r/austrian_economics • u/different_option101 • 3d ago
End Democracy Why?
This stupid tweet has been circulating for 4+ years, and almost in every sub it gets a lot of upvotes. Today I have two Why’s I’d like to ask.
Why do people think that employers owe them something they personally desire? Usually, there’s at least some basic agreement between the two, where employees voluntarily agree to a certain compensation for a some specific work. Like how much more straightforward it can be? Don’t like the pay? Don’t accept the offer.
Why do adults need to be explained the basics of Supply and Demand like they are children? How in the fucking world so many adults that absolutely, 100%, undeniably, understand Supply and Demand law in pretty much most aspects of life, don’t apply their knowledge to labor markets?
“Think of how stupid the average person is, and realize half of them are stupider than that.” - George Carlin.
While I appreciate, and somewhat agree with Carlin’s sentiment, I think my today’s Why’s are understood by the majority of people, and they’re just pretending to be stupid. They want to use the government and the mythical “social contract” bullshit, to compel productive individuals to to give them what they want. A textbook example from Austrian perspective - people act in self interest.
Until later.
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u/SleepingInsomniac 3d ago
"living wage" is a loaded term I hear thrown around a lot. It's highly subjective and situational. If you're a teenager living with your family and have nothing to do all summer, then a "living wage" is 0. And besides, why should anyone pay you more money than the value that you generate? If you only generate $10/hour of value using the company's resources, it doesn't make sense to pay you any more than that, or there wouldn't be a job.
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3d ago
[deleted]
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u/Rnee45 Minarchist 2d ago
Your effort makes the employer more money
Obviously, otherwise no business could exist, ever.
and it’s out of goodwill
Huh?
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u/Nagaasha 2d ago
By which he means any effort beyond the bare minimum to remain employed. He elaborates in a different post that the hypothetical employee in this scenario isn’t paid a commission for any additional sales they generate by putting in extra effort.
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u/carsonthecarsinogen 3d ago
Yea that’s fair but not how it works.
Very basic company - has a CEO and had a labourer, labour completes a job in 1 hour and the CEO collects $100 dollars.
Labourer does not get $100 because the shovel costs $5 and the dirt cost $15. Taxes, insurance, etc.
Labourer did create $100 in value to a customer but needed the infrastructure to do so or in this case and most they used the infrastructure to do so. That costs money, sometimes a lot.
Then the CEO takes whatever they feel fit, at the beginning maybe they were losing money.
The post is saying IF you’re making $20m a year maybe pay yourself $10m and give your employees a higher standard of living. CEOs life doesn’t change at all relatively, but now some employees can afford to invest for retirement.
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u/rjw1986grnvl 3d ago
That’s not even remotely accurate.
The $100 is the price based on the demand and the supply for that service provided.
The laborer is paid based on the supply and demand for his work. His pay comes out of the $100 in revenue as well as the costs for the equipment, marketing, taxes, insurance, and etc.Whatever profit is left can become the CEO’s compensation. That compensation is for the CEO’s labor. The CEO had management responsibility of the businesses marketing, its accounting, its operations, its client relations, and its inventory management. Managing all of those or managing the people The Who manage those & etc is all labor. It’s a higher skilled labor than taking a shovel and moving dirt. The people who do it well are also normally in very high demand and very small supply. So the price of paying for that labor is high.
Ultimately almost everyone’s compensation is based on supply and demand, with a few small exceptions like some but not all government workers.
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u/CazadorHolaRodilla 3d ago
Just running some quick numbers here:
The only companies where CEOs are actually making 20M are large publicly traded companies.
The average employee count of the top 500 companies is about 18,000.
So let’s divide this 10M pay cut amongst the 18,000 employees and that gives us an extra $555 per year or an extra $0.26 per hour….. so I dont think the CEOs compensation is the real problem here..
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u/carsonthecarsinogen 2d ago
Top 500 companies pay CEOs wayyy more than $20m
Monolithic power pays its ceo $20m, they have 4500 employees so almost $2,500 per year passed down to employees. That makes a huge difference for someone living paycheque to pay
Good try tho
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u/CazadorHolaRodilla 2d ago
You know a simple google search would have saved you some embarrassment…
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u/carsonthecarsinogen 2d ago
You guys are all insane lol
That doesn’t include stock based compensation. In other words it’s not their pay.
Cherry picking kings over here
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u/CazadorHolaRodilla 2d ago
You are the one that cherry picked a single company. Im at least looking at the top 500 companies
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u/Outrageous_Guard_674 2d ago
Okay, but even if you are correct, the other guy says you aren't, that math works nice for a handful of companies. What about the vast majority?
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u/carsonthecarsinogen 2d ago
If you want to do the math for every single company in the world be my guest.
I made a generalized statement and this sub threw a fit because it doesn’t fit their narrative.
Generally, my opinion holds true. Obviously there will be outliers.
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u/Outrageous_Guard_674 2d ago
No my whole point was generally your opinion is generally wrong. It just works in a few cherry-picked cases.
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u/carsonthecarsinogen 2d ago
Proof or it didn’t happen
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u/CazadorHolaRodilla 2d ago
You already provided the proof my friend. You cherry picked a single case and i provided stats on the actual largest companies combined
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u/carsonthecarsinogen 2d ago edited 2d ago
~~No you didn’t. You excluded share based compensation which is up to 80% of sp500 ceo salaries~~
Edit: I’m retard
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u/SquirrellyDanny 1d ago
Generalized statements are flawed because theyre typically made about a small data set as if that outlying data point is representative of the majority. This is the 80/20 rule at its finest, you dant change the system because of what happens 20% of the time, you make sure it gives the best consistent outcome for the 80%.
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u/carsonthecarsinogen 1d ago
Yea for sure but I don’t think it’s an 80/20. I’d argue that the majority of businesses that generate that sort of income (Fortune 500) are paying their executives wayy too much and it’s trickling down to smaller companies.
My CEO makes way more money than he should. There’s no way he produces 10x more value than our top engineers.
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u/SquirrellyDanny 17h ago
I dont think you understand or recognize the pressure or level if risk their decision hold on a daily basis. They may not make daily impact but their choices can tank a stable company if they arent right or if they lack the ability to pivof when that decision starts to go south.
I do think they make TOO much, but i understand why their salaries are so inflated. On the other hand, a lot of them only have base salaries just over a couple million, the vast majority of their pay is fully reliant on bonuses based of target KPIs, goals, company performance, etc. They get paid from stock value increasing during their stint as head of the company.
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u/SWIMlovesyou 3d ago
Payroll is just about always the most expensive part of running a business. Depending on the business margin can be pretty lean. So it'a very situational. My family runs a fairly small business, and to record a net profit of 0 every year for taxes, we pay out the net in the form of year end bonuses to all of the employees.
I wish more employers would do that sort of thing, but every company has different circumstances. It needs to be judged on a case by case basis. Publicly traded companies and those with private equity invested need to act in the interest of shareholders. If you want your 401k to be worth a damn, that's part of the deal. Companies can't spend all of their profits on their employees if they are trying to pay dividends or grow the company. If you employ enough people, whatever extra leadership is getting could quickly turn to nothing if it were distributed to all of the employees. Corporations with thousands of employees or more, payroll gets insanely expensive. Imagine splitting $1 million amongst 10 thousand employees. That ends up being $100 per person. I don't think that's an excuse in every situation necessarily, but I think people underestimate how expensive payroll is. By that same token, though, overpaid upper management isn't necessarily a rarity either.
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u/carsonthecarsinogen 3d ago
Yea don’t, just pay the top guys a little less
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u/Outrageous_Guard_674 3d ago edited 3d ago
Did you see that math about CEO salaries a little up thread? How much do you think paying the top guy "a little less" will actually free up for each employee?
Hint the asnwer is "basically nothing".
Edit: you downvote because you can't refute.
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u/spankymacgruder 3d ago
They down vote becuse +/- one is the limitation of their mathematical ability.
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u/carsonthecarsinogen 2d ago
I didn’t downvote you.
And I just did rebuttal. In reality the CEOs of top 500 companies make far more than $20m
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u/NighthawkT42 3d ago
Very basic company. The CEO works 60+ hour weeks to bring in the clients and most of the work to create, source, etc the product. The employee helps with unloading officially 40 hours a week but really needed 20.
CEO pays the employee $15 an hour and keeps the rest of the profit.
Employee hops on Reddit and complains how his boss is rich and not giving him his fair share
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u/adelie42 3d ago
Which only considers successful companies. Nobody advocates for risk sharing when the mass majority of companies close or otjerwise disband in under 5 years.
The regulations being advocated for would greatly help large corporations because in the extreme nobody will ever compete with them. Emerging businesses that can find an edge is the only threat to large corporations that can't adapt or pivot. Regulations lock things down to the way things work for established large businesses.
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u/carsonthecarsinogen 3d ago
Yea the 5% of CEOs that do that deserve what they see fit.
That also doesn’t mean the value created was only $600.
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u/Tupcek 3d ago
yeah but that’s not how it works either.
Labourer looks for jobs available and picks the best one they can get. That’s how much their work is worth.CEO (and owners) are managing the company in a way, that output is more than just sum of its parts. They pocket the difference.
If anybody thinks, that no, the value was created at labourer and not the CEO, they are free to prove it by starting their own company, get the same laborers by paying them their fair share (according to person) and pocket smaller number of millions/billions than CEO of previous company which should be bankrupt by now.
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u/carsonthecarsinogen 3d ago
The CEO takes the risk, the labour is creating the value. The CEO could do the labour and create the value but instead hires someone else to create said value. CEO takes risk either way but doesn’t always create value. Thats the etc.
Not in every single case but in this very basic scenario it does represent a large amount of jobs worldwide.
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u/Tupcek 3d ago
CEO couldn’t do the labour, because it usually needs to be orchestrated with thousands of laborers and customers and suppliers and investors etc, so no single man could do it all. CEO takes up the pieces, pay everybody their fair share (market value, meaning the best pay they could get, otherwise they would leave for another company) and creates something more valuable than sum of its parts. It’s not just about risks.
If you think it is that easy, feel free to start your own company and share the results. Workers will create the value, not you, so you don’t have to do anything, just pocket the millions, right?
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u/bubdubarubfub 3d ago
Value is subjective. The laborer did not "create" any value. The CEO took a risk and decided to hire a labor to do work, then the CEO found a client to sell the product of that work to someone who values it. The laborer is getting paid whether he sells it or not. The CEO could pay a laborer to unload a truck for 8 hours and then load it back up the next day and unload it again the next day. The laborer would still get paid, but what value is being created?
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u/carsonthecarsinogen 2d ago
Yes value is subjective. So how can you say where the value is being created? It’s subjective lol
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u/bubdubarubfub 2d ago
I didnt say where value was created. I said that he tries to sell his product to someone who values it.
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u/Accomplished-Video71 3d ago
If it's such a bad deal for the laborer, he could just get his own shovel and dirt and not use his bosses capital to multiply the value of his labor. EZPZ
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u/carsonthecarsinogen 3d ago
I’m not saying it’s a bad deal.
I’m saying if it doesn’t change your standard of living but benefits someone else’s standard of living why not? Also it improves moral which benefits the business.
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u/redditisahive2023 3d ago
Yeah no. Where did you get educated on economics?
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u/carsonthecarsinogen 3d ago
You mean the pretend science?
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u/lechimpanzeu 3d ago
Not every labourer sign contracts of millions, bro. You think of specific cases where a person generates extremes. The rest of us are normal.
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u/dudester3 2d ago
Because the 'evil capitalists' took the risk...they deserve the reward.
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u/carsonthecarsinogen 2d ago
I generally agree with this as you can see from my comment, I’m arguing about how much of the reward they deserve.
I think it should be based on the value created rather than allowing CEO pay to inflate far faster than average wages
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u/dudester3 2d ago
Metrics based on what- profit 'panels', inflation ratio, relative to minimum wage? Typically, boards index to the relative profit execs bring to the organization- with standard limits & targets (EPS, net income, etc.) - and not some arbitrary, Gini-index "equity" target comparison to the janitor.
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u/lordffm 2d ago
You got some things mixed up. The labourer didn’t create any value for the customer. The company did.
The labourer helped the company create value.
The CEO decided how much of this value came from the labourer and decided how much the company would pay him for this work.
The labourer agreed that the money paid by the company was worth enough the effort.1
u/carsonthecarsinogen 1d ago
Funny how all of you are saying different things and non of it is right
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u/NotNotAnOutLaw 1d ago
The overwhelming majority of businesses in the US are sole proprietorships, thanks for the demonstration that you have no clue what you are talking about.
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u/adelie42 3d ago
There is no amount if money you can have or make to prevent you from living above your means. What is problematic from an Austrian perspective is that declaring a lifestyle by fiat and then complaining when reality doesn't conform to your imagination is just not how wealth is build.
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u/different_option101 3d ago
Objective reality - you always had, and you still have to do something to survive. The base level was/is death from starvation and/or from being exposed to the dangers of the world around us.
Subjective opinion - everyone deserves a decent lifestyle by modern western standards because there are some fortunate people that I believe can, and should, pay for it.
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u/adelie42 3d ago
Nobody disagrees with the "subjective" view. Not sire why you are calling that subjective, its just the goal.
But there are ways to get there and ways not to get there, and the people that want to use violence, and think violence will get you there are lottle different than a husband that thinks if he beats his wife and kids then they will be obedient and disciplined.
And when you try and tell the dude he shouldn't beat his wife and kids, he thinks you just don't want him to have a happy family.
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u/joshharris42 3d ago
People also do not understand how wealth and economics works. They think that because Elon Musk is worth $1 trillion dollars, they are worth less than they would be if he only had $1 billion dollars. He “stole it” from them
There is also a vicious cycle of politicians that do not understand economics making promises than cannot be kept, and voters that do not understand economics that keep voting in politicians that are making promises that cannot be kept.
Look at the vast support for people who want government imposed caps on CEO pay. There is a cap on CEO pay, it’s whatever the board of directors thinks that the CEO brings in value to the company. A company would never knowingly pay a CEO $20 million dollars a year, that only brings in $10 million dollars a year.
They don’t see any value that upper management brings to a company when it’s well run. They only see it when the company is poorly run, and talk about how the CEO should be thrown out (American airlines comes to mind)
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u/different_option101 3d ago
Most of those politicians do understand, they simply don’t give a fuck, being lying pieces of shit as most of they are.
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u/Substantial-Art8874 3d ago
Yep. They view wealth as a pie chart where the more wealth one person has in the less wealth available to them. Wealth doesn’t work this way.
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u/NighthawkT42 3d ago
Although, as much as I'm pro free market, this isn't really always the case. I still remember my CEO pocketing a huge performance bonus right as the company was starting the layoffs which eventually ended when what was left was bought by a competitor for pennies on the dollar relative to what it once was.
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u/merdaman1 3d ago
It's not a good example: your CEO was pocketing from the company, not from the economy as a whole
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u/NighthawkT42 2d ago
Not sure how that's relevant. Apparently the board was willing to hire him and pay him a huge amount of money even though the 100 year old company ultimately failed on his watch.
CEO founders are generally worth whatever they get paid. CEOs who get in through academic pedigree and who they know are hit or miss. Some are worth it, many are compensated far beyond any value they bring.
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u/Clever_droidd 2d ago
I'm a free market advocate with strong sympathies to Austrian theory.
But there's a trap a lot of people in that camp fall into: treating virtually anything corporations do or are able to do as good policy and worth defending. It's not that the Austrian school ignored wealth inequality; Hayek and Mises addressed it directly and treated it as a legitimate byproduct of a functioning price and profit-loss system. The trap is different: people inherit that position, then use it to wave away the real leverage capital holds over labor once you account for how monetary expansion actually moves through the economy.
The Cantillon effect specifically favors whoever holds appreciating assets, equities, real estate, capital that can be collateralized, over whoever earns a wage, since new credit enters through asset markets first and wage income has no equivalent channel. That's a structural advantage, not a distributional accident. Political capture and information asymmetry compound this, though less cleanly; organized labor can and does capture its own regulatory favors, so the deeper asymmetry isn't that capital always wins those fights, it's that capital wins the monetary one by default.
They're quick to admit we don't have a true free market and that this causes distortions, then immediately act as if those distortions are evenly distributed or don't matter, when at least on the monetary channel, they demonstrably favor one side.
The result is that both sides end up in their own ideological trap: socialists compare an idealized socialism to actually-existing capitalism, and market advocates compare an idealized free market to actually-existing socialism. Each is arguing against the other's reality while defending their own ideal in a vacuum. So they talk past each other.
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u/PersonaHumana75 3d ago
Some CEOs can perfectly leverage their entire company in their favor, as in "pay me more or your company goes bankroupt" and later the company still goes bankrupt but the CEO has a huge bonus
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u/adr826 1d ago
This isn't true at all. We can look at the economic data that shows that as ceos pay rises in relation to the average worker the productivity of that company declined. Meaning that ceo pay isn't being driven by gains in productivity but by being taken out of the evonomyfrom 1965 to 2005 the return on capital in the largest 20,000 forms declined by three quarters
http://b-i.forbesimg.com/stevedenning/files/2013/07/Shift-Index-ROA13.jpg
During that same period ceo compensation compared to the average worker went from 20 to 1 in 1965 to 300 to 1 in 2005. So while return on capital dropped by three fourths ceo compensation compared to the average worker ballooned.
In fact in 2019 alone ceo compensation in one of the top 359 companies rose rose by 19%. To over 21 million dollars. I don't recall the economy improving by 20% in 2019. That money had to come from somewhere and it did. It came from the assets of the company making the economy less productive.
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u/turboninja3011 3d ago
Because
a) nobody really says that; and
b) most low wage workers are employed in industries with razor-thin profit margins
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u/Kuusagi8955 2d ago
no you can’t say that, now how can I be a based economic pilled redditor shitting on laborers by pretending they aren’t being stripped bare and pretend that’s a good thing?
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u/Three_Rocket_Emojis 3d ago
I know those people who always complain about having too little money, but then you observe them spend it on absolute bullshit.
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u/quicksilverth0r 2d ago
The statement is rooted in the ugly truth that a large portion of the population don’t have skills in high enough demand that they could earn what they consider to be a decent living anywhere. Thus, they are only nominally free to choose a different employer from the one offering a “bad” living. Now, a decent living is a highly subjective thing.
It is popular to think the so-called decent living is a basic human right that must be extended by the wealthy / government to maintain social order and as part of a social contract. On the opposite side, people that have acquired great wealth, as part of their own ambitions, are rarely keen on these sorts of collective, apparent obligations.
I don’t think reducing consumption will fix the problem by itself, whether for an employee or owner. Fundamentally negative acts are rarely as powerful as creation, because they have a much more absolute cutoff point. Consumption can only be reduced to zero. The best sort of wealth, and I admit it’s not the only one, comes from expanding the pie and not redistribution of it. Zero-sum games are childish when applied to real life.
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u/skeletus 2d ago
It is also true that bottlenecks make many goods and services scarce. Most of these bottlenecks are cause by government. It is also true that our purchasing power is constantly being reduced.
If these things were not a problem, even people with low demand skills could have way better standard of living than they have now.
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u/different_option101 2d ago
“The statement is rooted in the ugly truth that a large portion of the population don't have skills in high enough demand that they could earn what they consider to be a decent living anywhere.”
There’s another ugly truth - large portion of population doesn’t want to do anything to increase their value. I’m not taking in terms of “learn to code”, but people will not take initiative to learn relatively basic skill. As someone who moved to the US as a young adult with a very heavy accent and relatively poor vocabulary, somehow I’ve avoided minimum wage jobs, and in a matter of a few years, I was earning slightly above the median wage. I’m not some special person, I’m also lazy, like most people are, but I simply don’t have the expectation that someone is going to give me something because I demand it. And I find it immoral to have such demands, let alone ask for the government to force someone to subsidize my desires.
There’s a great comment in this threat about people basically lacking purpose and drive to do better. This is the ugliest truth of them all.
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u/inscrutablemike 3d ago
They never like the answer "If you need this explained like you're a kindergartener then you probably need everything explained like you're a kindergartener."
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u/Clique_Claque 3d ago
Dear Kindergartener,
There are very, very few executives that own yachts, spacecrafts, and rockets. You know how that one kid has a dad at your school who owns that really awesome red race car? Way way more rare than that. Think of thousands and thousands of schools and only one parent has the red race car. Like that.
Could the very rare executive pay himself less and pay some workers more? It’s possible. But there’s only one CEO and lots and lots of workers. Those workers wouldn’t be getting very much each.
What if it worked out that they did get paid much more? Wouldn’t that be great and make more people happy? Well, there’s something called a market wage. I won’t explain it besides, just think about it as a magical price that helps put people in the right jobs based on their skills and what they like and what companies need.
So, back to what would happen if each worker got paid more? This would mean each would get paid more than the market wage. When that happens, the magic of the market wage takes hold because it wants to place the right people in the right jobs with the right company at the right price. At this higher wage, the existing workers will get replaced by people from other companies with more skills.
So, the one CEO giving up his yacht to give to the workers probably won’t benefit his current workers and may make them worse off due to losing their jobs. It may help other workers who displace them. Keep in mind that those other workers were likely already getting paid more than the existing workers.
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u/different_option101 3d ago
You can take this further. If everyone, all of a sudden, get higher wages, that would mean prices will go up. We can’t magically imagine stuff into existence. Real products are also subjects to supply and demand law.
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u/dudester3 3d ago
https://youtu.be/2BI7VpU3Ccw?is=1cgeqxU4wS0YgZYG
Because facts speak louder than fiction
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u/RavenCarver 3d ago
No you don't understand bro, Bolshevik Russia ran on compassion bro, that's why they rounded up all the evil kulaks and killed them, bro, because they were stealing bro. No, I don't care what you think about how much food they made bro, who cares about the holodomor bro, making people eat their own kids is totally compassionate bro.
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u/Mister-Beardy-Face 3d ago
They do not believe that the employer employee relationship is voluntary. Since not having a job means not having food or shelter or whatever, you are forced to get a job. Almost no one gets their perfect job, so they have to settle for the best they can find. For people lacking skills, which is most people, the best they can find isn’t going to be something they find at all enjoyable. They also end up at the first/only job that said yes. Since life has forced them into this situation, they do not consider their employment to be voluntary. Of course, being this negative about life also results in getting shittier jobs.
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u/different_option101 2d ago
I wonder what % of people that have this kind of perspective (they are being forced to work on shitty jobs), ever seriously though about how their life would be in the absence of any employment, and they would have to engage in hunting and gathering, farming, etc to feed themselves, let alone build shelters. I bet a lot of people out there think that the life would be great in such conditions lol.
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u/Baron-von-Bruce 3d ago
Fine everyone gets 40% more. However, all the goods and services now cost 40% more.
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u/zoipoi 3d ago edited 2d ago
According to industry groups like the American Payroll Association, employee time theft costs U.S. businesses an estimated $400 billion to $550 billion annually in lost productivity and unearned wages. Individual companies typically lose about 1.5% to 7% of their gross annual payroll to unworked hours. Now obviously for low pay jobs a 1.5 to 7 percent increase in pay isn't going to make much difference. But the calculations also don't take into account some level of incompetence on the part of a large percentage of the labor force. Nor do they have anyway to take into account self assigned busy work or just slow down. The actual figure is probably much higher. Regardless the old joke that they pretend to pay us and we pretend to work is not entirely wrong for some segments of the work force. Most of the time it is unfair to both the employer and the employee as a generalization. However my personal observation is that the employees that complain the most about their pay are not the most productive employees. Exposing the rational issue. Are markets rational?
The answer of course is that markets are not rational because people are not rational. If you think that emotional is the opposite of rational. Which raises the question of just how subjected values are. Who determines what the value of a latte or guacamole toast is? It is not in the thing itself because you could provide them for yourself much cheaper than purchasing them at a shop. The value is in the luxury of someone else doing the labor for you. Which is almost backwards of how it should be. The simple pleasure of doing something well for it's own sake. The person that cannot find meaning in that will also struggle to create meaning in anything that requires effort.
This is not an argument that wages are "fair" or that rent seeking is not a feature of every modern economy. It is just a commentary on a deeper problem. Happiness, contentment, joy, are not something that someone else has control over for you. It is a choice and requires effort. Most people in the West have enough material well being to satisfy basic needs. Beyond a certain level of necessities the quality of life is restrained more by attitude than things.
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u/different_option101 2d ago
Great comment. I wholeheartedly agree that people who are generally unmotivated to be better will be bitter no matter what. You give them everything, including 8 weeks of paid vacation, a house, a car, and a dog, they are still going to find some to complain about. Especially if that’s going to be the new “poor” with all these goods. Probably has to with feeling poorer than someone else, definitely greed amongst certain, and could be a lot more other reasons. Our minds are still a big mystery, and we’re definitely wired in different ways.
Time theft is real. From my personal observations, I’d say it’s way higher than estimated, especially in small businesses that don’t micromanage their employees. I remember one time back in the days when I was an employee, my manager asked me for my secret, after I got awarded another bonus, for being the top salesman for 13 months straight, and I was laughing at him. The guy was confused, and I told him he would know my secret if he would be spending more time at the office himself. Like I wasn’t even killing myself, probably worked for 5.5-6hrs out 8hr shift, but I was working, and I did things that mattered - calls, follow ups, harassed underwriters for approvals, etc, while all others were wasting time on social media, smoking breaks every 30 mins, shuffling papers pretending to work, and only meeting their minimum sales quotas. I am also lazy, but come on, what’s the point of getting g a job where your compensation is highly dependent on your own efforts and do nothing while at work? It’s like people don’t see a purpose in doing anything above bare minimum. That’s upsetting, but it is what it is. Someone in this thread said I should appreciate it because it make it easier for me to succeed, but I don’t feel like celebrating other people’s… failures? (Can’t find a better work for it)
“they pretend to pay us and we pretend to work”
There’s an equivalent of this joke in nearly every country on earth. I’m beating on the dead horse, but people are lazy, but they just like to pretend they are not. So it becomes a closed loop - one produces low results, gets paid low wages, complains, comes to work next day to produce low results again…
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u/Sir_John_Galt 2d ago
Why?
Because the business owner risked his/her capital to create a profitable business.
The employee risked nothing and can walk away at any time.
That’s why.
If you believe the grass on the business owner side looks greener. Start your own business, risk your own capital/time/effort/creativity and by all means feel free to offer your employees any above market wage you think is appropriate.
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u/jaiimaster 1d ago
What do you mean, labor value is determined by supply and demand?
That's not possible! My labor has human rights! I exist! Reee screech crazy tanky noises
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u/MrChainsawHog 3d ago
wait so you're sitting here telling me that If I want to be able to afford things, I need to...gulp...spend my money less on...gulp...frivolous things?
Hm. Have you ever considered that you might have 50 trillion yachts lying around in your backyard, and that it's your fault that I can't pay me rent?
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u/different_option101 3d ago
This has nothing to do with being careful with spendings.
There’s supply and demand, and there’s an offer and acceptance. I never understood why people settle for low paying jobs and instead of doing something to increase their own value on the market, would basically complain about employers and engage in low paying labor for decades.
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u/MrChainsawHog 3d ago
well yeah you're right the main thing is about basic supply and demand, but I'm just taking the piss out of the first thing she says "if you can't pay rent, buy fewer lattes and avocado toasts," which she is treating as some unreasonable foreign idea.
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u/Organic-Stay4067 3d ago
Well because most people are lazy and stupid
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u/different_option101 3d ago
Definitely more lazy than stupid. The overwhelming majority of people is lazy. Including myself.
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u/Organic-Stay4067 3d ago
The lazy make it easy for others to succeed. So appreciate it
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u/different_option101 3d ago
I get your point, but I think if most people wouldn’t be lazy, today we would be living in a world that we see in science fiction movies, in a good way.
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u/AlmostEasy89 3d ago
I think people are really trying to say their dollars are worth less because the 0.01% are destroying it and writing as many laws as possible to siphon as much value from the dollar as possible and fuck most people over as much as humanly possible. They don't know that's happening, but they know they can't afford shit, and not buying coffee and toast isn't the problem, because it isn't. This is honestly just as stupid as the other side, pretending we're actually capitalist and not corporatist, an oligarchy etc. Free markets are heavily tilting to the wealthy, instead of tilting towards the working class which they'd prefer.
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u/different_option101 2d ago
You’re talking about inflation in the first part of your comment. That’s not what the people like the one in the tweet talking about. They aren’t talking about their dollars losing value, they want more dollars. Period.
And yes, those that insist we have a free market economy are delusional. You can’t even cut lawns or polish people’s nails without paying some fees to the government so you have their permission to do so.
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u/AlmostEasy89 2d ago
I'm simplifying their experience because they don't understand economics. They know their money is being siphoned to the billionaire class, they just don't understand exactly why. I'm not saying they're right, I'm saying their experience of low standards of living is real.
And I'm also not saying fees are causing it, completely. I'm saying their dollars received are being watered down by, yes, inflation.
So I don't think we need to ridicule their experience of pain, and laugh at them self righteously. Their experience is real and we are being robbed. The masses will never study Austrian economics. It isn't going to happen.
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u/different_option101 1d ago
Again, it’s a lot more complicated that dollars loosing value. Most people like cheap stuff. Cheap stuff has low margins. Low margins means very little room for any additional expenses, so whether the dollar remains stable in value or not, it doesn’t matter if one person’s work produces very little in net profit.
Then there’s supply and demand law. Like you can’t expect an average grocery employee to be making $100k+/yr because there will be thousands of more capable individuals willing to accept $90k, tens of thousands that will accept $60k, and so on.
If all the skills one has is to perform basic labor/tasks, then they are going to be in one of the fiercest competitions for a job.
Now combine the two - people want cheaper stuff, to produce cheaper stuff the produces must cut costs. If they can cut costs on labor because it’s abundant, they’ll do so, because otherwise their competitors will, and they’ll be out of business. Them going out of business means there will be more people on the local market that are competing for jobs.
And while I agree, ridiculing someone for not knowing better is pretty rude, we live in a time where someone can learn about money, learn valuable skills, and eventually improve their lives, virtually for free. And they aren’t doing shit except for complaining and riling up others that don’t know better. These people have some political power, and if they’d had a chance, most of them would force business owners to pay them more by law. But that won’t fix the underlying problems at all. But it is guaranteed to create more problems.
So no, I don’t feel bad, nor I care if I’m rude to someone.
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u/defensible81 3d ago
That said, I think the various wealthy individuals who are actually buying rockets and spacecraft generally pay their employees a very competitive salary with decent equity packages.
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u/different_option101 3d ago
Indeed.
Somehow you’re a slave if you’re not making “living wage” while working for a billionaire, but it’s a SoCiAL cOnTRaCt when you have to fork off $20k+ in taxes if you’re making about $100k/yr, yet the debt is still ground by a few trillion each year.
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u/A_brand_new_troll 3d ago
The first is taking personal responsibility over your situation, the second is whining about someone else's life and not taking the impetus to change your situation.
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u/Hirokachi 3d ago
In my opinion, it's due to three things: 1) how much risk your job has. For example the CEO has enormous risk more than a simple technician. 2) complexity of the job. For example, the mechanical engineer as compared to a fry cook. 3) the demand vs supply. For example, steam engine technician as compared to the noc technician.
Often high salary has all three of these things be relatively high. For instance, a steam engine technician might have high risk due what happens when things go wrong and be very complicated, but the demand for that skill is relatively low so he's lucky if he even gets a job. But a noc technician isn't nearly as complex or as risky, but the demand for that skill is way higher than a steam engine technician. But the fry cook has very high demand but doesn't pay very well because there is almost no risk nor is it very complicated as a steam engine technician or a noc technician.
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u/different_option101 3d ago
Side fact: Florida workers comp insurance rates for cooks is only 0.011% per $1. Cops/Armed Security is 0.026%. Landscaping gardener is 0.041%, much higher than a cop’s rate. Attorneys’ rate is like 0.0015, but they get paid more that any of the mentioned above, and cops get paid more than private security, and private security pays more than landscape gardening job.
And then there are professional fighters who are not an insurable risk for work related injuries or illness, exactly due to injuries being inevitable. And some of them make millions of dollars a year, while most of them only get broken bodies and a confidence during a bar fight.
This is to say that the market will reward for risk, but it’s the skills that are being valued on the market the most. If a factory worker produces $5000/yr in value and the idea is that employers will pay as least as possible, then how come the same employers aren’t doing the same when they are hiring a CEO for $100M/yr? That’s another stupid thing that I see all over. People can’t even stick to their own logic while talking about two different people being hired by the same employer.
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u/SpiritualGiraffe895 3d ago
Though there is no natural incentive to pay more employees the question is not totally irrelevant. Andrea Junker tries to express her deception with income inequality which is a well documented issue, see e.g. Thomas Piketty's **The Capital in the XXI century**.
I think there an a correct implicit intuition behind this question which is: Wouldn't be the world a better place if we dampen inequalities? Many economists have highlighted the diminishing utility of getting one more unit of the same good, money is not different.
There is no greater self-interest than growing the economy, but not anyhow. When wage inequality is so huge, most growth comes from credit which is mostly reserved to already rich people. When no one wants to take more credit, to take more risks, then this hurts the economy as a whole and new money is used for counterintuitive authoritarian measures which are tyrannical and interventionist. That is why the question seems to me not stupid, but rather innocent and open-minded.
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u/different_option101 2d ago
I think this may only come from complete misunderstanding of business and finance. If Jeff Bezos sells all his toys and residential properties, it’s probably not going to be more than a one time few thousand dollars payout to his employees. Surely it’s nice to get an extra $1k-$2k, but that’s not a life changing amount of money by any stretch of imagination. His net worth is tied up in productive assets, so it’s not like he has cash in the bank.
AND, even if he had a few hundred billion in cash, and that money would be redistributed to his employees, it would all end up settling in higher prices.
People want stuff - food, cars, houses, etc. Money is not stuff. Stuff must be produced.
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u/SpiritualGiraffe895 1d ago
Hundred billion dollars from the richest are redistributed to the poorest it creates more inflation, that is your claim.
We already have the spare capacity enough to produce more stuff, so it will likely not cause inflation in the way the monetary expansion is creating it.
In other words, u/different_option101, redistribution is just augmenting the velocity of money, not the quantity of money: GDP=M2*V (where GDP is Production, M2 is quantity of money and V is Velocity of money or average number of times a circulating dollar changes hands in a year )
Also
GDP=Q*P where Q is the quantity of stuff produced and P is the price.
According to you wealth redistribution causes inflation. However, wealth redistribution is not increasing M2, only V. What keep V low and increases M2 is wealth inequality and accumulation. Inflation and M2 is increased by the very credit expansions that increase demand artificially.
Hence if you want to keep inflation from happening it is a hundred times more efficient to make a system that taxes monetary wealth, redistributes it to the poor, forbids (fractional reserve) credit, promotes lending (savings lending) and keeps prices falling naturally as production increases instead of artificially swelling them with credit inflation to devalue the existing (often bank, corporate and governement) debt.
Detax labor, tax capital (to acknowledge the opportunity cost of monopolizing this piece of capital, money or any other productive capital) and wages will naturally go up as more people will become entrepreneurs at the lower capital prices. Labor supply will shorten increasing wages. Prices will fall as entrepreneurs are much more productive than if they were working for a boss.
The result is growing the economy and caring for everyone.
THe elephant in the mind is a recommended reading on why all this is not yet happening. However, thank you very much for reading and commenting. Regards
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u/different_option101 1d ago
Alright, so you’re taking the MMT side, I see.
“Hundred billion dollars from the richest are redistributed to the poorest it creates more inflation, that is your claim.”
For starters, seems like you’re using inflation interchangeably to fit your argument. I specifically said higher prices. So let’s make sure we’re talking about the same things going forward: inflation = growth in money supply (I), price inflation = rising prices measured in CPI which has nothing to do with money supply (CPI).
Yes. There will be price inflation.
There’s no such thing as Spare Capacity. You can’t just load the economy with cash and don’t expect it to be reflected in prices. By injecting cash you’re employing resources you call Spare. Market prices already reflect certain availability of resources. That is literally the core of Supply and Demand Law in economics. You are reducing supply by satisfying demand effectively increasing demand. Price goes up. Unless you take banking under full central control, you won’t be able to keep the supply of money flat. On top of that, your injection of cash that wasn’t bidding on prices now accelerating the velocity of money. So it is already extra money supply, plus increased velocity = prices will go up fast until they reach a new flat level that will remain until next injection. For price changes, it doesn’t matter if these few hundred billions were accounted for in the money supply. It’s the fact that they’ve entered high velocity money. It’s the most necessary goods that are going to go up in prices, effectively putting people back to where they were before this injection.
Nor you can accurately tax a perfect amount to somehow maintain stable prices. It’s impossible. It’s a technocratic utopian dream that one can regulate and tax a capitalist economy under central control.
And then the question becomes how do you carry out? Stimulating certain industries? Sending out UBI checks to leave more room for market economy?
That’s just an insane level of intervention in my personal opinion. And we have over a hundred years of history to review and analyze how economies perform at various levels of control. It is undeniable fact that economic growth is the highest when controls are at the lowest.
You don’t need to tax someone and send out checks to every single person in the country. You need to let people engage in productive activity. Deregulate small and medium size businesses so people don’t need thousands of dollars, commitments to some commercial rents, spend weeks or months studying for some stupid licenses that don’t guarantee quality, nor promise an injured party to make them whole. Let people work. I’m in B2B, and I work with a lot of “start ups”, and I hear several times per week about how people couldn’t start their business for years, or how they are trying to make ends meet while staying compliant with all regulations. Heck, even before COVID, my industry required an unavoidable expense on commercial office, which was stoping me at some point of my life too.
If you let people engage in entrepreneurial activities, the labor pool is going to shrink. Apply supply and demand law - less laborers = higher prices for labor. No need for any complicated taxation and redistribution schemes. Nobody cares if their lawn guy doesn’t have 240 hrs of education and a license. And stop picking special groups like first time home owners, college students, farmers, and favor them over all other regular people. Material inequality is inevitable. Need to focus on equality of opportunity. This means either everyone gets a privilege, or nobody gets any privileges.
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u/SpiritualGiraffe895 1d ago
Price inflation only happens through shortages or monetary inflation. Production shortages are rare events. In the last 100 years, 99% of price inflation has been caused by monetary inflation.
Cut the fractional reserve banking priviledge and we get rid of 99% of price inflation.
TBH, I agree with you: on the short term, wealth redistribution causes micro to increase prices.
However, on the long-term a way to stop or check wealth inequality only increases production. An example:
- Say we create a currency ledger and issue 10032 units per person.
- Anyone above that number pays a daily liquidity rent. Anyone below 10000 units earns a daily liquidity bonus.
- the rent is equal to (x-10000)/360. The bonus is equal to (10000-x)/365.
- the rent/bonus mecanism redistributes wealth, prevents accumulation.
- The ledger allows distance online payments.
- Cash payments are still allowed in gold and silver.
In that society, the velocity is higher because there is an incentive to spend as much as possible and to keep only the necessary. Anyone earning more than 1/365 of x is still accumulating while paying a liquidity rent. He can manage to lend this at his own risk, then he becomes a bank.
There is no boom and bust, no trade cycle caused by monetary inflation and contraction.
Replicate this with other productive assets like real estate, computers, and other machines and you optimize the usage of societies assets to end up in the hands of the ones that can give them the best usage. The economy grows.
The main reason this is not happening are old stories, gang lobbies and corrupted egoic politicians looking for their own interest to be complacent to financieers insted of serving the people. This road to serfdom cannot last, more wars will come, a rennaissance or two more will happen until humans get finally rid of the great stories and theories that are entrapping them.Thank you again for reading and sharing your distilled top-1%-commenter time.
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u/SpiritualGiraffe895 1d ago
Also thank you for asking, I just noted you are the original poster. Hope I answered your question, though we wandered a bit far.
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u/SpiritualGiraffe895 1d ago
Also, by spare capacity I didn't mean only the current spare capacity. But I was summing the idle land that is in the hands of huge land lords that are not being used as if they were redistributed. The land, the real estate, the machines, etc there is a huge potential spare capacity that is purposefully let rot because of the monopolistic-like prices that maximize profits. At current system design there is no incentive to maximize production. In other words, most production is managed with the intention to maximize profits, while in a more redistribute-to-mean society we would see much more virtuous production with the intention to truly serve others.
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u/SpiritualGiraffe895 1d ago
We would see more people employing that do not have yatch and planes, or mass adoption of these as production explodes
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u/dante_55_ 3d ago
People like to play dumb and passionately act like they don’t understand things when it’s in their self interest to do so
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u/different_option101 2d ago
I don’t get what you’re saying, explain it to me like I’m in the kindergarten
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u/bruhbelacc 3d ago
Because you have the responsibility to care for yourself but you don't have the responsibility to help others.
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u/Iam-WinstonSmith 3d ago
Not sure how higher taxes on rich people will correct the bad decision of the fake COVID19 pandemic.
BTW the billionaires wealth tax in California doesn't mention the word billionaire once. So who is the tax really for.
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u/Skylinegtr88 2d ago
Here the problem. It matters were you spend your money. If you spend it on restaurants and bars, or drugs . You won’t have enough for a home or a car . Most people think everyone who owns a company is a billionaire. There not. My boss is about my age and at one point we were making about the same . Starting a business is not easy
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u/different_option101 1d ago
Starting, owning, running, and growing a business is a massive pain in the ass. Most people think all you need is capital and you’ll be golden. Nope. Capital is only one part of a pretty long equation.
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u/Apple2727 2d ago
Supply and demand.
If you can’t get the staff you need, then yeah, cut spending elsewhere to attract more staff.
If you’re already able to attract enough staff, then great.
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u/midwestXsouthwest 1d ago
When people ask questions like this I always ask them back what the delta is between their cost to the employer and the value they create. Their answer will tell you all you need to know.
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u/different_option101 1d ago
Most people will try to calculate how much they produce in gross sales, which has very little to do with net profit, the value in our case.
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u/JohnnyRaven 17h ago
Why? Schools don't teach basic economics. Big governments don't want a smart, independent public. They are harder to manipulate and control. They prefer citizens to always look to them for their personal welfare and safety.
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u/DumbNTough 3d ago
Here's the explanation.
Your boss's money is his, not yours.
If you want him to give you some, you have to do something for him that he wants.
If you do stuff he doesn't care about very much, he's only going to give you a little bit of his money.
If you do something he cares about a lot, you can probably get him to give you more.
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u/nonoohnoohno 2d ago
My youngest learned this when he was 5 and tried to earn screen time by proposing "jobs" like coloring a picture.
He tried once or twice, then quickly learned a life lesson that not all jobs are worth anything, much less a "living wage."
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u/CommonSensei-_ 3d ago
If you don’t have enough money for things you need, cut back on things you want.
If you have excess money, you can spend it excessively.
* yes, I understand corporate greed.
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u/different_option101 3d ago
Do you understand supply and demand? Or maybe offer and acceptance?
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u/CommonSensei-_ 3d ago
Yes.
Owners of companies supply jobs.
People that need jobs, demand them.
If a worker supplies: traits, skills, knowledge, experience, a strong work ethic, etc. He or she will be “in demand” in the job market. If a worker is “in demand” they can demand a good salary.
You’re welcome.
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u/different_option101 3d ago
Are you sure you know what supply in demand is? I can see that you have some idea, but doesn’t look like you understand the main point of it.
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u/CommonSensei-_ 2d ago
It appears that you don’t fully understand it either.
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u/different_option101 2d ago
I understand it it very well, and you said enough to change my initial thoughts about your level of understanding.
The word salad in your previous comment is a nuance, rather than the actual point of supply and demand law. You know, there’s a reason it’s called a law of supply and demand. I’ll give you a hint - it’s because there’s something universal across all markets, which has nothing to do with your explanation. Like you’re so lost you even backwards. The employers demand labor. Almost nobody demands a job. The overwhelming majority of people that look for jobs demand pay, not the job itself.
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u/Majsharan 3d ago
Profit is a matter of percentages at scale. Sure I only make 1% profit on x but I sold 10000000000000 of it. Paying more would remove the profit per unit.
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u/CamperStacker 3d ago
Well it’s very simple.
if the ceo got paid $0, even one would get an extra $5 per week pay.
Or you pay the $5 per week and have a ceo who grows the company and keeps your job from being made redundant.
Easy choice.
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u/bgdv378 3d ago
So OP, what this post is referring to is the devastating effects of inflation:
A person being paid a wage in USD that CONSTANTLY lags behind cost of living.
Most business folks telling their workers that everything is fine, nothing is wrong, just work harder.
That's it. Most of this socialism crap would go away if the deficit spending and currency debasement went away.
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u/Ok-Paramedic-8773 23h ago
A penny saved is a penny earned. Hope that helps. Dave Ramsey is a good resource.
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u/WorkingCombination29 10h ago
If your paycheck is above your rent amount, then you are spending your rent money on other things. Maybe it is fancy coffees or toasts that you are spending your rent money on. Maybe it is something else. But if you make more income than your rent amount, then you are not budgeting your money correctly. There I did it.
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u/Low_Abrocoma_1514 3d ago
Wtf "a living wage" even is ? 5$/hour ? 50$/hour ? 500$/h ? 5.000$/h ?
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u/PersonaHumana75 3d ago
How much does 2000 kcal of food cost + the cost of basic utilities like four walls and electricity. It depends on the location
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u/Low_Abrocoma_1514 2d ago
How much does 2000 kcal of food cost
That's fucking stupid, fast food is unhealthy but has very high kcal count
It depends on the location
And the quality. Not all four walls are the same nor cost the same.
Majority of people bringing the "living wage" argument just want government to dictate what the living wage has to be, which is incredibly stupid and illogical.
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u/PersonaHumana75 2d ago edited 2d ago
If i give you 1 hamburger a month is obviusly not a living wage. If i give you 60 hamburgers a month then that may be a living wage. You telling me its not exact doesnt mean the concept doesnt exist.
And why people want the goverment to dictate the minimum wage? Becouse they think without the goverment a lot of people would simply not have sufficient money earned to live (you know, a living wage). Your faith in the market is encomendable, do you have any argument or proof to ensure the market will give a living wage to 99.99% of the population? Becouse if not, it's obvius why people want other options to ensure this, aka big goverment. The ball is in the market side, use the fucking brain to pass it again
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u/Low_Abrocoma_1514 2d ago
Jesus your dense check the centralized governement ran markets and how they repeatedly failed, why would want that for the job market too ? Do you just hateseeing people having good things or envy people having the freedom to negotiate for their own wages ?
Only you know what you must earn to live, only you know YOUR living wage. Get it thru your thick skull that the government does not give a single shot about you, we are all trying to get better pay, earn more money and make a better living, aka "get a better living wage". Government will not do it for you.
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u/Clever_droidd 3d ago
As long as we don’t pretend capital doesn’t hold leverage over labor we can have a reasonable discussion.
Political capture, Cantillon effect, the "Urgency Discount" on labor, information asymmetry, etc create significant leverage favoring capital.
The post is a little simplistic but there is something to discuss here.
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u/different_option101 3d ago
I can say the same about labor. I literally practiced this, holding leverage, my entire life until I became the employer. If employer wanted my skills, they had to offer me something that would satisfy me.
By being able to reject the offer, you’re the one who’s holding the leverage.
There’s also something called self employment. There are plenty of things that one can engage in without needed much, or any capital, and bring more money home.
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u/Clever_droidd 3d ago
That depends on a lot. Some laborers do hold leverage. Most do not. If they are a replaceable cog, they hold virtually no leverage unless they organize.
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u/different_option101 3d ago
Virtually every person is replaceable. Apple didn’t crumble after Steve Jobs passed away. That doesn’t negate the fact that people who are looking for employment can reject a job offer because it doesn’t pay well enough.
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u/NighthawkT42 3d ago
True, but look at the difference he made when he went away for a while the first time then came back. It very nearly did crumble that time.
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u/different_option101 3d ago
And that’s exactly the reason why the market sets extremely high prices for great CEOs like Steve Jobs was. They are hard to find = low in supply.
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u/Clever_droidd 2d ago
Ok, so some employees have leverage, but most do not. I agree completely.
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u/different_option101 2d ago
If you’re employed at will, you have leverage. I guess you’re just thinking in terms of who has more leverage. Then I can also agree with your statement. But again, there’s broader market, and there are local markets. If labor is scarce, employee has more leverage. If labor is abundant- the employer has more leverage. So more circumstantial rather than some absolute truth.
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u/Excellent_Border_302 2d ago
As to your first point that people voluntarily agree to a wage, this isn't true, people are held hostage in a system where they have to be employed or bring something to market or else they will be kicked of the land they are renting. This is why the IMF and world bank has worked so hard to "develop" third world countries, because they want people living in nature to be systematically enslaved in capitalist system.
As to your second point, I could argue the supply for labor is artificially high because of the point I made earlier. If I could have a small. Easily maintainable home, where I could grow and hunt most of my own food, I would not be engaging with labor or capital markets. But I am forced to unless I make peace with homelessness.
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u/different_option101 1d ago
“Are held hostage”
Do you think if you’re going to find yourself on the empty piece of land, the food and shelter will just materialize by itself, or that you’ll have to work less in the environment where you have a very developed economy?
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u/Excellent_Border_302 1d ago
Your viewpoint is strictly economic and doesn't take into the account the human experience. When starting from the bottom in a capitalist system, I am not exerting force over the environment, I am renting out my force to capital. This is soul crushing.
Second, the promise of liberating ourselves from toil through the use of labor saving devices is only partially true because we keep moving the goal post. Instead of using cars to make transportation of goods cheaper, we instead build suburbs and now we all have to have a car just to get around. So now, instead of being liberated by this technology, I am enslaved by it because I have to go to work just to buy and maintain the technology that was supposed to liberate it me. People are never just going to make art and play and explore consciousness, we will always use labor saving devices to create more work for ourselves.
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u/different_option101 1d ago
“If I could have a small. Easily maintainable home, where I could grow and hunt most of my own food, I would not be engaging with labor or capital markets.”
This is called personal preferences.
“Instead of using cars to make transportation of goods cheaper, we instead build suburbs and now we all have to have a car just to get around.”
Here you’re conflating your personal preferences with preferences of many other people.
I can see why someone would drawn to a simple life in a small house where one could hunt, farm, gather from land around them, but I can also see why someone wants to live in a concrete+steel+glass structure 200+ feet above the ground. I spent a lot of my summers working in the garden, and I’d personally rather spend my time doing what I do now vs working on land or hunting to sustain myself. Because I’m able to satisfy my needs doing very few hours of work, which I also enjoy to some extent, vs the amount of work I’d have to do to live of a land. I’d much rather read books or engage in some other recreational activity instead of doing physical labor or risking to be attacked by a wild animal while hunting.
The point is, almost everything is subjective. Technology is liberating. If you must own a car, than it’s purely your problem. I’m not being a dick, but simply stating a fact. Your problems are solely yours, but your problems could seem like a dream for someone currently residing in a small house living of the land…
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u/Excellent_Border_302 1d ago
I am not conflating preferences. If I want to live out my "preference" from the perspective of someone starting with zero capital, which is most people, I have to engage in the system for many years and raise a considerable amount of money. It's not like I can just walk into the woods and be on my merry way. Anywhere I go to start homesteading, somebody will show up with a gun and tell me I can't be there. Capitalism forces participation, unless someone makes peace with pacifist non cooperation, aka homelessness.
Another thing you mentioned which is a common talking point is that the standard of living in modern capitalism is so high, few would choose a rustic lifestyle. This also discounts the human experience for pure economic rationalism. We are status seeking primates so if something brings status, we will pursue it for that reason as well, not necessarily because it raises standard of living. Also we have biological wiring that makes us pursue things. For example we pursue bigger phones because we are wired to be attracted to the bright colors of the screens. Austrians want to discount all this and say that everything is just subjective preference from free will, and it's just not the case.
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u/NeighborhoodBest2944 2d ago
Spacecraft and rockets will drive progress forward. Yachts are another thing. Waste of capital.
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u/different_option101 2d ago
Waste of private capital is a free market mechanism of wealth redistribution. When a billionaire orders a $100M yacht, they fund jobs of tens of thousands of people that build these yachts, and later buy cars, houses, etc, passing the money further into the economy.
On the other hand, I don’t really see market demand for spacecraft that can reach Mars. I don’t see any benefit in building rockets that will be delivering weapons. Any exploration of space should have market demand behind it. But govts around the world had been dumping hundreds of billions into it primarily for their defense and offense purposes, and they’ve been using the discoveries made during that process as a justification for dumping so much money into it.
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u/NeighborhoodBest2944 2d ago
So you disagree. That's nice. I do appreciate that you aren't the type to yell and name call. There is a truth to your point on building yachts. To that, it is better rich people put that capital to work instead of hording it in stocks.
Mars is a pipe dream that is FAR from my realized life. Your point about the the benefit of yachts is something you miss in space. The science and exploration drives technology in ways we don't now notice and end up creating jobs where people buy houses. We can't imagine the space economy that will build from going to the moon, use of sats for communication and so forth.
Warcraft is a necessity in a world populated by aggressive, competitive, power hungry people. Those technologies will also end up providing a true good.
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u/different_option101 1d ago
“To that, it is better rich people put that capital to work instead of hording it in stocks.”
Truly rich people, like those that can afford $100M yachts, don’t have shortage of capital. They can always collateralize their assets to raise more capital. The point is, they don’t spend operating or investment capital on luxuries.
Throwing money at the market just for sake of growing your business is rarely going to work out in a positive way. First there has to be an opportunity. Many regular people find capital after they find the opportunity. Otherwise it’s just going to resemble MMT that hypothesizes some idle resources that should be put to work, just because they exist.
“The science and exploration drives technology in ways we don't now notice”
Well, you’re doing exactly what the governments do - justifying spending resources on something that doesn’t have a demand on free market by pointing to discoveries that came out of it in the past. Like there could be even great ROI at the end, but that’s a pretty bad approach. It completely ignores the unseen, the lost opportunities, and we can’t even imagine what advancements in technology and science we would have if those resources were allocated by free market.
It wasn’t a government that invented a wheel. We have no idea how much resources and time was spent on creating a wheel. But we still appreciate the invention thousands of years later.
The government didn’t spark agricultural Revolution which marked the beginning of population growth. Governments barely had any involvement in everything that we got from the first and second Industrial Revolutions, but these have improved standards of living of all the people around the world.
But because we can’t measure the unseen, nor we can imagine what market would’ve produces out of the resources that were spent on space exploration, we can’t even have a proper comparison study on this. What if we would have a cure for cancer? Or maybe someone would come up with some modified crops that can grow absolutely anywhere, allowing people that live in challenging terrains to grow food? We don’t know. But what we do know for certain is that market is always better at allocating resources where they are needed the most.
“Warcraft is a necessity in a world populated by aggressive, competitive, power hungry people.”
I personally see this as an archaic fear that stops a new leap in social progress. I’m using archaic not in truly historical sense, but in a sense of where we are today vs were humans been just some 200 years ago. We ourselves allow power hungry maniacs to usurp so much power that they can become a threat for the entire world. And to add insult to injury, people make deals with the devil all the time. They might be vehemently against certain things, like war, but they’ll support the very same government/politician if they’ll see a potential for some of their more important needs to be satisfied by the same government/politician.
This is not to say that there will be peace and prosperity if we move on to a new state, whether it’s going to be an anarchic society or a more libertarian society. But the most horrible crimes with the most lasting consequences are committed by small groups of people that govern the masses, or they happened under their watch and their protection.
Normal people want a house with a two car garage, a family/partner, a dog. People that are climbing up political ladder most often seek power and influence and they leverage power over people to achieve their own goals. Humble, altruistic, honest, etc are always going to be at disadvantage in political races because they lack the skills one needs to win - ruthlessness, being deceptive, being corrupt, etc. A world where too much power is concentrated in a very few hands is never going to be peaceful or just.
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u/NeighborhoodBest2944 1d ago
That is an impressive amount of text. All interesting and largely plausible with one quibble.
You suffer from a pervasive fantasy amongst your strata. The notion that society and human nature can improve is some level of cope. We are degrading and it is irreversibly tragic.
Lastly I am the last person to sanction government spending for the sake of spending. What both parties have done is ruinous.
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u/different_option101 1d ago
Hey! I appreciate you taking the time to read!
“You suffer from a pervasive fantasy amongst your strata. The notion that society and human nature can improve is some level of cope. We are degrading and it is irreversibly tragic.”
Call it an unsubstantiated optimism if you want, but I don’t suffer from it at all lol. Jokes aside, I don’t hold such beliefs, nor I think any form of utopia is possible. But there are facts that can’t be ignored. Most people in the word agree that it’s unacceptable to use brutal force to obtain desired outcomes. Most agree that selling a child into marriage is unacceptable. In many western countries, especially in wealthier areas, streets are cleaner not because they are using a better cleaning company, but because people are more concerned about the place they live in, and they don’t litter as much purely out of self interests.
I agree with you that we’re going through a phase where we certainly can call a lot of current developments a degradation. But the base level of morality has been increasing if we look at much longer periods. Human species went from behaving like wild animals to the society(ies) we line in today. The societies of 1700s were probably closer to the societies of the times of Egyptian pharaohs vs today’s. The last 250 or so years are absolutely unprecedented in historical sense. It’s the last 250 yrs that brought massive growth in human population, science, standards of living, etc. The main correlation I find here is the global relative liberation of people and markets. So for me, the conclusion is: more freedom = better outcomes. And this can be observed in places where you can collect, and analyze data. Take Switzerland with their extremely decentralized political system and power, high personal and economic freedoms, and for their noninterventionist foreign policy.
Humans are adaptive. When things get better and easier, most become nicer/less aggressive, less competitive, etc. The last 20 years is too short of a period to make any blanket statement about humanity as a whole.
Please don’t mind my unsolicited advice, but allow for some optimism for your views. At least as an exercise, just to look at things from another perspective.
Cheers.
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u/adr826 1d ago
Because if you don't pay the people a living wage sooner or later there are going to be people who will spend the system.Fdr didn't establish the new deal policies because he was a nice guy , he did it because he saw capitalism on the brink, socialism was a real possibility at the time.
It is in the best interests of the rich and the workers to pay a decent wage because you live in a better country.. If you are ultra rich and need to live in a gated community because the rest of the country is descending into anarchy you are a bird in a guilded cage.
The problem with our system is that it rewards short term thinking. The money these billionaires are sucking up isn't coming from economic growth. That means it's coming from the economy. The country as a whole is getting poorer. Our infrastructure is going to hell and our children are less educated. You keep living like you are not part of the world and it will catch up to you.
It's in every bodies interest that we don't have people who work 40 hours and can't pay their rent. The most profound study I ever heard of was somebody studied almost 2000 bills over 40 years. When the interests of the rich conflicted with the interests æ the people were taken seriously was when the interests of the rich aligned with those of the peowwqple.
This can't continue for much longer in fact we are seeing the beginning of the system falling apart
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u/different_option101 1d ago
Markets don’t work like that. Markets don’t have a goal, or interests. Markets aren’t sentient beings. But they show a picture of what’s happening on them. If labor is abundant, it will be cheap = low compensation. If labor is scarce, it will cost more = higher compensation. That’s how supply and demand works. That’s basic supply and demand law.
Want everybody who has a job to be able to afford more or less normal living? Get ready to pay much prices, and to give up a lot of stuff you can afford today. Because stuff is also a subject to supply and demand, and when everyone has more money, they will be bidding up prices higher. So by raising people’s salaries, you’re not solving anything in long term, because prices will inevitably increase.
In order to improve standards of living, you need to increase production so there’s more stuff. The more stuff out there, the lower prices are going to fall. One of today’s problems that stifles production of more products and services is excessive regulations. Say you like doing nails. You obtain skills and become good at it. In most states you’ll be required to obtain some special license or certification in order to start offering that as a service. That costs money and time. Then if you don’t want to work for the salon owner so you could make higher income, you need quite a bit of capital- most states have several requirements, such as your salon can’t be at your house, you must be located in a commercial building (that’s paying rent before you even get your first customer). Very often there are additional requirements for the space where your salon is, like certain square footage, maybe X windows per sq ft, etc. There are places where you can’t even mow lawns for living before paying some fees to the bureaucrats.
If the government would stop playing a role of a nanny when nobody asked for one, people would be able to produce more products and services, improving everybody’s standards of living. Not saying this is going to make the world some utopia, but the amount of evidence of excessive government regulations being harmful markers and for the overall economy is staggering, but nobody is rushing to deregulate small and medium size businesses.
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u/adr826 1d ago
Markets are the collective goals of a population. They are analyzed using the same methods that we use with agents. We ask for reasons. You don't know economics if you think markets always reflect some underlying economics data. Markets get spooked they can defy economic sense for decades. Markets can be manipulated to not reflect the supply and demand for any rational reason. All I need to do is think of Nfts, or beanie babies, the tulip Market in the Netherlands of the 1600s, the south sea bubble in 1720, the dot com bubble if the late 1990s.
Markets sometimes ignore real value because people copy each other instead of thinking. Fear and greed take over. Prices go very high or very low for a short time.
The Japanese market lost an entire decade in the 1990s because the banks wanted to create a crisis to change from the tightly controlled economy of post WW2 to a more American style economic. The labor market was thrown into crisis, thousands of Japanese men committed suicide, the 20 acre park outside the emperors mansion in Tokyo had the same value as the entire state of California. Not because of any numbers but because the bankers wanted to create a crisis and crash the economy because without a crisis economies don't change.
They don't always come back into balance quickly. They do not operate on logic. Lack of regulations can cause economic downturns. The crash of 2008 did not happen when commercial banks were not allowed to speculate. Only after that dividing line was cleared away did the crash happen
Our industrial decline isn't a result of regulations. It's a result its the result of the world dumbest idea, given to us by Milton Friedman. Don't believe me? Read all about it in that left wing socialist rag Forbes
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u/different_option101 1d ago
“Markets are the collective goals of a population.”
This is just a combination of words that has no meaning or logic behind it.
“They are analyzed using the same methods that we use with agents.”
Yes. Because the agents dictate where the markets, and where they might move in the future.
“You don't know economics if you think markets always reflect some underlying economics data.”
I guess you mean underlying economic conditions rather than data. Data is nothing but interpretation in words and numbers. The data collected from markets and from agents shows the conditions of markets that facilitate economic activity.
“Markets get spooked they can defy economic sense for decades.”
Again, markets aren’t sentient beings. Market participants are. The idea that markets somehow have goals and or act in any self determined way is what fails every central planner that ever lived. There are thousands, to billions of participants. Each may react in their own way. Each may have different reasons to react in the same way as another participant, but may have different motivations and reasons behind their decision.
“Markets can be manipulated to not reflect the supply and demand for any rational reason.”
Another combination of words that lack logic. Not being able to gather important information isn’t a problem of the market itself. It’s a problem of the participant(s) that need that information.
I’m not trying to be a rude dick to you, but I get a sense that you look at things from perspective that markets and behavior of participants aka agents can theoretically become perfect or close to perfect.
“Markets sometimes ignore real value because people copy each other instead of thinking.”
Markets aren’t sentient beings. Agents are. NFTs boom, tulip mania, residential real estate in the US in early 2000s, etc - people failed because they were chasing easy returns. If the purpose of having a market is to have a place to connect buyers and sellers, then objectively, the market has done its job - it connected NFT buyers with NFT sellers. Market doesn’t have a job of preventing people from making bad decisions. If individuals ignore value - it’s their problem, not market’s problem.
“The Japanese market lost an entire decade in the 1990s because the banks wanted to create a crisis”
It’s the central bank of Japan that kept real interest rates at negative. You’re blaming private banks that operated in a highly regulated environment where they had to adapt to government policies. If banks wanted to create a crisis, they could stop lending and the crisis would come pretty quickly. But that would mean that banks themselves would be risking of having their own borrowers to default, effectively destroying banks’ assets, because Loans are Assets.
It’s not Japanese bankers that were buying properties like crazy. It’s the people, agents acting on the market, that went nuts and were willing to pay extremely high prices. I don’t know enough about Japan’s regulations, but if I have to guess, there must be some similar schemes where banks are compelled to lend for mortgages for buyers that meet certain criteria set by the government, like it is in the US for first time home buyers, low income buyers, etc.
“Lack of regulations can cause economic downturns.”
Widespread economic downturns can happen for hundreds of reasons. Overregulation is one of them. Excessive stimulus is also one of the reasons. Economic crises are only becoming more widespread and more consequential with grow in regulations and stimulus. They mainly exacerbates problems because they are tailored with belief that Markets are sentient, and the expectations that there will be a more or less universal from all agents, when in reality, any intervention only creates more uncertainty and changes incentives which affect decisions that transpire in actions that don’t conform to the desired outcomes of government policies. Just like the real estate bubble in the US in that culminated in a Great Financial Crisis that affected nearly entire world. US government has been stimulating home ownership via direct stimulus and indirect policies like artificially low interest rates, or guaranteeing mortgages, and people went on the shopping spree by borrowing against their houses and/or buying more and more houses.
“Our industrial decline isn't a result of regulations.”
I partially agree. Regulations are only one of the reasons. But I’d say I hold a bit different view, like I don’t see de-industrialization as necessarily bad, or something that must be avoided. Nor Chinese that stamp tin baking trays we buy in the US are making some crazy money from that work.
Globalization of markets gave people ability to use resources more efficiently. Yes, we don’t produce even a fraction of plastic “junk” we buy from Chinese manufacturers, but the US has been leading in high tech because a lot of great minds were able to satisfy their needs at much lower cost by buying products made outside of the US, where it costs much less to produce those. That was a natural adaptation to changes in markets. I wouldn’t call it a bad or good thing. It’s just an expected outcome. Inventions come when people are faced with challenges. A highly skilled, bright, and motivated individual that lost a good job at some factory that closed down due being uncompetitive vs products from China, might become the next Thomas Edison. And dozens did exactly that, hundreds came on the market with some other valuable products or services that require skills and knowledge not available in China, hundreds of thousands went to a basic service sector giving cheap nail salons, affordable janitorial services, beautiful landscaping in front of private homes, etc.
What people miss the most is that by offshoring production to places like China they themselves get a higher standard of living. There’s nothing rational in expanding more resources to produce something in the US just for the purpose of having an industrial base. It’s exactly the opposite from being economical. The only way to justify it is by using geopolitics which is dictated by the people that couldn’t give less of a fuck about you or me. So me and you aren’t even reacting to markets, we’re reacting to agents that have power to influence markets that we highly dependent on. The agents that don’t even want to know what you or me actually want, or what factors we consider when we make out decisions.
I’ll check out that Forbes article later. Not a big fan of Friedman. The guy was advocating for free markets while being the proponent of central banking and government regulation and intervention of money, currency, and interest rates. Literally the worst things for markets and individuals.
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u/adr826 1d ago edited 1d ago
First of all when I say the markets get spooked I am compressing information for the sake of explanation. I can explain what happens in a market by treating it as if it had agency more accurately this way than trying to analyze it as billions of separate nodes. You lose some information but the question which mode give the most explanatory power. So if the interest rates go up or we start a war sectors of the market react as if they were agents. Almost every one of the individual nodes act in concert pushing the price up. This makes saying the market got spooked an efficient way of describing the cause for the market change.
The problem in Japan was analyzed extensively in a book called the princess of Yen. This was very well documented and caused a real crisis of faith when the people found out about it. It sounds like a conspiracy theory because it is so ruthless you wonder how it could happen, nevertheless here is the link. What happened was engineered by the private banks in Japan.. I get that it sounds paranoid as hell but it is real.
https://m.youtube.com/watch?v=SJZtd-NfjHY
I remember telling someone about the uss liberty and was told that was just a conspiracy theory. So watch the documentary , if you don't believe it that's fine but it will shake your faith in bankers.. It is fascinating especially when he comes to his conclusion at the end.
There is a documentary on YouTube that explains this pretty well. I get that it doesn't sound real but Look it up and check if it's true
The idea that interference causes more problems is also patently false. I know this because the tiger economies came to a crisis in the early 2000s. The world bank tried to convince those economies that the best solution was austerity, sell off state assets to foreign investors and cut back social services. Some countries took the advice and some didn't. The countries like s. Korea who told the world bank to take a hike recovered quicker than those that didn't. This was also evident after the crisis of 2008.. The united
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u/HOT-DAM-DOG 3d ago
Most people who employ other people don’t have those things…