Philosophy Discussion Forums | A Humans-Only Philosophy Club

[Good_Egg]

I've never really understood why the investor gets all the profit, while employees, the ones whose work actually produces the profit, are considered to be a pesky overhead, not as primary contributors.

That's a misconception. "Overheads" are costs that do not scale with production - costs that a business is faced with regardless of business volume.

If your firm wins a big contract and can now produce twice as many widgets as last year, you'll need twice as much labour from the "primary contributors" who actually assemble the widgets. And conversely when there's a bad year and the demand for widgets dries up and you don't have work for these people, redundancies will occur. Because that cost scales with the volume of production.

But the same finance person can run bigger or smaller numbers through their spreadsheet to report on the company's performance. He or she is an overhead - the widget-assemblers are not.

But that's a minor point. Your main question is why those widget-assemblers are on a fixed wage rather than working for a share of the profits (when there are some), while the shareholders who put up the capital get the profit but no guaranteed or fixed income from the business.

And mostly the answer is that the shareholders can afford to not get paid in a bad year, whereas the assembly workers depend on their wage to put food on the table and therefore prefer the security of a fixed return for their contribution.

[Sy Borg]

I've never really understood why the investor gets all the profit, while employees, the ones whose work actually produces the profit, are considered to be a pesky overhead, not as primary contributors.

If the returns for investments are poor, then investors put their money elsewhere. Then the company contracts or folds and the jobs are taken off the books.

At any given time in history there is a balance point, which is currently heavily skewed to capital around the world. If you have eight billion people with rapidly depleting resources, rapidly depleting space and rapidly improving technology, then the costs of labour will be relatively lower.

After major wars or epidemics (like the Black Death) reduce populations, labour is more in demand, land becomes available, job opportunities appear and wages rise. At present, populations are vastly greater than ever before in the history of the world, and the inevitable result is a growing wealth gap between capital and labour.

[Pattern-chaser]

I've never really understood why the investor gets all the profit, while employees, the ones whose work actually produces the profit, are considered to be a pesky overhead, not as primary contributors.

If the returns for investments are poor, then investors put their money elsewhere. Then the company contracts or folds and the jobs are taken off the books.

At any given time in history there is a balance point, which is currently heavily skewed to capital around the world. If you have eight billion people with rapidly depleting resources, rapidly depleting space and rapidly improving technology, then the costs of labour will be relatively lower.

After major wars or epidemics (like the Black Death) reduce populations, labour is more in demand, land becomes available, job opportunities appear and wages rise. At present, populations are vastly greater than ever before in the history of the world, and the inevitable result is a growing wealth gap between capital and labour.

Yes, in our Capitalist world, no company can succeed without investors. But isn't it also just as true to say that no company can succeed without contributions from labour, from *people*? I'm not talking about a global equilibrium between capital and labour, but instead, I question why one of the two reaps a far greater proportion of the benefits than the other?

[Sy Borg]

I've never really understood why the investor gets all the profit, while employees, the ones whose work actually produces the profit, are considered to be a pesky overhead, not as primary contributors.

If the returns for investments are poor, then investors put their money elsewhere. Then the company contracts or folds and the jobs are taken off the books.

At any given time in history there is a balance point, which is currently heavily skewed to capital around the world. If you have eight billion people with rapidly depleting resources, rapidly depleting space and rapidly improving technology, then the costs of labour will be relatively lower.

After major wars or epidemics (like the Black Death) reduce populations, labour is more in demand, land becomes available, job opportunities appear and wages rise. At present, populations are vastly greater than ever before in the history of the world, and the inevitable result is a growing wealth gap between capital and labour.

Yes, in our Capitalist world, no company can succeed without investors. But isn't it also just as true to say that no company can succeed without contributions from labour, from *people*? I'm not talking about a global equilibrium between capital and labour, but instead, I question why one of the two reaps a far greater proportion of the benefits than the other?

As stated, labour is easy to find when there's so many people, increasing rapidly with historically high levels of immigration.

In economics, everything hinges on supply and demand.

There are relatively few people capable of thinking up a business plan, having the work ethic and determination to follow through, the steadfastness to make sacrifices before their business becomes profitable, and the courage to risk everything on their investments. By contrast, there's many more people who prefer a relatively simpler, easier, less busy and stressful life as an employee.

Knowledge and intelligence are other abilities that impact earnings. Consider in African nations like Zimbabwe where it was decided that "white" farmers did not deserve to be rich, so they confiscated the land and gave it to less experienced and capable "black" farmers.

Major crops such as tobacco, maize, and sugar experienced sharp declines in yield due to mismanagement and lack of expertise among new farmers.

Food Insecurity: As agricultural output plummeted, Zimbabwe transitioned from being a food exporter to facing severe food shortages. By 2003-2004, millions were dependent on food aid.

Economic Collapse: The agricultural crisis contributed to broader economic instability characterized by hyperinflation (which peaked at an astronomical rate), unemployment rates soaring above 80%, and a collapse of essential services.

Remember, the boss who workers assume is being paid to sit in an office and do nothing is thinking, and is being paid to do so - to use their knowledge and experience. (We can all think of examples of bad bosses who did not deserve their position, but there are many others who did earn it).

[Mo_reese]

It's the Libertarian philosophy that believes that the free market place should determine an employee's wages potentially even down to the point of bare subsistence for the employee or essentially wage slavery.

Henry Ford believed in paying his workers decent wages believing that healthy and happy employees is a asset to a business. Also, such employees are more able to buy his products.

Granted the "boss" has to think but how do we put a value on that compared to an employee's pay? When looking at the employee pay as a ratio to the boss's pay, how do we rationalize that the US bosses get four times more pay for their thinking than German bosses?

The wealth inequality is growing in the US as the wealthy use their power to cut wages, create monopolies, and lower their share of taxes. This is not a healthy trend.

[LuckyR]

I agree, but the impact of tax cuts (on the wealthy) is way more important than the impact of wage policy.

[Mo_reese]

I agree, but the impact of tax cuts (on the wealthy) is way more important than the impact of wage policy.

I certainly agree that the wealthy need to pay more in taxes. There are a lot of things that would need to change and high on my list is the end to corporate bailouts. The new corporate business model is to suck all the assets out in exec compensation and then beg the government for a bail out. The Biden Admin got the CHIPS Act passed which gave billions in subsidies to CHIPS mfr corporations. No restrictions were placed on the use of the subsidies and Intel used part for executive compensation and stock buy backs.
In the recent presidential election it was the battle of the billionaires for each side to get control and be able to plunder the resources of the 99% (the People).

[Lagayascienza]

I agree that corporate bailouts are iniquitous and economically and socially destructive. Unfortunately, it is ultimately the workers who can least afford it who pay for the bailouts with their tax dollars and not the corporations, many of whom pay no, or very little, tax. Bush bailed out corporations after their derivatives debacle brought about a crisis in 2008. Biden did some bailing out, too. Governments on both sides of politics are in bed with corporations and the billionaires who own them. That is why we get crashes and bailouts. I does not have to be like this.

Quasi monopolies need to be broken up to promote competition and lower prices for consumers. And corporations and billionaires must be forced to pay a fair share of taxation, from which share any future bailouts could be funded - a bit like insurance. And taxes on the workers need to be reduced so that they can afford more of the products and services that corporations provide so that corporations remain profitable and able to provide continued employment opportunities for workers. We cannot make everyone equal, but a new social deal is possible and sorely needed.

Unfortunately, there is no sign of this happening.

[Pattern-chaser]

I'm not talking about a global equilibrium between capital and labour, but instead, I question why one of the two reaps a far greater proportion of the benefits than the other?

As stated, labour is easy to find when there's so many people, increasing rapidly with historically high levels of immigration.

In economics, everything hinges on supply and demand.

There are relatively few people capable of thinking up a business plan, having the work ethic and determination to follow through, the steadfastness to make sacrifices before their business becomes profitable, and the courage to risk everything on their investments. By contrast, there's many more people who prefer a relatively simpler, easier, less busy and stressful life as an employee.

Knowledge and intelligence are other abilities that impact earnings. Remember, the boss who workers assume is being paid to sit in an office and do nothing is thinking, and is being paid to do so - to use their knowledge and experience. (We can all think of examples of bad bosses who did not deserve their position, but there are many others who did earn it).

I think there's a difference between an "investor" and the entrepreneurs you seem to describe. And between entrepreneurs and managers. Etc.

So imagine that the investor is specifically that, a shareholder who does no work to further the aims of the business. And then let's also imagine that the employee you refer to is a business planner. Is there a reason why the greater part of the benefits of success (profit) should go mostly to the investor, and not to the 'worker'?

[Sy Borg]

I'm not talking about a global equilibrium between capital and labour, but instead, I question why one of the two reaps a far greater proportion of the benefits than the other?

As stated, labour is easy to find when there's so many people, increasing rapidly with historically high levels of immigration.

In economics, everything hinges on supply and demand.

There are relatively few people capable of thinking up a business plan, having the work ethic and determination to follow through, the steadfastness to make sacrifices before their business becomes profitable, and the courage to risk everything on their investments. By contrast, there's many more people who prefer a relatively simpler, easier, less busy and stressful life as an employee.

Knowledge and intelligence are other abilities that impact earnings. Remember, the boss who workers assume is being paid to sit in an office and do nothing is thinking, and is being paid to do so - to use their knowledge and experience. (We can all think of examples of bad bosses who did not deserve their position, but there are many others who did earn it).

I think there's a difference between an "investor" and the entrepreneurs you seem to describe. And between entrepreneurs and managers. Etc.

So imagine that the investor is specifically that, a shareholder who does no work to further the aims of the business. And then let's also imagine that the employee you refer to is a business planner. Is there a reason why the greater part of the benefits of success (profit) should go mostly to the investor, and not to the 'worker'?

How did the investor gain money? Either through hard work, risks, sacrifices and enterprise, or that of their family.

Also, without investors in a public company, there is no business - which pays the workers' wages. How do managers gain their jobs? Qualifications, experience, networking, deftness with social games.

You expect equity, but without equal abilities, efforts and risks being made. Why do some people earn more than others? Leverage. They might be smarter, braver, more aggressive or better networked. Why can lions kill antelopes? Leverage - size, claws, muscle, teeth, cooperation.

This is a competitive world. Not everyone wins a participation prize. Humans pretend that they have risen above it all, but that is only wishful thinking. All attempts to achieve equity (not to be confused with equality) end up backfiring catastrophically.

[chewybrian]

This is a competitive world. Not everyone wins a participation prize. Humans pretend that they have risen above it all, but that is only wishful thinking. All attempts to achieve equity (not to be confused with equality) end up backfiring catastrophically.

How would you categorize something like single payer healthcare? The countries that have it experience significantly longer lifespans, better overall health, and drastically lower health care costs than the U.S. Is that a failure in your mind, or do you categorize it as something other than an attempt at equity?

[Sy Borg]

This is a competitive world. Not everyone wins a participation prize. Humans pretend that they have risen above it all, but that is only wishful thinking. All attempts to achieve equity (not to be confused with equality) end up backfiring catastrophically.

How would you categorize something like single payer healthcare? The countries that have it experience significantly longer lifespans, better overall health, and drastically lower health care costs than the U.S. Is that a failure in your mind, or do you categorize it as something other than an attempt at equity?

Universal healthcare is about equality, not equity. Equity would be actively denying healthcare to whites and wealthy people to even things up. As per the adage, two wrongs don't make a right. Actively thwarting those deemed to be Oppressors to right the wrongs of the past is counter-productive IMO.

Do you think that young white males should be treated worse than their peers in every aspect of society to make up for colonialism or past discrimination against minorities?

[chewybrian]

This is a competitive world. Not everyone wins a participation prize. Humans pretend that they have risen above it all, but that is only wishful thinking. All attempts to achieve equity (not to be confused with equality) end up backfiring catastrophically.

How would you categorize something like single payer healthcare? The countries that have it experience significantly longer lifespans, better overall health, and drastically lower health care costs than the U.S. Is that a failure in your mind, or do you categorize it as something other than an attempt at equity?

Universal healthcare is about equality, not equity. Equity would be actively denying healthcare to whites and wealthy people to even things up. As per the adage, two wrongs don't make a right. Actively thwarting those deemed to be Oppressors to right the wrongs of the past is counter-productive IMO.

Do you think that young white males should be treated worse than their peers in every aspect of society to make up for colonialism or past discrimination against minorities?

Nope. I think that extra opportunities should be available to anyone with low income. Groups who have suffered discrimination could take better advantage of these programs without worrying about discrimination or reverse discrimination. Giving poor kids free school lunches or helping poor parents afford healthcare or get a house doesn't feel like any form of discrimination to me. Sometimes these things are seen as giveaways but society often sees a net gain for the effort. For example, money spent on school lunches has been shown to give more back in health outcomes and such than what is spent on these programs.

You seem to have an unusual definition of equity, and to be assuming that I am advocating reverse discrimination. If you think the ideas I just described amount to reverse discrimination, then I guess I am in your mind. Rather, I am only trying to acknowledge that the accumulated effects of past discrimination are still with us, and that we should give anyone who is disadvantaged a path to success. That's the only way I see to address the problem without adding further discrimination to the mix.

[Sy Borg]

This is a competitive world. Not everyone wins a participation prize. Humans pretend that they have risen above it all, but that is only wishful thinking. All attempts to achieve equity (not to be confused with equality) end up backfiring catastrophically.

How would you categorize something like single payer healthcare? The countries that have it experience significantly longer lifespans, better overall health, and drastically lower health care costs than the U.S. Is that a failure in your mind, or do you categorize it as something other than an attempt at equity?

Universal healthcare is about equality, not equity. Equity would be actively denying healthcare to whites and wealthy people to even things up. As per the adage, two wrongs don't make a right. Actively thwarting those deemed to be Oppressors to right the wrongs of the past is counter-productive IMO.

Do you think that young white males should be treated worse than their peers in every aspect of society to make up for colonialism or past discrimination against minorities?

Nope. I think that extra opportunities should be available to anyone with low income. Groups who have suffered discrimination could take better advantage of these programs without worrying about discrimination or reverse discrimination. Giving poor kids free school lunches or helping poor parents afford healthcare or get a house doesn't feel like any form of discrimination to me. Sometimes these things are seen as giveaways but society often sees a net gain for the effort. For example, money spent on school lunches has been shown to give more back in health outcomes and such than what is spent on these programs.

You seem to have an unusual definition of equity, and to be assuming that I am advocating reverse discrimination. If you think the ideas I just described amount to reverse discrimination, then I guess I am in your mind. Rather, I am only trying to acknowledge that the accumulated effects of past discrimination are still with us, and that we should give anyone who is disadvantaged a path to success. That's the only way I see to address the problem without adding further discrimination to the mix.

Kamala made this distinction, that equality is treating everyone equally and equity is everyone being equal. The latter can only be achieved via discrimination.

I am for the former. Treat people equally, based on merit and need. As for past discrimination, if everyone is treated equally, gradually things will even out. Why rush progress based on ideology rather than simply treating people as individuals and letting nature take its course, rather than making policy based on demographics? Societies can simply allow the progress that automatically happens from industrialisation and digitalisation to happen organically. Tinkering creates the risk of unforeseen problems, eg. the welfare cycle, transitioning young children.

[chewybrian]

I am for the former. Treat people equally, based on merit and need. As for past discrimination, if everyone is treated equally, gradually things will even out. Why rush progress based on ideology rather than simply treating people as individuals and letting nature take its course, rather than making policy based on demographics? Societies can simply allow the progress that automatically happens from industrialisation and digitalisation to happen organically. Tinkering creates the risk of unforeseen problems, eg. the welfare cycle, transitioning young children.

I can agree with treating people equally based on race. I cannot agree with treating them equally based on wealth and income. The wealthy are holding the spoils of past discrimination and the poor are suffering the lingering effects of past injustices. We should have more empathy than it takes to tell millions of people to wait a few generations for things to even out a little bit.

More important even than justice is the lost opportunity of getting the full potential out of all those folks who are stuck on the bottom, whether as a result of discrimination or the poor efforts or bad choices of their parents or grandparents. With each generation, we lose out because people with great potential are put in situations where that potential is inevitably wasted as they get a poor education in a dangerous and unhealthy environment with few resources available for them to use to break the cycle. I truly believe that society would get a good return on the money invested in helping the poor to advance. The fact that it also speeds up the advance of justice makes it a no-brainer. I don't see any valid 'reverse discrimination' argument against this approach.