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Does net wealth or income indicate the productivity or merit of someone?

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Villiage Idiot
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Lets say that some poor working dude got fed up with working and robbed a bank and got millions from his crime. Then he invested it in stocks and quit working, spending all of his time looking at porn magazines. Some would praise the guys merit's because he is now a "capital provider" claiming that because he has the financial ability to fund businesses he is now more productive than he was when he was just a worker.

Did he actually do anything to improve production? Actually, all he did was transfer control of wealth from the bank to himself. He produced nothing and no additional production will result in his actions. If anything, but quitting working, he is impeding production.

Now after a few years, he is feeling guilty about his crime so he goes back to work and donates all of his money to a wino on the street who does nothing with the money because he is happy being a wino. Is the bank robber now somehow less productive since he is no longer a "capital provider" and has gone back to his lowly job? Is the wino somehow now more productive since he is now considered a "capital provider" - even though he is still a wino?

Lets say that the bank robber now gets paid more at his job (the same job he had before he robbed the bank) because his employer things that he is a good person for giving all of that money away to charity. So does the fact that the former bank robber now makes more money indicate that he is more productive than he used to be?

What if the bank robber gave the money back to the bank, would the bank employees suddenly have became more productive just because the bank now shows a big windfall profit due to getting the money back?

And would it make any difference if he got rich by inheriting money instead of robbing a bank? What if he won the lottery instead? Or if he became a CEO of his mom's business and was paid $10 million bucks before he was fired for being not doing his job? What if he got rich from being in a commercial for the company that he worked for (I once had a roomate who was paid a fairly good size amount of money for doing a Holiday Inn commercial - he was selected just because he had the right "look" for the part and they wanted an actual employee to play the part).
 

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Transferring wealth around isn't productive.
 

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If you measure production in terms of dollars value generated than yes he's actually being productive as far as he's concerned. The problem is in this model when you look at it on a macro-economic scale, since all he's doing is moving money from one part of the economy, the bank, to himself it would be like taking money from your right pocket and putting it into your left and calling it profit. So personally, he's productive, but as far as the economy is concerned he's impeding production.
 

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Lets say that some poor working dude got fed up with working and robbed a bank and got millions from his crime. Then he invested it in stocks and quit working, spending all of his time looking at porn magazines. Some would praise the guys merit's because he is now a "capital provider" claiming that because he has the financial ability to fund businesses he is now more productive than he was when he was just a worker.

Did he actually do anything to improve production? Actually, all he did was transfer control of wealth from the bank to himself. He produced nothing and no additional production will result in his actions. If anything, but quitting working, he is impeding production.

Now after a few years, he is feeling guilty about his crime so he goes back to work and donates all of his money to a wino on the street who does nothing with the money because he is happy being a wino. Is the bank robber now somehow less productive since he is no longer a "capital provider" and has gone back to his lowly job? Is the wino somehow now more productive since he is now considered a "capital provider" - even though he is still a wino?

Lets say that the bank robber now gets paid more at his job (the same job he had before he robbed the bank) because his employer things that he is a good person for giving all of that money away to charity. So does the fact that the former bank robber now makes more money indicate that he is more productive than he used to be?

What if the bank robber gave the money back to the bank, would the bank employees suddenly have became more productive just because the bank now shows a big windfall profit due to getting the money back?

And would it make any difference if he got rich by inheriting money instead of robbing a bank? What if he won the lottery instead? Or if he became a CEO of his mom's business and was paid $10 million bucks before he was fired for being not doing his job? What if he got rich from being in a commercial for the company that he worked for (I once had a roomate who was paid a fairly good size amount of money for doing a Holiday Inn commercial - he was selected just because he had the right "look" for the part and they wanted an actual employee to play the part).


Was there some point to all this?

Most of these scenarios being posited have little or no relation to the real world. If there's something of substance you're trying to say be so kind as to spill it.

Are you trying to equate inheriting money to bank robbery? The two are not related. In one case money is obtained by theft. In the other case the money was earned by a parent; the parent earned the right to dispose of that money as he saw fit due to working for it - and chose to will it to his child. The two are not at all comparable.
 

justabubba

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doesn't it depend on how he has allocated those capital resources?
if he leveraged them to expand business activity, employment and profitability above what would have otherwise existed but for his allocation of capital, how could his efforts not be found productive?
 

presluc

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I have a question.

If corporations are outsourceing more , wouldn't that be considered transferring wealth from American labor to cheap foriegn labor?

Wouldn't that be considered conterproductive due to the loss of tax revenue and consumer sales?
 

justabubba

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I have a question.

If corporations are outsourceing more , wouldn't that be considered transferring wealth from American labor to cheap foriegn labor?

Wouldn't that be considered conterproductive due to the loss of tax revenue and consumer sales?

don't see it being counterproductive from the perspective of the employer
the outsourcing will likely result in greater net profits
 

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I have a question.

If corporations are outsourceing more , wouldn't that be considered transferring wealth from American labor to cheap foriegn labor?

Wouldn't that be considered conterproductive due to the loss of tax revenue and consumer sales?

No, not allowing the natural, ie more productive cheap foriegn labor would be counterproductive for the most part. Maybe in certain situations you could make the case, but by and large it would be more beneficial to allow for outsourcing. That way we can specialize in things we have comparative advantage in domestically.
 

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Was there some point to all this?

Most of these scenarios being posited have little or no relation to the real world. If there's something of substance you're trying to say be so kind as to spill it.

Are you trying to equate inheriting money to bank robbery? The two are not related. In one case money is obtained by theft. In the other case the money was earned by a parent; the parent earned the right to dispose of that money as he saw fit due to working for it - and chose to will it to his child. The two are not at all comparable.

I'm just trying to figure out why we tend to measure someones productivity in terms of income or wealth. I suspect that there is little relationship between someones productivity and their income, and that productivity could better be measured in terms of productive hours worked.

In my senerio, I think that Hoplite had the most logical answer, as in my senerio, nothing was created that wouldn't already be created, and since one of the two people that I refered to actually stopped working, even though he became wealthier, his productivity may have actually declined.

And I do agree with you that there is little comparison between inheritance or bank robbery, other than in both instances wealth was transfered, creating an income, without productivity being increased, and in both situations the person who got the wealth transfer did nothing to earn the transfered wealth.
 

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...personally, he's productive, but as far as the economy is concerned he's impeding production.

Thats exactly my quandry. We tend to think of people with large incomes or large net worths as being productive, but unless they actually directly produce something that increases macro-economic wealth, does income actually represent productivity? Although we justify people who have large holdings on passive investements (stocks, bonds, band accounts) as "capital providers", unless they are activly managing those assets, and unless they actually created those assets with their own personal productivity, I am not at all sure that simply being a "capital provider" is productive behavior. I guess that it is realitively more productive than having the money hidden under their bed, but certainly not productive enough for us to worship the wealthy just because they are wealthy. The reason that I come to this conclusion is that unless one actually created the capital that they are providing, it really doesn't matter to our economy who happens to control the capital, just that it exists.

Now certainly that does not hold true for people who actively create wealth, like Donald Trump, or my granny, who have actively engaged in creating wealth most of their lives.
 

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doesn't it depend on how he has allocated those capital resources?
if he leveraged them to expand business activity, employment and profitability above what would have otherwise existed but for his allocation of capital, how could his efforts not be found productive?

I tend to agree with that. If the bank robber used the money to start up a business, or to expand a business, then there is certainly some productivity involved with that. But what if he just randomly bought some passive investments that already existed? Like if he used all the money to purchase Microsoft stock which we was going to let sit in his account forever, Microsoft doesnt get any of that money to expand with. No new productive investment was actually greated - especially since the money that the guy stoled was already in our investement pool (nothing new was created by the robber transfering the banks wealth to himself).

Shouldn't one have to actively manage investments in such a manner that they maximize production inorder to be considered as being "productive".
 

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I have a question.

If corporations are outsourceing more , wouldn't that be considered transferring wealth from American labor to cheap foriegn labor?

Wouldn't that be considered conterproductive due to the loss of tax revenue and consumer sales?

Depends on what economy you are looking at. If it is cheaper for the company to outsource overseas, then it is certainly more productive for them to do so (microeconomically). If an overseas company is more cost effective, then they are likely more efficient, so if they increase their sales, that would tend to represent a total increase in productivity for the world. But most certainly it would be counterproductive if we are just looking at US tax revenue and jobs.
 

presluc

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don't see it being counterproductive from the perspective of the employer
the outsourcing will likely result in greater net profits
To have greater net profits you must have more consumers, consumers have jobs or they are not consumers and don't buy.
 

presluc

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No, not allowing the natural, ie more productive cheap foriegn labor would be counterproductive for the most part. Maybe in certain situations you could make the case, but by and large it would be more beneficial to allow for outsourcing. That way we can specialize in things we have comparative advantage in domestically.

Well, outsourceing has increased and what has America specialized in cellphones?
That was the #1 technology project in 2004 I don't think America has had one since.
And where does an increase in outsourceing leave America shelling out bailout money to keep American corporations afloat, more unemployment in manufacturing, less tax revenue, a lot of debt and printing money we don't have.

Globalization is supposed to be a competition of nations not a money machine for the rich.
 

presluc

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Depends on what economy you are looking at. If it is cheaper for the company to outsource overseas, then it is certainly more productive for them to do so (microeconomically). If an overseas company is more cost effective, then they are likely more efficient, so if they increase their sales, that would tend to represent a total increase in productivity for the world. But most certainly it would be counterproductive if we are just looking at US tax revenue and jobs.

All governments, federal, state and local depend on tax revenue.
Most tax revenue is taken from paychecks.
Less paychecks less tax revenue more budget cuts.

Any state in America is run basicly the same way as a corporation .
When a corporation cuts the budget as much as they can they will ask for cheaper labor, states will ask for more taxes property right down the line to sales tax.
The same with federal , nobody from middle class down would stand for a tax raise while rich are getting tax cuts.
So in the end everybody looses that has money.
 
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To have greater net profits you must have more consumers, consumers have jobs or they are not consumers and don't buy.

But there are lots and lots of consumers that don't have jobs. You don't have to have a job to have access to money. My 17 year old is a consumer, yet he doen't have a job. I am not so sure that Paris Hilton has what you may call a job right now, but she certainly purchases stuff. There are lots of retired people who are consumers, but if they are retired, then obviously they don't have jobs. I think that only something like 1 out of 3 Americans have jobs, but almost everyone over the age of 10 or 12 makes purchasing decisions and spends money.

And businesses can also increase their net profits in other ways other than increasing sales. They can raise prices, or operate more efficently, they can reduce their cost of products (ie outsourcing), or start scamming people.

Outsourcing is generally good for individual businesses and consumers. Otherwise we wouldn't outsource.

It is also good for the global economy, it lets countries that are capable of being very efficent producing certain products to concentrate on producing those products instead of having to produce a little of everything. Like Brazil has the climate to produce abundent coffey, but maybe they arn't good at growning wheat. So we outsource our coffey needs to them and they outsource their wheat needs to us.

Only when you look at a particular countries economy is outsourcing bad, but if the outsourcing between two or more countries is mutually receiprocated, it can be benefical to individual countries also.
 

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All governments, federal, state and local depend on tax revenue.
Most tax revenue is taken from paychecks.
Less paychecks less tax revenue more budget cuts.

Any state in America is run basicly the same way as a corporation .
When a corporation cuts the budget as much as they can they will ask for cheaper labor, states will ask for more taxes property right down the line to sales tax.
The same with federal , nobody from middle class down would stand for a tax raise while rich are getting tax cuts.
So in the end everybody looses that has money.

Sure, but if our production is increased because foriegn countries purchase products from the US, then in terms of taxation, outsourcing can be neutral.

This is beside the point, but personally I would prefer to see us base our tax needs less on income and sales tax and more on inheritance tax. Inheritance tax in leu of other taxes is basically a tax deferance where we tax people after they are dead but let them keep more of their earned income while they are alive. I'd much rather pay when I am dead than to have to pay now.
 

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Well, outsourceing has increased and what has America specialized in cellphones?
That was the #1 technology project in 2004 I don't think America has had one since.
And where does an increase in outsourceing leave America shelling out bailout money to keep American corporations afloat, more unemployment in manufacturing, less tax revenue, a lot of debt and printing money we don't have.

Globalization is supposed to be a competition of nations not a money machine for the rich.

You are assuming that our bad economy has been caused by outsourcing. I am thinking that our bad economy is much more due to lower consumer spending due to uncertainy of our economy. Our outsourcing habits have not really changed that much from 3 years ago, but our unemployment figures have. That makes it really hard to blame outsourcing for a bad economy. If anything, if we didn't have cheap products from overseas, we would be spending even less money.

Ya know, for decades we hated China because they were communist. Now that they are permitting some private enterprise, we hate them even more because they have become very productive. Maybe instead of hating on the Chineese and hating on American companies that buy from the Chineese, we should be hating on things like our own laws that empower union's that inflate the cost of labor, and our minimum wage law that prevents us from being competitive with the Chineese for low skilled labor.
 
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justabubba

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To have greater net profits you must have more consumers, consumers have jobs or they are not consumers and don't buy.

you have left out instances where the business offers multiple products and/or is able to sell its goods at higher margins; both measures might be expected to generate additional profits without an increase in the market share

you should also recognize that consumers needn't be wage earners. they might be pensioners, or affluent, other businesses or government buyers ... none of which are job dependent
 

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Wealth has very little to do with merit.

How the wealth was obtained might have bearing on merit, but it might not.
 

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But there are lots and lots of consumers that don't have jobs. You don't have to have a job to have access to money. My 17 year old is a consumer, yet he doen't have a job. I am not so sure that Paris Hilton has what you may call a job right now, but she certainly purchases stuff. There are lots of retired people who are consumers, but if they are retired, then obviously they don't have jobs. I think that only something like 1 out of 3 Americans have jobs, but almost everyone over the age of 10 or 12 makes purchasing decisions and spends money.

And businesses can also increase their net profits in other ways other than increasing sales. They can raise prices, or operate more efficently, they can reduce their cost of products (ie outsourcing), or start scamming people.

Outsourcing is generally good for individual businesses and consumers. Otherwise we wouldn't outsource.

It is also good for the global economy, it lets countries that are capable of being very efficent producing certain products to concentrate on producing those products instead of having to produce a little of everything. Like Brazil has the climate to produce abundent coffey, but maybe they arn't good at growning wheat. So we outsource our coffey needs to them and they outsource their wheat needs to us.

Only when you look at a particular countries economy is outsourcing bad, but if the outsourcing between two or more countries is mutually receiprocated, it can be benefical to individual countries also.

I think you may have overlooked a couple of details.
I The majority of American labors in America today are blue collar unskilled workers.
Maybe 1 out of 3 Americans have jobs the other 2 are in debt and not paying taxes
2 States aren't the only ones dealing with budget cuts most of American families are dealing with cutting the budget , that means less sales for somebody in the corporate world.
Prices have already been raised that didn't work to well then, if you think raises prices will help the American economy "which by the way is where the monewy comes from" in the middle of a recession WELL?
I f outsourceing is so good for the American economy , since outsourceing has increased where is America today?
Not a lot of money I see circulating.
As far as outsourceing coffee for wheat, I'm not talking about outsourceing products , I'm talking about outsourceing jobs.
As far as the global economy, you actualy believe that nationds in globalization are always going to play fair in trade deals?
A bit naive aren't you?
 

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Sure, but if our production is increased because foriegn countries purchase products from the US, then in terms of taxation, outsourcing can be neutral.

This is beside the point, but personally I would prefer to see us base our tax needs less on income and sales tax and more on inheritance tax. Inheritance tax in leu of other taxes is basically a tax deferance where we tax people after they are dead but let them keep more of their earned income while they are alive. I'd much rather pay when I am dead than to have to pay now.

So how many of these cheap foriegn workers have American taxes taken out of their paycheck?

Well, since they baned inheritance tax along with Windfall tax.
Gues what class of Americans these taxes are most likely to be taken from?
 

presluc

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you have left out instances where the business offers multiple products and/or is able to sell its goods at higher margins; both measures might be expected to generate additional profits without an increase in the market share

you should also recognize that consumers needn't be wage earners. they might be pensioners, or affluent, other businesses or government buyers ... none of which are job dependent

You sir have left out much more than I.
You have left out the American labor force, Tax revenue taken from paychecks that no longer exist, a declining real estate, an increaseing debt, the elderly that paid into Social security and now want it back, productive sales.
Example top 5 car sales in America 4 out of 5 foriegn based.
Retail sales, Wallmart a majority of products based outr of China
I say again sir, if globalization is a competition America is losing.
At present China is working on an updated version of internet computers at a cheaper price.
 

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You sir have left out much more than I.
but i was responding to your inaccurate rebuttal found immediately below:
To have greater net profits you must have more consumers, consumers have jobs or they are not consumers and don't buy.
i explained why business to business sales are not dependent on one's job
i pointed out your notion, that more customers are required if more profits are to be attained, is a fallacy ... because there are ways to generate more sales revenues and/or profit margins than by acquiring a larger slice of the consumer pizza. certainly, that is one way, but not the only way, as you had presented it to be

You have left out the American labor force, Tax revenue taken from paychecks that no longer exist, a declining real estate, an increaseing debt, the elderly that paid into Social security and now want it back, productive sales.
that litany has nothing to do with my post, causing me to wonder if you have any real sense about what you are attempting to express
Example top 5 car sales in America 4 out of 5 foriegn based.
again, you present something which had absolutely no bearing on our discussion
Retail sales, Wallmart a majority of products based outr of China
you continue to interject references to internationally produced goods that had absolutely nothing to do with the dialogue in which we had engaged
I say again sir, if globalization is a competition America is losing.
and tell me again, what does this have to do with your assertion (and my rebuttal to your argument) that "To have greater net profits you must have more consumers, consumers have jobs or they are not consumers and don't buy"?
At present China is working on an updated version of internet computers at a cheaper price.
again, i ask, what does this have to do with your inaccurate point that "To have greater net profits you must have more consumers, consumers have jobs or they are not consumers and don't buy?
 

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The two are not at all comparable.

Not in the act of how the money was acquired no, but the rest of the analogy does hold true. A trust fund baby sitting on capital investments doing nothing productive is the same functionally as the bank robber sitting on capital assets doing nothing productive. The fact that one got it legally and the other didn't is irrelevant to the point trying to be made here.
 
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