Do the rich earn their income?

[Uncensored2008]

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.

Editec, you have a net zero understanding of economics.

The claims you make are Malapropisms. You clearly don't know what capitalism is, the mechanisms and constraints therein.

You need to be slapped by the invisible hand.

 

[georgephillip]

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.

Professor:

Land.
Labor.
Capital.

Take away any of the above and there is no final product to sell?

 

[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.

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.

I need to study economics? Please. I think it is painfully clear that you haven't the faintest idea how free markets work. The reducation of your arguments to ad hominem makes that quite evident.

 

[thereisnospoon]

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.

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

Reference the above quote, if you will.

 

[bripat9643]

The idea that an economic numskull like you thinks he is qualified to school anyone about economics is simply too absurd for words.

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.

 

[bripat9643]

Professor:

Land.
Labor.
Capital.

Take away any of the above and there is no final product to sell?

However, all your theories depend on the idea that Land and capital are irrelevant to the production process.

 

[georgephillip]

The idea that an economic numskull like you thinks he is qualified to school anyone about economics is simply too absurd for words.

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.

"A negative externality is an action of a product on consumers that imposes a negative side effect on a third party; it is 'social cost'.

"Many negative externalities (also called 'external costs' or 'external dis-economies') are related to the environmental consequences of production and use. The article on environmental economics also addresses externalities and how they may be addressed in the context of environmental issues.

"Air pollution from burning fossil fuels causes damages to crops, (historic) buildings and public health. The most extensive and integrated effort to quantify and monetise these impacts was in the European ExternE project series."

Externality - Wikipedia, the free encyclopedia

You don't have to be the smartest person in the room to see how capitalists increase profits by externalizing the costs of air pollution, water quality and solid waster mismanagement onto the wider society.

Ever heard of market failure?

 

[georgephillip]

Professor:

Land.
Labor.
Capital.

Take away any of the above and there is no final product to sell?

However, all your theories depend on the idea that Land and capital are irrelevant to the production process.

Wrong again.

While I believe labor (and land) are prior to and independent of capital, I recognize all three factors of production are indispensable to the production of goods and services.

I would add one more factor, namely the cultural inheritance of society, defined by CH Douglas "...as the knowledge, technique and processes that have been handed down to us incrementally from the origins of civilization."

Social Credit - Wikipedia, the free encyclopedia

 

[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?

I mean in the NATIONAL interests.

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

As in the Nationalization of Commerce? I thought so, thanks for clarifying.

 

[Intense]

Professor:

Land.
Labor.
Capital.

Take away any of the above and there is no final product to sell?

However, all your theories depend on the idea that Land and capital are irrelevant to the production process.

Wrong again.

While I believe labor (and land) are prior to and independent of capital, I recognize all three factors of production are indispensable to the production of goods and services.

I would add one more factor, namely the cultural inheritance of society, defined by CH Douglas "...as the knowledge, technique and processes that have been handed down to us incrementally from the origins of civilization."

Social Credit - Wikipedia, the free encyclopedia

Maybe they should start making those I-Pads out of chocolate, so that when everything else goes to shit, we will both have something to eat, and feel good about. Only kidding.

We all do benefit from, invention, discovery, vision, that is the point. You want to control the terms on how, who, and degree without paying your dues. Starting to see the light? If you bring it to the table, you have more of a say than someone that wants to just take it from you without fair compensation. Check this out, Just got to love Gary Cooper.
In perspective here, without condoning violence here, there are valid points.

[ame=http://www.youtube.com/watch?v=Zc7oZ9yWqO4]The Fountainhead - Howard Roark Speech (Ayn Rand) - YouTube[/ame]

 

[Uncensored2008]

Land.
Labor.
Capital.

Take away any of the above and there is no final product to sell?

Really?

So without land, Google ceases to exist?

Marx wrote from the perspective of the 19th century. He understood feudal relations with the landed gentry. His ideas are simply not relevant to the modern world.

Communists are trying to stick an 8" floppy disk into a SD flash slot, and are confused why it doesn't work, convinced that if they just try again, it will somehow succeed.

 

[Texanmike]

Land.
Labor.
Capital.

Take away any of the above and there is no final product to sell?

Really?

So without land, Google ceases to exist?

Marx wrote from the perspective of the 19th century. He understood feudal relations with the landed gentry. His ideas are simply not relevant to the modern world.

Communists are trying to stick an 8" floppy disk into a SD flash slot, and are confused why it doesn't work, convinced that if they just try again, it will somehow succeed.

If he would replace land with property he's much closer to right.

Mike

 

[Uncensored2008]

If he would replace land with property he's much closer to right.

Mike

That's true, but then you get into intellectual property - the true wealth of the 21st century.

Marxists and Marxians are mired in agrarian ideas. The entire construct is based on peasant sharecroppers.

The fact that an Ethiopian with 20 acres can't produce what a man with an high IQ, a free copy of Linux, living in an apartment can, is stupefying to the left.

 

[ShackledNation]

Marx did not understand the structure of capital, and his understanding of value was also incorrect. The labor theory of value, like the cost theory of value, does not accurately explain reality. The entire notion of exploitation was based around the labor theory of value, and once you recognize that subjective value theory is much closer to the truth, the entire economic model of Marxism collapses.

 

[Sundial]

Marx did not understand the structure of capital, and his understanding of value was also incorrect. The labor theory of value, like the cost theory of value, does not accurately explain reality. The entire notion of exploitation was based around the labor theory of value, and once you recognize that subjective value theory is much closer to the truth, the entire economic model of Marxism collapses.

Prices of things are set by the law of supply and demand, not by the amount of labor that goes into making them, or by the subjective opinion of the purchaser. Buyers try to get the lowest price, and sellers try to get the highest. Labor and subjective value might represent boundaries, but that's it.

"Exploitation" implies immorality. That human labor (physical and mental) produces all goods and services is a simple fact. It follows that people who don't work, whether because they're unemployed or wealthy, too old or too young - or whatever other reason - are subsisting on the efforts of others. It also follows income derived from profits is unearned income, which is what the tax code says it is. This is meant to be positive, not normative. It's not a value judgment. (Though personally I think the development of a class of extremely rich, unproductive people is probably unhealthy.)

What's important is that when too much of the income goes to the owners, rather than than the workers, workers can afford to buy less and less stuff. When they can't afford to buy stuff, effective demand for the stuff they're making goes down. When there's not demand, workers get laid off, which decreases demand even more. It's not a cycle that automatically ends by itself. It's an enormous, unnecessary waste that could be fixed, given the right policies.

 

[Intense]

Marx did not understand the structure of capital, and his understanding of value was also incorrect. The labor theory of value, like the cost theory of value, does not accurately explain reality. The entire notion of exploitation was based around the labor theory of value, and once you recognize that subjective value theory is much closer to the truth, the entire economic model of Marxism collapses.

Prices of things are set by the law of supply and demand, not by the amount of labor that goes into making them, or by the subjective opinion of the purchaser. Buyers try to get the lowest price, and sellers try to get the highest. Labor and subjective value might represent boundaries, but that's it.

"Exploitation" implies immorality. That human labor (physical and mental) produces all goods and services is a simple fact. It follows that people who don't work, whether because they're unemployed or wealthy, too old or too young - or whatever other reason - are subsisting on the efforts of others. It also follows income derived from profits is unearned income, which is what the tax code says it is. This is meant to be positive, not normative. It's not a value judgment. (Though personally I think the development of a class of extremely rich, unproductive people is probably unhealthy.)

What's important is that when too much of the income goes to the owners, rather than than the workers, workers can afford to buy less and less stuff. When they can't afford to buy stuff, effective demand for the stuff they're making goes down. When there's not demand, workers get laid off, which decreases demand even more. It's not a cycle that automatically ends by itself. It's an enormous, unnecessary waste that could be fixed, given the right policies.

Prices of things are set by the law of supply and demand, not by the amount of labor that goes into making them, or by the subjective opinion of the purchaser. Buyers try to get the lowest price, and sellers try to get the highest. Labor and subjective value might represent boundaries, but that's it.

Fair market value is not going to be less than the cost to get the product or service there for long, if one plans to keep doing what one is doing. If there is no profit margin, why on earth would anyone continue to operate at a loss? Nice try though.

 

[dblack]

Prices of things are set by the law of supply and demand, not by the amount of labor that goes into making them, or by the subjective opinion of the purchaser.

You seem to be getting a handle on it, but "demand" is, essentially, the subjective opinion of the purchaser. Or, rather, and aggregate of the opinions of each purchaser.

"Exploitation" implies immorality. That human labor (physical and mental) produces all goods and services is a simple fact. It follows that people who don't work, whether because they're unemployed or wealthy, too old or too young - or whatever other reason - are subsisting on the efforts of others. It also follows income derived from profits is unearned income, which is what the tax code says it is. This is meant to be positive, not normative. It's not a value judgment. (Though personally I think the development of a class of extremely rich, unproductive people is probably unhealthy.)

This is the equivocation at the heart of your argument. You're equating the term 'unearned income', a technical term used by tax accountants to distinguish investment income from wages, with people who sponge off the good will of others. Even though you're denying it, it IS a moral argument because you then use it to support your idea that government should intervene.

What's important is that when too much of the income goes to the owners, rather than than the workers, workers can afford to buy less and less stuff. When they can't afford to buy stuff, effective demand for the stuff they're making goes down. When there's not demand, workers get laid off, which decreases demand even more. It's not a cycle that automatically ends by itself. It's an enormous, unnecessary waste that could be fixed, given the right policies.

This dynamic is actually more responsive than you're portraying here because most workers won't wait until they can't afford to buy stuff. Most of them are keeping an eye out for an opportunity to earn better wages and will do so when it seems prudent. Keeping too much of the profit for themselves is more likely to leave owners in a situation where they can't attract labor with wages that are too low - more or less the opposite scenario to what you describe here.

I either case, the question is, who decides when 'too much of the income goes to the owners'? What I think you're ignoring is that this cycle determines exactly that, and it does it more efficiently and accurately than a government agency could. That's the painfully reality that's hit every state that's tried to run a command economy.

 

[Gadawg73]

I worked a case from 11:30 pm last night until 4:30 am this morning. I charged $500.
Did I earn it?

 

[Sundial]

Marx did not understand the structure of capital, and his understanding of value was also incorrect. The labor theory of value, like the cost theory of value, does not accurately explain reality. The entire notion of exploitation was based around the labor theory of value, and once you recognize that subjective value theory is much closer to the truth, the entire economic model of Marxism collapses.

Prices of things are set by the law of supply and demand, not by the amount of labor that goes into making them, or by the subjective opinion of the purchaser. Buyers try to get the lowest price, and sellers try to get the highest. Labor and subjective value might represent boundaries, but that's it.

"Exploitation" implies immorality. That human labor (physical and mental) produces all goods and services is a simple fact. It follows that people who don't work, whether because they're unemployed or wealthy, too old or too young - or whatever other reason - are subsisting on the efforts of others. It also follows income derived from profits is unearned income, which is what the tax code says it is. This is meant to be positive, not normative. It's not a value judgment. (Though personally I think the development of a class of extremely rich, unproductive people is probably unhealthy.)

What's important is that when too much of the income goes to the owners, rather than than the workers, workers can afford to buy less and less stuff. When they can't afford to buy stuff, effective demand for the stuff they're making goes down. When there's not demand, workers get laid off, which decreases demand even more. It's not a cycle that automatically ends by itself. It's an enormous, unnecessary waste that could be fixed, given the right policies.

Prices of things are set by the law of supply and demand, not by the amount of labor that goes into making them, or by the subjective opinion of the purchaser. Buyers try to get the lowest price, and sellers try to get the highest. Labor and subjective value might represent boundaries, but that's it.

Fair market value is not going to be less than the cost to get the product or service there for long, if one plans to keep doing what one is doing. If there is no profit margin, why on earth would anyone continue to operate at a loss? Nice try though.

That's what "lower boundary" means - that If the market price goes below labor costs the thing will stop being produced.

 

[editec]

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

The frightening thing is that we HAVE to, GP.

I make a statement that no economist in the UNIVERSE would take exception to, and some completely ignorant nitwit here imagines that such a statement is an assult on capitalism?

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.

One way or the other, in EVERY economic system that is a GOING CONCERN, capital or resources MUST BE put aside for FUTURE endeavors.

In our system, the folks who put asdide that capital, do so from the profits made today.

Those profits are generally the result of paying workers LESS than 100% of the value of their labor.

Now there's isn't a serious economist no matter how conservative they are, who would question that.

But in this place, a place loaded with constitutional scholars who never studiued the law, and economic theorists who never studied economics, even the most apodectic truthm the most pedestrian of observations is questioned by people wholly ignorant of what is being disucssed.

Hence instead of having real discussions, this boards completely cluesless serves up the same old stupid content FREE arguments daily.

Jesus people, READ A ******* BOOK!