Another link
Dec. 8th, 2004 02:29 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
pecuniumLiberal Tough Guy dotcom
Forget the picture of the Quad .50 (which is cool, in a gun-geek kind of way) and read the text.
I've no beef with social Liberalism but economic Liberalism is True Liberalism and must come first. I'll put it to ya like this: what some Mexican-American janitor needs is to be paid $25 an hour, not to have bi-lingual education for his kids or a translator at the Secretary of State's office. Get the money and the rest will follow.
There is a lot of truth to that.
Forget the picture of the Quad .50 (which is cool, in a gun-geek kind of way) and read the text.
I've no beef with social Liberalism but economic Liberalism is True Liberalism and must come first. I'll put it to ya like this: what some Mexican-American janitor needs is to be paid $25 an hour, not to have bi-lingual education for his kids or a translator at the Secretary of State's office. Get the money and the rest will follow.
There is a lot of truth to that.
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no subject
Date: 2004-12-09 05:25 pm (UTC)But with a gap between to and bottom not 15-1, not 30-1, but 75-1, there is a lot of overcompensation going on.
I was thinking about this in the shower last night, and wondering why the shareholder is the be-all and end-all of whom we think a company owes it's return.
Because the stockholders (that faceless enity whom we have have been told is the driving force of all that's good) are a heartless beast. Most of them are institutional. Answering to nothing.
But they provide mere capital. The start up money is nice, but HIlton isn't in need of it any more. But the maids, the clerks, the guy who keeps the boilers working, he adds a real value to the place.
I was a machinist, in a job-shop. Non-union. I was being robbed. My skills were journeyman. The cost to the customer to get my labor was the same as if I were Wai-Wong. I got $12 an hours, after three years. New hires, with some claim to expertise, were coming in at $21. Some of them were no better than I.
The company was clearing enough that the accountant (who was a filthy piece of work. Her driving goal was to see to it that not one penny more than the law was used to bludgeon out of her got to an employee) got a Navigator, the year they came out.
I made, one afternoon, a change to the way a class of parts (which we got frequently) was done. It saved 20 hours on that job (and a similar amount on every job of that sort thereafter). Profit on that job went up $1,500. I got an attaboy, but nothing else.
Had there been shareholders, the increase in productivity would have been praised, but a reasonable increase in payroll, to reward me for making more money for the company, is decried.
From a biblical standpoint this is poor ("Thou shalt not bind the mouth of the kine that tread the grain) and from a business standpoint this is poor. I no longer work there, and they certainly didn't replace me for the same wage they were paying me. Add the time to learn the system, and the parts I knew how to make, that need the knowledge of how they run, and it would have been far cheaper to pay me the $17 an hour I was actually worth (and maybe even the $20-25 I'd have been making in a union shop).
To respond to
TK
no subject
Date: 2004-12-09 06:39 pm (UTC)no subject
Date: 2004-12-09 10:03 pm (UTC)Thank you, Chairman Mao :)
Yes, this is indeed the case, but taking from one people and giving to other is not the way to increase overall well-being. In fact, it is quite opposite, as it reduces both the incentives to be productive and ability to accumulate capital for investment in further production.
The only place redistributionism leads to is "back to the USSR" where no private interests can afford to own means of production, so all production is state owned and controlled. Been there already, thank you.
no subject
Date: 2004-12-10 12:48 am (UTC)And what is taking from the janitor, in this case, in the form of labor, and keeping that for the shareholder, but a form of redistrinbution?
It's just that one form helps more people than the other.
Which, it seems, as a Libertarian (though fiscal libertarians tend to have some huge blind spots as to what they are arguing for. We tried a laissez faire economy, it led to things like Packing Town and the trusts, which is where Adam Smith said it would go, but they tend to forget that), is a good thing.
TK
no subject
Date: 2004-12-10 02:59 am (UTC)And what is taking from the janitor, in this case, in the form of labor, and keeping that for the shareholder, but a form of redistrinbution?
Ok, Economics 101.
The janitor and the company (i.e. shareholders) enter into a voluntary contact, according to which janitor exchanges some of his time and efforts to some amount of money.
If any of those parties thought that the exchange does not benefit them, they wouldn't enter into the contract (remember, that is voluntary). Therefore, the exchange benefits both.
If janitor is thinking he's underpaid, he can leave the job and seek another employer, willing to pay more. If there are no such employers, then he, obviously, overestimates the value of his work.
Similarly, an employer cannot arbitrarily depress the offered compensation - or nobody'll be willing to sweep the floors. The salary (in the absense of the government regulation) is determined by the balance of supply and demand. The added benefit resulting from the exchange will generally be distributed equally (this is, essentially, the profit - and the norm of profits tends to equalize in the long run).
All voluntary contracts are Pareto-superior, meaning that they cannot decrease welfare of any party. Therefore, they can only increase the overall welfare of the society.
The non-voluntary transactions of any kind (meaning taxation or other form of regulatory-imposed redistribution) are, by definition, reducing welfare of some paries. Therefore, they cannot be guaranteed to be Pareto-superior, and, in fact, are always inferior to the voluntary contracts, thus reducing the wellbeing of the society as a whole.
The "labour" theory of value (as implied in your statement) is pretty much meaningless, unless one is willing to stipulate that all kinds of labour are equally productive. Which is pretty much what socialists did - so they paid people willing to spend years on education and doing "easy, clean work" less than unskilled laborers. Which made "an engineer" a derogatory word and explains why the ex-Soviet Union is such a hotbed of technology and innovation, not to mention its enormous economical prowess.
(Don't let the "success" of space and nuke programs to mislead you into thinking that Soviet system is somehow adequate - engineers and scientists involved had a quite powerful non-economical stimulus to deliver (or be shot). These Soviet programs were supervised by NKVD (the old name of KGB), and most "employees" were political prisoners. In the later years the "incentives" became somewhat softer, like staying off the black lists of unemployable, and with that softness the performance, correspondingly, collapsed).
(continuation)
Date: 2004-12-10 02:59 am (UTC)Some people are more willing or capable of helping themselves, sorry. Please don't feed me B.S. regarding how bad starting conditions prevent people from raising above their station - my own life is a proof by existance that this is a patent nonsense (I came to US with, like, $100 of my life savings and practically no English, no network of relatives or friends, and no clue about life in a capitalist country - basically, in much worse shape that any native-born - 10 years later, I work for my own company, and have never took any form of government welfare).
So it is difference in personal qualities and difference in motivation which makes people unequal, the starting conditions are in long term irrelevant.
As you cannot make stupid people smarter, it only means that equality can be achieved by putting down all smarter people. Or killing them. This was done, too, by the true believers in the egalitarianism.
Which, it seems, as a Libertarian (though fiscal libertarians tend to have some huge blind spots as to what they are arguing for. We tried a laissez faire economy,
Excuse me, when exactly US was laissez faire? Maybe in the official democratic mythology?
The last recorded examples of laissez-faire-kinda econimies were medieval trading towns (Venice, etc) - which also happened to be the cradle of the Western civilization.
As for trusts - Economy 101, part #2:
A trust is a group of independent producers engaged in price-fixing (i.e. coordinating offering prices) and, by necessity, in fixing the market shares. The trusts are effective only short-term - if they succeed in raising profitability of the companies involved, there's an increased incentives for independents to enter the market (as it becomes an attractive investment), and for existing trust members to desert and capture larger market share by offering slightly lower prices.
This means that trusts may exist long-term only by means of government-enforced exclusion of new entrants. Historically, all long-lived trusts were direct results of government intervention and collusion between businesses and governments.
Worse, it continues today in the form of patents and "intellectual property" laws - which are, basically, nothing more than government-sponsored exclusion of new market players.
where Adam Smith said it would go
On every historical opinion there's a better counter-opinion. For example, Socrates explained why democracies are evil and will fail :)
fiscal libertarians tend to have some huge blind spots as to what they are arguing for
Please, elaborate.
As for huge disparities in pay between executives and rank-and-file: this is the direct result of government regulations, ostensibly "protecting" investors. In fact, what those regulations do is protect executives from shareholders - their huge self-appointed pay comes from the pockets of shareholders, not from the pockets of employees.
I'm not sure that public in general is familiar with the mechanics of the scam called "publically-traded companies" - it is somewhat arcane (I had to learn it as I used to be an executive in few such companies) - but it couldn't exist without helpful government acting "for the good of the people".