Monday, April 17, 2006
The Good, The Bad, and The Profitable
It is good to profit off of labor!!
Why is this good?
It is good because individuals would not be hired in the first place if it were otherwise. You are of greater "worth" than they pay you in wages -- that's why you still have a job. If your productivity transformed into profit were of equal or less value than the wages paid to you, then there would be little reason to continue to pay you that amount of money or even to extend your employment contract.
While many of our bleeding heart friends would be appalled by this statement, I think this mostly stems from a rather Marxist 'class warfare' approach and a misunderstanding of markets, especially the notion of labour and profits.
Profits are built-in incentives to further the production of goods and employment of labour. Without capital and labour, there would be no goods and no profits. So there is this web of interdependence created -- all at the betterment of humanity, not at the expense of the proletariat coerced by the bourgeoiseie caste of land owners or some corporatocracy.
So...profits are actually good??? How can worker exploitation be good??
Why is this good?
It is good because individuals would not be hired in the first place if it were otherwise. You are of greater "worth" than they pay you in wages -- that's why you still have a job. If your productivity transformed into profit were of equal or less value than the wages paid to you, then there would be little reason to continue to pay you that amount of money or even to extend your employment contract.
While many of our bleeding heart friends would be appalled by this statement, I think this mostly stems from a rather Marxist 'class warfare' approach and a misunderstanding of markets, especially the notion of labour and profits.
Profits are built-in incentives to further the production of goods and employment of labour. Without capital and labour, there would be no goods and no profits. So there is this web of interdependence created -- all at the betterment of humanity, not at the expense of the proletariat coerced by the bourgeoiseie caste of land owners or some corporatocracy.
So...profits are actually good??? How can worker exploitation be good??
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Workers aren't exploited, they're just paying rent.
People naturally try to get the best paying job they can, with certain conditions which may be counted as opportunity costs.
I might get a job in Winston Salem paying $20 more a day, but will that cover the cost of time spent traveling plus the cost of fuel? For many mothers returning to the work force the cost of working barely pays for itself.
One of the most common opportunity costs is the opportunity of working for oneself. Let's say a plumber has his own business. He has some busy days, and some slow days. He makes a greater profit per hour than if he worked for a contractor, but the work is less steady.
But why doesn't he make just as much working for the contractor? Isn't the quality of his work just as good? Indeed it may be better because the contractor can arrange for certain plumbers to specialize in certain jobs and thus improve effeciency.
But usually, the plumber will be paid less. Why?
Because the contractor has assumed many of the risks inherent in owning a business, and he charges the plumber rent for the management of those risks.
And such is the case for all employees. The could receive a higher portion of the profits of their labor if they were willing to assume more of the risk.
With trade growing freer, we are seeing more and more people in America working for themselves. Anyone have access to the number of people filing 1099's this year instead of W-2's and whether there is a trend in owning your own work?
I would have to add that risk aversion is part of a P_ _ _ N mentality.
People naturally try to get the best paying job they can, with certain conditions which may be counted as opportunity costs.
I might get a job in Winston Salem paying $20 more a day, but will that cover the cost of time spent traveling plus the cost of fuel? For many mothers returning to the work force the cost of working barely pays for itself.
One of the most common opportunity costs is the opportunity of working for oneself. Let's say a plumber has his own business. He has some busy days, and some slow days. He makes a greater profit per hour than if he worked for a contractor, but the work is less steady.
But why doesn't he make just as much working for the contractor? Isn't the quality of his work just as good? Indeed it may be better because the contractor can arrange for certain plumbers to specialize in certain jobs and thus improve effeciency.
But usually, the plumber will be paid less. Why?
Because the contractor has assumed many of the risks inherent in owning a business, and he charges the plumber rent for the management of those risks.
And such is the case for all employees. The could receive a higher portion of the profits of their labor if they were willing to assume more of the risk.
With trade growing freer, we are seeing more and more people in America working for themselves. Anyone have access to the number of people filing 1099's this year instead of W-2's and whether there is a trend in owning your own work?
I would have to add that risk aversion is part of a P_ _ _ N mentality.
I have to agree with Travis.
Risk aversion is quite a rational approach. That explains why most people don't work for themselves, why they invest in T-bills, or buy safe cars.
What's so bad about that (or paganism)?
Also, it needs to be cleaned up a bit, but you shed light on the difference between managers (and self-employed) and workers. If you go a little further, you can explain to the folks on the left why a CEO makes more than a minimum wage earner and why they are not comparable.
(that's the argument that is always made and Krugman is just about the worst of them on it)
Risk aversion is quite a rational approach. That explains why most people don't work for themselves, why they invest in T-bills, or buy safe cars.
What's so bad about that (or paganism)?
Also, it needs to be cleaned up a bit, but you shed light on the difference between managers (and self-employed) and workers. If you go a little further, you can explain to the folks on the left why a CEO makes more than a minimum wage earner and why they are not comparable.
(that's the argument that is always made and Krugman is just about the worst of them on it)
A pagan is fatalistic. He believes that the gods have placed him where he is socially and economically, and he should shut up and work. Do whatever it takes to appease the gods. Don't try to alter you status in life. Complain about the bad gods, speak well of the gods that show you favor. Accept your static position.
The opposite: You are responsible for your position in life. Do whatever you can to better it. Take dominion! Create wealth! Don't dream of the perfect job, go out there and create it! Be your own boss! Take risks!
Risk is rational if there are no opportunities for creation of wealth. But if the opportunity cost of a T-bill is the extra interest you could have earned on a riskier enterprise then the T-bill is a net loss to the economy and an act of worship to the government at the same time.
"If you go a little further, you can explain to the folks on the left why a CEO makes more than a minimum wage earner and why they are not comparable.
(that's the argument that is always made and Krugman is just about the worst of them on it)"
What arguement does Krugman make? Mine?
I don't follow you.
Nathan
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The opposite: You are responsible for your position in life. Do whatever you can to better it. Take dominion! Create wealth! Don't dream of the perfect job, go out there and create it! Be your own boss! Take risks!
Risk is rational if there are no opportunities for creation of wealth. But if the opportunity cost of a T-bill is the extra interest you could have earned on a riskier enterprise then the T-bill is a net loss to the economy and an act of worship to the government at the same time.
"If you go a little further, you can explain to the folks on the left why a CEO makes more than a minimum wage earner and why they are not comparable.
(that's the argument that is always made and Krugman is just about the worst of them on it)"
What arguement does Krugman make? Mine?
I don't follow you.
Nathan
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