income inequality

[thaumaturgy]

Great post, this is the reason hikes in the minimum wage don't work.

Great reasoning! So how do yo propose to keep the costs under control in a free market economy? Central planning?

 

[childofGod1]

Great reasoning! So how do yo propose to keep the costs under control in a free market economy? Central planning?

Whoosh....

 

[childofGod1]

WRONG.



You seem to forget economics and politics involve "PEOPLE". Hence compassion should be part of it. It is for me but then I'm not a "Christian".

I vote for higher taxes on myself to make for a more compassionate and just society. I work for grass roots things related to politics in California that will make for a more economically equitable society.

I bring up "compassion" because I see little in your posts. And I find it confusing. Maybe it's also because you seem to think of yourself as enough of a "Christian" to call yourself "ChildofGod".

I vote what my beliefs are. My master isn't money.

It's a great shame that you can't se the compassion in fighting for the rights of every individual, It's a shame you can't see the compassion in advocating an economic system that produces more so the poor have more, and preserves their dignity and their right to work toward a better utire for themselves and their families.

You seem to think that if everyone doesn't agree with your political ideology, they must be hateful, lack compassion and be general idiots, and that you were placed on this earth tfor the sole purpose of pointing out your personal disapproval.

Go ahead, judge, you will one day be judged.

 

[childofGod1]

In the same way that I can have a bunch of battery powered items in my home yet the electic company is still a "natural monopoly".



Really? So you are going to drop "the grid" altogether? Because that's one of the biggest barriers to entry. You going to outfit each home with its own solar? That's good. I installed a solar panel on my house and I haven't paid an electricity bill in over 2 years now. But it still hooks into the grid.

Wind power? That's a bit trickier. Relatively localized. Not sure you could make it work on a house-by-house basis.

So, yes, if you get rid of distributed power grids you will have a fall of a natural monopoly. Don't count on it happening soon.



No they exist because your proposed ideas are just that: ideas. Only small scale and won't work on a larger scale without a huge capital investment. We went into some amout of debt (short term) to install solar. I guess poor people are S.O.L., huh?

As I said, schools are not a natural monopoly. They operate quite efficiently as independent, local entities, under private ownership and private operation.

And as I said, IF you had taken the time to read it, that the barriers to private electric companies are dropping due to technology, not that they HAVE dropped, but ARE dropping.

Rant on.

 

[childofGod1]

Correct, but it doesn't have to be unbridled capitalism. I am currently over in Europe working with some of our partners on development of new technology in our area. These folks are just as capable of generating new tech as we are. In fact, because many of these european companies have a longer view (and many pay their chief executives less money) development of new tech sometimes works really well here!



Yes, let's do!

Computers: largely developed due to government funding for research into weapons in WWII.

Freeze dried food, calculators, advances in kidney dialysis, new insulating materials for homes, hazardous gas monitoring equipment advances,: largely developed by the government funded Apollo program. (LINKY)

Huge advances in agriculture: largely due to research done by the USDA Agricultural Research Service (ARS) (Feel free to ignore this link HERE which outlines the huge number of agricultural breakthroughs brought to you by government funded science since the late 1800's!)

About 55% of the research that lead to the top 5 selling drugs in 1995 was done by taxpayer funded research.

Now this is not to say that private industry doesnt' develop new technology, but never ever forget what we have worked as government scientists did for the country as well.



ORLY? I am an inventor (I am guessing I have more patents than you do) and while I was at the USDA I got nothing extra in my paycheck for my patents. At one industry each filing netted me a "silver dollar", at the company I work for now they do give us some nice cash incentives. But up until the last year my pay, when adjusted for cost of living, had actually gone done year over year for 5 years straight. Last year they finally got back on track with some raises. So do tell me all about how "inventors are encouraged"! I'd love to hear you talk about it at length!

You agreed to a contract to sell any future inventions you came up with to the company for a fixed salary. They've paid you exactly what you agreed to. If your inventions are so hot, why don't you go invent something in your basemsnt, patent it and sell it to the highest bidder. Oh, but that's too risky, what if you don't invent anything valuable? What if you run out of money? No, you chose the safe route. Stop whining, you got your pacheck.

 

[childofGod1]

Oh wow. You missed it where I said that I do agree with the source I cited.

Here, to show you your errors:

Wow, do you ever read what you write?

 

[childofGod1]

I am still wondering where you got the requirement. Just telling me that some unnamed great mind said it doesn't = an answer to my query.

I already told you that you could find it in a book, The Federalist Papers. I also told you that the information is all through the book, you have to actually read it. It's not my responsibility to give you sound bites in an attempt to educate you on a whole political and economic ideology. If you don't know what you're talking about, maybe you should go read the book instead of arguing against ideas you are entirely ignorant of.

 

[dlamberth]

This "lack of compassion" you accuse me of just a sorry attempt to derail the discussion. This is a discussion of economics and politics, not a discussion of charity. We haven't discussed music, art or childhood friends, either. I have said many times over the years that charity is a personal choice, not a governmental issue.

Though they may overlap at times, Compassion and Charity are two different things. Running a compassionate corporation OR government isn't about charity...it's about fairness, honesty and having the importance of the workers/people come before profit or politics.

I agree with you that charity is a personal choice...but if we have a government that is for the people, helping those in need ALSO becomes the government's issue as well.

Lastly, you touched on so many topics, in today’s world I don't believe a full and honest discussion about economics OR politics can occur with out compassion being brought into the picture.

.

 

[childofGod1]

Though they may overlap at times, Compassion and Charity are two different things. Running a compassionate corporation OR government isn't about charity...it's about fairness, honesty and having the importance of the workers/people come before profit or politics.

I agree with you that charity is a personal choice...but if we have a government that is for the people, helping those in need ALSO becomes the government's issue as well.

Lastly, you touched on so many topics, in today’s world I don't believe a full and honest discussion about economics OR politics can occur with out compassion being brought into the picture.

.

As you said, "touched on so many topics". At some point you have to narrow down the subject or it becomes an incoherent mess. I tried to keep it on point, but you see what happens.

 

[Yekcidmij]

the workers/people come before profit or politics.

But don't profits indicate that people's preferences/wants/desires are being satisfied? Profits indicate that a business is giving people a product that they want and are willing to exchange their own resources to obtain. Profits are simply a signal to a business that they are meeting customer's satisfactions. If profits are falling, it's a signal that for whatever reason customers do not have demand for the product at current prices.

Profits and prices are economic signals to market participants so that exchange can be coordinated among the many actors. Profits are neither evil nor anti-people.

 

[lordbt]

My master isn't money.

Oh yes it is. Particularly if that money belongs to someone else.

 

[dlamberth]

Profits are neither evil nor anti-people.

True...but the whole picture of corporate responsibilities change when the workers become just as important as profits. When profits become more important than people, than greed can take over…and that IS evil. Corporate Greed is the very thing that crashed our economy.

.

 

[Yekcidmij]

True...but the whole picture of corporate responsibilities change when the workers become just as important as profits.

I would think that workers should be as important as profit too. AFter all, it's the workers who make a quality product in an efficient and cost effective manner. Profits would seem to signal that the workers are doing well too. They must be producing a product that is meeting consumer demands otherwise there would be falling profits. The motive for profit should ensure that workers are treated well and trained appropriately as the product is dependent on their work. Falling profits could very well be a signal to the business that workers are not being trained properly or compensated properly.

I don't see how profits are more important than workers as profits are tied up with the work the employees are doing.

Corporate Greed is the very thing that crashed our economy.

Well, I'm not one to look for simple explanations or overgeneralizations. I don't think there is one thing to point to and say, "that's the problem." The economy is entirely too complex to reduce to simplistic explanations. It's the same situation when people blame everything on the President. I find it hard to believe that things can be reduced to one man.

I think there are a host of things that contributed to the market crisis. I'm not even convined we've accounted for them all.

 

[conamer]

But don't profits indicate that people's preferences/wants/desires are being satisfied? Profits indicate that a business is giving people a product that they want and are willing to exchange their own resources to obtain. Profits are simply a signal to a business that they are meeting customer's satisfactions. If profits are falling, it's a signal that for whatever reason customers do not have demand for the product at current prices.

Profits and prices are economic signals to market participants so that exchange can be coordinated among the many actors. Profits are neither evil nor anti-people.

Can you say Apple? Sure, I knew you could.Profits show a company is efficient and doing right by the consumer.

 

[Viren]

But don't profits indicate that people's preferences/wants/desires are being satisfied? Profits indicate that a business is giving people a product that they want and are willing to exchange their own resources to obtain. Profits are simply a signal to a business that they are meeting customer's satisfactions. If profits are falling, it's a signal that for whatever reason customers do not have demand for the product at current prices.

Profits and prices are economic signals to market participants so that exchange can be coordinated among the many actors. Profits are neither evil nor anti-people.

I agree with that if there is competition within the market, but since we have monopoly capitalism the profits are helped along by a corupt government.

 

[thaumaturgy]

But don't profits indicate that people's preferences/wants/desires are being satisfied? Profits indicate that a business is giving people a product that they want and are willing to exchange their own resources to obtain.

Not the whole story obviously.

Profit is the difference between the cost to make something and the price it fetches in the market.

If I make a widget for $50 and today it costs me $10 to make it (including both fixed and variable costs) I get a profit of $40.

But if one of the costs I burden mysefl with is the cost of employees' salaries, all I need do there is offshore the jobs to where the salary is lower. I will have to pay for transportation of the goods, but in many cases I can find a combination of "labor+transportation" that is less than the original labor I had.

Now it costs me $8 to make the product and I've increased my profit.

Therein lies the rub if you will.

So why do you think a few years back more corporations decided to get away from raises and move over to better bonuses? Because raises "stick" and bonuses come and go based on the performance of the business.

All the while the top executives keep raking in giant sums. Even when they have a middling year they may still get up to 100% of the salary in bonus.

That's why middle income wages stagnate for decades while CEO salaries go up and up and up and up.

The companies turn a profit and their profit grows even without increasing sales.

 

[Yekcidmij]

Profit is the difference between the cost to make something and the price it fetches in the market.

Profit is the difference between total revenue and total costs, of course. And of course firms try to maximize profit by maximizing revenue, minimizing costs while being subject to budget constraints.

Firms solve the problem:
max [Profit = TR - TC]

max [Profit = P*Q - (wL+rK+dA)]

where Q = f(L, K, A)

P: Price
Q: Quantity/output
L: Labor
w: wage rate
r: capital depreciation/cost rate
K: Capital
d: price of technology
A: technology


Without providing customers a product that they want at some given price P, it will be impossible to maximize profit at P relative to some other quantity/quality of work and some other price. In a way then, poor labor could minimize costs, but it could also decrease revenue since revenue is a function of labor's output. Cheap labor isn't necessarily better labor for a firm.

But if one of the costs I burden mysefl with is the cost of employees' salaries, all I need do there is offshore the jobs to where the salary is lower.

Yes, costs will be minimized if a firm can find a homogeneous source of labor that doesn't demand a higher wage. This isn't always and everywhere the case though. Lower salaries do not automatically translate to more ideal conditions for a firm as labor is not homogeneous.

 

[thaumaturgy]

Firms solve the problem:
max [Profit = TR - TC]

max [Profit = P*Q - (wL+rK+dA)]

where Q = f(L, K, A)

P: Price
Q: Quantity/output
L: Labor
w: wage rate
r: capital depreciation/cost rate
K: Capital
d: price of technology
A: technology


Without providing customers a product that they want at some given price P, it will be impossible to maximize profit at P relative to some other quantity/quality of work and some other price. In a way then, poor labor could minimize costs, but it could also decrease revenue since revenue is a function of labor's output. Cheap labor isn't necessarily better labor for a firm.

Wholly agree, but maximizing profit or even keeping it maximized was not inherent in the post to which I was responding.

It is a given that lowering operational expenditures can increase margins and is it not trivially true that lowering wages (or simply failing to adjust them for cost of living) will result in higher margin assuming output and cost of the item to the consumer remain the same?

Yes, costs will be minimized if a firm can find a homogeneous source of labor that doesn't demand a higher wage.

Hence offshoring to China or Singapore or India or Indonesia, etc. We see it all the time.

This isn't always and everywhere the case though. Lower salaries do not automatically translate to more ideal conditions for a firm as labor is not homogeneous.

Agreed. That is why the woman who shares my cube now at work was asked to spend a year or so to train her Chinese replacement presumably. But indeed the level of skill may also be inhomogenous but given enough time and a relatively strong market position for the company then the "learning curve" can be overcome with only a slight impact to the firm's standing in the market (and revenues).

My response was more in line with increasing a given profit margin by merely lowering one aspect (in this case labor costs). Even at the expense of quality (something we all live with every day....many of the goods I purchase today that are analogous to a piece of equipment I purchased 25 years ago will never last or long or be as solidly built as the older version, but since the company has been able to make use of cheaper technology they have been able to make the appearance of increased "quality" --illusory in that they have only added more bells and whistles but the product is still worse in overall quality) but at a lower labor cost.

And I will readily grant this works on the short term in that if you find that consumers' "pain point" is above your quality of output you will lose sales and end up in the dumpster. But I see many, many, many examples all around me (in fact I'm using one right now) that is worse than the one I had 3 years ago, feels cheaper in quality, but still sells.

In a sense there is an entire portion of our economy that leverages people's willingness to pay more for less.

If I want quality I will pay for it. And I can. But it will cost me. But if I, as an average American worker, see my wages stagnating and I still want some of the good things, I will be tempted to make my purchasing decisions on price rather than quality and I will keep afloat a manufacturer that maintains or increases their profit by lowering their costs (in materials and/or labor). This can go on for years and years.

 

[Archaeopteryx]

It's a great shame that you can't se the compassion in fighting for the rights of every individual, It's a shame you can't see the compassion in advocating an economic system that produces more so the poor have more, and preserves their dignity and their right to work toward a better utire for themselves and their families.

You seem to think that if everyone doesn't agree with your political ideology, they must be hateful, lack compassion and be general idiots, and that you were placed on this earth tfor the sole purpose of pointing out your personal disapproval.

Go ahead, judge, you will one day be judged.

Pot kettle.

For a large portion of this thread you seem to think that if everyone doesn't agree with your political ideology, then they must be "envious", or "greedy", "lazy" and "whiny". What's the matter? Don't like the taste of your own medicine?

 

[thaumaturgy]

It's a great shame that you can't se the compassion in fighting for the rights of every individual, It's a shame you can't see the compassion in advocating an economic system that produces more so the poor have more, and preserves their dignity and their right to work toward a better utire for themselves and their families.

ChildofGod, perhaps you hadn't noticed but the U.S. is among the richest nations on earth. Our per capita GDP has grown since the 1940's....so at what point do the poor start getting all these advantages?

(SOURCE)

You want to see "compassion"?

Look at this graph:

We have among the lowest expenditures on child poverty as a percentage of GDP in the OECD COUNTRIES.

Does this not horrify you?

You seem to think that if everyone doesn't agree with your political ideology, they must be hateful, lack compassion and be general idiots, and that you were placed on this earth tfor the sole purpose of pointing out your personal disapproval.

Actually, ChildofGod, I provide citations for my points precisely so that I am not making comments based solely on my gut feel.

I could be wrong as the day is long. I think the data I present backs up my points.

So you may wish that I was just here pontificating, but I'm providing support for my points.

Go ahead, judge, you will one day be judged.

We are all already being judged.

The second graph up there is the best evidence for what we are. You are not required to care one whit what I say or think. That's why I provide citations.

Ignore me. Fine! But ignoring the data is a bit harder.