Do the rich earn their income?

[Gadawg73]

Peers of the realm once argued that without them OWNING EVERYTHING society would collapse.

CApitalism is based on the assumption that laborers must be paid less than they produce so that capital can be concentrated for future projects.

And that is a good economic system when the economy is CLOSED.

But when that capital can migrate to other economies, then the basic concept of how this system works is flawed.

And that is what is happening to this nation right now.

"for future projects"
Tell me what future projects my 2 corporations are planning and how much $ I am concentrating on that.

 

[Intense]

Peers of the realm once argued that without them OWNING EVERYTHING society would collapse.

CApitalism is based on the assumption that laborers must be paid less than they produce so that capital can be concentrated for future projects.

And that is a good economic system when the economy is CLOSED.

But when that capital can migrate to other economies, then the basic concept of how this system works is flawed.

And that is what is happening to this nation right now.

You mean closed as in held hostage, right?

 

[Intense]

Do you honestly think Henry Paulson and Franklin Raines earned their money?

George, you're missing the point. No one's really denying that there are corrupt assholes making a lots of money. The OP proposed that income on investments was 'unearned', and went on to insinuate it was undeserved, painting the usual caricatures of rich capitalists at leeches on society, extracting wealth and not contributing anything. That's what some of us here are rejecting. Not that fact that plenty of rich people are crooked bastards.

Would you agree with the statement over the last four decades Republicans AND Democrats in congress have shifted the burden of taxation from unearned income to earned income?

What is your position on hidden taxes, surcharges, and fee's? What are they based on?

 

[Sundial]

Peers of the realm once argued that without them OWNING EVERYTHING society would collapse.

CApitalism is based on the assumption that laborers must be paid less than they produce so that capital can be concentrated for future projects.

And that is a good economic system when the economy is CLOSED.

But when that capital can migrate to other economies, then the basic concept of how this system works is flawed.

And that is what is happening to this nation right now.

Wrong. Laborers are not paid less than they produce, nor does capitalism have that assumption. Laborers are not paid for what they produce. They are paid for their services. The labor theory of value is incorrect. Final goods are valued by individuals in society, and supply and demand of these goods determine their market price. The wage is simply another price, the price of offering a service. Laborers are paid less than the price of a final good. Otherwise there would be no point in hiring laborers.

Trade with different countries is no different than trade with different states. The system before capitalism was mercantilism, based on the same fallacies that anti-free traders are using today. Those who forget the past are doomed to repeat it.

Laborers are not paid less than they produce

But

Laborers are paid less than the price of a final good

And how can you say capitalism doesn't "have that assumption," but that there would be no point in hiring laborers if it weren't the case?

What's the difference between what laborers produce and a "final good"?

 

[dblack]

What's the difference between what laborers produce and a "final good"?

In terms of value, pretty much everything. The value of the labor has nothing to do with the value of the finished product. You should really try to absorb this point, because I think it's key to your misconceptions regarding 'unearned' income. When a worker sells their labor to an employer, the agreed upon price (wage) is in no way dependent on what the finished product sells for. Even if it doesn't sell at all, the laborer gets paid the same. The value of the finished product is an entirely separate negotiation between the seller of the product and buyer - and it's completely subjective. The value of a product is solely dependent on the willingness of someone to buy if. If they're not willing to buy it at all, it's not worth anything.

 

[ShackledNation]

Peers of the realm once argued that without them OWNING EVERYTHING society would collapse.

CApitalism is based on the assumption that laborers must be paid less than they produce so that capital can be concentrated for future projects.

And that is a good economic system when the economy is CLOSED.

But when that capital can migrate to other economies, then the basic concept of how this system works is flawed.

And that is what is happening to this nation right now.

Wrong. Laborers are not paid less than they produce, nor does capitalism have that assumption. Laborers are not paid for what they produce. They are paid for their services. The labor theory of value is incorrect. Final goods are valued by individuals in society, and supply and demand of these goods determine their market price. The wage is simply another price, the price of offering a service. Laborers are paid less than the price of a final good. Otherwise there would be no point in hiring laborers.

Trade with different countries is no different than trade with different states. The system before capitalism was mercantilism, based on the same fallacies that anti-free traders are using today. Those who forget the past are doomed to repeat it.

Laborers are not paid less than they produce

But

Laborers are paid less than the price of a final good

The price of a good is not determined by the labor that went into it. I am very familiar with Marx and his surplus value theories, and his use of the labor theory of value. But the labor theory of value is wrong. Laborers do not need to be paid the full price of the final good, nor should they be, because they are being paid for their service. Labor is not equivalent in value to the final good.

And how can you say capitalism doesn't "have that assumption," but that there would be no point in hiring laborers if it weren't the case?

What's the difference between what laborers produce and a "final good"?

Because the value of labor is not equal to the value of the final good. The statement that workers are paid less than they produce is meaningless because workers are never paid more, less, or equal to what they produce. The value of labor is derived from the value that labor contributes to producing that good, not the value of the good itself. More productive workers get paid more because their labor is more valuable to employers. But that has nothing to do with the price of the final good. The price of the final good is not determined by the costs of production. The price of the final good is determined by subjective value. If people do not value a good above $10, and the cost of production is $15, the good will simply not be produced. The cost of productions, including labor, helps an employer determine if a good should be provided on the market. It does not determine the price of the final good. Nor does labor determine the price of the final good, and nor is the value of labor derived from that price.

The labor and cost theories of value are false. Marx and the classical economists and were incorrect about the theory of value. Fundamentally, the cost theory is deficient because it doesn't actually explain the determinants of market prices. Rather, the cost theory merely explains relationships among market prices.

"Costs" are prices too. To "explain" the price of a $10,000 car by reference to the prices of the engine, tires, glass, and so on, doesn't really explain market prices per se. At best, it pushes back the explanation one step: Why does the engine have a price of $5,000, etc.?

The labor theory of value avoids this particular snare by explaining the ultimate price of a good by the total amount of labor going into its production, including the labor required in the past to produce the components of the final good. But this too is incorrect. The best way to explain why is through examples.

1. Valuable paintings of dead artists go up and down in price. Why? Did the painter do more or less painting in the grave? 2. The house I live in is a small mansion, finely upkept, in a neighborhood gone seedy. I can't get back the labor expenses I put into it. Why not? 3. Walking down the beach today, I found a tin can and a diamond thrown up from the depths of the sea. I put the same effort into getting them both, bending down. And yet I can get much more for the diamond. Why? 4. Say a car company builds a model [The Grande Lemon] that nobody wants. It's been known to happen. They wind up having to sell it for less than their more popular models even though more labor was put into the Lemon. In fact it is technically superior in every way to every existing car. 5. Last years clothing fashions are suddenly cheaper this year, cause styles have changed. Why? The answer to all these is, of course, that their price is set by how much people, for whatever reason, are willing to pay for it. How much labor went into it is totally irrelevant.

Capitalism does not rest on the cost theory of value or the labor theory of value. It rest on the subjective theory of value. Capitalism is not based on the assumption that workers must be paid less than they produce. Capitalism is based on the fact that workers are paid for their utility to the employer. The price of labor to the employer is a completely different valuation than the price of the final good to the consumer.

 

[georgephillip]

Would you agree with the statement over the last four decades Republicans AND Democrats in congress have shifted the burden of taxation from unearned income to earned income?

Yes, the government now uses the tax code as a projection of power - as both a carrot, to reward friends, and a stick, to punish detractors. We need to end this practice and return to taxation as a 'color-blind' vehicle for funding government, rather than a political tool.

Another telling point followed by an excellent solution to the problem.
How do we accomplish what you suggest by "choosing" between Republican OR Democrat?

Elected politicians from both parties depend on the richest 1% of voters to fund their campaigns.

If any politician actively seeks to transform taxation from a political tool in the way you lay out, she or he will find a very well funded (read corporate) rival waiting in their next primary.

This problem began thousands of years before America came into existence, imo.
For centuries all governments have socialized cost and privatized profits for the benefit of their richest citizens.
If we find a way to end that practice, we all take one giant stride toward authentic freedom.

 

[Intense]

Would you agree with the statement over the last four decades Republicans AND Democrats in congress have shifted the burden of taxation from unearned income to earned income?

Yes, the government now uses the tax code as a projection of power - as both a carrot, to reward friends, and a stick, to punish detractors. We need to end this practice and return to taxation as a 'color-blind' vehicle for funding government, rather than a political tool.

Another telling point followed by an excellent solution to the problem.
How do we accomplish what you suggest by "choosing" between Republican OR Democrat?

Elected politicians from both parties depend on the richest 1% of voters to fund their campaigns.

If any politician actively seeks to transform taxation from a political tool in the way you lay out, she or he will find a very well funded (read corporate) rival waiting in their next primary.

This problem began thousands of years before America came into existence, imo.
For centuries all governments have socialized cost and privatized profits for the benefit of their richest citizens.
If we find a way to end that practice, we all take one giant stride toward authentic freedom.

Here is a far out concept, yet to be tried. ..... Wait for it.....
Government By the People, Of The People, and For The People. Government by the consent of the Governed. Enumerated Powers. Federalism could work if we take it seriously this time. Let's try 3 equal Branches of Government that stay equal this time.
How about a Bill of Rights that includes Privacy. Life, Liberty, Property, The Pursuit of Happiness. Let' build on Individual Liberty, Rights, Protection, you know Unalienable Rights granted by our Creator, where Each of us matter? You do believe in the Rights of the Individual, whether in the majority or the minority, right? You do believe that theft through legislation or mandate is morally apprehensive, heinous, right? Lets make sure.

I think that what existed for thousands of years before the birth of this Nation was the gap between rich and poor. I think the key is to make life meaningful and worth living with the talent, brains, and resources within your reach. Providence is beyond your power to legislate. You choose to gain honorably or not. It is your choice, just as the consequences of your choices are for you and your conscience to accept or struggle over. Coveting what is beyond your reach serves what end? It is a vice in itself.

 

[georgephillip]

I don't think it's possible to make the changes you lay out by "choosing" between Democrat OR Republican.

Do you?

 

[dblack]

I don't think it's possible to make the changes you lay out by "choosing" between Democrat OR Republican.

Do you?

Nope.

The future of hope and change is in the unlikely convergence of progressive and libertarian radicals:

Ron Paul, Ralph Nader agree on ‘progressive-libertarian alliance’ | The Raw Story

 

[thereisnospoon]

Like Enron earned its money?

Non sequitur.
No you're going to dazzle us with something like "gadawg could not possibly have earned $4k in a week. He had to cheat to get it."..

While $4,000 is more money than I've earned in many different years during my illustrious life of labor, $4,000/week doesn't even qualify for the richest 1% of Americans, and it is chump change for these guys and gals:

"The median ANNUAL income of a person in the top 0.01% is $50,000,0000. They have $350,000,000 in assets and, since 1978, that is an increase of 550% – how have you done the past 30 years?"

America is 234 Years Old Today – Is It Finished? | Phil

Why do you think someone earning $5,000/week is in the same tax bracket as someone earning $5,000,000/week?

Go back through the entire thread and find where I stated anything remotely close to that.
I am not dazzled. You'll have to do better.

 

[Sundial]

There's two different arguments going on here. One has to do with the nature of the economic system, and the other with its associated moral implications.

In terms of consumers, workers, and owners, the relationship is pretty straightforward:

The price ($) consumers pay = workers' income (w) + owners' profit (p).

From the owners' perspective: $ - W = P.
From the workers' perspective: $ - P = W.

Every dollar paid for goods and services goes either to workers or to owners. When owners get more, workers get less, and vice versa. Workers, to the extent that they are workers, make, distribute and sell everything. To the extent that managing is work - which it is - they also manage the making, distributing and selling of everything. Owners, to the extent that they're owners, don't work. They receive their income by virtue of being owners.

Of course, in practical terms, not everybody falls into one category or the other. Some people are both workers and owners. Small business owners are a good example. To the extent a person is at his business doing work, he's a worker (he's self-employed). To the extent that he takes profits without working, he's an owner. It's entirely possible for one person to be a little of both.

Someone who is just an owner - is someone who consumes without working.

You're free to make whatever inference from that you like. It is really just a simple and obvious fact.

Shak - when you say that owners pay market wages, and that goods and services sell at market prices, you're right. When you say that "The price of a good is not determined by the labor that went into it," you're kind of right. It's determined by the market, and it's composed of the cost of the labor that went into it, PLUS the profits that the owners take.

When you say that, "the value of labor is not equal to the value of the final good," you're right. If it were, then owners would not make a profit.

When you say, however, that "Capitalism is not based on the assumption that workers must be paid less than they produce," you're wrong. If they were paid the same as what they produced, there would be nothing left over for the owners.

To me it seems like you're performing a lot of mental gymnastics to avoid acknowledging what seems to me to be a pretty plain and straightforward fact.

Which brings me to the second argument (the one about the moral implications): If owners consume without working, does that mean we should get rid of them (or, more precisely, get rid of ownership)?

The answer is, obviously, "No". Among other reasons, no one has a workable model of how an economy would work without people owning things.

And - I do acknowledge this, dBlack - owners are, in theory, the ones who should take the first hit when things go wrong. Which ought to give them an incentive to see that they don't. And as I've said, unfortunately, it often doesn't seem to work out that way. Owners seem to have ways of sloughing off the risk they ought to be bearing on the rest of us.

In any event, there's a balance that has to be struck between owners and workers, and the balance has swung too far in the wrong direction. That doesn't mean "workers of the world, unite!" It means it's time for the rich to pay their fair share of the taxes.

 

[dblack]

In terms of consumers, workers, and owners, the relationship is pretty straightforward:

The price ($) consumers pay = workers' income (w) + owners' profit (p).

But the thing is, from the consumers view, the price is atomic. They don't know how much workers were paid, or how much of the price goes to capitalist profit, nor do they care. They evaluate a product based on how much it is worth to them. On the other side of he equation, the workers income is a fixed amount. What varies is the owner's profit, which depends entirely on their ablity to predict consumer needs and values.

When owners get more, workers get less, and vice versa.

No, that's what I'm pointing out to you. The workers wages are negotiated up front and fixed. The profit isn't determined until the products are sold successfully. The profit doesn't retroactively change how much the workers were paid. Likewise, workers don't have to give back their wages if the products don't sell.

Owners, to the extent that they're owners, don't work. They receive their income by virtue of being owners.

Not so. This is the crux of the matter. Owners have to estimate the value that the finished product will have to customers. That's the work that they do and profits (or losses) are their wages for that work. The don't simply get paid 'by virtue' of being owners. They get paid by accurately predicting the needs of consumers. If they don't do this well, they lose money. This is actual work. When done successfully it provides real value to the economy.

 

[shintao]

According to the IRS, the answer is mostly not.

Of the richest of the rich only 6.5% of income was from working, as of 2007. The rest came from things like interest, dividends, and capital gains.

In other words, the kind of income you get without having to wake up in the morning.

Which raises the question: if the rich are consuming without working, who is doing their work for them?

Link

Ah Geez--You can walk down your own main street. You will see doctors/dentist's office's--the guy who rebuilds car engines--your auto mechanic--your construction company--from A to Z--who bust their butts every single day of the week to bring a necessary service to this country and you. They are called small business people in this country and are also known as the largest employer of it.

The PRESIDENT you voted for--decided to attack these same small business people with his continual and on-growing threat that if they make 250K per year--he is going to throw them into the exact same tax bracket (39%) which is exactly what multi-billion dollar corporations pay. If you add in state and local taxes--you are taxing the hardest working, most innovative people in this country 50% or .50 cents on every dollar they earn.

And Boner told the workers he didn't care if they lost their jobs. You a worker, or a paid shill of the RNC? Looks like the whole world is gone to hell in a hand basket. LOL!

This is the economic terrorist you have elected. And then your Harvard graduate--community organizer--most intellectual President ever--wonders where the "jobs" are?--

Looks like Boner is an inside terrorist, huh? LMAO!! Hey bad boy, Who you going a call?

Small business in this country has tucked in like a turtle and is waiting for the threat to leave. And that threat is Barack Obama. Not everyone that earns 250K per year pushes a button and works on 2 blocks of lower Manhatton in New York City--Da--Duh.

Yeah, small businesses are chugging along and leaving the Retards behind in the dust.

 

[bigrebnc1775]

Yes, the government now uses the tax code as a projection of power - as both a carrot, to reward friends, and a stick, to punish detractors. We need to end this practice and return to taxation as a 'color-blind' vehicle for funding government, rather than a political tool.

Another telling point followed by an excellent solution to the problem.
How do we accomplish what you suggest by "choosing" between Republican OR Democrat?

Elected politicians from both parties depend on the richest 1% of voters to fund their campaigns.

If any politician actively seeks to transform taxation from a political tool in the way you lay out, she or he will find a very well funded (read corporate) rival waiting in their next primary.

This problem began thousands of years before America came into existence, imo.
For centuries all governments have socialized cost and privatized profits for the benefit of their richest citizens.
If we find a way to end that practice, we all take one giant stride toward authentic freedom.

Here is a far out concept, yet to be tried. ..... Wait for it.....
Government By the People, Of The People, and For The People. Government by the consent of the Governed. Enumerated Powers. Federalism could work if we take it seriously this time. Let's try 3 equal Branches of Government that stay equal this time.
How about a Bill of Rights that includes Privacy. Life, Liberty, Property, The Pursuit of Happiness. Let' build on Individual Liberty, Rights, Protection, you know Unalienable Rights granted by our Creator, where Each of us matter? You do believe in the Rights of the Individual, whether in the majority or the minority, right? You do believe that theft through legislation or mandate is morally apprehensive, heinous, right? Lets make sure.

I think that what existed for thousands of years before the birth of this Nation was the gap between rich and poor. I think the key is to make life meaningful and worth living with the talent, brains, and resources within your reach. Providence is beyond your power to legislate. You choose to gain honorably or not. It is your choice, just as the consequences of your choices are for you and your conscience to accept or struggle over. Coveting what is beyond your reach serves what end? It is a vice in itself.

And the chior said AMEN

 

[editec]

Peers of the realm once argued that without them OWNING EVERYTHING society would collapse.

CApitalism is based on the assumption that laborers must be paid less than they produce so that capital can be concentrated for future projects.

And that is a good economic system when the economy is CLOSED.

But when that capital can migrate to other economies, then the basic concept of how this system works is flawed.

And that is what is happening to this nation right now.

Wrong. Laborers are not paid less than they produce, nor does capitalism have that assumption. Laborers are not paid for what they produce. They are paid for their services. The labor theory of value is incorrect. Final goods are valued by individuals in society, and supply and demand of these goods determine their market price. The wage is simply another price, the price of offering a service. Laborers are paid less than the price of a final good. Otherwise there would be no point in hiring laborers.

Trade with different countries is no different than trade with different states. The system before capitalism was mercantilism, based on the same fallacies that anti-free traders are using today. Those who forget the past are doomed to repeat it.

Its time for you to study economics, lad.

You seriously don't understand even the basic principles underlying the capitalist economic system we have, that's bloody obvious.

 

[editec]

Peers of the realm once argued that without them OWNING EVERYTHING society would collapse.

CApitalism is based on the assumption that laborers must be paid less than they produce so that capital can be concentrated for future projects.

And that is a good economic system when the economy is CLOSED.

But when that capital can migrate to other economies, then the basic concept of how this system works is flawed.

And that is what is happening to this nation right now.

You mean closed as in held hostage, right?

I mean in the NATIONAL interests.

You know (or more likely you don't) rather like the Floundering Fathers envisioned AND THEN PRACTICED it?

 

[editec]

Peers of the realm once argued that without them OWNING EVERYTHING society would collapse.

CApitalism is based on the assumption that laborers must be paid less than they produce so that capital can be concentrated for future projects.

And that is a good economic system when the economy is CLOSED.

But when that capital can migrate to other economies, then the basic concept of how this system works is flawed.

And that is what is happening to this nation right now.

Wrong. Laborers are not paid less than they produce, nor does capitalism have that assumption. Laborers are not paid for what they produce. They are paid for their services. The labor theory of value is incorrect. Final goods are valued by individuals in society, and supply and demand of these goods determine their market price. The wage is simply another price, the price of offering a service. Laborers are paid less than the price of a final good. Otherwise there would be no point in hiring laborers.

Trade with different countries is no different than trade with different states. The system before capitalism was mercantilism, based on the same fallacies that anti-free traders are using today. Those who forget the past are doomed to repeat it.

Laborers are not paid less than they produce

But

Laborers are paid less than the price of a final good

And how can you say capitalism doesn't "have that assumption," but that there would be no point in hiring laborers if it weren't the case?

What's the difference between what laborers produce and a "final good"?

You know, SD, when attempting to discuss issues with people who are so clearly ignorant about even the most fundamental concepts as some are now taking umbrage with, it's a fairly hopeless task.

My original post is interpreted by these ignoramouses as some kind of attack on capitalism.

I mean, seriously, having a worthwhile discussion about economics with people that ignorant about the subject isn't really possible.

 

[georgephillip]

Maybe we haven't uncovered the common ground necessary to establish "the most fundamental concepts"?

Profit:

"In economics, the term profit has two related but distinct meanings.

"Normal profit represents the total opportunity costs (both explicit and implicit) of a venture to an entrepreneur or investor, whilst economic profit (also abnormal, pure, supernormal or excess profit, as the case may be monopoly or oligopoly profit, or simply profit) is, at least in the neoclassical microeconomic theory which dominates modern economics, the difference between a firm's total revenue and all costs, including normal profit..."

Profit (economics) - Wikipedia, the free encyclopedia

I would nominate "all costs" as one possible starting point in this discussion.

Capitalism as it's practiced in much of the world, enhances profit by externalizing as many costs as possible onto the wider society.

Socialize cost.
Privatize profit.
It's as old as the Fall of Man, and it's suicidal.

 

[Uncensored2008]

Its time for you to study economics, lad.

You seriously don't understand even the basic principles underlying the capitalist economic system we have, that's bloody obvious.

It's bloody obvious that someone doesn't have a clue.

In capitalism, goods are traded. Labor is traded for cash. Cash is traded for beer. Beer is traded for credit receipts.

Capitalism is based on the unconcerned trade of what the buyer values who exchanges what the seller values in return.

The claim that the laborer has ANYTHING to do with the final product is idiotic, totally ignorant. The laborer trades his labor for cash. The amount of cash he gets is a matter of negotiation between him and the purchaser of his labor.