not imposition in my book. If no trade takes place, then there is no price that clears the market, and the notion of "fair" is moot.

Whoops mea culpa. First Jaggy said...

What do you mean by "fair price"? If you and the owner of what you want to use do not agree that a price is fair, then no deal is done. What you seem to want is the right for you to decide on a price and impose it on the seller - seems to use an odd definition of "fair".

And I replied

A price set by supply and demand in a competitive free market would be a fair price. A price set by an independent third party regulator with anti trust concerns would be a fair price. A price set by a buyer and then imposed on the seller would be unlikely to be a fair price. I don't know why you would assume that's what I want.

What I meant to type was "A price set by a seller and then imposed on the buyer" i.e. what Jaggy thought I might be of suggesting was a fair price.

I then re-read what I'd written and went on to give and example of what I'd written, conflating it for the actual straw man it had been suggested I was proposing.

Nontheless both cases are true - a price set soley by the buyer is unfair whether it's part of a forced transaction or whether the unfairness of the price leads to the trade not taking place. The same is true of a price set solely by the seller. A fair price is one agreed by both parties or one imposed by an independant thrid party where it is in the interests of society to adjudicate an impasse that cannot be resolved by the free market.

Ocelot

25th April 2007, 02:59 PM

The cost is lost revenue, which the buyers would agree to pay if they were not able to obtain the product free. It is not negligible, nor imaginary.

I'm not advocating piracy here. I'm pointing out that when a transaction take place supply is unaffected. When is sell you a chair it costs wood and labour. When I sell you a licence to use the design for a chair it costs me next to nothing - I still have design to sell again.

You seemed to.

...

Again, you seemed to, to me.

You know what the problem is. And it's all my fault. The irony of my first statement on copyright was not apparent in printed form when I read it back to myslef in the context of a forum so full of nutjobs.

I don't seriously think that Disney should be forced to sell licences for the use of Mickey Mouse in porn. I don't think that this would make the market either better or freer. I think that the concept of a free market describes a situation where if the Pornographer couldn't get what they wanted from Disney they are free to go elsewhere.

By virtue of the nature of copyright that is impossible. Therefore the market from the buyer's perspective is not a free market. There are unavoidable restrictions.

A company may protect its own interests by denying competitors access to vital copyrights and patents. The free market does not step in the help the competitor source this intelectual property elsewhere, where appropriate regulators often step in for the benefit of society. However in same cases they don't when perhaps they should do or when they do they take so long over it that by the time they reach a decision it's too late for the competition.

Schneibster

25th April 2007, 06:02 PM

But that is not the definition of the technical term "free market".Hmmm. OK, so what is the definition of a free market (not a free labor market) with respect to the individual? Do companies not violate that definition in the same way as unions do in the labor market?

Do not presume to tell Dr Adequate what his ideas are, for he is unsubtle and quick to anger.It was not my intent to be abrasive or impolite; I was merely pointing out the above. Pardon me for putting words in your mouth (or ideas in your head).

I am sympathetic to your left-wing views; nonetheless, an effectively unionised market in labor is not a free market in labor --- which is the whole damn point of unionising.Well, I'm not so sure about that. Granted the first idea of unionizing is to get more money, there are many other issues dealt with- working conditions primarily. These may or may not represent market trade items, though they are often the subject of negotiations.

Meadmaker

25th April 2007, 07:06 PM

Ocelot,

I think you pretty much have it figured out. A couple of specific comments.

So why do they accept what are effectively lower wages for the same day's work?

Because they have no options. They have to eat, at least something. They can starve, or work for subsistence pay. The employer doesn't need to pay them any more than what is needed to keep them alive, and picking coffee beans.

If I had to guess I'd assume that the chicken just didn't get imported.

Exactly. Why not? Because the peasants don't have any money. They can't import food, because international producers want money. Only the landowner has money. He imports food, but he eats it. Then, he has lots of money left over, so what does he do? He imports luxury goods.

As long as there is surplus labor, and a collection of wealth among a few, this situation will continue. The arable land will be used to produce luxuries, which will be traded for other luxuries, but the peasants won't participate in that economy at all.

Lets take a less drastic example than third world coffee production. Let's look at our own grocery stores. You will find that over the last couple of years, food prices have risen faster than the overall level of inflation. Why? Well, that's a complicated question, and I'm sure there are multiple answers, but one contributor is ethanol. We're producing more ethanol. Ethanol provides transportation. That doesn't seem so much like a luxury, but it is. Rich people use more gas than poor people. They drive bigger cars farther. On the other hand, they eat about the same amount. A farmer can grow food for a poor person, or fuel for a rich person. Once grain becomes cheaper than oil as a fuel source, people will buy the grain for fuel, which means less food available, and that means higher food prices. It has already begun here.

The more concentrated the wealth is at the top, the more pronounced the problem will be, because the demand for food will be high, but the demand for food from people who have money will be lower. I may demand just as much food as you do, but if I make more money, I'll buy enough food, and then use my leftover money to buy your food, and fill my jet-ski's fuel tank with it.

COLOR=black]In such a process how have my assumptions on what a free market might be been deficient enough to produce a happy little world when reality is so different.

The problem is that the free market is a fiction. There is not, never has been, and never will be a free market, and you need look no farther than Adam Smith, who gave us a lot of the terms we use today, to find out why. He explained that a totally free market could only exist in the presence of perfect competition, and that perfect competition would never exist.

If the free market truly existed, wealth would not concentrate at the top. It seems reasonable to assume that some workers are more productive than others, and that in a free market, that would mean that some people would earn more money, and thus get a bigger share of goods than others. However, it is absurd to say that some workers are thousands of times more productive than the average worker.

Francesca R

26th April 2007, 02:02 AM

I'm not suggesting that there's anything wrong in principle with protecting copyright. I'm suggesting that calling it a free market is wrong.I understand you are not saying copyright is wrong. We appear to agree on its relative merit. And this is semantic perhaps, but I do regard it as freer than a market where copyright does not exist. I regard the latter as less free.

As for why I understand no copyright protection to be less free: a free transaction is one that is entered voluntarily—by choice—by the buyer and the seller. For it to be voluntary it is necessary that the buyer and the seller can both walk away if they are not satisfied with the terms of trade offered by the other party. If the good in question can be acquired by the buyer without the seller agreeing to it, on unsastisfactory terms to the seller (EG—I copy your chair design) then the transaction was not voluntary on the seller's part. The seller was compelled to "sell" for zero consideration.

The sky daddie and his zombie bastard never structured the universe such that some comandment to have no other markets but competitive free markets was rewarded by eternal paradise and failure to obey was punished with eternal damnation and torture. Theer's not fundamental inviolate article of faith that says that free markets are the best option in all imaginable casesAs far as what the "sky daddy" did—the laws of nature (or the jungle, if you like) are such that a good which is not physical—but which has value to people nonetheless—can be acquired without the provider voluntarily giving it and without the use of force. If one thought that free market meant "left to the laws of nature" then copyright protection is not free. But markets are human constructs not naturally occuring things. Markets where you have to pay for a chair, rather than go and steal it if you have the capability, are also not free under the laws of nature.

sphenisc

26th April 2007, 02:31 AM

The only minimum wage that exists is $0.

We used to dream of a wage of $0.

FOURTH YORKSHIREMAN:
Right. I had to get up in the morning at ten o'clock at night half an hour before I went to bed, drink a cup of sulphuric acid, work twenty-nine hours a day down mill, and pay mill owner for permission to come to work, and when we got home, our Dad and our mother would kill us and dance about on our graves singing Hallelujah.

:) [Monty Python's Flying Circus]

Francesca R

26th April 2007, 02:42 AM

I can buy from any supplier who cares to make it two all beef patties, onions, sauce, lettuce, cheese, a pickled onion under a sessame seed bun. The recipe is not copyrighted. What they cannot do is call it a Big Mac. As for handbags the Gucci and the Rebook handbag can be functionally equivalent too.Agreed. However, functionality is not the only source of value to the market. People do not tend to buy Gucci bags solely for their storage capacity, portability or the material they are made of. The presence of the trademarked insignia has value in itself to many (perhaps not to Naomi Klein). You can't shop around for the unique brand value from other suppliers. Does this make the market not a free one, to your understanding?

I think that the concept of a free market describes a situation where if the Pornographer couldn't get what they wanted from Disney they are free to go elsewhere.Per your previous reply—the porn company could shop around for a functionally equivalent item elsewhere (IE a cartoonist's picture of a mouse), but not for the brand value.

I am not seeing a difference between your Disney/Electric Blue scenario and my Gucci/Reebok setup. Is one freer than the other?

69dodge

26th April 2007, 03:31 AM

As for why I understand no copyright protection to be less free: a free transaction is one that is entered voluntarily—by choice—by the buyer and the seller. For it to be voluntary it is necessary that the buyer and the seller can both walk away if they are not satisfied with the terms of trade offered by the other party. If the good in question can be acquired by the buyer without the seller agreeing to it, on unsastisfactory terms to the seller (EG—I copy your chair design) then the transaction was not voluntary on the seller's part. The seller was compelled to "sell" for zero consideration.

Aren't you assuming what you want to prove?

One could just as easily argue as follows:

If the chair designer knew, before he designed the chair, that anyone could copy his design once he designed it, and he chose to design it anyway, presumably because a buyer or group of buyers offered him sufficient payment, then that was his free choice. He chose to sell the time and effort of his, needed to create the design.

Subsequent copying of the design by others isn't a transaction involving a buyer or seller. It's just copying.

the laws of nature (or the jungle, if you like) are such that a good which is not physical—but which has value to people nonetheless—can be acquired without the provider voluntarily giving it and without the use of force. If one thought that free market meant "left to the laws of nature" then copyright protection is not free. But markets are human constructs not naturally occuring things. Markets where you have to pay for a chair, rather than go and steal it if you have the capability, are also not free under the laws of nature.

Paying money for receiving a valuable chair to the person who loses the chair in the transaction seems not quite the same as paying money for copying a valuable design to someone who has, after the copying, precisely what he had before it. (Whether what the designer has, includes the right to prevent copying by others, depends on what the copyright laws are. But in any case, it's the same before and after.)

Jaggy Bunnet

26th April 2007, 04:38 AM

[A price set by supply and demand in a competitive free market would be a fair price. A price set by an independent third party regulator with anti trust concerns would be a fair price. A price set by a buyer and then imposed on the seller would be unlikely to be a fair price. I don't know why you would assume that's what I want.

You talk about Microsoft being unwilling to sell you a licence or pricing it out of the market. In other words what they believe is a fair price is not what you believe a fair price is. You want somebody to require them to sell you a licence at a price that they would be unwilling to sell you a licence at without compulsion. I disagree that you can call that a "fair" price.

Let's offer up an example.

Here in the UK we have a Satellite TV carrier called BskyB owned by Rupert Murdoch. We also have a number of SKY TV channels also owned by Rupert Murdoch. We have a number of Cable TV Distributors not owned by Rupert Murdoch. They pay him for SKY TV channels.

One of these is called Virgin Media and is owned by Richard Branson. They too are a Cable TV carrier offering other people's channels. They are picking up market share from BSkyB with their "new and exiting range of interactive services"

BskyB see Virgin media as a competitor. Sky TV doubled the price it was asking Virgin Media for it's Sky TV offering. Virgin refused so no longer carry the Sky Channels. BskyB then launched a marketing campaign directed at Virgin Media Cable Customers to it's satellite network on the basis that they can no longer receive Sky TV channels on Virgin Media.

Virgin media then go crying off to the broadcasting regulator Offcom claiming that Rupert Murdoch is using monopoly powers, to interfere with the free market. Note that other cable carriers have not complained - presumably they still persist at the old pricing as they are not the ones picking up market share from BSkyB.

Anything to back up this assertion that they pay a different price to that offered to Virgin Media and that this is because Sky does not see them as a threat? I can see a number of possible alternative explanations for why they can still offer Sky while Virgin don't:

They entered into deals at the old price which have not yet expired;
They entered into new deals at the new price offered to Virgin Media judging that the price was acceptable;
They have negotiated new deals with Sky at prices above those offered to Virgin Media because they have less bargaining power;
They have negotiated new deals with Sky at lower prices because they have better negotiators.

[COLOR=black]I don't think a price set by Richard Branson would be fair. Equally I don't think that the price set by sky can have been fair otherwise the transaction would have gone ahead. The price Sky is offering Virgin's cable competitors presumably that's fair.

But neither get to set the price. If they don't do a deal Sky loses money because its advertising is less valuable (less viewers) and Virgin lose money because it loses subscribers. What price Sky agree with other suppliers is not directly relevant.

In a competitive free market supply and demand could set the price every time. If Branson didn't like what Murdoch was charging he could by an exactly equivalent product of another supplier.

Not if he can't find one willing to sell at the price he is willing to pay.

Ocelot

26th April 2007, 07:30 AM

You talk about Microsoft being unwilling to sell you a licence or pricing it out of the market. In other words what they believe is a fair price is not what you believe a fair price is. You want somebody to require them to sell you a licence at a price that they would be unwilling to sell you a licence at without compulsion. I disagree that you can call that a "fair" price.

So when regulators do intervene alleging anticompetitive business practices would you say that the intervention was in all cases unfair?

Why? If you reason is because it violates free market principles then I have to ask you firstly was it a free market beforehand and secondly why you are placing the ideals of a free market over what is beneficial to society? Surely we only use free market principles where they are possible in order to maximize benefit to society? If such principles fail in that regard we should try something else?

Anything to back up this assertion that they pay a different price to that offered to Virgin Media and that this is because Sky does not see them as a threat? I can see a number of possible alternative explanations for why they can still offer Sky while Virgin don't:

They entered into deals at the old price which have not yet expired;
They entered into new deals at the new price offered to Virgin Media judging that the price was acceptable;
They have negotiated new deals with Sky at prices above those offered to Virgin Media because they have less bargaining power;
They have negotiated new deals with Sky at lower prices because they have better negotiators.

It's Richard Branson's assertion not mine. I'm happy to wait and see what the regulator decides. My only point is that it is possible that this is the reason that Sky TV attempted to price Virgin Media out of the market. That this sort of eventuality is a possibility. That is sufficient for my argument.

But neither get to set the price. If they don't do a deal Sky loses money because its advertising is less valuable (less viewers) and Virgin lose money because it loses subscribers. What price Sky agree with other suppliers is not directly relevant.

Both companies knew they were entering a regulated market. Both voluntarily entered the market knowing full well that Ofcom could step in and change their pricing. That's fair isn't it?

In fact who cares if it's fair or not. My point is that if as is quite possible and has happened in countless similar situations the price is set by a regulator and not by the laws of supply and demand it's clearly not a free market.

In the Gucci bag market I couldn't charge white women twice as much as black women. All that'd happen is that the black women would buy up the bags and sell them on to white women. In other words market forces would intervene.

That can't happen with the Cable TV channels. Market forces are not able to intervene in the same way due to a fundamental difference in the type of product making a free market impossible.

In a competitive free market supply and demand could set the price every time. If Branson didn't like what Murdoch was charging he could by an exactly equivalent product of another supplier.

Not if he can't find one willing to sell at the price he is willing to pay.

What on earth has that got to do with whether the copyright market is is a free market or not?

In a free market Branson could find another supplier. Whether they are willing to sell at the price he is willing to pay is besides the point. The fact that he could go elsewhere in a free market is what helps the laws of supply and demand set prices. The fact that he can't go elsewhere in the copyright market means that fair or not the market isn't free.

Are you deliberately missing the point? If there was an exactly equivalent product available from other suppliers or even the same product from the same end supplier, available through various independent supply channels then we'd have a free market where supply and demand would set a price available for all. We don't. That's my point. We have one supplier, resale is heavily restricted, the supplier can choose to set different prices for different customers. This permits predatory pricing.

One of things that makes the free market good is that suppliers must compete with one another.

In the copyright market suppliers often don't have to compete with one another.

This is one of the many reasons that the copyright market doesn't exhibit the all the benefits of a free market.

Francesca R

26th April 2007, 07:47 AM

In the copyright market suppliers often don't have to compete with one another.Indeed they have to compete. Buyers still have a choice about whether to buy from them or not. Their products can be still be substituted by different products from competitors. The establishment of uniqueness does not remove competition. Unique products (whether protected by copyright law or simply hard to copy) are susceptible to disruptive competition 24 hours of every day.

Francesca R

26th April 2007, 08:51 AM

Ocelot—I re-read your comments that "a free market is impossible" in what is currently copyright material, given your requirement of what constitutes free. The illustration below attempts to show this.

XYZ R&D Co: "OK I've designed your perpetual motion machine. The plans are on this disc. That'll be two squillion pounds please . . ."

Buyer: "That's a bit steep. I think the firm across the street would charge me less. I'm going to shop around."

XYZ R&D Co: "What? You can't 'shop around'. Nobody else knows how to build it. It's our invention and it's a secret."

Buyer: "Well you can't keep it secret. That's anti-competitive! I need to be able to get the best price. You have no right to keep the plans to yourself. Send a copy to a few other firms now please. There's no loss to yourself. I'm sure they'd pay you the cost of the CD-ROM. You still have the invention to sell to buyers, but you have to compete. If you don't, you're a monopoly."

XYZ R&D Co: "Shucks, you're right. I don't want the authorities onto me. Tell you what, I'll post it on the net and run a story on tonight's news. That'll save the bother of recouping distribution costs and distribution isn't my core competency."

Buyer: "Cheers"

Buyer: [right click—save as . . .] "That was easy. The market price for this machine design appears to be nothing!"

XYZ R&D Co: "Oops I'm out of this business, it's a mug's game. I wonder what a burger-flipper makes . . ."

Thus, the market is destroyed. Market forces cannot set any price other than zero.

Now with Sky TV, would it be a step towards market freedom to allow a rival broadcaster to record all of Sky's programmes off-air, and broadcast them on its own airwaves with a delay of 0.2 seconds, charging rather less? This doesn't stop Sky selling the content, but introduces fiercer competition that benefits the customer.

(I understand that you would probably not be in favour of these scenarios. I want to understand why you think they are freer.)

Jaggy Bunnet

26th April 2007, 09:45 AM

So when regulators do intervene alleging anticompetitive business practices would you say that the intervention was in all cases unfair?

Not if there was in fact anti-competitive behaviour. I don't see that there is in the example you gave. If Virgin want to market Sky programmes, they have to pay Sky. If they don't they are perfectly free to make their own content.

Are you deliberately missing the point? If there was an exactly equivalent product available from other suppliers or even the same product from the same end supplier, available through various independent supply channels then we'd have a free market where supply and demand would set a price available for all. We don't. That's my point. We have one supplier, resale is heavily restricted, the supplier can choose to set different prices for different customers. This permits predatory pricing.

One of things that makes the free market good is that suppliers must compete with one another.

[COLOR=black]In the copyright market suppliers often don't have to compete with one another.

Why do you require an exactly equivalent product? Should Petrus be regulated in the amount they charge for their wine as otherwise they are acting as a monopoly or does the fact that alternative products (i.e. NOT exact equivalents, but competing products) exist mean there is a free market operating?

So Virgin can't show the newest episodes of the Simpsons - big deal. There is a vast amount of alternative programming out there they can buy or they can make their own.

Ocelot

26th April 2007, 10:47 AM

Why do people keep insisting that I want copyright laws removed?

You are both absolutely right. Removing copyright legislation would be daft.

How many time to I have to point out that I agree that this would be silly.

How many times do you think you can get away with pretending that this is what I’m saying before I start arguing against your blatantly false assertion that paedophilia is OK.

How many times must I point out that my position is that a slavish adherence to the free market as an ideal is what would require the removal of such artificial restrictions on the supply side of the equation.

My position is not that the copyright market should be a free market.

It is that the copyright market is not a free market.

Do you somehow read "such and such is not a free market" and automatically think that the person is suggesting that it must be changed so that it is a free market?

If so then perhaps you can just give me a number of times I have to repeat myself to break that delusion.

It is a myth that free markets are always the best option
In fact free markets are not always possible
In a free market there is no government regulation affecting supply.
Without government regulation the creator of copyrightable material would find it enormously more difficult to profit from their work.
The defining characteristic of such material is that it is possible for it to be duplicated and permeate for free.
As such there would be no market.
This gives little incentive for creative thinking.
Therefore the government regulates the supply of copyrightable material granting sole ownership to the creator and regulating for non transferable licences to be issued only by this sole owner.
This is a government regulation affecting supply.
This means that the market thus created does not fit the description of a free market as a free market has no government regulation affecting supply.
At most it's a reasonable approximation of a free market.
However that's not a problem because it is a myth that free markets are always the best option
In fact free markets are not always possible
In a free market there is no government regulation affecting supply.
Without government regulation the creator of copyrightable material would find it enormously more difficult to profit from their work.
The defining characteristic of such material is that it is possible for it to be duplicated and permeate for free.
As such there would be no market.
This gives little incentive for creative thinking.
Therefore the government regulates the supply of copyrightable material granting sole ownership to the creator and regulating for non transferable licences to be issued only by this sole owner.
This is a government regulation affecting supply.
This means that the market thus created does not fit the description of a free market as a free market has no government regulation affecting supply.
At most it's a reasonable approximation of a free market.
However that's not a problem because it is a myth that free markets are always the best option
In fact free markets are not always possible
In a free market there is no government regulation affecting supply.
Without government regulation the creator of copyrightable material would find it enormously more difficult to profit from their work.
The defining characteristic of such material is that it is possible for it to be duplicated and permeate for free.
As such there would be no market.
This gives little incentive for creative thinking.
Therefore the government regulates the supply of copyrightable material granting sole ownership to the creator and regulating for non transferable licences to be issued only by this sole owner.
This is a government regulation affecting supply.
This means that the market thus created does not fit the description of a free market as a free market has no government regulation affecting supply.
At most it's a reasonable approximation of a free market.
However that's not a problem because it is a myth that free markets are always the best option
In fact free markets are not always possible
In a free market there is no government regulation affecting supply.
Without government regulation the creator of copyrightable material would find it enormously more difficult to profit from their work.
The defining characteristic of such material is that it is possible for it to be duplicated and permeate for free.
As such there would be no market.
This gives little incentive for creative thinking.
Therefore the government regulates the supply of copyrightable material granting sole ownership to the creator and regulating for non transferable licences to be issued only by this sole owner.
This is a government regulation affecting supply.
This means that the market thus created does not fit the description of a free market as a free market has no government regulation affecting supply.
At most it's a reasonable approximation of a free market.
However that's not a problem because it is a myth that free markets are always the best option
In fact free markets are not always possible
In a free market there is no government regulation affecting supply.
Without government regulation the creator of copyrightable material would find it enormously more difficult to profit from their work.
The defining characteristic of such material is that it is possible for it to be duplicated and permeate for free.
As such there would be no market.
This gives little incentive for creative thinking.
Therefore the government regulates the supply of copyrightable material granting sole ownership to the creator and regulating for non transferable licences to be issued only by this sole owner.
This is a government regulation affecting supply.
This means that the market thus created does not fit the description of a free market as a free market has no government regulation affecting supply.
At most it's a reasonable approximation of a free market.
However that's not a problem because it is a myth that free markets are always the best option
In fact free markets are not always possible
In a free market there is no government regulation affecting supply.
Without government regulation the creator of copyrightable material would find it enormously more difficult to profit from their work.
The defining characteristic of such material is that it is possible for it to be duplicated and permeate for free.
As such there would be no market.
This gives little incentive for creative thinking.
Therefore the government regulates the supply of copyrightable material granting sole ownership to the creator and regulating for non transferable licences to be issued only by this sole owner.
This is a government regulation affecting supply.
This means that the market thus created does not fit the description of a free market as a free market has no government regulation affecting supply.
At most it's a reasonable approximation of a free market.
However that's not a problem because it is a myth that free markets are always the best option
In fact free markets are not always possible
In a free market there is no government regulation affecting supply.
Without government regulation the creator of copyrightable material would find it enormously more difficult to profit from their work.
The defining characteristic of such material is that it is possible for it to be duplicated and permeate for free.
As such there would be no market.
This gives little incentive for creative thinking.
Therefore the government regulates the supply of copyrightable material granting sole ownership to the creator and regulating for non transferable licences to be issued only by this sole owner.
This is a government regulation affecting supply.
This means that the market thus created does not fit the description of a free market as a free market has no government regulation affecting supply.
At most it's a reasonable approximation of a free market.
However that's not a problem because it is a myth that free markets are always the best option
In fact free markets are not always possible
In a free market there is no government regulation affecting supply.
Without government regulation the creator of copyrightable material would find it enormously more difficult to profit from their work.
The defining characteristic of such material is that it is possible for it to be duplicated and permeate for free.
As such there would be no market.
This gives little incentive for creative thinking.
Therefore the government regulates the supply of copyrightable material granting sole ownership to the creator and regulating for non transferable licences to be issued only by this sole owner.
This is a government regulation affecting supply.
This means that the market thus created does not fit the description of a free market as a free market has no government regulation affecting supply.
At most it's a reasonable approximation of a free market.

If that's not enough I can just carry on repeating myself.

Francesca R

26th April 2007, 12:59 PM

Why do people keep insisting that I want copyright laws removed?People don't. You do not read their posts perhaps:

I understand you are not saying copyright is wrong. Now:

[ . . . snippity-snippity-snip . . . ]

In a free market there is no government regulation affecting supply.

[ . . . snippity-snippity-snip . . . ]
Thank you for your definition of free finally. This is where we are at odds. My free market has voluntary transactions. Involuntary ones are theft and are outlawed.

(Outlawing the theft of physical property is also government regulation affecting supply.)

Ziggurat

26th April 2007, 01:16 PM

Thank you for your definition of free finally. This is where we are at odds. My free market has voluntary transactions. Involuntary ones are theft and are outlawed.

That's an insufficient definition, because your definition of a free market says nothing about government preventing otherwise voluntary transactions. And there are certainly ways that government can prevent the operation of a free market by forbidding otherwise voluntary transactions, not just by forcing or permitting involuntary ones.

(Outlawing the theft of physical property is also government regulation affecting supply.)

Well, no. It's government regulating the transfer of ownership (namely limiting it to voluntary transfers only) - it has NO direct (though massive indirect) effect on supply at all.

Ocelot

26th April 2007, 04:09 PM

I wasn't attempting to define a free market. I merely listed on of it's characteristics. A full definition would be

A free market is a market where the price of an item is arranged by the mutual consent of sellers and buyers, with the supply and demand of that item not being regulated by a government.

Furthermore while a free market necessitates that government does not regulate supply, demand, and prices, it also requires the traders themselves do not coerce or defraud each other, so that all trades are morally voluntary.

Where do we disagree?

Is it with the definition? Do you not see government regualation of the supply of a product as precluding a free market?

Or is it interpretation? Do you not see copyright legislation as regulation of supply?

Or perhaps something else?

Francesca R

27th April 2007, 12:48 AM

Where do we disagree?

[ . . . ]

Or perhaps something else?Don't know. I think you think that a market with copyrights is not free, but that a free market in the realm of (what is now) copyright cannot exist. The government could repeal copyright law, but then involuntary transfers would abound. It might not be fraud, but the use of (formerly copyright) material for free would not be by consent.

When you alleged copyright was not free, I wanted to understand what would make it free to you (already knowing that you were not opposed to copyright). Am I now to understand that "nothing" would make it free because the conditions for freedom cannot be fully satisfied at all?

If that is the case, which scenario represents the closest approach to freedom?

Francesca R

27th April 2007, 12:50 AM

That's an insufficient definition, because your definition of a free market says nothing about government preventing otherwise voluntary transactions. Agreed.

Well, no. It's government regulating the transfer of ownership (namely limiting it to voluntary transfers only) - it has NO direct (though massive indirect) effect on supply at all.Call it direct or indirect. If the chairs of a chair-maker can be possessed by others without her consent, she will make fewer chairs.

Ziggurat

27th April 2007, 04:54 AM

Call it direct or indirect. If the chairs of a chair-maker can be possessed by others without her consent, she will make fewer chairs.

That's an indirect effect, and the distinction matters. The direct effect is that she will have fewer chairs if someone steals from her (or from someone who doesn't make chairs but owns them). Which is not the case with intellectual property, and which is why intellectual property is fundamentally different than physical property.

Jaggy Bunnet

27th April 2007, 05:17 AM

That's an indirect effect, and the distinction matters. The direct effect is that she will have fewer chairs if someone steals from her (or from someone who doesn't make chairs but owns them). Which is not the case with intellectual property, and which is why intellectual property is fundamentally different than physical property.

But she doesn't make chairs so that she has chairs, she makes chairs to sell so that she has money.

Stealing her chairs deprives her of that money in exactly the same way that stealing intellectual property deprives the person who created it of the money they would have received from a sale.

Ziggurat

27th April 2007, 05:47 AM

But she doesn't make chairs so that she has chairs, she makes chairs to sell so that she has money.

Stealing a chair from a chair maker is legally no different from stealing a chair from a non-chair-making chair owner. The critical component of theft is that the owner has involuntarily lost the object. What they planned on doing with that object (sell it, sit on it, use it for firewood) or how they acquired it in the first place (made it, bought it, traded a goat for it, got it as a gift) is beside the point for that purpose.

Jaggy Bunnet

27th April 2007, 05:55 AM

Stealing a chair from a chair maker is legally no different from stealing a chair from a non-chair-making chair owner. The critical component of theft is that the owner has involuntarily lost the object. What they planned on doing with that object (sell it, sit on it, use it for firewood) or how they acquired it in the first place (made it, bought it, traded a goat for it, got it as a gift) is beside the point for that purpose.

The effect however is that in both cases (the chair and the copyright) the owner has lost out on the income they would have received from the expected sale - i.e. the outcome is the same for both the chair maker and the copyright owner.

Ziggurat

27th April 2007, 06:04 AM

The effect however is that in both cases (the chair and the copyright) the owner has lost out on the income they would have received from the expected sale - i.e. the outcome is the same for both the chair maker and the copyright owner.

Yes, but that's a secondary effect - which is why you're only arguing about theft from producers, and not from consumers, whereas my position makes no distinction. I'm not arguing against copyright, I'm arguing that intellectual property is not the same thing as physical property. Because it isn't (and god forbid we actually ever treat them the same, because that would mean no expiration for copyrights or, even worse, for patents).

Ocelot

27th April 2007, 06:18 AM

Don't know. I think you think that a market with copyrights is not free, but that a free market in the realm of (what is now) copyright cannot exist. The government could repeal copyright law, but then involuntary transfers would abound. It might not be fraud, but the use of (formerly copyright) material for free would not be by consent.

When you alleged copyright was not free, I wanted to understand what would make it free to you (already knowing that you were not opposed to copyright). Am I now to understand that "nothing" would make it free because the conditions for freedom cannot be fully satisfied at all?

That's pretty much it.

If that is the case, which scenario represents the closest approach to freedom?

I guess that would depend on which metric you used to measure closeness to freedom. Which diversion from an ideal free freemarket is least offensive. That's clearly subjective. One person might be more offended by the idea that the creator of an idea recieves little recompense for their creativity. Another person might be more offended by the idea that a person who can put the idea to use is restricted by the creation of an artificial market. As I said the current system is at best a close approximation to the free market ideal.

However, that said I'm not particularly interested in which solution is the closest approach to freedom.

I'd rather consider which approach results in the maximum utility for the market it serves.

In cases where a free market is possible, the maximum utility is often preserved by restricting monopolies and monopsonies. I don't much care that this might be considered to violate free market principles: monopolies themselves might be considered an equal violation. There's an economic imperitive for a monopoly to exploit their inate ability to coerce other traders.

I consider copyright and intellectual property legislation to often create a special case of monopoly.

In principle I have no better method for incentivising creativity. However there are a number of variable present in the current implentation about which I have reservations.

- Preditory pricing.
- Export restrictions in "Militarily sensitive" technology.
- The ever increasing duration of protected content.

As such I wouldn't call this system an approach that results in the maximum utility for the market it serves. However something quite close to it might be.

Francesca R

27th April 2007, 06:27 AM

The direct effect is that she will have fewer chairs if someone steals from her (or from someone who doesn't make chairs but owns them).Actually, that does not "directly" affect supply (the total stock of chairs), just her supply. The only way it will affect supply is influencing the manufacture of more chairs.

69dodge

27th April 2007, 07:29 AM

But she doesn't make chairs so that she has chairs, she makes chairs to sell so that she has money.

Stealing her chairs deprives her of that money in exactly the same way that stealing intellectual property deprives the person who created it of the money they would have received from a sale.

The effect however is that in both cases (the chair and the copyright) the owner has lost out on the income they would have received from the expected sale - i.e. the outcome is the same for both the chair maker and the copyright owner.

It sounds like you are taking it for granted that copyright laws are in place. Is that correct? I thought the discussion was more about comparing how things would be if they were in place with how things would be if they weren't.

If we are going to talk about how things would be if copyright laws weren't in place, we ought to take the idea seriously on its own merits. No one would be losing out on an expected sale, because they wouldn't be expecting any such sale, because they and everyone else would know that anyone can freely and legally copy the material in question.

On the other hand, supposing that copyright laws are in place and that everyone knows it, you're still comparing apples and oranges. If I steal a chair from someone who was planning to sell it, then, first of all, she won't get any money for it from me, and second of all, she won't get any money for it from anyone else either because she no longer has the chair to sell. If I illegally copy her copyrighted material, she won't get any money for it from me, but she can still get money for it from other, more law-abiding, people.

Or, here's a slightly different way to look at the difference, where everyone is law-abiding: Let's compare me buying the chair with me not buying it. And then let's compare me buying a copy of some copyrighted stuff with me not buying it. If I buy a chair from her, she has my money but she also has one less chair to sell to others. If I don't buy it, she doesn't have my money but she can sell that chair to someone else. The only difference to her, on the other hand, between me buying a copy of her copyrighted stuff or me not buying it, is whether she has my money or not. She will be able to sell just as many copies to other people, whether I buy a copy or not.

69dodge

27th April 2007, 07:52 AM

I disagree with that. I think the unprotection of intellectual property would cause the creation of new intellectual property to become very scarce, just as the unprotection of physical property would cause that to become scarce. With legal defence, the scarcity of both is lower.

By "scarcity" he meant the number of copies of a particular copyrighted work, not the number of different works.

Anyway, creating a lot of new intellectual property is a worthy goal, but so is having a lot of people use it once it's been created. The purpose of creating it is for people to use it, after all. I mean, big picture-wise. Of course, often the purpose any particular creator has in mind is simply to make money for himself.

Iamme

27th April 2007, 03:53 PM

Can anything be done about the widening income gap (http://select.nytimes.com/gst/abstract.html?res=F00917FC3B540C7A8EDDAA0894DF4044 82)in the U.S. (between rich and poor (http://forums.randi.org/showthread.php?t=75619&highlight=income+disparity))? Should anything be done about it?

When CEOs make hundreds of times more than the average worker, is that because they're hundreds of times smarter and/or harder working than the lower level workers? Is 500 times too much? 1,000 times? 100 times?

When a TV star or athlete makes a thousand times more than a school teacher or soldier, is that a necessary evil of capitalism? Or do they deserve to make that much more money? Or something else?

From NOW (http://www.pbs.org/now/politics/executive2.html):

I don't have anything against people making a lot of money. But it seems obscene to have millions working full time without health care, barely scraping by, in one of the richest countries in the world.

It's just a byproduct of how our money system is set up.

If someone has national exposure and everyone nationally likes the person exposed...if say that person only charges a penny per person...look how much money that person will get. And each person contributing considers this a drop in the bucket without considering the receiving person could be getting rich because EVERYONE else is also paying a penny. Most people only care about what THEY have to pay.

Now let's up the ante to let's say what people will pay to see a professional game. $75? You might say, "Heck..*I'LL pay that to see Peyton Manning! Heck yeah!" Now look at what an 80,000 seat stadium times $75 minimum would be!

Now step up the ante even MORE. Involve advertisers who know millions are watching the game on tv, and even though they aren't paying the $75 to see the game in person, the advertiser is willing to pay thousands...millions to the network to air their product. Then the footbal league gets money out of that.

In the end, the player is paid millions. And the poor school teacher who maybe spent thousands and thousands on a college degree is now ONLY making $40,000 a year.

Fair?

That is not the issue. It is just the way our free society works and how people are willing to pay money for what they want. It just so happens that people with national exposure end up getting a little bit of money from lots and lots and lots of people. (Also look at paying to see a movie...and what movie stars get, because of this. Or paying for a new CD and what the recording artist makes because of this. Same thing.)

To have it any other way would require someone (i.e. gov't) stepping in and wrecking our free enterperise system and just paying people 'what they are worth' (who would be the judge?). But would you really really want such a system? Such gov't intrusiveness?

Schneibster

27th April 2007, 07:51 PM

So, an anarchist wants a level playing field, and he ensures that this level playing field happens . . . how? Care to help me out? ;)With laws. Why, what did you have in mind? Still having trouble distinguishing between laws and the people who make them?

As to unions, and guilds, they tend to be pro protectionist, it is in their interest to be so, and thus anti level playing field as a standard practice.

Care to address that?Oh, it's beyond doubt that if any one faction takes over, it won't be level. It's that takeover that makes it non-level, not the existence of a faction. And the problem today is not the unionists.

Furthermore, it's not "good for most people to be in the middle," particularly when most of the money is on one side. For there to be balance, if most of the money's on one side, most of the people have to be on the other. If they lose sight of that, they get raped by the people with the money.

Like I said, welcome to the real world.

I find it amusing the number of people here who don't seem to understand the meaning of quotation marks. Yet more evidence that the average IQ is 100- and from two of the smarter people around here, yet. C'mon, read what I wrote, not what you thought I wrote (or worse yet, what you want me to have written).

Note: unions happened for a good reason. They were needed as a balance to other forces. I'd say they are still needed,Sorry, but that absolutely deserves:

Gee, ya THINK???!!?!?

though some of their function have been subsumed by legislation, which unions sponsored and fought for. (A mild irony there.) The question is, where is the balance point between two diverging interests?

DRThe little legislation there's been recently hasn't impressed me as unduly subsumptary (I think that's the right way to mangle subsumed, particularly when you're trying to be as snide as I am) just recently, doncha know?