Both the employer and the landlord I think - but the basic point is the same. Tesco made something like 1.7 billion profit last year, so why are we paying their staff about 250 million in wage supplements ? Why couldn’t they have 1 billion profit and their workers be paid a decent wage ?
All this is why the idea of proportionate wages helps (they have another name, but I cannot recall it)
So you can pay you CEO 1M a year. As long as the least well paid person (which includes the cleaners, the agency staff etc) earns at least 1/30th of this. At an hourly rate, assuming the CEO works a 40 hour week.
I htink that works out at around £16 an hour. And a decent number of hours a week. So increases in the CEO salary also increases everyone elses salary.
It is not just about the financial impact, these people do everything they are told is right, they go out and get a job and work - and still get harassed by the DWP, still talked about as ‘scroungers’ and all that shite.
All this is why the idea of proportionate wages helps (they have another name, but I cannot recall it)
So you can pay you CEO 1M a year. As long as the least well paid person (which includes the cleaners, the agency staff etc) earns at least 1/30th of this. At an hourly rate, assuming the CEO works a 40 hour week.
I htink that works out at around £16 an hour. And a decent number of hours a week. So increases in the CEO salary also increases everyone elses salary.
I've thought about this often. What I haven't sorted out is whether there is an effective mechanism to prevent companies contracting out the employment of their lower paid staff to a wholly-owned subsidiary to avoid the rule.
I take it Tesco is a grocery store in the UK. Do they have a union?
Do people complain when food prices rise? Do people deliberately shop local and pay more? I see the trend for organic everything Which boosted local here, until the grocery giants went after that market too.
What's their competition? Are they or any of their competitors headquartered some other country?
Did your gov't do what they love to do here by not taxing corporate income at anywhere close to the same rates as individuals?
I understand the UK has elected a conservative/Conservative gov't recently. Do you expect any changes with these people?
Do I expect the Tories to have a problem with corporate welfare, or be interested in the quality of life of those at the bottom of the pile - thinks for a nanosecond - no, no I do not.
a person who puts their own financial security at risk is morally entitled to get something financial back for that to which a person who does not put themself at risk is not.
A fair bet would be that someone who takes a 50% risk of losing their investment is entitled to get double their initial investment.
a person who puts their own financial security at risk is morally entitled to get something financial back for that to which a person who does not put themself at risk is not.
A fair bet would be that someone who takes a 50% risk of losing their investment is entitled to get double their initial investment.
Fair in a sense, but also kind of pointless, since the expected return is zero - that is, if you made lots of investments like that, on average you would expect to end up with no more money than you started with. So why would you bother investing it at all?
If on average your investments enable firms to expand their production in a way that they otherwise couldn't, don't you have a moral claim to at least some of the proceeds from that expanded production, in addition to the return of the original amount invested?
a person who puts their own financial security at risk is morally entitled to get something financial back for that to which a person who does not put themself at risk is not.
A fair bet would be that someone who takes a 50% risk of losing their investment is entitled to get double their initial investment.
Fair in a sense, but also kind of pointless, since the expected return is zero - that is, if you made lots of investments like that, on average you would expect to end up with no more money than you started with. So why would you bother investing it at all?
If on average your investments enable firms to expand their production in a way that they otherwise couldn't, don't you have a moral claim to at least some of the proceeds from that expanded production, in addition to the return of the original amount invested?
I would have thought the only moral claim is to costs incurred from not having the money yourself. Why should having money give you the right to the fruit of others' labour? Return on investment is merely a bribe to encourage the investor to release the money. It's arguably necessary but I think any moral claim is stretching it.
a person who puts their own financial security at risk is morally entitled to get something financial back for that to which a person who does not put themself at risk is not.
A fair bet would be that someone who takes a 50% risk of losing their investment is entitled to get double their initial investment.
Fair in a sense, but also kind of pointless, since the expected return is zero - that is, if you made lots of investments like that, on average you would expect to end up with no more money than you started with. So why would you bother investing it at all?
Strictly I suppose the fair bet would be double what you would have made on your investment had you put it into a risk-free savings account or government bond.
In an ideal free market all forms of investment will converge on the same expected payoff. If investment in business has a greater expected payoff than investment in bonds or property then the supply of investment in business will rise above demand reducing the expected payoff, and the supply of investment in property will drop below demand forcing the expected payoff of the latter to rise. And so each type of investment will end up with the same payoff, the type each investor prefers depending solely on their risk profile.
If this does not in practice happen that shows that economic theories based on the ideal free market are not good models for the economy, and that political positions that laud the ideal free market are likewise flawed positions.
If on average your investments enable firms to expand their production in a way that they otherwise couldn't, don't you have a moral claim to at least some of the proceeds from that expanded production, in addition to the return of the original amount invested?
Economic theory is supposed to operate on the basis of self-interested economic agents. An investor doesn't get any moral credit for operating out of enlightened self-interest. Moral claims don't come into it. At least, moral claims on behalf of those who are not doing so well out of the present economic order are according to free-market economists not supposed to come into it. It's somewhat inconsistent to say that the workers don't have a moral claim to more than the market price of their labour, but then to assert a moral claim on behalf of the investors.
All this begs the question as to when renumeration becomes excessive.
I'm self employed but as a sole trader. The idea of running a growing and going concern and employing people and remortgaging property or renting or buying premises etc would be the stuff of nightmares. I wouldn't know where to start.
I take my hat off to those that can and do.
What I can't establish from the comments so far is the point at which a 'legitimate' return or renumeration for the proprietors or principals in an enterprise topples over into 'evil fat capitalist bastard' territory.
Where's the cut off? Where do we draw the line? ...
The usual cut-off point seems to be where there is someone else who is earning more than oneself, and whom one envies, resents or of whom one is jealous.
There's a cockamamy idea that running government and managing people is a profession. And a profession best run by people who argue well (lawyers and their friends business graduates). These people take argument as evidence. Often without regard to data and actual proof as from science.
I'll ask this as a question: for how many MPs, MLAs, MPPs, etc is getting elected the best gig they've ever had re pay?
All this begs the question as to when renumeration becomes excessive.
I'm self employed but as a sole trader. The idea of running a growing and going concern and employing people and remortgaging property or renting or buying premises etc would be the stuff of nightmares. I wouldn't know where to start.
I take my hat off to those that can and do.
What I can't establish from the comments so far is the point at which a 'legitimate' return or renumeration for the proprietors or principals in an enterprise topples over into 'evil fat capitalist bastard' territory.
Where's the cut off? Where do we draw the line? ...
The usual cut-off point seems to be where there is someone else who is earning more than oneself, and whom one envies, resents or of whom one is jealous.
Back to monarchy it is then.
Ha ha ha ...
I think there can be a rather puritanical politics of envy (or resentment) out there - but I'm not convinced that comes into it when we are discussing some of the whopping big corporate behemoths.
Why do I say that?
Scale, I suppose. Some of these large corporations are operating on such a gargantuan scale and at margins that dwarf the rest of us to the extent that puts them beyond the level of 'look at that fat bastard in his flash car.'
They are so unimaginably large that they go beyond the level of personal resentment, if I can put it that way.
There is also the moral aspect. I once met the Ethiopian ambassador. He literally quivered with rage and righteous indignation when he told me how an infinitesimally small adjustment to the bottom line by some of the international coffee shop chains would make a world of difference to subsistence farmers in his country for whom coffee was the only cash crop available. 'They could send their daughters to school ...'
Is that the politics of envy? I think not.
Where I might part company with Doublethink to some extent would be on how prescriptive we might be. Would it be right to legislate in some way to 'cap' the amount of profit an enterprise might make once it has paid its dues and created a contingency? In saying this, I would make a distinction between small to medium sized enterprises and the corporate giants.
Even so, philanthropic as they were, I rather suspect that the likes of the Cadburys and Rowntrees were making rather more than enough to leave just a contingency fund.
That said, the issue of 'in-work poverty' is very real and The Guardian article that Doublethink cites makes a cogent point. The rest of us are subsidising some real corporate cut-throats.
I'm still struggling with the issue of how much is enough. It's all relative of course but there must be some yardstick and guidelines we could adopt.
How do we avoid a kind of judgemental Pharisaism on the one hand or a careless complacency on the other?
And what about me? Am I doing what I can to alleviate poverty and pursue social justice?
On the other hand, in the benevolently paternalistic context of the time, the Cadbury’s tried to do right by their workers. They went a lot further than the law required - but that was primarily motivated by their moral and religious views rather than overwhelming commercial considerations.
a person who puts their own financial security at risk is morally entitled to get something financial back for that to which a person who does not put themself at risk is not.
A fair bet would be that someone who takes a 50% risk of losing their investment is entitled to get double their initial investment.
Fair in a sense, but also kind of pointless, since the expected return is zero - that is, if you made lots of investments like that, on average you would expect to end up with no more money than you started with. So why would you bother investing it at all?
If on average your investments enable firms to expand their production in a way that they otherwise couldn't, don't you have a moral claim to at least some of the proceeds from that expanded production, in addition to the return of the original amount invested?
I would have thought the only moral claim is to costs incurred from not having the money yourself. Why should having money give you the right to the fruit of others' labour?
Having money doesn't - lending it out or investing it does, because an understanding that the proceeds would be shared was a condition for the investment in the first place.
When the bank pays you interest, do you think of it as a bribe? Or do you think that since your money is being lent out at interest, you have a right to receive some share of that interest?
If this does not in practice happen that shows that economic theories based on the ideal free market are not good models for the economy, and that political positions that laud the ideal free market are likewise flawed positions.
If flawless economic theories are a prerequisite for acceptable political positions, we're all pretty much shit out of luck.
If on average your investments enable firms to expand their production in a way that they otherwise couldn't, don't you have a moral claim to at least some of the proceeds from that expanded production, in addition to the return of the original amount invested?
Economic theory is supposed to operate on the basis of self-interested economic agents. An investor doesn't get any moral credit for operating out of enlightened self-interest. Moral claims don't come into it. At least, moral claims on behalf of those who are not doing so well out of the present economic order are according to free-market economists not supposed to come into it. It's somewhat inconsistent to say that the workers don't have a moral claim to more than the market price of their labour, but then to assert a moral claim on behalf of the investors.
You didn't object when Enoch used "morally entitled", so I'm not sure why it's a problem now. I don't think it's necessarily inconsistent - if a share in the proceeds of business operations is the agreed price for the investment in the first place. And if you've decided the expected value of investments should be nothing, or nothing more than the return on a government bond, you're not going to get a lot of investment.
Genuine question: how the government subsidizing Tesco?
We pay in work benefits to the majority of their employees - because the wages they are paid in the places where they live are insufficient to cover an acceptable standard of living.
Thanks. I suppose it's an interesting question why the government prefers the low-income supplement rather than simply raising the minimum wage (as the article proposes). I think we do something similar in Canada.
I don't doubt that Tesco benefits from this, but I'm a bit reluctant to characterize this straight-up as a subsidy, because I doubt that they would find itself having to pay the entire difference itself if the taxpayer didn't pony up. More generally, I get antsy about characterizing social programs as subsidies to business - back when we were debating free trade with the US in the 1980s, there was concern that Canada's publicly funded health care system would be seen as a subsidy, because it eliminates a cost that businesses would otherwise be required to pay.
All this begs the question as to when renumeration becomes excessive.
I'm self employed but as a sole trader. The idea of running a growing and going concern and employing people and remortgaging property or renting or buying premises etc would be the stuff of nightmares. I wouldn't know where to start.
I take my hat off to those that can and do.
What I can't establish from the comments so far is the point at which a 'legitimate' return or renumeration for the proprietors or principals in an enterprise topples over into 'evil fat capitalist bastard' territory.
Where's the cut off? Where do we draw the line? ...
The usual cut-off point seems to be where there is someone else who is earning more than oneself, and whom one envies, resents or of whom one is jealous.
Back to monarchy it is then.
Ha ha ha ...
I think there can be a rather puritanical politics of envy (or resentment) out there - but I'm not convinced that comes into it when we are discussing some of the whopping big corporate behemoths.
I wouldn't disagree, but you (and Enoch) came closest to making a 'politics of envy' style argument in this thread.
I don't doubt that Tesco benefits from this, but I'm a bit reluctant to characterize this straight-up as a subsidy, because I doubt that they would find itself having to pay the entire difference itself if the taxpayer didn't pony up.
They may not -- but the present situation is that to the extent that their staff are on various forms of public subsidy, they have a business model that relies on this subsidy.
On the other hand, in the benevolently paternalistic context of the time, the Cadbury’s tried to do right by their workers. They went a lot further than the law required - but that was primarily motivated by their moral and religious views rather than overwhelming commercial considerations.
All this begs the question as to when renumeration becomes excessive.
I'm self employed but as a sole trader. The idea of running a growing and going concern and employing people and remortgaging property or renting or buying premises etc would be the stuff of nightmares. I wouldn't know where to start.
I take my hat off to those that can and do.
What I can't establish from the comments so far is the point at which a 'legitimate' return or renumeration for the proprietors or principals in an enterprise topples over into 'evil fat capitalist bastard' territory.
Where's the cut off? Where do we draw the line? ...
The usual cut-off point seems to be where there is someone else who is earning more than oneself, and whom one envies, resents or of whom one is jealous.
Back to monarchy it is then.
Ha ha ha ...
I think there can be a rather puritanical politics of envy (or resentment) out there - but I'm not convinced that comes into it when we are discussing some of the whopping big corporate behemoths.
I wouldn't disagree, but you (and Enoch) came closest to making a 'politics of envy' style argument in this thread.
I can't speak for Enoch but in my case it's because I'm a contrary so-and-so.
I am asking a genuine question, though. Where do we draw the line? It's easy enough to point the finger at the Tescos of this world but what about me? What am I doing?
I'd love to see the likes of Tesco acting like the Cadburys and Rowntrees, for all their paternalism, but that ain't going to happen any time soon - just as Boris's vaunted thing about being a Heseltine but with Brexit ain't going to happen either.
I can't change either Tesco nor the Tories. Whatever I do isn't going to be enough. But we have to start somewhere.
Chelping about the fat bastard in the BMW isn't going to achieve a great deal. So where do we start?
a person who puts their own financial security at risk is morally entitled to get something financial back for that to which a person who does not put themself at risk is not.
A fair bet would be that someone who takes a 50% risk of losing their investment is entitled to get double their initial investment.
Fair in a sense, but also kind of pointless, since the expected return is zero - that is, if you made lots of investments like that, on average you would expect to end up with no more money than you started with. So why would you bother investing it at all?
You didn't object when Enoch used "morally entitled", so I'm not sure why it's a problem now. I don't think it's necessarily inconsistent - if a share in the proceeds of business operations is the agreed price for the investment in the first place. And if you've decided the expected value of investments should be nothing, or nothing more than the return on a government bond, you're not going to get a lot of investment.
Italics mine. This agreement is made between the haves on the backs of the have nots. Talk about moral entitlement.
a person who puts their own financial security at risk is morally entitled to get something financial back for that to which a person who does not put themself at risk is not.
A fair bet would be that someone who takes a 50% risk of losing their investment is entitled to get double their initial investment.
Fair in a sense, but also kind of pointless, since the expected return is zero - that is, if you made lots of investments like that, on average you would expect to end up with no more money than you started with. So why would you bother investing it at all?
Only if each business has a 50% risk of failure.
Dafyd is clearly equating a "fair bet" with an investment that has an expected value of zero - so again, why bother?
You didn't object when Enoch used "morally entitled", so I'm not sure why it's a problem now. I don't think it's necessarily inconsistent - if a share in the proceeds of business operations is the agreed price for the investment in the first place. And if you've decided the expected value of investments should be nothing, or nothing more than the return on a government bond, you're not going to get a lot of investment.
Italics mine. This agreement is made between the haves on the backs of the have nots. Talk about moral entitlement.
It's an agreement made by just about anyone with any savings at all.
a person who puts their own financial security at risk is morally entitled to get something financial back for that to which a person who does not put themself at risk is not.
A fair bet would be that someone who takes a 50% risk of losing their investment is entitled to get double their initial investment.
Fair in a sense, but also kind of pointless, since the expected return is zero - that is, if you made lots of investments like that, on average you would expect to end up with no more money than you started with. So why would you bother investing it at all?
Only if each business has a 50% risk of failure.
Dafyd is clearly equating a "fair bet" with an investment that has an expected value of zero - so again, why bother?
You didn't object when Enoch used "morally entitled", so I'm not sure why it's a problem now. I don't think it's necessarily inconsistent - if a share in the proceeds of business operations is the agreed price for the investment in the first place. And if you've decided the expected value of investments should be nothing, or nothing more than the return on a government bond, you're not going to get a lot of investment.
Italics mine. This agreement is made between the haves on the backs of the have nots. Talk about moral entitlement.
It's an agreement made by just about anyone with any savings at all.
If this does not in practice happen that shows that economic theories based on the ideal free market are not good models for the economy, and that political positions that laud the ideal free market are likewise flawed positions.
If flawless economic theories are a prerequisite for acceptable political positions, we're all pretty much shit out of luck.
Flawless economic theories seem to be a prerequisite for acceptable socialist political positions. It's only apparently right-wing and libertarian political positions that get a pass.
Economic theory is supposed to operate on the basis of self-interested economic agents. An investor doesn't get any moral credit for operating out of enlightened self-interest. Moral claims don't come into it. At least, moral claims on behalf of those who are not doing so well out of the present economic order are according to free-market economists not supposed to come into it. It's somewhat inconsistent to say that the workers don't have a moral claim to more than the market price of their labour, but then to assert a moral claim on behalf of the investors.
You didn't object when Enoch used "morally entitled", so I'm not sure why it's a problem now.
I pointedly left moral considerations out.
(I am bemused by the implied idea that one's first post on a thread has to be an encyclopedic conspectus of one's entire position, such that if you don't object to some point in your first post you're not thereafter allowed to object to it ever.)
I don't think it's necessarily inconsistent - if a share in the proceeds of business operations is the agreed price for the investment in the first place. And if you've decided the expected value of investments should be nothing, or nothing more than the return on a government bond, you're not going to get a lot of investment.
Entire industries are based around people being willing to put money on horses or dogs or spins of the roulette wheel where the expected payoff is less than zero. So it is not in fact actually obvious that nobody would ever invest at a risk where the overall payoff is the same as a risk-free investment.
I may not be following all of you people, but as above, most people appear to be relatively intolerant of risk. Many people who start businesses risk a lot. Like all of their assets, including the family home, all savings. Once you've figured out how to survive that, it's small potatoes to invest any money you don't need immediately in other things. I have personally lost 100% of some investments. My biggest overall loss, ie percent of everything was 36%. I've also made 300% on other investments and regained on the total losses. You cannot win if you don't play.
Risk tolerance and not being foolish make people rich or just comfortable depending on their priorities. Some of us don't retire because we like others, mentoring them, and offering then employment. I've been in retirement financial position since my early 50s. But there's something very happy about being able to keep individuals going, spreading values forward, and when a local charity has a disaster, buying them the replacement thing that burnt which benefits 1000s of people each week. And no I don't donate to capital costs for church buildings or anything else that doesn't directly serve people and their immediate needs.
If this does not in practice happen that shows that economic theories based on the ideal free market are not good models for the economy, and that political positions that laud the ideal free market are likewise flawed positions.
If flawless economic theories are a prerequisite for acceptable political positions, we're all pretty much shit out of luck.
Flawless economic theories seem to be a prerequisite for acceptable socialist political positions. It's only apparently right-wing and libertarian political positions that get a pass.
Well I don't think a flawless economic theory should be considered such a prerequisite - it appeared to be a criterion you were attempting to apply. But now you seem to say that it's unfair to hold socialism to this standard, so I guess at this point you're abandoning this point of your original criticism of free market political positions (or maybe just downgrading it to a complaint that their holders argue unfairly.)
I don't think it's necessarily inconsistent - if a share in the proceeds of business operations is the agreed price for the investment in the first place. And if you've decided the expected value of investments should be nothing, or nothing more than the return on a government bond, you're not going to get a lot of investment.
Entire industries are based around people being willing to put money on horses or dogs or spins of the roulette wheel where the expected payoff is less than zero. So it is not in fact actually obvious that nobody would ever invest at a risk where the overall payoff is the same as a risk-free investment.
You phrase that ("not in fact actually obvious") as though it's a direct contradiction of something I said - but it's not.
Is it that most people are intolerant of risk or do most people simply lack the capital needed to have the risk taking even be an option.
Nailed it.
No I don't think so. The capital you risk isn't surplus if you're going to progress investments. It's core. No one quietly accumulates capital monies in secure investments and then risks it later. Not how it works psychologically. The pattern of not risking for years until you feel secure and hsve enough money to invest changes you. Rather you get a loan, borrow against assets like your house. Then invest that. One of my children figured this out early and started investing while a university student. Yes student loan money. Yes, observations and mentoring by dad was significant.
As am experiment, try opening a stock account through your bank. 50 or 200 $£€ is enough. Invest in a fund which tracks the stock index. Ride it up and down. Put money in it monthly for 2 or 3 years. That's a lower risk way of starting. It means one or 2 tanks of gas, skipping meals out... Monthly.
All of this aside, I'd much prefer a system which assessed more tax to people like me and provided more safety net for everyone. Makes a better society. I don't think it's right that businesses get to keep money and direct public policy by sponsoring things like hospital wings, arenas, playgrounds, parks, theatre companies. These things should be publicly directed by the community and society, not by the likes of corporations and even small business people like me. WTF do I know about where it's best to direct money toward community works? No geniuses in the business world. Why should they decide?
Re risk, I could have happily stayed on as a civil servant. I can get just as turned on to risk when I shoot rapids in a canoe, well, probably more. Because it's real.
I was criticised earlier for referring to it, but that demonstrates that it's never far away in arguments about this.
No, it's just pointing out that you cannot use for security that which you do not have. I'm not sure how you read envy into that observation.
Not to pile on Enoch but it's nothing to do with envy.
The point here is all about opportunity.
It's simply not true that everyone who doesn't start a business has chosen not to because they are risk averse. For the many people, using their house as an asset to get started isn't an option because they don't have one. How many wouldn't do it anyway is moot but also beside the point. If you don't have that opportunity, it's not an option.
But I'll come back to my original point that rent-seeking is the primary problem. Not just morally but ultimately it makes the economy less productive so it's bad economics as well.
I think most democratic socialist thinkers have no problem with business owners or investors taking risks and getting profits as a return. It's profit without risk that's so distorting. Especially when those making said profits claim the moral high ground with phrases like 'wealth creators' or 'job providers' when in reality they are wealth consolidators. And that's a very different thing. In some cases economics is not a zero-sum game; in others it really is.
The subject of state support for employees has come up repeatedly because their wages are not high enough. Let me put it like this: if your business is not viable unless you pay your staff insufficiently then your business is not viable.
The great irony for me in the free market myth. What we are describing is actually a very un-free market. Stiglitz has written a lot on this point. Markets are not natural phenomena, they are shaped by the rules we choose to put on them.
As a self-described socialist I think we need to simply choose better rules for both economic and moral reasons.
It is not envy to point out the distortions in the system and the defence of 'politics on enzy' is very much a When did you stop beating your wife? argument.
In today’s economy, in the UK anyway, more and more people are having to rent. They cannot afford to buy a house. That is not envy, that is a fact. I have to rent due my circumstances. I was not able to get on the ladder. That is not envy that is fact.
I suppose the opposite of 'the politics of envy' would be the 'politics of greed' but that hasn't been bandwagoned in the same way.
Sort of.
Politics of envy is mostly a strawman. You see you are not allowed to object to inequality. If you do then the following is the standard response:
1) You're a communist - you want to make everyone poor.
2) You're objecting to the free market - people who are rich earn their wealth and that's how we make everyone better off
3) If you're poor, you're indulging in the politics of envy*
4) If you're rich, then you're a Champagne Socialist
To my mind; Socialists hate profit is just another form of the above.
AFZ
*I am not denying that the 'politics of envy' does exist - in the sense that it is an obvious form of populism to tell one group that all their problems are caused by another; In this case stir up the poor to blame the wealthy for all their woes. The problem is that to a large extent this is not a feature of Western politics and more importantly it's not true populism because we do have a distorted system in which the wealthy are exploiting the poor. That's a matter of empirical analysis.
Of course someone has to have a certain amount of capital if they are going to invest in setting up a business. That's how these things work.
They also borrow. Therein lies the risk.
I'm very risk averse, which is why I would never invest any property or assets in developing my own sole trader business so that I begin to employ people etc. The prospect would terrify me. Besides, I don't need to, I have enough to live on without giving myself nightmares.
That doesn't mean I'm not enterprising, but I'm not cut out to do what No Profit does - and yes, I can see the social value in what he's doing and applaud that.
I don't think it's the politics of envy to point out that someone needs a house or other collateral in order to set up a business. There can be a certain amount of that out there in extreme socialist and communist territory - 'Let's get those Kulak bastards ... Oh shit, we've destroyed the rural economy at the same time ... that wasn't supposed to happen ...'
From my involvement in local and regional politics I'd suggest that there are people in all the main political parties who understand business and who do have a social conscience - although that is expressed in very different ways. I do find that some Conservatives are highly patronising when it comes to Labourites - they admire those in traditional working class wards but can't get their heads around why a middle class professional, say, might vote Labour or espouse socialist principles.
It does seem to be a genuine blind-spot with many of them. I'm not making a party political point there, I can only speak as I find.
There does seem to be a sense of 'entitlement' there with many - but not all - of them. We are Conservative. We know best. Others seem able to understand different viewpoints.
Labour and other parties have their own blind-spots.
If this does not in practice happen that shows that economic theories based on the ideal free market are not good models for the economy, and that political positions that laud the ideal free market are likewise flawed positions.
If flawless economic theories are a prerequisite for acceptable political positions, we're all pretty much shit out of luck.
Flawless economic theories seem to be a prerequisite for acceptable socialist political positions. It's only apparently right-wing and libertarian political positions that get a pass.
Well I don't think a flawless economic theory should be considered such a prerequisite - it appeared to be a criterion you were attempting to apply. But now you seem to say that it's unfair to hold socialism to this standard, so I guess at this point you're abandoning this point of your original criticism of free market political positions (or maybe just downgrading it to a complaint that their holders argue unfairly.)
This seems to me disingenuous of you.
It was you who first applied the word 'flawless' to economic theories. I merely stipulated that the economic model underlying the economic theory should just be a good model, one that at least roughly describes what happens.
It's as if I had said that medicine based on the four humours model of illness was flawed, and you had responded that if flawless models of the body are a prerequisite for acceptable medical positions we're all out of luck.
Also, appeal to economic necessity or the ideal wisdom of the market does not play the same central role in most left-wing thought as it does in centrist/centre-right thought. Centrist and centre-right politics depends on the virtues of the free market and on the actual existence of a free market that sufficiently closely approximates to the model. Socialist thought is not so dependent.
I don't think it's necessarily inconsistent - if a share in the proceeds of business operations is the agreed price for the investment in the first place. And if you've decided the expected value of investments should be nothing, or nothing more than the return on a government bond, you're not going to get a lot of investment.
Entire industries are based around people being willing to put money on horses or dogs or spins of the roulette wheel where the expected payoff is less than zero. So it is not in fact actually obvious that nobody would ever invest at a risk where the overall payoff is the same as a risk-free investment.
You phrase that ("not in fact actually obvious") as though it's a direct contradiction of something I said - but it's not.
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I think 'nobody would ever invest' is within the acceptable range of overstatement for the proposition for which 'you're not going to get a lot of investment' is an understatement.
I think my point about gambling stands regardless.
You don't have to have a house to start a business. That was just one example of where to generate funds. Don't make that the centre argument why someone couldn't.
People have started businesses with nearly nothing, when living in rented homes, doing it on the side of employment and of under-employment. Selling personal home services, using their skills, something they've made etc. Website for free to certain level of use, using social media, 30k/year in Canada of earnings you don't need to charge GST (like VAT), you get to deduct expenses, including portion of rent. You can get a gadget for free which connects to a cell phone and take payments with credit and bank cards. The barriers to getting started are low. You don't need a huge amount of money. Probably a couple of hundred. You need to be willing.
You don't have to have a house to start a business. That was just one example of where to generate funds. Don't make that the centre argument why someone couldn't.
People have started businesses with nearly nothing, when living in rented homes, doing it on the side of employment and of under-employment. Selling personal home services, using their skills, something they've made etc. Website for free to certain level of use, using social media, 30k/year in Canada of earnings you don't need to charge GST (like VAT), you get to deduct expenses, including portion of rent. You can get a gadget for free which connects to a cell phone and take payments with credit and bank cards. The barriers to getting started are low. You don't need a huge amount of money. Probably a couple of hundred. You need to be willing.
Most businesses of that nature (my wife has one) don't go anywhere, and certainly nowhere close to making a living. A lot of people around here run small businesses of one sort or another, but the ones who make a living doing it are the ones who have capital to invest in (say) a RIB to do boat tours.
I think the point is that it requires collateral. Whether that is garnered individually or collectively/communally is the moot point.
Yes, willingness comes into it but there's more to it than that. I would very much doubt that I would have the ability to develop an enterprise that would do more than simply tick over. Not everyone is a potential Alan Sugar or Richard Branson - thank goodness!
If I had to rely purely on my freelance earnings I would have starved to death by now.
All this is why the idea of proportionate wages helps (they have another name, but I cannot recall it)
So you can pay you CEO 1M a year. As long as the least well paid person (which includes the cleaners, the agency staff etc) earns at least 1/30th of this. At an hourly rate, assuming the CEO works a 40 hour week.
I htink that works out at around £16 an hour. And a decent number of hours a week. So increases in the CEO salary also increases everyone elses salary.
I've thought about this often. What I haven't sorted out is whether there is an effective mechanism to prevent companies contracting out the employment of their lower paid staff to a wholly-owned subsidiary to avoid the rule.
It is not straightforward, but that is why it has to include the agency staff, the subcontracted staff. Yes, it makes it massively complicated, but that needs working out and resolving (including significant penalties for evading the rules.)
And complications should not rule out ideas if they are good. No, I don't have the answers, but others will have ways of making this work.
All this is why the idea of proportionate wages helps (they have another name, but I cannot recall it)
So you can pay you CEO 1M a year. As long as the least well paid person (which includes the cleaners, the agency staff etc) earns at least 1/30th of this. At an hourly rate, assuming the CEO works a 40 hour week.
I htink that works out at around £16 an hour. And a decent number of hours a week. So increases in the CEO salary also increases everyone elses salary.
I've thought about this often. What I haven't sorted out is whether there is an effective mechanism to prevent companies contracting out the employment of their lower paid staff to a wholly-owned subsidiary to avoid the rule.
It is not straightforward, but that is why it has to include the agency staff, the subcontracted staff. Yes, it makes it massively complicated, but that needs working out and resolving (including significant penalties for evading the rules.)
And complications should not rule out ideas if they are good. No, I don't have the answers, but others will have ways of making this work.
My thinking was something like "if the relationship between two companies accounts for more than 50% of the costs or revenue of either company in a given tax year, or where where the share of costs or revenue for one company exceeds 25% and is more than double the next largest share (excluding relationships that solely concern the purchase of goods and materials and services relating directly to that where the purchaser is the smaller of the two companies by gross revenue) then the pay ratio calculation for both must include all the hourly rates of staff and any contractors employed by both."
And then I start to understand why tax law is incredibly complex.
Comments
So you can pay you CEO 1M a year. As long as the least well paid person (which includes the cleaners, the agency staff etc) earns at least 1/30th of this. At an hourly rate, assuming the CEO works a 40 hour week.
I htink that works out at around £16 an hour. And a decent number of hours a week. So increases in the CEO salary also increases everyone elses salary.
I've thought about this often. What I haven't sorted out is whether there is an effective mechanism to prevent companies contracting out the employment of their lower paid staff to a wholly-owned subsidiary to avoid the rule.
Do people complain when food prices rise? Do people deliberately shop local and pay more? I see the trend for organic everything Which boosted local here, until the grocery giants went after that market too.
What's their competition? Are they or any of their competitors headquartered some other country?
Did your gov't do what they love to do here by not taxing corporate income at anywhere close to the same rates as individuals?
I understand the UK has elected a conservative/Conservative gov't recently. Do you expect any changes with these people?
If on average your investments enable firms to expand their production in a way that they otherwise couldn't, don't you have a moral claim to at least some of the proceeds from that expanded production, in addition to the return of the original amount invested?
I would have thought the only moral claim is to costs incurred from not having the money yourself. Why should having money give you the right to the fruit of others' labour? Return on investment is merely a bribe to encourage the investor to release the money. It's arguably necessary but I think any moral claim is stretching it.
In an ideal free market all forms of investment will converge on the same expected payoff. If investment in business has a greater expected payoff than investment in bonds or property then the supply of investment in business will rise above demand reducing the expected payoff, and the supply of investment in property will drop below demand forcing the expected payoff of the latter to rise. And so each type of investment will end up with the same payoff, the type each investor prefers depending solely on their risk profile.
If this does not in practice happen that shows that economic theories based on the ideal free market are not good models for the economy, and that political positions that laud the ideal free market are likewise flawed positions.
Economic theory is supposed to operate on the basis of self-interested economic agents. An investor doesn't get any moral credit for operating out of enlightened self-interest. Moral claims don't come into it. At least, moral claims on behalf of those who are not doing so well out of the present economic order are according to free-market economists not supposed to come into it. It's somewhat inconsistent to say that the workers don't have a moral claim to more than the market price of their labour, but then to assert a moral claim on behalf of the investors.
Back to monarchy it is then.
There's a cockamamy idea that running government and managing people is a profession. And a profession best run by people who argue well (lawyers and their friends business graduates). These people take argument as evidence. Often without regard to data and actual proof as from science.
I'll ask this as a question: for how many MPs, MLAs, MPPs, etc is getting elected the best gig they've ever had re pay?
Ha ha ha ...
I think there can be a rather puritanical politics of envy (or resentment) out there - but I'm not convinced that comes into it when we are discussing some of the whopping big corporate behemoths.
Why do I say that?
Scale, I suppose. Some of these large corporations are operating on such a gargantuan scale and at margins that dwarf the rest of us to the extent that puts them beyond the level of 'look at that fat bastard in his flash car.'
They are so unimaginably large that they go beyond the level of personal resentment, if I can put it that way.
There is also the moral aspect. I once met the Ethiopian ambassador. He literally quivered with rage and righteous indignation when he told me how an infinitesimally small adjustment to the bottom line by some of the international coffee shop chains would make a world of difference to subsistence farmers in his country for whom coffee was the only cash crop available. 'They could send their daughters to school ...'
Is that the politics of envy? I think not.
Where I might part company with Doublethink to some extent would be on how prescriptive we might be. Would it be right to legislate in some way to 'cap' the amount of profit an enterprise might make once it has paid its dues and created a contingency? In saying this, I would make a distinction between small to medium sized enterprises and the corporate giants.
Even so, philanthropic as they were, I rather suspect that the likes of the Cadburys and Rowntrees were making rather more than enough to leave just a contingency fund.
That said, the issue of 'in-work poverty' is very real and The Guardian article that Doublethink cites makes a cogent point. The rest of us are subsidising some real corporate cut-throats.
I'm still struggling with the issue of how much is enough. It's all relative of course but there must be some yardstick and guidelines we could adopt.
How do we avoid a kind of judgemental Pharisaism on the one hand or a careless complacency on the other?
And what about me? Am I doing what I can to alleviate poverty and pursue social justice?
When the bank pays you interest, do you think of it as a bribe? Or do you think that since your money is being lent out at interest, you have a right to receive some share of that interest?
If flawless economic theories are a prerequisite for acceptable political positions, we're all pretty much shit out of luck. You didn't object when Enoch used "morally entitled", so I'm not sure why it's a problem now. I don't think it's necessarily inconsistent - if a share in the proceeds of business operations is the agreed price for the investment in the first place. And if you've decided the expected value of investments should be nothing, or nothing more than the return on a government bond, you're not going to get a lot of investment.
Thanks. I suppose it's an interesting question why the government prefers the low-income supplement rather than simply raising the minimum wage (as the article proposes). I think we do something similar in Canada.
I don't doubt that Tesco benefits from this, but I'm a bit reluctant to characterize this straight-up as a subsidy, because I doubt that they would find itself having to pay the entire difference itself if the taxpayer didn't pony up. More generally, I get antsy about characterizing social programs as subsidies to business - back when we were debating free trade with the US in the 1980s, there was concern that Canada's publicly funded health care system would be seen as a subsidy, because it eliminates a cost that businesses would otherwise be required to pay.
I wouldn't disagree, but you (and Enoch) came closest to making a 'politics of envy' style argument in this thread.
They may not -- but the present situation is that to the extent that their staff are on various forms of public subsidy, they have a business model that relies on this subsidy.
Sure. I'm not questioning that.
I can't speak for Enoch but in my case it's because I'm a contrary so-and-so.
I am asking a genuine question, though. Where do we draw the line? It's easy enough to point the finger at the Tescos of this world but what about me? What am I doing?
I'd love to see the likes of Tesco acting like the Cadburys and Rowntrees, for all their paternalism, but that ain't going to happen any time soon - just as Boris's vaunted thing about being a Heseltine but with Brexit ain't going to happen either.
I can't change either Tesco nor the Tories. Whatever I do isn't going to be enough. But we have to start somewhere.
Chelping about the fat bastard in the BMW isn't going to achieve a great deal. So where do we start?
Only if each business has a 50% risk of failure.
Italics mine. This agreement is made between the haves on the backs of the have nots. Talk about moral entitlement.
It's an agreement made by just about anyone with any savings at all.
In other worsd, the privileged.
I pointedly left moral considerations out.
(I am bemused by the implied idea that one's first post on a thread has to be an encyclopedic conspectus of one's entire position, such that if you don't object to some point in your first post you're not thereafter allowed to object to it ever.)
Entire industries are based around people being willing to put money on horses or dogs or spins of the roulette wheel where the expected payoff is less than zero. So it is not in fact actually obvious that nobody would ever invest at a risk where the overall payoff is the same as a risk-free investment.
Risk tolerance and not being foolish make people rich or just comfortable depending on their priorities. Some of us don't retire because we like others, mentoring them, and offering then employment. I've been in retirement financial position since my early 50s. But there's something very happy about being able to keep individuals going, spreading values forward, and when a local charity has a disaster, buying them the replacement thing that burnt which benefits 1000s of people each week. And no I don't donate to capital costs for church buildings or anything else that doesn't directly serve people and their immediate needs.
Nailed it.
No I don't think so. The capital you risk isn't surplus if you're going to progress investments. It's core. No one quietly accumulates capital monies in secure investments and then risks it later. Not how it works psychologically. The pattern of not risking for years until you feel secure and hsve enough money to invest changes you. Rather you get a loan, borrow against assets like your house. Then invest that. One of my children figured this out early and started investing while a university student. Yes student loan money. Yes, observations and mentoring by dad was significant.
As am experiment, try opening a stock account through your bank. 50 or 200 $£€ is enough. Invest in a fund which tracks the stock index. Ride it up and down. Put money in it monthly for 2 or 3 years. That's a lower risk way of starting. It means one or 2 tanks of gas, skipping meals out... Monthly.
All of this aside, I'd much prefer a system which assessed more tax to people like me and provided more safety net for everyone. Makes a better society. I don't think it's right that businesses get to keep money and direct public policy by sponsoring things like hospital wings, arenas, playgrounds, parks, theatre companies. These things should be publicly directed by the community and society, not by the likes of corporations and even small business people like me. WTF do I know about where it's best to direct money toward community works? No geniuses in the business world. Why should they decide?
Re risk, I could have happily stayed on as a civil servant. I can get just as turned on to risk when I shoot rapids in a canoe, well, probably more. Because it's real.
I was criticised earlier for referring to it, but that demonstrates that it's never far away in arguments about this.
No, it's just pointing out that you cannot use for security that which you do not have. I'm not sure how you read envy into that observation.
It's simple: if you're poor and a socialist it's envy. If you're rich and a socialist it's hypocrisy. Heads they win, tails you lose.
Not to pile on Enoch but it's nothing to do with envy.
The point here is all about opportunity.
It's simply not true that everyone who doesn't start a business has chosen not to because they are risk averse. For the many people, using their house as an asset to get started isn't an option because they don't have one. How many wouldn't do it anyway is moot but also beside the point. If you don't have that opportunity, it's not an option.
But I'll come back to my original point that rent-seeking is the primary problem. Not just morally but ultimately it makes the economy less productive so it's bad economics as well.
I think most democratic socialist thinkers have no problem with business owners or investors taking risks and getting profits as a return. It's profit without risk that's so distorting. Especially when those making said profits claim the moral high ground with phrases like 'wealth creators' or 'job providers' when in reality they are wealth consolidators. And that's a very different thing. In some cases economics is not a zero-sum game; in others it really is.
The subject of state support for employees has come up repeatedly because their wages are not high enough. Let me put it like this: if your business is not viable unless you pay your staff insufficiently then your business is not viable.
The great irony for me in the free market myth. What we are describing is actually a very un-free market. Stiglitz has written a lot on this point. Markets are not natural phenomena, they are shaped by the rules we choose to put on them.
As a self-described socialist I think we need to simply choose better rules for both economic and moral reasons.
It is not envy to point out the distortions in the system and the defence of 'politics on enzy' is very much a When did you stop beating your wife? argument.
AFZ
Well, I was just wondering if you had thought about the impact on democracy of the idea that he who owns the most gold should make the most rules.
I suppose the opposite of 'the politics of envy' would be the 'politics of greed' but that hasn't been bandwagoned in the same way.
Sort of.
Politics of envy is mostly a strawman. You see you are not allowed to object to inequality. If you do then the following is the standard response:
1) You're a communist - you want to make everyone poor.
2) You're objecting to the free market - people who are rich earn their wealth and that's how we make everyone better off
3) If you're poor, you're indulging in the politics of envy*
4) If you're rich, then you're a Champagne Socialist
To my mind; Socialists hate profit is just another form of the above.
AFZ
*I am not denying that the 'politics of envy' does exist - in the sense that it is an obvious form of populism to tell one group that all their problems are caused by another; In this case stir up the poor to blame the wealthy for all their woes. The problem is that to a large extent this is not a feature of Western politics and more importantly it's not true populism because we do have a distorted system in which the wealthy are exploiting the poor. That's a matter of empirical analysis.
They also borrow. Therein lies the risk.
I'm very risk averse, which is why I would never invest any property or assets in developing my own sole trader business so that I begin to employ people etc. The prospect would terrify me. Besides, I don't need to, I have enough to live on without giving myself nightmares.
That doesn't mean I'm not enterprising, but I'm not cut out to do what No Profit does - and yes, I can see the social value in what he's doing and applaud that.
I don't think it's the politics of envy to point out that someone needs a house or other collateral in order to set up a business. There can be a certain amount of that out there in extreme socialist and communist territory - 'Let's get those Kulak bastards ... Oh shit, we've destroyed the rural economy at the same time ... that wasn't supposed to happen ...'
From my involvement in local and regional politics I'd suggest that there are people in all the main political parties who understand business and who do have a social conscience - although that is expressed in very different ways. I do find that some Conservatives are highly patronising when it comes to Labourites - they admire those in traditional working class wards but can't get their heads around why a middle class professional, say, might vote Labour or espouse socialist principles.
It does seem to be a genuine blind-spot with many of them. I'm not making a party political point there, I can only speak as I find.
There does seem to be a sense of 'entitlement' there with many - but not all - of them. We are Conservative. We know best. Others seem able to understand different viewpoints.
Labour and other parties have their own blind-spots.
But that's another issue.
Potato, potahto.
It was you who first applied the word 'flawless' to economic theories. I merely stipulated that the economic model underlying the economic theory should just be a good model, one that at least roughly describes what happens.
It's as if I had said that medicine based on the four humours model of illness was flawed, and you had responded that if flawless models of the body are a prerequisite for acceptable medical positions we're all out of luck.
Also, appeal to economic necessity or the ideal wisdom of the market does not play the same central role in most left-wing thought as it does in centrist/centre-right thought. Centrist and centre-right politics depends on the virtues of the free market and on the actual existence of a free market that sufficiently closely approximates to the model. Socialist thought is not so dependent.
You phrase that ("not in fact actually obvious") as though it's a direct contradiction of something I said - but it's not.
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I think 'nobody would ever invest' is within the acceptable range of overstatement for the proposition for which 'you're not going to get a lot of investment' is an understatement.
I think my point about gambling stands regardless.
People have started businesses with nearly nothing, when living in rented homes, doing it on the side of employment and of under-employment. Selling personal home services, using their skills, something they've made etc. Website for free to certain level of use, using social media, 30k/year in Canada of earnings you don't need to charge GST (like VAT), you get to deduct expenses, including portion of rent. You can get a gadget for free which connects to a cell phone and take payments with credit and bank cards. The barriers to getting started are low. You don't need a huge amount of money. Probably a couple of hundred. You need to be willing.
That entirely depends on the type of business you are able/want to start.
Most businesses of that nature (my wife has one) don't go anywhere, and certainly nowhere close to making a living. A lot of people around here run small businesses of one sort or another, but the ones who make a living doing it are the ones who have capital to invest in (say) a RIB to do boat tours.
Yes, willingness comes into it but there's more to it than that. I would very much doubt that I would have the ability to develop an enterprise that would do more than simply tick over. Not everyone is a potential Alan Sugar or Richard Branson - thank goodness!
If I had to rely purely on my freelance earnings I would have starved to death by now.
It is not straightforward, but that is why it has to include the agency staff, the subcontracted staff. Yes, it makes it massively complicated, but that needs working out and resolving (including significant penalties for evading the rules.)
And complications should not rule out ideas if they are good. No, I don't have the answers, but others will have ways of making this work.
My thinking was something like "if the relationship between two companies accounts for more than 50% of the costs or revenue of either company in a given tax year, or where where the share of costs or revenue for one company exceeds 25% and is more than double the next largest share (excluding relationships that solely concern the purchase of goods and materials and services relating directly to that where the purchaser is the smaller of the two companies by gross revenue) then the pay ratio calculation for both must include all the hourly rates of staff and any contractors employed by both."
And then I start to understand why tax law is incredibly complex.