Tea Party, Hypocritical Parasites?

[Ghostbear]

How would new facilities and equipment be the same capital? If new machinery is installed, nothing else changes, and productivity rises, it's obvious that the increased output can be attributed only to the new machinery (i.e., capital investment).

It's the same capital investment for them; that it's a different kind of machinery is irrelevant- the workers are going to be providing physically different labor working that machinery, but it's still the same labor input from them, just applied differently.

If you're talking purely from the act of buying the machinery, that only doesn't account fully for the realities of the situation: lots of equipment is replaced on a depreciation schedule, such that even if vastly superior equipment comes out, it will still be phased in at the same rate. In those instances, the capital investment isn't changing any appreciable amount- in essence, the investment provided is staying the same, just like the labor.

[lutzj]

How would new facilities and equipment be the same capital? If new machinery is installed, nothing else changes, and productivity rises, it's obvious that the increased output can be attributed only to the new machinery (i.e., capital investment).

It's the same capital investment for them; that it's a different kind of machinery is irrelevant- the workers are going to be providing physically different labor working that machinery, but it's still the same labor input from them, just applied differently.

If you're talking purely from the act of buying the machinery, that only doesn't account fully for the realities of the situation: lots of equipment is replaced on a depreciation schedule, such that even if vastly superior equipment comes out, it will still be phased in at the same rate. In those instances, the capital investment isn't changing any appreciable amount- in essence, the investment provided is staying the same, just like the labor.

Suppose I own a farm and hire someone else harvest corn or something at maximum effort for 8 hours. I can either buy them no tools (zero capital) and they will produce one bushel of corn, gloves ($5) and they will produce two bushels, a sickle ($25) and they will produce ten bushels, or gloves and a sickle ($30) and they produce twelve bushels.

The farmhand is doing essentially the same thing in each scenario: swipe at the corn and put in in a basket for 8 hours. (In fact, their job probably becomes much more pleasant with gloves.) Hands that work on sickle-equipped farms and non-sickled farms will make pretty much the same wage.

The capital, on the other hand, is producing massive gains in productivity. Farmers who invest in gloves and sickles therefore see much larger output.


I'm not sure how the four types of capital (nothing, gloves, sickle, gloves+sickle) I just presented are "the same capital."

[Ghostbear]

I'm not sure how the four types of capital (nothing, gloves, sickle, gloves+sickle) I just presented are "the same capital."

That's because your example is based on a different scenario than the one being discussed- "One day, the owner of the factory pays to replace the machines with new machines that can make twice as many buttons for the same amount of effort.". Those are machines that would have had to been replaced eventually, and in many (dare I say, most) cases, new equipment of that kind will be acquired on a specified schedule (such as replacement schedule based on depreciation) even in the presence of massive improvements.

So in that instance, you'd get:
- Factory uses [machinery]
- After 5 years [machinery] is scheduled for replacement. The company purchases new equipment, except this time, it's [machinery 2.0] which is gives twice as much output for a similar cost.

vs:
- Factory uses [machinery]
- After 5 years [machinery] is scheduled for replacement. The company purchases new equipment, and nothing better than [machinery] is out, so the replacement has the same output as before at a similar cost.

In both instances, the same (or very nearly same) amount of investment is made, except in one case technology advanced in the meantime to allow them to use that investment on something more useful. The capitalist still did the same work as before, still invested the same amount of capital as before- just as the workers did the same amount of work as before, and invested the same amount of labor as before. Why does the capitalist get all the rewards for the march of technological improvements?

What you're discussing is a capitalist moving in and making an investment over prior nothing- in that case, yes, they do deserve quite a bit of the credit. I expect that that isn't going to represent a majority, or even a significant amount of the cases of productivity improvements that society has experienced- most of it is the slow march of progress- improving things a bit here and a bit there. Even without that progress, you still would have had to buy new equipment; tools wear down with use over time, just in these instances, people were able to make a better tool for you to buy by the time your previous one wore out.

[lutzj]

I'm not sure how the four types of capital (nothing, gloves, sickle, gloves+sickle) I just presented are "the same capital."

That's because your example is based on a different scenario than the one being discussed- "One day, the owner of the factory pays to replace the machines with new machines that can make twice as many buttons for the same amount of effort.". Those are machines that would have had to been replaced eventually, and in many (dare I say, most) cases, new equipment of that kind will be acquired on a specified schedule (such as replacement schedule based on depreciation) even in the presence of massive improvements.

That doesn't make it not an investment. "You were going to do it anyway" doesn't make the action lose its moral weight.

Why does the capitalist get all the rewards for the march of technological improvements?

Wage-earners benefit from improvements in technology because their wages become more useful. Just as machines are replaced over time by better ones, consumer goods and food are replaced over time by better ones.

What you're discussing is a capitalist moving in and making an investment over prior nothing- in that case, yes, they do deserve quite a bit of the credit. I expect that that isn't going to represent a majority, or even a significant amount of the cases of productivity improvements that society has experienced- most of it is the slow march of progress- improving things a bit here and a bit there. Even without that progress, you still would have had to buy new equipment; tools wear down with use over time, just in these instances, people were able to make a better tool for you to buy by the time your previous one wore out.

I don't see how replacing old equipment is different in either cost or benefit from buying new equipment. The capitalist still has the option to not buy the new machines if the current ones are breaking down.

[Ghostbear]

That doesn't make it not an investment. "You were going to do it anyway" doesn't make the action lose its moral weight.

Nowhere did I say it was not an investment. If you truly think I said that, then you are missing my entire argument.

I don't see how replacing old equipment is different in either cost or benefit from buying new equipment. The capitalist still has the option to not buy the new machines if the current ones are breaking down.

It's an example of how the capitalist did nothing extra to cause that improvement, just as it was said the workers do nothing extra. They make their same investments, just as often, and productivity goes up because of factors that are not them. If they would have bought machinery for $x no matter what, when the machinery available at $x is now twice as capable, the investor didn't do anything new over what they were doing before: they were investing $x every [time period], and they are still investing $x every [time period]. This is the crutch of what is being said: the capitalists are not doing anything new over what they were doing before to create that productivity. (Emphasis added to draw as much attention to this as I can- this is the argument being made, and I don't know if I just made it poorly before, or you just missed it, or something else, but I want to be very certain that it gets across.).

Your second statement can be very easily reversed: The worker still has the option to not continue working when they feel like it. Does that mean that all the new productivity from technological advances is "theirs"? No. Just the same as how the capitalist having the option to not buy new machines does not make the technological benefits "theirs". Both parties have many options to destroy or greatly lessen the productivity at hand. I don't think it's a relevant observation at all, because it does nothing to affect the situation being discussed.

Wage-earners benefit from improvements in technology because their wages become more useful. Just as machines are replaced over time by better ones, consumer goods and food are replaced over time by better ones.

And yet, their wages do not become larger; if your wage is more useful, and the person it is more useful to isn't you, then how have you benefitted? In many ways, it could harm them: the job of multiple people can now be done by one person, and absent a proportional increase in demand, that's going to mean less people are needed for that task, resulting in their wage going down, despite the profits of the capitalist going up. Both groups put the same amount of extra skin in the game (none) to create that improvement, and yet one group gets all the rewards, and the other group, if they're lucky, gets none- if they aren't lucky, they get some of the directed negatives.

Better consumer goods is an external factor and completely irrelevant to this discussion.

[Vaniver]

I'm saying that you don't achieve that "more free" position by just willy nilly removing government from the equation.

And I'm wondering why you thought that was novel.

It doesn't matter where the increase in productivity comes from - the factory is doing better. You say the workers are providing the same quality and quantity of effort as before - is not the owner, as well?

The owner paid for the new machines, and thus should get the benefits accrued by those new machines.

If you're talking purely from the act of buying the machinery, that only doesn't account fully for the realities of the situation: lots of equipment is replaced on a depreciation schedule, such that even if vastly superior equipment comes out, it will still be phased in at the same rate.

"Phasing in" machines takes money, and the alternative is shutting down the factory (or running it while obsolete). The fact that factories need to be periodically repaid for suggests the necessity of capitalists, not their superfluousness.

[Ghostbear]

And I'm wondering why you thought that was novel.

Because I have never heard anyone say they want the markets to be more free without meaning they want less government involved in the markets. Based on your posts in general, I expect the same from when you say it.

The owner paid for the new machines, and thus should get the benefits accrued by those new machines.

The workers used the new machines, and thus should get the benefits accrued by those new machines.

That logic goes both ways- neither party bears responsibility for that improvement in part or in full. As such, the benefits from that improvement should not go mostly or wholly to only one of those groups.

"Phasing in" machines takes money, and the alternative is shutting down the factory (or running it while obsolete). The fact that factories need to be periodically repaid for suggests the necessity of capitalists, not their superfluousness.

You're missing the point I made (which makes me sad, since I tried to draw so much attention to it in my last post )

The benefits of the new machines over the older machines is caused by neither party- both parties continued to do what they did before (invest at a certain rate- whether that investment is in money or labor). Actually, I'm going to save myself the trouble and just requote myself from my prior post:

It's an example of how the capitalist did nothing extra to cause that improvement, just as it was said the workers do nothing extra. They make their same investments, just as often, and productivity goes up because of factors that are not them. If they would have bought machinery for $x no matter what, when the machinery available at $x is now twice as capable, the investor didn't do anything new over what they were doing before: they were investing $x every [time period], and they are still investing $x every [time period]. This is the crutch of what is being said: the capitalists are not doing anything new over what they were doing before to create that productivity. (Emphasis added to draw as much attention to this as I can- this is the argument being made, and I don't know if I just made it poorly before, or you just missed it, or something else, but I want to be very certain that it gets across.).

Where do you disagree with the above?

[lutzj]

Where do you disagree with the above?

I disagree that the person buying new machinery did "nothing extra" in doing so. There is a difference between upgrading equipment and merely maintaining it. It doesn't matter why the new machinery is better, or whether it costs more than the old machinery. Technological advances go both ways: When advances in the realm of artificial lighting enable people people to work at different times of day, they reap the benefits by applying their time more efficiently, even though they're not doing any more work and their poor oppressed employers see none of the benefits.

[Vaniver]

Because I have never heard anyone say they want the markets to be more free without meaning they want less government involved in the markets. Based on your posts in general, I expect the same from when you say it.

Your point, as I understood it, was "you should be selective when removing government restrictions." Great, that's what I tried to communicate.

You're missing the point I made (which makes me sad, since I tried to draw so much attention to it in my last post )

I'm not missing your point, I'm disagreeing.

If the owner pays for new machines, they cause those new machines to enter the factory, and their share of the output depends on how much production they caused. Even when there are different parts of the production process that are all necessary, we can figure out the proper share to give each by the price system. (You need materials, machines, and labor to make buttons, but that doesn't mean all are equally important or should be rewarded equally.)

Take your argument and apply it to labor instead. Suppose we told workers who had been working 4 hour days that they were now going to work 8 hour days, but we we're still paying them the same daily rate. When they complain, we respond with "we're not asking you to do anything extra; you were going to come into work anyway!"

[Ghostbear]

I disagree that the person buying new machinery did "nothing extra" in doing so. There is a difference between upgrading equipment and merely maintaining it. It doesn't matter why the new machinery is better, or whether it costs more than the old machinery.

The point is that they did nothing over what they were already doing, just like the workers. This is the important point. Imagine a capitalist who invests $10,000 a year into keeping his company filled with typewriters for the workers to use, and for 100 years straight the typewriters have no advancements and productivity. Then, after those 100 years, office computers are invented, and the capitalist spends $10,000 a year buying computers for the workers to use instead (as in, the total money invested is unchanged!). What has the capitalist done to earn all the rights to that increased productivity? It is not created from their actions; their actions have remained completely unchanged throughout this scenario, and they have literally done nothing extra.

Technological advances go both ways: When advances in the realm of artificial lighting enable people people to work at different times of day, they reap the benefits by applying their time more efficiently, even though they're not doing any more work and their poor oppressed employers see none of the benefits.

This is just like the improved consumer goods point: completely external to this discussion. It's about who benefits from the increased productivity from those technological changes. Not that the average person didn't benefit at home from advances in medicine or computers.

Your point, as I understood it, was "you should be selective when removing government restrictions." Great, that's what I tried to communicate.

I didn't interpret what you had said to mean that at all. All you said was "we should make the markets freer to fix this". Which implies to me, as I said, to remove government from the equation as much as possible.

I'm not missing your point, I'm disagreeing.
[,,,]
Take your argument and apply it to labor instead. Suppose we told workers who had been working 4 hour days that they were now going to work 8 hour days, but we we're still paying them the same daily rate. When they complain, we respond with "we're not asking you to do anything extra; you were going to come into work anyway!"

No, that does miss my entire point! All of it; the entire thing. If you are saying this, then none of my point was gotten. Really, truly, and seriously: what you are saying very directly implies you missed my point.

They are doing more than they would have, because they are putting twice as many hours in. If the capitalist invests more than they would have otherwise, then, and only then, are they doing more. If they are investing at the same rate (working the same number of hours), then they are contributing nothing extra, by definition. If they invest $x a year, and they are still investing $x a year but that $x gets them more productivity because of the technology fairy, they did nothing more than the workers have done to create that increased productivity, because nobody involved- not the capitalists, and not the workers- have done anything new or special or different to cause that it to happen.

[Greyarcher]

I'm not missing your point, I'm disagreeing.
[,,,]
Take your argument and apply it to labor instead. Suppose we told workers who had been working 4 hour days that they were now going to work 8 hour days, but we we're still paying them the same daily rate. When they complain, we respond with "we're not asking you to do anything extra; you were going to come into work anyway!"

No, that does miss my entire point! All of it; the entire thing. If you are saying this, then none of my point was gotten. Really, truly, and seriously: what you are saying very directly implies you missed my point.

Heh, hang in there. I thought about interjecting a post at various times, but you're already doing fine but I doubt I would be more clear and concise.

Regarding this scenario though: employers' investment (in the form of capital) is constant, yet the so-called "application of your argument" has workers' investment (in the form of hours) being increased. So Vaniver is doing it wrong, or skipping a few steps in making clear how this is a proper analogy despite this problem. It seems like an obvious break in the analogy, so I find it a bit puzzling.

[lutzj]

They are doing more than they would have, because they are putting twice as many hours in. If the capitalist invests more than they would have otherwise, then, and only then, are they doing more. If they are investing at the same rate (working the same number of hours), then they are contributing nothing extra, by definition. If they invest $x a year, and they are still investing $x a year but that $x gets them more productivity because of the technology fairy, they did nothing more than the workers have done to create that increased productivity, because nobody involved- not the capitalists, and not the workers- have done anything new or special or different to cause that it to happen.

First of all, if they invest more every year then they are doing more. Investment != maintenance costs, even if you keep conflating the two.

Second, workers also benefit from the "technology fairy," as well as the "talent fairy" and many other factors that have nothing to do with effort.

[Princess Marzipan]

It doesn't matter where the increase in productivity comes from - the factory is doing better. You say the workers are providing the same quality and quantity of effort as before - is not the owner, as well?

The owner paid for the new machines, and thus should get the benefits accrued by those new machines.

[later, to Ghostbear]: The fact that factories need to be periodically repaid for suggests the necessity of capitalists, not their superfluousness.

It suggests a necessity for CAPITAL. Not capitalISTS.

The idea of reinvesting money into a business does not require that one person is holding full control of an inordinate amount of wealth. It just requires a person or group of persons within the company to be responsible for ensuring that enough profits remain after paying workers to ensure continued operation. The way it works now, enough profits remain after paying workers to pay CEOs potentially hundreds of times what an average employee earns.

I intentionally did not state that the owner is providing nothing. I said he was providing nothing more than before.His job with the company is a management and financial position, and I agree it needs to be done. (It CAN be done with groups, small or large, though.)

Presumably, since we're talking about a capitalist here, there is financial incentive to upgrade the machines. Once that profit from the new machines materializes, the effort can no longer be distinguished. The workers wouldn't have sold as many buttons without the owner's investment, but the investment itself was useless without the workers. The owner has done his job by ensuring/improving efficiency, the workers have done their jobs by operating the machines and producing buttons.
I am assuming that this is money out of the pocket of the capitalist, however, and not from the company. That's fine. The capitalist here would be justified in repaying himself the cost of the new machines from out of the pool of increased. At some point, though, the investment is fully paid off, everyone's putting in the same effort, the factory is more productive than before...and yet only a small percentage of the people involved are seeing any benefit from that increase.

[jareds]

It suggests a necessity for CAPITAL. Not capitalISTS.

I responded to this exact platitude on the last page. However, I think you may have read it, or it least understand the point that capital does not come from genies.

The idea of reinvesting money into a business does not require that one person is holding full control of an inordinate amount of wealth. It just requires a person or group of persons within the company to be responsible for ensuring that enough profits remain after paying workers to ensure continued operation. The way it works now, enough profits remain after paying workers to pay CEOs potentially hundreds of times what an average employee earns.

I intentionally did not state that the owner is providing nothing. I said he was providing nothing more than before.His job with the company is a management and financial position, and I agree it needs to be done. (It CAN be done with groups, small or large, though.)

The owner's job is not managerial--the manager's job is managerial. The owner and the manager may or may not be the same person. The owner's job is forgoing present consumption to allow the production of capital goods. If the owner's job is done by a group of people, that is called a corporation or partnership and the underlying shareholders or partners are normally considered capitalists.

You provided a story for how a factory would operate without capitalists (or rather with the capitalists being the workers--nothing about your scenario suggests that the return on capital goes to anyone but the workers (including managing workers)). I would note that, in the absence of capital markets, the factory would need to retain more cash to have the same risk of failure as in capitalism. Since it has no ability to raise money based on its future ability to earn profits, it has to retain enough cash to weather any adverse events. (Even if it did have the ability to raise money, it is still difficult to imagine that the retained profits necessary to ensure continued operation would not amount to hundreds of average employees' salaries in an enterprise with tens of thousands of employees--that is by definition less than 1% of the operating costs.)

More seriously, your story does not explain how factories are supposed to get started in the first place and weather the initial years when they have little or no retained profits.

[Ghostbear]

First of all, if they invest more every year then they are doing more. Investment != maintenance costs, even if you keep conflating the two.

Sigh. I don't know how to explain it any more clearly: THEY ARE NOT INVESTING MORE! That's the whole point! They are continuing to do what they were doing before: Investing $x per year. Just as the workers were continuing what they were doing before: invest y hours of labor per year. Both of those are essential, but unless one group adds to what they were already doing (investing at a greater rate, working more hours, investing at a higher risk, working on more difficult tasks...) they aren't doing any extra over what they are doing.

The argument that the capitalists could just not continue to invest is a hollow one, because the workers could also just not continue to provide labor: that does not change the discussion at hand.

Second, workers also benefit from the "technology fairy," as well as the "talent fairy" and many other factors that have nothing to do with effort.

Your insistence on saying this makes me wonder if you have a fundamental misunderstanding of what is being discussed. Yes, they benefit from technology outside of their job, but so does the capitalist. What they don't do is benefit directly for the increased productivity from that labor, while the capitalists do.

[ThunderOfCondemnation]

First of all, if they invest more every year then they are doing more. Investment != maintenance costs, even if you keep conflating the two.

Sigh. I don't know how to explain it any more clearly: THEY ARE NOT INVESTING MORE! That's the whole point! They are continuing to do what they were doing before: Investing $x per year. Just as the workers were continuing what they were doing before: invest y hours of labor per year. Both of those are essential, but unless one group adds to what they were already doing (investing at a greater rate, working more hours, investing at a higher risk, working on more difficult tasks...) they aren't doing any extra over what they are doing.

In fact, it doesn't really matter if they are "doing more" or "doing less." Moving a greater amount of money or lesser amount of money is still moving money, which does not help actually produce anything of value. Capitalists move money around and get more money. The capitalist makes pure profit from surplus labor. What is the capitalist useful for? The money might be useful, but the capitalist certainly is not.

[lutzj]

First of all, if they invest more every year then they are doing more. Investment != maintenance costs, even if you keep conflating the two.

Sigh. I don't know how to explain it any more clearly: THEY ARE NOT INVESTING MORE! That's the whole point! They are continuing to do what they were doing before: Investing $x per year. Just as the workers were continuing what they were doing before: invest y hours of labor per year. Both of those are essential, but unless one group adds to what they were already doing (investing at a greater rate, working more hours, investing at a higher risk, working on more difficult tasks...) they aren't doing any extra over what they are doing.

The argument that the capitalists could just not continue to invest is a hollow one, because the workers could also just not continue to provide labor: that does not change the discussion at hand.

Are you really saying that it doesn't cost anything to implement new technology into one's enterprise? The owner(s) of a business pay suppliers, employees, taxes, and maintenance costs every year. Anything above and beyond basic costs like that is investment by definition, regardless of how often it's done. If a corporation pays for advertising, equipment upgrades, etc. every year, they are making new, independent investments, adding to the productivity of the business, and therefore realize the rewards of their investment.

Second, workers also benefit from the "technology fairy," as well as the "talent fairy" and many other factors that have nothing to do with effort.

Your insistence on saying this makes me wonder if you have a fundamental misunderstanding of what is being discussed. Yes, they benefit from technology outside of their job, but so does the capitalist. What they don't do is benefit directly for the increased productivity from that labor, while the capitalists do.

That's because the investors and inventors are the ones causing the increased productivity. When I say that everyone benefits from technology I am responding to your assertion that only the wealthy benefit from new technology.

[IcedT]

I think we can get around these kinds of arguments by just pointing out the fact that the guy who provides the initial capital owns the business, and therefore can do whatever he wants with the profits. Businesses aren't things that exist on their own and have capitalists imposed on them, they're generally things created by capitalists or with money borrowed from capitalists. Hence, the social value of the capitalist is that the businesses he creates for himself provide wages and products/services to the rest of society.

[Ghostbear]

Are you really saying that it doesn't cost anything to implement new technology into one's enterprise? The owner(s) of a business pay suppliers, employees, taxes, and maintenance costs every year. Anything above and beyond basic costs like that is investment by definition, regardless of how often it's done. If a corporation pays for advertising, equipment upgrades, etc. every year, they are making new, independent investments, adding to the productivity of the business, and therefore realize the rewards of their investment.

I am saying that they aren't going to be investing at a greater rate for that new technology than they would have before. Saying things like "The owner(s) of a business pay suppliers, employees, taxes, and maintenance costs every year" is missing the entire point: how is that different from me saying "The worker(s) of a business invest their labor, their creativity, their productivity every year"? The rate of investment is unchanged, just as how the rate of work is unchanged, yet because of a factor outside of that investment (technological advances that they did not cause or invest in), those hours of work combined with that investment produce more than before. Go read my typewriter example again:

Spoiler:

The point is that they did nothing over what they were already doing, just like the workers. This is the important point. Imagine a capitalist who invests $10,000 a year into keeping his company filled with typewriters for the workers to use, and for 100 years straight the typewriters have no advancements in productivity. Then, after those 100 years, office computers are invented, and the capitalist spends $10,000 a year buying computers for the workers to use instead (as in, the total money invested is unchanged!). What has the capitalist done to earn all the rights to that increased productivity? It is not created from their actions; their actions have remained completely unchanged throughout this scenario, and they have literally done nothing extra.

I feel it nicely illustrates what I am argueing: they are going to invest their $x per year no matter what. So long as they continue to invest that $x per year, if improvements in the equipment they buy with it that is completely separate from their investments happen, they have done nothing new to make it happen. If they invest $1.2*x or $2*x or even $0.5*x, then they are doing something different. My argument is that for the vast majority of those cases of improved productivity from technological advancements, they are not increasing their investments, due to the nature of how they are investing it.

That's because the investors and inventors are the ones causing the increased productivity. When I say that everyone benefits from technology I am responding to your assertion that only the wealthy benefit from new technology.

You really don't understand what is being discussed then. This is a discussion about the benefits from the increased productivity from that technology in the workplace. It.Does.Not.Matter. that they see benefits from that technology outside of the work place, because that is not relevant to the discussion at hand. Not even remotely.

[lutzj]

I am saying that they aren't going to be investing at a greater rate for that new technology than they would have before. Saying things like "The owner(s) of a business pay suppliers, employees, taxes, and maintenance costs every year" is missing the entire point: how is that different from me saying "The worker(s) of a business invest their labor, their creativity, their productivity every year"? The rate of investment is unchanged, just as how the rate of work is unchanged, yet because of a factor outside of that investment (technological advances that they did not cause or invest in), those hours of work combined with that investment produce more than before. Go read my typewriter example again:

Spoiler:

The point is that they did nothing over what they were already doing, just like the workers. This is the important point. Imagine a capitalist who invests $10,000 a year into keeping his company filled with typewriters for the workers to use, and for 100 years straight the typewriters have no advancements in productivity. Then, after those 100 years, office computers are invented, and the capitalist spends $10,000 a year buying computers for the workers to use instead (as in, the total money invested is unchanged!). What has the capitalist done to earn all the rights to that increased productivity? It is not created from their actions; their actions have remained completely unchanged throughout this scenario, and they have literally done nothing extra.

1) I can't quite fathom a scenario where buying 100 new computers costs as much as keeping 100 typewriters operational for a year.

2) They have to do at least something extra by researching the benefits of the new technology and diverting their spending to the most efficient one. People get burned buying stupid expensive new stuff as much as they benefit from awesome expensive new stuff.

[Ghostbear]

1) I can't quite fathom a scenario where buying 100 new computers costs as much as keeping 100 typewriters operational for a year.

They aren't buying the same number of computers as typewriters- replacement schedules are usually such that they can afford to a slower replacement cycle for some equipment. What they are doing is taking the $x they would have used for new typewriters, and now using it on $x for new computers.

2) They have to do at least something extra by researching the benefits of the new technology and diverting their spending to the most efficient one. People get burned buying stupid expensive new stuff as much as they benefit from awesome expensive new stuff.

And the workers have to do at least something extra by learning how to use and work the new technology, and diverting their time to figuring that out. Those are side actions, and roughly irrelevant, since the investor's principle purpose was investing money (which they have still done at the same rate) and the worker's to invest labor (which they have still done at the same rate). Nothing about the situation has materially changed.

[jareds]

This is getting silly. I assume we care so much about this hypothetical button factory because, from earlier in the thread, it is Vaniver's answer to

This is why the exploiters were able to keep real wages for the working class at the same level for 40 years while productivity doubled.

However, this is a greatly exaggerated canard. There several major problems with the claim as commonly stated: (1) it requires different measures of inflation to be used for productivity and wages and is therefore meaningless, (2) it ignores non-cash compensation, (3) it uses median wages and mean productivity.

(1) and (2) are discussed in this paper.

1. Real wages are measured with the consumer price index (CPI). Real productivity is measured with the implicit price deflator for nonfarm business output (IPD). The CPI has been exceeding the IPD. Measured by the IPD, even median real cash wages have increased. (Conversely, if you measure productivity using the CPI, it hasn't actually doubled.) In no event is it meaningful to measure wages by the CPI and productivity by the IPD and then compare the values.

2. As the claim is normally stated, it only looks at actual cash wages. Because of the growth in health care and other fringe benefits, wages have declined from 89.4% of total employee compensation in 1970 to 80.9% in 2006 (yeah, the paper is a bit old). Part of the productivity increase has gone toward allowing this increase in non-cash compensation.

3. (This is a point I am making myself.) If median wages lag behind mean wages, such an increase in inequality has jack-all to do with the income of capitalists, which by definition is not wages, so looking at mean wages is fine for analyzing the extent to which we're purportedly exploited by capitalists.

[folkhero]

Your second statement can be very easily reversed: The worker still has the option to not continue working when they feel like it. Does that mean that all the new productivity from technological advances is "theirs"? No. Just the same as how the capitalist having the option to not buy new machines does not make the technological benefits "theirs". Both parties have many options to destroy or greatly lessen the productivity at hand. I don't think it's a relevant observation at all, because it does nothing to affect the situation being discussed.

Isn't this the whole point of market economies? If either side doesn't think that the arrangement isn't worth it for them, they are free to opt out. The workers can stop working, either as a temporary strike or permanently leaving the company, while the owners can liquidate the company's assets or try to assemble a new work force. This is how the price of labor is established.

[Ghostbear]

Isn't this the whole point of market economies?

I'm not sure I'd call it the whole point, but in general, sure. That doesn't change that the fact that the investor can quit is not a good justification for them getting all of the reward, because the same option is available to the workers. The fact that they can quit is not a special attribute of theirs, and arguing that because they can do so and are thus special is completely ignoring that everyone else involved can do it too.

[lutzj]

That doesn't change that the fact that the investor can quit is not a good justification for them getting all of the reward, because the same option is available to the workers. The fact that they can quit is not a special attribute of theirs, and arguing that because they can do so and are thus special is completely ignoring that everyone else involved can do it too.

Again, you're conflating the costs of running a business with investment. Ceasing to reinvest in a company is not "quitting" on the investor's part. A group of shareholders could theoretically sit back and collect all profits as dividends if they wanted to, even after paying for all the typewriters. They're not quitting; they're just sitting back and letting their capital do work. This is not something that the vast majority of corporations do, because they have to constantly invest new money to remain competitive. In order to realize higher (or any) returns, they have to constantly make new investments from profits that they would otherwise pocket. Does this make sense?

[Ghostbear]

This is not something that the vast majority of corporations do, because they have to constantly invest new money to remain competitive. In order to realize higher (or any) returns, they have to constantly make new investments from profits that they would otherwise pocket. Does this make sense?

Which is what they would have done at the same rate already. How many times do I have to say it? They were investing at the same rate before as they are after, all that's changed is the intrusion of the technology fairy.

You can't call it a "new" investment if it's the same amount of investment as they would have made before. It's not "new" work if when you show up and do your job this week- it's the same work you would have done anyway. If your investment gives more productivity now than it did before- because of nothing new that you yourself did- or if you work is more productive now than it was before- because of nothing new that you yourself did- you have not done anything to earn all that increase for yourself.

[Vaniver]

Regarding this scenario though: employers' investment (in the form of capital) is constant, yet the so-called "application of your argument" has workers' investment (in the form of hours) being increased. So Vaniver is doing it wrong, or skipping a few steps in making clear how this is a proper analogy despite this problem. It seems like an obvious break in the analogy, so I find it a bit puzzling.

The value of anything- be it capital or hours- is not in the input but the output. If we ask someone to produce twice as much at the same cost, they will complain. For workers with constant skill, that represents working twice as long. For capital, that represents twice the capacity. If you asked Abe, who worked twice as quickly as Bob, to accept the same wage as Bob, Abe would find an employer who paid them what they were worth. Why Abe produces twice as much is irrelevant.

The idea of reinvesting money into a business does not require that one person is holding full control of an inordinate amount of wealth. It just requires a person or group of persons within the company to be responsible for ensuring that enough profits remain after paying workers to ensure continued operation.

Right. This works great if you only have one company, but becomes troublesome when you have many companies. When do you decide to shut down the textile mill, and buy more button machines instead?

A similar exercise is working through the problem of the Czechoslovakian Firm.* Typically, all workers are paid at the marginal product of labor- which means the owner of the firm captures the difference between the first worker (who added a lot) and the marginal worker (who only adds some, because of costs of scaling). One way to work around this is to pay workers by their average productivity rather than their marginal productivity. The problem, though, is that labor is optimally employed when marginal productivity equals marginal cost- but marginal cost is now set to be average productivity, meaning the firm will stay far smaller than would be efficient.

(The similarity is chiefly that how you incentivize decision-makers matters, and what seems like a good idea on the small scale may have negative side effects that aren't clear until you try to extend it outwards.)

*This is the name it was called when I was introduced to this concept, but I don't know if this is a common name since I'm not finding it quickly on Google.

The way it works now, enough profits remain after paying workers to pay CEOs potentially hundreds of times what an average employee earns.

CEO wages are roughly proportional to log(company size). Employee wages increase with company size, but nowhere near as quickly. We should expect the CEO's fraction of total costs to be lower in large firms than in small firms, but we should expect the CEO/line worker multiple to be much higher in large firms than in small firms.

The workers wouldn't have sold as many buttons without the owner's investment, but the investment itself was useless without the workers. The owner has done his job by ensuring/improving efficiency, the workers have done their jobs by operating the machines and producing buttons.

Right. Solving the valuation problem simultaneously across the entire economy is a tough problem; that's what the price system exists for. Information propagates throughout the economy by prices moving up and down.

Stagnant real prices for labor mean that the value labor provides, modified by its scarcity, is not significantly changing. If there are too many machines and too few workers, then there will be unused machines, and so the owners of those machines will increase prices to attract laborers to their machine. This will continue until the price of labor is high enough that the markets clear. What we're seeing with low-skilled work, though, are used machines and unused labor. That drives up the price paid to machines, attracting more machines to the laborers, again until the market clears.

It may help to think of markets not as providing what you want now, but the mechanism by which your wants change the world to suit you better. It would be nice for labor if labor were scarcer than capital- but the way to get there is to invest in capital until that's the case. (Other approaches exist, like trying to restrict the supply of labor. It's not clear that's effective in the long-run.)

(The real challenge for laborers are the regions where capital is a substitute for them, not a complement. There, there is no turning back the clock.)

What is the capitalist useful for? The money might be useful, but the capitalist certainly is not.

Again, this is a testable question. Examine the places in the world with few capitalists, and examine the places in the world with many capitalists. Which ones are more pleasant? Which ones are more prosperous?

Once your opinions match the ground facts, then work on understanding why the ground facts are they way they are.

How many times do I have to say it?

Repetition is not a substitute for accuracy.

[Ghostbear]

Repetition is not a substitute for accuracy.

That doesn't make it unnecessary if the points you are attacking are not the points I am making. You missed my point, very directly, told me that you had not, and then gave me a wonderful example of you not getting my point immediately afterwards.

You can call me inaccurate if you wish, but to prove so you have to actually attack what I am saying. Neither you nor Lutzj have done so, hence my repetition. Until you do, I will keep repeating my point, because you keep missing it.

[Silknor]

@Ghostbear: Yes, it's easy to create a hypothetical situation where technological innovation increases the marginal value of capital and so an owner can accrue additional gains without increasing their investment (say that some portion of their capital investment is renting computers and new models come out that cost the same but as more efficient, so they continue renting $X in computers). But while the argument in this thread is over how that isn't the case most of the time (perhaps because owners have to invest more to take advantage of technological change, or there are other costs and risks, or depreciation), I think it's important to note that in the situation, it's not accurate to say all the benefits accrue to owners of capital. That may be true if you're looking only at how much people are paid, but that ignores the economy-wide benefit: the product is now cheaper* since the marginal cost of production has fallen (each worker can now produce more, so the labor cost of the marginal unit is lower).

*This is true even in the case of monopolies, barring those who are not setting prices at the right levels to maximize profit.

More broadly, as has been noted in this thread, over the last 40 or so years median worker productivity has been decoupled from median compensation. Some seem to be implying this is because the owners of capital are exploiting the workers. So did something change around 40 years ago that made the owners of capital better at exploiting workers?

Or is a better explanation that what changed iwas government policies, some of which were intentionally designed to (or had the clear and predictable consequence of) redistributing income upward? An interesting free e-book on this is The End of Loser Liberalism: Making Markets Progressive by Dean Baker at CEPR. I'll quote a some selected paragraphs from the first chapter:

Spoiler:

Money does not fall up. Yet the United States has experienced a massive upward redistribution of income over the last three decades, leaving the bulk of the workforce with little to show from the economic growth since 1980. This upward redistribution was not the result of the natural workings of the market. Rather, it was the result of deliberate policy, most of which had the support of the leadership of both the Republican and Democratic parties.

Unfortunately, the public and even experienced progressive political figures are not well informed about the key policies responsible for this upward redistribution, even though they are not exactly secrets. The policies are so well established as conventional economic policy that we tend to think of them as incontrovertibly virtuous things, but each has a dark side. An anti-inflation policy by the Federal Reserve Board, which relies on high interest rates, slows growth and throws people out of work. Major trade deals hurt manufacturing workers by putting them in direct competition with low-paid workers in the developing world [I have to note, since otherwise free traders will rightly point out that free trade really does help the economy as a whole, the his solution isn't to set up trade barriers to protect manufacturing, it's to subject highly paid professions, such as doctors and lawyers, to the same international competition. -Silknor]. A high dollar makes U.S. goods uncompetitive in world markets.

[...]

For the most part, progressives accept the right's framing of economic debates. They accept the notions that the right is devoted to the unfettered workings of the market and, by contrast, that liberals and progressives are the ones who want the government to intervene to protect the interests of the poor and disadvantaged.

But this view is utterly wrong as a description of the economy and competing policy approaches. And it makes for horrible politics. It creates a scenario in which progressives are portrayed as wanting to tax the winners in society in order to reward the losers. The right gets to be portrayed as the champions of hard work and innovation, while progressives are seen as the champions of the slothful and incompetent. It should not be surprising who has been winning this game.

In reality, the vast majority of the right does not give a damn about free markets; it just wants to redistribute income upward. Progressives have been useful to the right in helping it to conceal this agenda. Progressives help to ratify the actions of conservatives by accusing them of allegiance to a free-market ideology instead of attacking them for pushing the agenda of the rich.

For the last three decades the right has been busily restructuring the economy in ways that ensure that income flows upward. The rules governing markets, written by the rich and powerful, ensure that this gravity-defying outcome prevails. The right then presents the imposition of rules that it likes as the natural result of unfettered market forces.

Rarely does this upward flow of income require a government check to the wealthy. But when the checks are necessary, they come. The Treasury and the Federal Reserve Board gave trillions of dollars in loans, at below-market interest rates, to the largest Wall Street banks at the peak of the financial crisis in 2008. These loans kept Goldman Sachs, Citigroup, and most of the other major Wall Street banks from collapsing, and the subsidies implied by the loans and guarantees to the world's largest banks were in the tens if not hundreds of billions of dollars. Yet somehow this massive intervention on behalf of these banks' executives, shareholders, and bondholders – some of the richest people in the country – is not viewed as interference with the market.

While the bank bailouts were big news, there is no shortage of less-visible instances in which conservatives have long been eager for the government step in to support the interests of the wealthy. We'll quickly discuss seven examples here: continued support for too-big-to-fail banks, patent and copyright protection, restrictions on organized labor, corporate liability limitations, Federal Reserve monetary controls, trade and dollar policy, and housing policy.

[Ghostbear]

@Ghostbear: Yes, it's easy to create a hypothetical situation where technological innovation increases the marginal value of capital and so an owner can accrue additional gains without increasing their investment (say that some portion of their capital investment is renting computers and new models come out that cost the same but as more efficient, so they continue renting $X in computers). But while the argument in this thread is over how that isn't the case most of the time (perhaps because owners have to invest more to take advantage of technological change, or there are other costs and risks, or depreciation), [...]

Yes, but the point I was trying to make through those hypotheticals was to show how if they spend, say $1,000 on new equipment, and that new equipment doubles productivity, you can't say all $1,000 of that was a "new" investment by them if they would have spent $900 on new equipment regardless, and just splurged the extra $100 because it was a better model. Even then, that $100 will probably not be a pure extra that they are throwing into the mix- they might buy less equipment, or they might hire less workers that year, or they might advertise less, or... The exact amount invested might vary from year to year, but in general, their contribution- investing approximately $x over a period of time- is not going to change. Just like how a worker's actual dedication to their tasks at work might vary from time to time, and how when they do get that new equipment, there's going to be some minor changes in their work amount.

I'm arguing that quite a bit- likely the vast majority- of those investments would have happened anyway, regardless of the new technology. This is because a lot of equipment is replaced on set schedules, regardless of the availability of improvements, because in general, they're going to say "I'm going to invest $x into improving this company" regardless of what the options for that are. If they can't spend their $x on new and improved equipment, they might spend it on an advertising campaign, or re-analysis of product lines, or hiring more workers, or any other of various things. I highly doubt that in anything other than a few one-off cases (such mechanizing a factory for the first time) that they are investing anything extra into the game. Also, the one-off cases do work separately, and I have never argued otherwise. Most progress is incremental however, such as the new models of computer in your quote- yes, sometimes they'll switch everybody over to a computer in one fell swoop, but most of their productivity increases are going to be those slow, incremental product improvements that slowly creep up their efficiency as they replace their depreciated equipment.

I think it's important to note that in the situation, it's not accurate to say all the benefits accrue to owners of capital. That may be true if you're looking only at how much people are paid, [...]

Compensation is the principle subject of the discussion though. The owners have been seeing the lion's share of the benefits (as seen by the company) of the increased profitability from that increased productivity, while the workers have not. Yes, people might live a better life because their widget is now twice as good at widgetting, but that isn't the topic at hand.

More broadly, as has been noted in this thread, over the last 40 or so years median worker productivity has been decoupled from median compensation. Some seem to be implying this is because the owners of capital are exploiting the workers. So did something change around 40 years ago that made the owners of capital better at exploiting workers?

Or is a better explanation that what changed was government policies, some of which were intentionally designed to (or had the clear and predictable consequence of) redistributing income upward? An interesting free e-book on this is The End of Loser Liberalism: Making Markets Progressive by Dean Baker at CEPR. I'll quote a some selected paragraphs from the first chapter:

I don't think I disagree with any of this, but I was never arguing against that. I've just been saying that you can't attribute all (or really much of any) the reason for that increased productivity due to technological advances due to the people investing capital wholly to the exclusion of the workers, because in the end nothing about their investment (whether it be capital or labor-hours) has materially changed in this instances. If they did increase their investment in a material way, or the worker's increased their hours in a material way, then those groups could be credited with some notable amount of that outcome.

[ThunderOfCondemnation]

More broadly, as has been noted in this thread, over the last 40 or so years median worker productivity has been decoupled from median compensation. Some seem to be implying this is because the owners of capital are exploiting the workers. So did something change around 40 years ago that made the owners of capital better at exploiting workers?

Something is changing. Global markets are (and have been for the past 40 years) opening and we are beginning to see the massive effects of the reserve army of labor on a global economy. We see this in the current trends of outsourcing to India for service jobs and China for industry, and increasing structural unemployment in Western economies. The capitalists are extracting record amounts of profit now while millions in the US are finding out that the capitalist economy has valued them at about one tenth of their former valuation (check factory jobs in China and programming jobs in India for an example), and that if they still want to get jobs, they are going to have to compete with a reserve army of labor that now includes 2 billion more people, and they must agree to get paid a tenth of what they are worth. Yup, it's a voluntary transaction! An offer you can't refuse!
These trends will only continue (and some have predicted that automation will also be a larger factor soon), and no amount of reformism will stop them.

[sardia]

You do know that automation is a huge factor in why Americans are more productive than their cheaper counterparts right? Technology will only help our situation, not hurt it. The simple example is the switch from horse and buggy to car. Lots of buggy makers went out of business in the transition, but we don't stop making cars because of it. Increasing efficiency is always a good idea. It frees workers to do other tasks, like arts or improving our technology further.

[Vaniver]

ThunderOfCondemnation: I agree with your assessment that things are bad for unskilled American labor. But it's not clear to me how that can change in the short run. Should we return India and China to destitution?

The simple example is the switch from horse and buggy to car. Lots of buggy makers went out of business in the transition, but we don't stop making cars because of it. Increasing efficiency is always a good idea. It frees workers to do other tasks, like arts or improving our technology further.

Well, what about the horses? With a shrinking economic niche, the horse population collapsed.

[Dark567]

ThunderOfCondemnation: I agree with your assessment that things are bad for unskilled American labor. But it's not clear to me how that can change in the short run. Should we return India and China to destitution?

Ultimately the only long term solution is going to be removing unskilled labor. In the short term job retraining and other education can help a little.

[nitePhyyre]

@Ghostbear, Vaniver, & lutz: Let me see if I can help. The 3 of you are missing each other's point completely. You are discussing the differences between 3 scenarios.
Rob the investor spends X dollars running a business for a year. During this year, he makes Y dollars in profit. After the original X dollar investment has been used up, Rob has several options.

Option A: Get out while the getting's good. Here Rob doesn't invest any more money, he takes his Y dollars and closes the factory.
Option B: Put out a call to other businesses for buying supplies. In this option the only company to respond is Joe's B2B corp. Joe offers Rob the same deals as last year.
Option C: Put out a call to other businesses for buying supplies. In this option Joe's B2B corp and Mark discount supplies both offer quotes. Mark's quote is for the same X dollars, but for twice the supplies. This would let Rob's company earn 2Y dollars next year.

Ghostbear is saying that between B and C, the only difference is Mark, and if the difference is Mark, Rob should not reap (all) the rewards.
Vaniver and lutz are saying that you shouldn't compare B to C. A is the default. Therefore you should be comparing A to B\C. And if you compare the default, A (doing nothing) to the other options (doing something), then yes the person who did something rather than nothing should get all the rewards for their actions.
Do you people understand each other yet? There might be an interesting conversation here if you people could all get on the same page.

If a worker fails to get a job, he will starve or face a very miserable existence. Thus, the worker is being coerced by economic forces, which somehow doesn't count as coercion to some people.

Its not coercion because a person isn't forcing that worker to have a job, nature is. Since the beginning of humanity we have had to do work to survive, that's simply nature.

And for most of that time, if someone couldn't get a job, or didn't want a job, or lost their job, they could go onto the common land and hunt, forage, farm, fish, etc. to survive. This is no longer the case. Men have passed laws that removed our ability to feed and clothe ourselves on our own terms. This leaves but one option: Get a job. So yes, it is coercion. You are forced to get a job because people have removed your ability to participate in competing economic systems.

tl;dr: To say that one is entering a voluntary agreement, one has to have the ability to opt out.

@Ghostbear: Yes, it's easy to create a hypothetical situation where technological innovation increases the marginal value of capital and so an owner can accrue additional gains without increasing their investment (say that some portion of their capital investment is renting computers and new models come out that cost the same but as more efficient, so they continue renting $X in computers). But while the argument in this thread is over how that isn't the case most of the time^[1] (perhaps because owners have to invest more to take advantage of technological change, or there are other costs and risks, or depreciation), I think it's important to note that in the situation, it's not accurate to say all the benefits accrue to owners of capital. That may be true if you're looking only at how much people are paid, but that ignores the economy-wide benefit: the product is now cheaper* since the marginal cost of production has fallen (each worker can now produce more, so the labor cost of the marginal unit is lower).

It is true that streamlining or improving the economy helps everyone in it. But it helps everyone in it equally, and wealth is relative. So its a wash, isn't it? The only real benefits accrue to owners of capital. That said, thank you for at least understanding the argument.

[1]I don't think the argument is 'this happens too often'. The argument is 'we decide how to reward people in our economic system. Do we want this reward as a feature in our system, or is it a bug?'

More broadly, as has been noted in this thread, over the last 40 or so years median worker productivity has been decoupled from median compensation. Some seem to be implying this is because the owners of capital are exploiting the workers. So did something change around 40 years ago that made the owners of capital better at exploiting workers?

Better? No. The barriers that prevented exploitation were lowered or removed. I don't think that ebook will be very good. The premise is wrong. Money DOES fall up. Everyone with money and power try to consolidate money and power. If money didn't fall up, there would be no wealthy.

ThunderOfCondemnation: I agree with your assessment that things are bad for unskilled American labor. But it's not clear to me how that can change in the short run. Should we return India and China to destitution?

Ultimately the only long term solution is going to be removing unskilled labor.

Most people agree that automation of low skilled labour is a good thing, the problem, however, is how capitalism tends to readjust:

The simple example is the switch from horse and buggy to car. Lots of buggy makers went out of business in the transition, but we don't stop making cars because of it. Increasing efficiency is always a good idea. It frees workers to do other tasks, like arts or improving our technology further.

Well, what about the horses? With a shrinking economic niche, the horse population collapsed.

Except this time the low skill labour being removed is done by humans, not horses.

ThunderOfCondemnation: I agree with your assessment that things are bad for unskilled American labor. But it's not clear to me how that can change in the short run. Should we return India and China to destitution?

There exists about $6000 per person in the world. Considering that globalization is doing nothing to get rid of an upper wealth class, the money for the common man is going to be even less. So the options are:
1) Return China and India to destitution
2) Return everyone to destitution
3) Increase the size of the world economy by several orders of magnitude
4) Slaughter several orders of magnitude worth's of the world's population.

#1 is probably the easiest, although the required protectionism might lead to war. And therefore #4. #2 seems to be what path we are currently on. #3 is our best bet, but doing so will probably destroy the environment, also leading to war and #4.

I guess, what I'm saying is, we need a mass exodus to the cosmos or we are all pretty fucked. A sterility causing plague will also be acceptable.

[Ghostbear]

@Ghostbear, Vaniver, & lutz: Let me see if I can help. The 3 of you are missing each other's point completely. You are discussing the differences between 3 scenarios.
Rob the investor spends X dollars running a business for a year. During this year, he makes Y dollars in profit. After the original X dollar investment has been used up, Rob has several options.

Option A: Get out while the getting's good. Here Rob doesn't invest any more money, he takes his Y dollars and closes the factory.
Option B: Put out a call to other businesses for buying supplies. In this option the only company to respond is Joe's B2B corp. Joe offers Rob the same deals as last year.
Option C: Put out a call to other businesses for buying supplies. In this option Joe's B2B corp and Mark discount supplies both offer quotes. Mark's quote is for the same X dollars, but for twice the supplies. This would let Rob's company earn 2Y dollars next year.

Ghostbear is saying that between B and C, the only difference is Mark, and if the difference is Mark, Rob should not reap (all) the rewards.
Vaniver and lutz are saying that you shouldn't compare B to C. A is the default. Therefore you should be comparing A to B\C. And if you compare the default, A (doing nothing) to the other options (doing something), then yes the person who did something rather than nothing should get all the rewards for their actions.
Do you people understand each other yet? There might be an interesting conversation here if you people could all get on the same page.

I'd disagree that (A) is the default. The investor is going to keep investing that $x (or similar to) per year, and pocket the difference between y and x as their profits. If we change this to a worker scenario*, I think it'd be absurd to assume that (A) is the default, and I don't really see much of a difference between the two groups- for one their principle investment into the company is money, and for the other, it's time. The default, essentially, is to keep doing what you've already been doing: working N hours per week, investing $x per year, etc.

I'd also say that my argument is based around the fact that where most of the productivity improvements in the past several decades are concerned, that they're happening in situations similar to the B/C divide. Incremental technological progress making the machinery need 3% less power this year, operate 8% faster another year, take up 5% less space at another point, fail 12% less often... In most cases, it isn't happening because an investor offered to invest $100,000 in a company so they could switch to a mechanized factory; it's happened because when the company wanted to replace some of the machinery in its mechanized factory, that machinery had been made better (for the same or similar cost) in the intervening years. The investor did nothing to make that happen, such as in your B/C scenarios. In the case where they did invest that money to mechanize a factory, yes, they deserve quite a bit of credit, and a corresponding portion of the rewards (and I've admitted as such before). Even in many cases where that equipment does cost more and they still pay it, you can expect that there wasn't an actual increase in investment. Instead, that money would have come from other areas they were investing the money, such as more employees, advertising, additional factories, etc.

* Worker spends x hours a week working at a factory, making $y in wages, and at the end of the week has the options:
(A) Quit while the quitting is good. Here they don't work any more hours, and take their $y paycheck and leave.
(B) Keep working, wherein the company has the same equipment as before, giving their productivity as the same.
(C) Keep working, wherein the company has replaced their equipment with better, and the worker's productivity is now doubled.
(Similarity to your scenarios intentional). Here, the default is going to be "Keep working, regardless of if it's scenario (B) or scenario (C)".

[Vaniver]

There exists about $6000 per person in the world.

What? This is entirely the wrong way to think about things.

Current global production per capita is about $9,000, not $6,000, and that's at exchange rates (PPP is higher, about $10.7k). That number is not set in stone and does not fall from heaven; it changes as people become more or less productive. In 1 AD, it was about $700.

As mechanization and computerization increase, the divide between the rich and poor will increase, and the divide between the smart and dumb will increase. But it seems unlikely that the American/European common man will suffer an real decline in income- what's more likely is the stagnation we've been seeing for decades, while the upper class continues creating wealth (which everyone benefits from) and being rewarded for that wealth creation. The global common man, though, has had a marvelous success story over the last few decades- but until the global poor catch up with the American poor, it's not clear to me that we should be focusing our efforts on building up the American poor instead of the global poor.

[ThunderOfCondemnation]

As mechanization and computerization increase, the divide between the rich and poor will increase, and the divide between the smart and dumb will increase. But it seems unlikely that the American/European common man will suffer an real decline in income- what's more likely is the stagnation we've been seeing for decades, while the upper class continues creating wealth (which everyone benefits from) and being rewarded for that wealth creation.

So you think it is entirely fair for an entire technological revolution to occur and for productivity to explode while workers get paid the same amount, and in some cases, even lose jobs?
A real decline in income IS coming.
The reserve army of labor will increase by several billions more and will be far more skilled in the future. The job market is about to get a whole lot more competitive. Productivity will go up, the exploiters will make record profits, and the workers will lose.
The most frightening thing is what automation will do to the economy.
The trends of mechanization and computerization will also obsolete many jobs. This time, the Luddite fallacy is not a fallacy, because developments in AI, nanotech, etc. will ensure that a computer is, for many purposes, not just a tool, but its own master. These jobs will go away, never to be replaced. Many other jobs will have lower wages in the future. And because of this great economic system we live in, the exploiters will make record profits, and workers will suffer mass layoffs even as we approach a post-scarcity level of technology.

Even if that doesn't happen, I'm not happy with stagnation in wages for the workers and increased income disparity in a time when technology and productivity are undergoing exponential growth. This should be making everyone's lives better.

[Bharrata]

^Please explain to me how the next collapse is going to come.

The global economy seems to be strengthening, maybe it's still in the shitter relatively speaking but an entire generation is retiring while another entire generation is having to wake up from their TV coma to realize they have to work for the next 40-50 years.


I would also like to know how you think AI is even going to exist in any of our lifetimes, let alone take all our jibs such that we cannot afford the blood pumping out of our sleeves.

[Dark567]

A real decline in income IS coming.

I wish I knew who you were because I would bet you $10,000 the median income 15 years from now will be higher.

This time, the Luddite fallacy is not a fallacy,

Cry wolf.