Published: Tuesday, Feb. 4 2014 12:00 a.m. MST
"For starters, the poor are not poor because the rich are rich." A
Marxist such as myself would argue that the process - profits - which has made
some wealthy (almost all are business owners) has made others (employees) less
well-off compared to what their situation would be with ownership rights. The matters of defining what profits are and determining how profits are
created has been a point of contention among both economists and accountants.
Marx posed the question - in a system like ours where exchange mostly involves
things of equivalent value - where do profits come from? Marx argued that for
the most part profits come from employers not compensating employees for all of
the value they add (Marx's famous surplus value). If Marx is right, labor
is almost always exploited. You'll note that few become wealthy without
employees. The wealthy make profits off of the employees.If nothing
else Samuelson's piece shows how necessary Marx's perspectives are.
We're ready to debate, but Marx needs a place in the debate denied him by
contemporary economics, and by commentators like Samuelson.
"(car dealerships, builders), creating big enterprises (Google, Microsoft),
being at the top of lucrative occupations (lawyers, doctors, actors, athletes),
managing major companies or inheriting fortunes."These avenues
for wealth have been around for a long long time. Why are they now producing so
much more wealth?If we look at the larger picture, worker
productivity has grown significantly in the last 30 years and their wages have
not. CEO's used to make 30 times their average worker, now it is closer to
300 times.The focus on the bottom line has pushed companies to ship
jobs overseas in order to maximize profits.Granted this is a complex
issue. And I agree that the "poor are not poor because the rich are
rich".But it is hard to deny that the effort of corporations to
increase their bottom line has come, to some extent, at the expense of the poor
and middle class.Those with money can buy favorable legislation. I
would contend that in the last 30 years they have tilted the playing field more
in their favor, and that has grown the inequity.Dont get me wrong.
Profits are great. Maximum profits have a downside.
During his interview with Obama, Bill O'Reilly asked probably the most
important question asked in that interview; "What has the government done to
address the real cause of poverty in America, the explosion of single parent
families, especially in the African American community". Obama's answer
was that, "He has talked about this in at least 10 speeches"! More than
anything else Obama talks about something he calls "social justice and
income redistribution" which are in reality the enablers of the increase in
single parent families, not the solution. The government with their easy welfare
programs make men in the home irrelevant. Men do not need to provide for their
offspring anymore, the government will do that for them which enables and
sustains poverty. The solution to poverty is more moral responsibility not more
government responsibility. Poverty will never be solved with income
redistribution in fact it will increase it!
Both Marxist and JoeBlow give the impression that they find the necessity of
government intervention or structure to be the answer to the questions of income
or profit distribution. I would agree with JoeBlow that "maximum
profits" may have been the result of government intervention . It does
appear that money does have a significant influence on elections to Federal
government representatives and cronyism is the result. Might not the answer be
the downsizing of the influence of a centralized government? Would not that
reduce the temptation to put your profits where they are the most effective -
into the hands of a select few elected officials - who can then determine who
benefits and who does not from the centralized empowered few? Might we not be
better off with strengthened emphasis on the family, based upon a foundation of
moral philosophy where we - as individuals - look for the opportunity to lift
the poor and the unfortunate through our individual efforts? Profit motive is
not an unworthy endeavor, since it is what provides for each of us the
opportunity to provide for the needs of our families - where, hopefully, we are
teaching principles that will lift our vision and our efforts.
"most important question asked in that interview; "What has the
government done to address the real cause of poverty in America, the explosion
of single parent families, especially in the African American
community""What suggestions would you have? What do you
think "the government" should do to address this problem?I
would sincerely be interested to know.
Marxist. You continue to suggest that workers are exploited. That is totally
false for many reasons and here are just a few: #1: In a free society
businesses compete for talent (workers) and in order to attract and keep the
best talent, they must pay workers with competitive salaries and benefits or
their business fails.#2: Prosperity is always generated by productivity.
If low productivity produced prosperity there would be no poverty! America was
prosperous because America was so very productive. Marxist societies like N.
Korea, Cuba and the former USSR among many others were never productive and
therefore never prosperous. #3: There is no such thing as productivity
without freedom to produce. When the government controls productivity, there
never will be any prosperity. Capitalism rewards productivity, which generates
prosperity. Marxism punishes productivity and therefore kills prosperity.
History is full of examples.#4: In a free society, if I don't like my
employer and believe my employer is exploiting me, I am free to go somewhere
else. In a Marxist society, you are what the government determines you are, not
you. #5: Only successful employers and employees pay taxes. If you
think workers in America are being exploited, you should visit a Marxist
One thing for sure, legislated jealousy is not a solution. Jealousy is of zero
use in helping the poor.
" JoeBlow give the impression that they find the necessity of government
intervention or structure to be the answer to the questions of income or profit
distribution"Not true. I do believe however that governmental
policies have contributed to the collection of wealth at the top.While poor people have a vote, rich people and corporations have a vote AND
lots of money.This money can purchase legislation which is favorable
to the corporations and the rich.Look at tax rates in the last 30
years. Look at the favorable tax treatment of capital gains. Look at the
loopholes and deductions available to corporation and the wealthy.Yes, I understand that the wealthy pay the bulk of the taxes. But they also
make a bulk of the money, and with a good accountant and favorable legislation,
their % of often lower than many.I believe that the playing field
has increasingly been tilted to favor the wealthy, hence the growing income
Marxist:Of course many wealthly people got that way by leveraging
the value of many employees. Profits generated by paying employees less than
they actually produce reward those who start businesses and/or invest capital in
them.The fatal flaw in your agrument (started by Marx) that
businesses should pay employees the full value of their labor (i.e. share all
the profits with workers) is that the businesses themselves would not exist
without the profit motive. The workers would have no place to work.Businesses are inherently risky ventures. For every one that succeeds, several
more fail. I am trying to start a business. If I am successful, I will employ
lots of people and I will become very wealthy. I would not even bother trying if
the reward was the same as continuing to work for someone else. It's called
capitalism. It works - not always perfectly but certainly better than Marxism
Any discussion of inequality needs to include one fact that this piece omits.
The share of the national wealth going to workers has declined precipitously
while the share of the national income going to corporate profits and to the
hyper-rich has skyrocketed. This discussion is not about the rich vs the poor.
It is about the rich vs. the working class and the middle class. The
CEO of Google recently admitted that Corporate America is shafting the middle
class. He also admitted that the reason for the slow economic recovery is that
the middle class has no money to spend, thus there is inadequate demand He said
that no one corporation can solve this on their own, because any corporation
that unilaterally raises salaries for their workers puts themselves at a
competitive disadvantage. It is a problem that has to be solved collectively.
"The fatal flaw in your agrument (started by Marx) that businesses should
pay employees the full value of their labor"I highly doubt that
anyone would espouse that idea.However, the goal of a business
should not be to pay their people as little as possible.It is a
tough labor market right now. We hear daily about the struggles of college
graduates and how under-employed they are.Business definitely has
the upper hand. The question is how much should they squeeze. How many jobs
should they move overseas to increase their profits.When the job
market is depressed, people have no choice to work for less. Unfortunately,
business seems to be all to happy to pay as little as possible while cutting
benefits.Corporations have had a great run for several years. And
their stockholders have done quite well. The employees? Not so much.You know, just because you can, does not mean it is the right thing to do.
Regarding Marxist's explanation:Historically, there have been
three basic explanations for where overall profit in an economy comes from.
These were put forth by Marx, Joseph Schumpeter, and Thorstein Veblen. Each of
these explanations is right in a small sense and wrong in a much larger sense.
The question of where profit comes from, when every transaction produces a
situation in which every cent of revenue is offset by one penny of expense (all
of my income is someone else's expense), is a very complex question. It can
be explained, I believe, but not in the 200 words allotted here. Part of the
explanation, though, is that money is borrowed into existence. Another part has
to do with our system of accrual accounting in which revenues and expenses are
not realized in the same year. If the economy grows over time, this results in
revenues that exceed expenses (not just for one business), but for the
aggregation of all businesses.The problem of inequality, though, has
a lot to do with initial distribution of wealth, and, as usual, Roland is right
on target with his explanation. This is a systemic problem.
Mr. Samuelson calls out a “half right” analysis (WU economists) and
offers in return a half right analysis of his own.If we can agree
that poor people are often their own worst enemy due to a whole host of bad
habits and bad decisions (this is not necessarily a moral condemnation, just a
fact), can we also agree that they face entrenched disadvantages that our
current economy often exacerbates?We can see this in everything from
the ubiquitous payday loan stores in poor neighborhoods to the relative lack of
basic services (e.g., good police, education, etc…) to the massive
economic insecurity (i.e., low skilled jobs can be shipped overseas tomorrow)
driven by the modern economic mindset that corporations exist for one reason
only – to maximize shareholder wealth. Until the Left
understands that there is a large component of personal responsibility and the
Right understands that modern corporations that do not benefit society are
amoral at best and often can be monstrous, we will continue to see half right
solutions from both sides which are largely meant not to solve problems but to
fuel the political divide.
Samuelson's numbers are a bit suspect when he claims that even the poor
have experienced economic gains since 1980. He is apparently using actual
numbers, not adjusted for inflation. When you take inflation into account, only
the wealthy have made gains. So, in real terms, life is more difficult for not
only the poor but also those in the middle.
This article reinforces my belief that many people covet what someone else has.
If the top 1% earned their money with integrity, good for them. I look at
beautiful houses and the luxury trips people take, and I tend to covet, also. I
have to watch for this behavior as it is wrong. Also, I am grateful that I do
have enough money to fulfill my needs. It took time and a lot of education, but
we are doing okay. Anyway, who wants to clean a huge house?
Who is this "we" who want to punish the rich? I don't. I just want
them to pay their fair share. They benefit way out of proportion to the rest of
us, who are also hard working, contributing people. I would like to see them
become enlightened capitalists and share (voluntarily) their amazing gains with
the people who helped them--their employees. I would also like to see them pay
their weight in taxes, none of which I consider "punishment." Why does
Mitt Romney pay only 13% income tax when I pay a lot higher rate than that off a
tiny fraction of his income?
What is a "fair wage"? How much to you pay your "paper boy"? I
made $0.50 per customer when I delivered newspapers. I had to collect for
papers sold, pay my own taxes and buy my own supplies. Was that fair? I had
100 customers. The route was five miles from my home. I started immediately
after school ended and was usually home within five hours. Do the math. The
GROSS profit was $50 per month. Was I being exploited? I don't think so.
It was the best learning experience of my life, at the time. I learned that I
did not want to always work for $0.30 per hour. If "need"
drives "covetousness", then society will fail. If "need" drives
the desire to self-improve, to learn, to become better qualified, then society
will benefit. Telling someone that he "deserves" more because his
employer risked capital to provide a job is teaching a person how to fail. If
he wants more money, he can either risk his own capital or prepare to get a
better paying job. Too many people want to collect the profits without
Re: IronyGuy " I would like to see them become enlightened capitalists and
share (voluntarily) their amazing gains with the people who helped them--their
employees." It's a nice thought but it's not going to happen (was
Henry Ford an exception?). Why? Once again we need Marx to explain.
Capitalists feel driven to maximize profits (surplus value) by minimizing wages,
because they fear losing it all. The explanation of this behavior is more
complex. There is no room here. But the behavior is obvious is it not? It
explains off-shoring and American down-sizing. And the process has gotten
really mean - cutting food stamps, cutting unemployment benefits, destroying
pension funds (largely completed), and the intent to destroy social security.
We know that capitalism can't function without a prosperous
middle class. Even the wealthy know it, but they can't help themselves -
they want maximum profits no matter what the cost.
We've got to stop paying attention to money - add value wherever you can,
get what money you need and then stop focusing on it. Capitalism is much better
than the alternatives but is still so blatantly dishonest that how much money a
person has means very little. So many of us spend most of our lives
dishonestly getting paid far below the value we add, all the while shuffling it
upstairs to someone who just delegates the hard work back down to us. And if
they fail they shuffle the risk down to us through the various safety nets &
bailouts. And then we buy their products they misrepresent and overprice and
then fight half the time because they don't work or break. Focus on your own lives and ignore the rich and celebrities. Every dollar and
blessing they have that they don't fully deserve they'll have to
square with the rest of us in the end for.
Every time I hear or read someone say the rich should pay their fair share, I
shake my head because of the ignorance it takes to make a statement like that.
The wealthiest Americans pay nearly 80% of all federal income taxes paid while
around 47% of Americans pay no federal income taxes at all! Obviously the rich
are paying their fair share but guess who isn't paying their fair share?
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