Technology and Unemployment

[douglas]

So someone who runs a multi-billion dollar business and works 70-plus hours per week is supposed to make no more than 20-times the lowest paid worker? That will never fly, my friend. I mean, who do we want to use as a role model? France or Singapore?

Can The Last Taxpayer Leaving France Please Turn Out The Lights? - Forbes

I had read that before, but it doesn't change the fact that change is necessary. Do Caps on Executive Compensation Really Work? - TIME Time magazine recommends a more successful plan of giving shareholders a vote on CEO pay, which seems to be working in the UK. I say we should do whatever works, it's just not acceptable that the upper-management can swallow up so much profit. Mind you that I'm all for profit, that's sort of the point in capitalism. But, the original point of a "company" was to make partnerships between craftsmen to use their different talents to create goods together; it was owned, operated, and worked by the same people, who shared the wealth equally. The total profit was more than the total if they had worked as individuals and there was perfect equality. This is a success of the free market and I can absolutely admire that.

The failure rate for a small business startup is around 70-80% (By some definitions, 95%). We are past the point where people can just come in and do their thing with a group of talented people and actually expect to succeed. Statistically, you'll make more money from working for an employer then trying to be one. This has led to the "see they took the risk and made it" argument, where an employer is respected for doing exactly the same as their peers, but being lucky enough to not fail and then using this as a "reason" to expect most of the profit. Understand, I'm not against the idea of the boss getting the biggest piece (they did take a risk and it's their idea), but the issue is with how big is too big? In a free-market, there is no such thing as too big, it's assumed that you will just reach an equilibrium of being too greedy and losing business or too generous and losing profit. The problem, is this equilibrium is only an effective limiter to greed if there are open jobs with better wages. If there's even 1% unemployment, you can pay as low as you want and other employers will independently reach the same low (it will reach an equilibrium as more people can be employed). Since minimum wage limits this to a certain ratio, that makes unemployment a direct product of wage-disparity.

I've heard the argument that companies shouldn't be responsible for employing people, and this is true, but understand that it's all connected; the more people who are unemployed, the less people who can consume, which sets up a vicious cycle of unemployment. Without minimum wage and social/consumer pressure to make Big Business employ more people, they'd put themselves out of business through short-sightedness.

The free market is perfect when it takes the same number of people to create as consume. The free market just isn't applicable when you can automate production; it's not a plea to humanity, it's just future-minded business sense.

 

[mtguy8787]

Good Afternoon,
I'm interested in what my fellow DP'ers think about the effects of Technology on Unemployment. With respect to the Luddite Fallacy, Technological unemployment - Wikipedia, the free encyclopedia , it's long been thought that technology increases employment, or atleast has no direct effect on unemployment. But, since the digital age, it seems that Neo-Luddism seems to have some validity. Essentially, previous technological advances led to more physical goods, which required more labor to process. But, new technological advances are decreasing the physical component of productivity, so there's less physical labor required due to that productivity. This is my take on neo-luddism; technological advances used to be periodic enough that the market could absorb the change by allowing for a smooth transition from one industry to the other. But, recent technology is advancing at such an accelerated rate, industries are just collapsing. That, coupled with the replacement of many goods and services with digital equivalents, has led to a reversal of the Luddite Fallacy.

Belief in Luddism as a Fallacy has been an economic axiom since the 19th century, so there are plenty of economic text books that completely say I'm wrong. I feel that doesn't do Neo-Luddism justice, though, since we've only been embracing the digital age for 2 generations or so. Is it time to switch our thinking and acknowledge that automation IS leading to unemployment?

As a believer in the theories of Utopian Socialism, I have always believed against the Luddite Fallacy; I believe that low-skill jobs are quickly dying out because of automation and it will lead to an economic collapse. But, I'm realizing that this is more of a controversial issue than I thought. So, what are you're thoughts on this topic; Does modern technology in capitalism lead to unemployment or new jobs?

Thank you.

technology sometimes creates more jobs. Or it simply means that people are freed to do other things, which overall, is a good thing.

The introduction of something like electric streetlights does not create more jobs than it eliminates. It allows the same task (lighting streets) to be done more efficiently.

That is the real benefit of technology -- not that it creates new job.

In the long term, more automation is a good thing, just as all technological advances are. Economic diversity, and the potentials of human pursuits are limited only by imagination -- hence, in the big picture, there no end to work, even if you can have temporary periods of readjustment. Workers simply have to adjust to changing industries.

Unemployed low skilled workers due to automation will not lead to economic collapse -- even if they were just all on welfare, the increased production from automation would offset it.

Employing them in public service is always a possible transition measure.

 

[mtguy8787]

The Luddite Fallacy is based on the assumption that demand is unlimited. I suspect that's not totally true.

First off, there are only so many cars, houses, tvs that we can utilize at a time. If demand was unlimited, the super rich would litterally own thousands of cars, houses, and tvs. The reason that they don't spend every penny that they have is because demand is not unlimited. Eventually, we will get to the point where demand for physical items has been virtually all filled.

This is extremely poor and narrow reasoning. Technological progress does not stop. Demand does not stop, either, because the old technology becomes obsolete -- its as simple as that.

The notion that demand for material items will somehow be filled is based on the ridiculous notion that technological process will cease.

Think 500 years into the future. Obviously nobody except antique collectors wants 21st century automobiles -- people want flying cars and spaceships.

When the latest hyperdrive comes out -- this creates new demand.

Desire is limited only by imagination.

As today's luxury goods become tomorrow's ordinary goods, new luxury goods are developed, and hence, new demand.

There is no limit to demand, because there is no end to scarcity. No matter how advanced your technology, there is always more, and new & novel things.

Certainly one of the largest issues that will be facing mankind during the next few hundred years will be how to distribute the fruits of our technology so that everyone has a livable income, and finding a way to maximize the quality of life for the vast majority of us. Sure, there will always be some jobs, but I believe that as technology continues to advance, we will ultimately be able to produce virtually everything that everyone wants, with so few workers that there will not be enough 40 hr/wk jobs that every family can have one.

First, there is no limit to technological progress.

Things like research, and production of the latest advanced goods (today, it might be nano-technology, or what have you. 1000 years from now, some exotic device based on advanced quantum engineering, or whatever) -- will always exist. There is no point where anything that people want can be produced in unlimited amounts -- scarcity will always exist. Assuming this assumes a hard limit to technological progress.

The demand for luxury and artisan goods will always exist.
The demand for services will always exist.

What WILL, happen is that as production increases to the point to allow a basic living to be afforded with only a few hours work -- the incentive to work will take a lower priority with many people.

So we will have to restructure our income system, in some form or another. We could either continue to expand our welfare state, and eventually get to the point where we have just a few workers working full time, who pay huge amounts of taxes so that everyone else can sponge off of them, or we will have masses of extreme poverty and income disparity that is inconcievable, or we will live in a society similar to the Jetsons, where every family only had one worker, and in the Jetsons family George was the worker and worked 3 hours a day, one day a week. I find the third option the most appealing.

Completely faulty reasoning. First, for the reasons I mentioned above -- there is no hard limit to technological progress, and thus no end to demand for new goods.

Any demand for services remains unchanged by technological progress -- if you to consume hours worth of services, you will have to work for it.

There will be no need of income restructuring.

 

[mtguy8787]

I think it'll last for as long as we make it last. The problem with removing the bad parts is that they are the parts that have so much control over our government; The lobbying groups and stuff like that. I don't "hate" capitalism and think we can make it work better. If capitalism was regulated in a way that ensured universal prosperity, it'd be great. My problem with it is things like high CEO/Executive pay, resource wars, and unemployment; those sort of things are validated by capitalism. It seems that profit has replaced morality; a company is "good" because it's profitable. I have absolutely no problem with the most basic idea of paying people to work or using money as a measure of debt.

I find that people seem to be opposed to CEO pay, yet I have found very few people opposed to top celebrities or athletes or news anchors who make just as much or more. What is with the hate towards CEOs? Studies have found no evidence of rent-seeking when it comes to CEO pay. A CEO is paid the same way that other actors in the market are -- that is, according to perceived value.

Wealth is not zero-sum -- a CEO earning millions does not take anything away from you, because in order to make that money in the first place, new wealth has to be created through innovation or more efficient business.

The standard of living has increased steadily since the industrial revolution. This is mostly due to capitalism. The average person today lives like a king compared to a person in the 19th century, and the average person 100 years from now (assuming we keep free markets), will live like a king compared to the average person today. How is this not universal prosperity?

Part of unemployment is transient, natural, and beneficial, as it represents the shifting of labor away from unproductive areas, and towards profitable ones. Other factors contributing to unemployment is a mismatch between the skills of the workforce, and the demands of industry.

You don't seem to understand the basic function of profit and loss. Profit and loss is not good or bad -- it is neutral in its economic role. No economist things that a profitable company is good, because profit is good. What profit does is to signal areas that have unfulfilled needs. Losses signal that resources are being allocated inefficiently. Higher potential profits indicate a greater demand -- entrepreneurs acting in self-interest move to fill this demand. There is nothing immoral about companies making profit, because they have to serve consumers first in order to do so.

Socialism doesn't say that you can't pay people for capitalistic work. They just limit what money can buy; money can only buy services or goods, not capital, raw resources, or land (these are typically owned by the state). I see this as a way to limiting the super rich and exploitative corporations.

You cannot have an economy without capital.. Talking about buying goods is meaningless without also talking about buying capital.

People talk about limiting the rich, and "exploitation" with little or no sound economic justification for why this is bad in the first place. BTW, the share of wealth of the top 1% has remained the same since at least 1995, and the income share of the top 1% has fluctuated since 1986, but has overall remained relatively the same.

In a properly implemented form of socialism, resources and land are distributed based on need. One of the flaws of Socialism is in determining that need, one of the reasons I think we need to go further towards Utopianism. In Utopianism, we'd use computers to determine need, which cuts alot of the corruption out of the equation.

You call yourself a libertarian, yet you would have people's demand dictated by what computers determine they need?

In any case, computers cannot replace the price system in terms of economic calculation, and without economic calculation, you are not going to be able to have an increasingly diverse economy (in which the information that would otherwise be conveyed by a price system increases exponentially).

You also have the serious, if not fatal flaw of incentives when it comes to any socialistic system.

The main flaw of both Socialism and Capitalism is that it depends on humans to distribute wealth and determine what is "fair", along with outright corruption such as bribery and theft by those in power.

Right, and what is the alternative? Computers? Which are programmed by..... that's right -- humans. And socialism would prevent corruption by those in power -- how, exactly? It wouldnt.

Socialism determines what is fair through a collectivist ideology where the collective values are imposed over individuals.

Capitalism does not determine what is fair. The concept of fair has no meaning in capitalism. What you receive in exchange for what you have is determined by what others are willing to give you for it. If you want to talk fair -- this is fair to me -- you are the arbiter of what you have to offer, and I am the arbiter of what I have to offer. You can choose to take it or leave it.

 

[mtguy8787]

I agree on both points. I'm not necessarily saying that we should toss out capitalism, since it would be easier to just fix the corruption than to change the system. But, there are some problems of modern capitalism that seem to arise from the system itself, not the way people are exploiting the system. For example, automation is a boon for Utopianism; each job lost is another person who doesn't need to work, it implies more prosperity. In capitalism, automation makes one man rich while it makes 100 men poor.

This is completely false. Automation decreases the real prices of the goods in question being produced. In other words, all consumers are better off.

Although our average quality of life has been increasing with capitalism, this isn't necessarily because of capitalism itself. If we could get the same benefits without making people work mundane jobs, it would be the ultimate increase in quality of life. I can't, for the life of me, understand how making a couple million Americans work at Walmart and McDonalds is a "good" thing for society.

Talking about "ifs" like "if only we could get more, by doing less" is completely meaningless.

You are obviously not a libertarian -- as most of what you have posted is incompatible with libertarian thought.

Nobody is "making" anybody do anything.

It is better for the individual and society, because if they were doing nothing, the overall economy would shrink. If people did not work at Mcdonalds -- then this service would not exist.

It's companies like Walmart and other big box outlets, essentially middlemen, that I question for a different reason.

Wal-mart hate.... second only to CEO hate... :roll:

They don't actually create resources, energy, refine goods, or perform a high-skilled service. They just buy things in bulk and then sell it in smaller amounts, for profit. From a resources standpoint, that profit shouldn't exist; the total amount of resources is the same, but total profit is higher, so GDP is higher. Could this be another source of inflation?

Raw resources are only one portion of the picture. It takes a lot more to mobilize and organize such resources across the entire chain of production and distribution to produce end-goods.

If retailers did not exist, what would people do -- travel directly to each manufacturer to purchase their goods? Extremely inefficient...

Its funny how I don't see you criticizing small business retailers for doing the exact same thing....

Retailers serve many important functions

- They provide a centralized place for distribution -- an essential part of the picture
- They assume risk by buying in bulk. This is beneficial for the supplier, as they are gaining certainty in exchange for offering lower prices. The distributor assumes the risk by having to anticipate market demand.
- Overall, it is far more efficient for there to be retailers than for there not to be.
- Wal mart hate is completely unjustified -- why would you hate on a business that is able to provide goods at a lower cost?
- The profit results from the increased efficiency that results from having retailers such as wal-mart

- No, a company making profit does not produce inflation.

I really do think we can make capitalism work, it's been doing great for thousands of years, but that doesn't make it the best solution to our problems. I really don't know if Utopianism will ever work or if capitalism isn't the best solution possible, but I think it's worth a discussion. If we could find more evidence for or against either idea, we'd have a better idea of what the problems are and how to solve them.

Capitalism has not been around for thousands of years.........

As for whether it is the best solution possible, I'll just quote economist Bryan Caplan to sum thing up

"In short, in neoclassical jargon, a powerful case now exists that free-market structures are "second-best" efficient: there is no feasible real-world way to improve upon them."


Capitalism has stood both the test of time, and the trials of developing economic theory that would serve to expose its weaknesses.

Socialism, on the other hand, has failed the test of history, and suffers from serious if not fatal flaws such as those related to incentives, and the problem of economic calculation. Unlike capitalism, socialism requires either an authoritarian body to force the collectivist ideology onto the populace (which is anti-libertarian), or it requires the collective body of people to accept the same ideals -- which is completely unrealistic. In the second case, if you advocate bringing this about somehow, you are advocating the forcing of people to conform to this collectivist ideology -- which is anti-libertarian.

 

[mtguy8787]

Yea, there are are series of steps that we can take that are logical, and create enough jobs that all families can have at least one.

At this stage, probably all we need to do is to increase demand, so tax cuts on lower incomes seem to be the logical step. I really can't see why anyone would object to that, on the right or the left, but for some reason, conservatives tend to think that only the rich need tax cuts.

But the next logical step might be something like time and a half for all hours worked over 35, then 30, then 25, etc.

Then possibly making our income tax system even more progressive than what we really need right now. Like no taxes on incomes up to the median income (GDP/workers = $125k), and then a flat tax on income above that level, as low as necessary to have a balanced budget.

Keynes created the myth of "underconsumption", then set about trying to solve the problem he had created.

Increasing demand does not increase production -- which is the source of wealth -- as I explained to you in the other thread.

Giving someone more money, who then goes out and purchases more goods -- those people who then go out and purchase more goods -- do not increase wealth. They simply bid up the prices, and consume savings that could have been used for investment.

 

[mtguy8787]

I fully acknowledge that every socialist nation has benefited from switching to capitalism. I'm not going to try and act like capitalism isn't a good way to improve human rights. My issue is that this has nothing to do with Utopianism, which has never been implemented. Utopianism =/= Socialism, they aren't the same thing. Utopianism is just one possible answer to some of our problems.

Utopian socialism suffers from the same problems as any other form of socialism.

The problem that I'm trying to address with this forum is what to do with automation. In capitalism, automation seems to do great for productivity and GDP, but it is also a major cause of the wage gap.

False.

A Look At Wealth Inequality In America: The Gap Between Rich And Poor | New Era Freedom

A related question is whether this wage gap is a measure of a failing capitalism. I think it is, based on past patterns; high wage disparity is typically present before a depression.

- The gap between the increase in productivity and that of wages is not related to inequality. See the article I linked, which references research that demonstrates this.

- Correlation =/= causation. It's as simple as that.


Your chart of the 1% income is highly misleading, for several reasons. This article will explain:

A Look At Wealth Inequality In America: The 1% | New Era Freedom

My fear for the current system is that it will fail catastrophically, not gradually; I compare it to a ponzi scheme, which always look great until people are being arrested on the 10 O'clock news. I can't have evidence for an economic collapse that hasn't happened yet, but I can propose that it's likely. I question things like the increasing wage gap. All capitalist economies have an acceptable wage gap and that isn't a big concern of mine. But, our modern capitalism is based on a consumer cycle, where the economy seems to be better even when we consume more than we create. This screams of a ponzi scheme, where the economy could collapse the second people stop consuming.

The concept of debt and the concept of a ponzi scheme are two completely different things.

This encourages the commercialism that we now have, where more than half of a company's budget for any given product is for advertisement. The system is paying less attention to making products more affordable, safe, or reliable, and more on just getting you to drop what you have and buy the new one.

The average advertising budget for companies is nowhere near 50%. You are pulling numbers out of your ass.

How Much Big Corporations Spend On Ads - Business Insider

Youre assuming that companies don't advertise for price and reliability -- half the infomercials on TV highlight the low cost, and superior feature. What do you think advertising sales and specials does?

Advertising to create a brand name serves an economic function. It is not "commercialism", and most economists today recognize the benefits of advertising.

A brand name communicates information to a consumer. It also fills a demand by some people to own brand name products. Don't like it? Blame them. Creating new and superior products and then marketing them is not "commercialism". Offering the latest generation of computer presents people with a choice -- pay for a new computer with increased performance, or spend the money on something else.

Its a matter of individual priority; you're assuming that people are simply zombies that are mass influenced by whatever the ad makers want them to buy, and then labeling this non-existent problem "commercialism" -- and then chalking this up as one of capitalism's faulty.

Firms emphasize quality where it counts/where it is demanded. Do you think people would buy Nike shoes if they had a tendency to fall apart? Do you think Intel would be successful if their CPUs failed or underperformed compared to AMD? When someone goes into a home improvement store, quality is obviously a factor that most people take into consideration.

Complaining about things like cheap goods, and lack of quality is assuming a narrow understanding of what consumers are looking for. Cheap goods are sold, because there is a demand for them. The priorities that any consumer places on price, quality, reliability, etc are relative. This is why variety exists. For just about any given cheaper good, higher quality alternatives exist. Why? Because consumer demand varies.

Think about Nike shoes. They're not better than regular shoes; they don't last much longer than bargain shoes, they don't "feel" better than a cheap orthopedic shoe, they certainly don't give you the super powers that the commercials imply you'll have. In the end, they're just a $5 shoe made in a sweatshop being sold to people for $50 (or more) due to brand recognition. In a more traditional capitalism, a Nike shoe would cost $5 and Nike would have gone out of business years ago. Modern capitalism allows for demand to be changed artificially.

It's not that capitalism is a flawed concept, it's the implementation that is flawed. The difference between Socialism and Capitalism, is that Capitalism has a decent way to reward new ideas and efficiency, where socialism (as implemented) doesn't. But, there is a real mistake in thinking that the free market is the best way to reward efficiency or new ideas; the best way to profit in capitalism is to cheat. Business Cartels, Exploitative labor, Advertisement (not the concept, but the way it creates false demand)

The free market rewards ideas based on the market value that they produce. Thus, the standard for what is valuable is consumer demand. The alternative is an arbitrary and subjective system that rewards people based on whoever is in charge of the system, and in charge of making the subjective judgements.

The most rational way to profit is generally not to cheat. Most anti-trust actions since the days of Sherman Anti trust have been complete nonsense. Collusion occasionally happens, but it is generally difficult to raise prices significantly above market level, and to sustain this in the face of competition.

I suggest you read this

http://econfaculty.gmu.edu/bcaplan/compet
mises.org/daily/436

are the norm these days, and are problems we need to address. There are plenty of technological advances that were suppressed for decades due to smear campaigns from big business (Edison vs Tesla ; DC vs AC comes to mind).

Power struggles based on people's personal agenda is not a flaw of capitalism. It is a human flaw, and will exist regardless of what system you implement. Social systems cannot compensate for the flaws of the people who create, implement, and maintain such systems.

None of that completely addresses the issues of modern fiat money, which Utopianism could eliminate (in theory, of course). When government and business have to interact through money, but government gets to control the value of money, there is no real way to have a free market.

Government does not control the value of money. Fiat money is not a problem if you have sound monetary policy

I've heard of no Capitalistic solution to the problems of fiat money or inflation and not too many complaints either. Even when you adjust for the inflation rate, the top earners of America are skyrocketing, where the rest of us are pretty much stagnant.

1.) Clearly you have nor heard of any solutions, because you have little understanding of economics. Look up Friedman's recommendation for monetary policy, as just one example.

Its also completely false that most of America is stagnating. The reality in fact is this:

- Median household income has increased 30% since 1967.
- Median household income can be misleading, because household composition has changed significiantly
- Real hourly compensation increased over 50% from 1970 to 2004.
- There has been a consistent trend towards fewer poor households, and more wealthier ones. When there are fewer poor people, and greater numbers of wealthier people, the increased overall income of the upper class is not an issue -- it is a good thing -- as more people are moving up
- Defining the middle class as some income level, and then showing that the number of households earning that amount has decreased is a simple yet convincing illusion
- The share of wealth of the 1% has remained flat since at least 1995
- The share of income of the 1% prior to 1987 is not comparable to dates after this. Income share of the 1% has risen and fallen with the stock market, and has changed little overall since 1986
- Income inequality increased in the early 1980s, but has increased barely at all since then.
- Consumption inequality has actually decreased since the mid 1980s

Everything stated above is backed by official data. The straight data is what you want to look at, as charts like the ones you posted can be highly misleading vs. what the big picture actually looks like.

A Look At Wealth Inequality In America: Stagnating or Falling Household Income and Wages | New Era Freedom
A Look At Wealth Inequality In America: The 1% | New Era Freedom
A Look At Wealth Inequality In America: CEOs and Celebrities | New Era Freedom
A Look At Wealth Inequality In America: The Gap Between Rich And Poor | New Era Freedom
A Look At Income Inequality In America: Closing Discussion | New Era Freedom

I hope people aren't thinking I'm against Capitalism.

You don't understand capitalism in the first place -- like the general public. Surveys have shown that the economic views of the general public are widely different than those held by most economists.

I believe in the American dream and would love to run my own business one day. But, that doesn't mean I should turn a blind eye to the problems around me. I don't know if Utopianism is the solution or even possible, but it's worth looking into. Even if we only introduce some of these ideas within our current capitalism, it could help.

Socialism and capitalism are mutually exclusive concepts. Socialism is based around the implementation of a collectivist value system -- it is not an alternative economic system.

Hypothetically, what if the American government made free potatoes; if potatoes were grown by government run, autonomous potato farms? It would put thousands of people out of work, certainly, but it would end the starvation of millions of Americans. The societal cost comes down to how cheap the government can make potatoes. That is the main flaw, governments have always been inefficient and almost reward incompetence, but that is the source of the problem. If we could guarantee a system of government that makes a potato for cheaper than the market, it could hypothetically be made free to the public.

Another hypothetical what if presented with zero reasoning behind it.

Hey, what if the government could find a way to ensure no disease, and happiness for everyone? See I can do it too. If we could guarantee a system of government that wasn't corrupt, it would be great. If we could create a government that eliminated negative feelings, society would be a much better place.

The government cannot produce things more cheaply because it does not have any special means that private businessmen do not. It certainly does not have talent or skill that private citizens do not. And this is assuming that you have no issues from politicization and bureaucracy, which is never the case.

It all comes down to having more money on hand for people to consume other things and pay more taxes. If so, it wouldn't bankrupt the government, the surrounding industries, or the individual. But, it all comes down to that crucial problem of having a government that can consistently be more efficient than a business. That is not the case at the moment and probably has never been the case. But, Utopianism is dependent on a more efficient form of government, ideally run by computers.

Computers are no better than the people who program them. I would think this is obvious. Computers must be controlled by the people in power as well. There is no sensible argument as to how this is somehow more efficient.

Socialism fails because of inefficient government

False. Socialism fails because there is no economic calculation, and because there is no incentive for most people to succeed or innovate. Government problems are simply the icing on the cake.

Utopianism succeeds by creating an efficient government. (In theory, since there hasn't been one yet.)

A government cannot replace market innovation. It cannot provide economic calculation except in an economically limited, authoritarian society where people are assigned goods based on what is determined they need. It cannot replace a price system -- all of which are necessary for continual economic progress. A utopia where nobody has to work will simply stagnate and not progress -- no thanks, Jeff.

There is no such thing as utopia, because there is no limit to progress, and no end to scarcity.

 

[mtguy8787]

2. The pay off from technology's efficiencies is mostly going only the people at the top.

False.

http://www3.nd.edu/~jsulliv4/Inequality3.6.pdf

 

[mtguy8787]

Oh, I wasn't saying Nike's aren't stylish, nor am I trying to downplay that kind of demand; a Utopia of identical houses, identical cars, identical people, etc., isn't really a Utopia. What I was trying to highlight was the way a company can "create" demand. I'm not proposing that advertisements are "evil", but they can be exploitative, especially those that are directed at young people. It's a lot easier to attack and exploit image issues than to actually create a better product.

As I touched on in a previous post -- this is generally not true. Look at the items around your house. How many of these have companies playing up image in the way that Nike does? Besides clothing and acessories, there isn't much..

But, I argue that susceptibility to exploitative advertisement is like using a drug addict; when you see a drug dealer selling to a drug addict, which one do you blame? (I blame both, but I definitely blame the dealer more than the addict)

You can't exploit unless there is already an underlying desire. Creating an image out of Nike, etc, would have no effect if people didnt already have a desire to be cool, have status, and gain social recognition.

In any case, the benefit of advertising far outweigh any costs -- I disagree that the things you mentioned are costs -- they do not cause physiological or psychological harm like drugs. Humans are imperfect, and people wasting money on Nike shoes is a part of human progress -- something to outgrown -- not a flaw in capitalism.

The virtue of capitalism is that it is centered around consumer demand. Its entirely neutral as to the value of that consumer demand.

 

[HumanBeing]

Does modern technology in capitalism lead to unemployment or new jobs?

It has nothing to do with capitalism, but yes, technology can lead to less human resources being needed to achieve certain tasks.

What do you propose we do about it? Ban power tools so that you need an entire team of builders to do the work of one or two people? Ban technology research so that the tools don't get any more powerful? Ban education to make sure there is no chance of future generations creating more advanced technology?

I think it's a valid point that technology can have the power to create human redundancies, but I also think it's kind of a dead end point. There isn't any sort of sensible solution to it, other than to ride it out and get into the tech industry so at least it will be someone else's job being lost instead of yours.

 

[mtguy8787]

Yup.

As ones income and wealth increases, each marginal dollar becomes exponentially easier to acquire, due to exponential increases in negotiating power. And most of our taxes, other than income taxes, tend to be regressive, as a percent of income.

Thus, in order to offset that regressiveness of other taxes, and the fact that obtaining more income and wealth is exponentially easier for those who already have more income and wealth, income tax has to be progressive, or else wealth will pool, and ultimately, all wealth would pool into the hands of the few, and everyone not included in that few would be dirt poor, and essentially slaves to the rich, with absolutely no bargaining power. This is perfectly natural in a free market capitalistic economy, but the eventual outcome also destroys the effectiveness of the free market capitalistic economy.

If this was true, then why has the share of wealth of the top 1% remained steady at around 35%, despite there being significantly lower taxes on the rich since 1986?

If capitalism makes people slaves to the rich, then why have we not become slaves since the industrial revolution? Your theory has no historical evidence, nor any sound economic theory behind it.

Another person being rich cannot take away the value of your labor, your skills, and your knowledge. Nor can others being rich stop you from obtaining education or bettering yourself in other ways. Nor can they, in the absence of government enforced barriers to entry, stop you from launching a new or novel business.

Progressive income tax, as much as it is hated by many, is the savor of the free market capitalistic system.

The overall standard of living and economic progress would happen with or without progressive taxation.

Progressive taxation simply meets the demand for aiding the poor.

Innovation and progress are not halted because of a lack of progressive taxation. Progressive taxation also is not responsible for the increased productivity of the worker.

They are two completely different things.

and suddenly income growth stopped for all but the top few percent, and the income and wealth of the top few percent started to skyrocket.

This claim is totally false. Median household income has increased by 30% since 1967. Real hourly compensation has increased over 50% since 1970. There are fewer poor households, and more households earning over $100,000. The income of the 1% is not out of control, and the share of wealth of the 1% is the same today as it was in 1995.

A Look At Wealth Inequality In America: The 1% | New Era Freedom
A Look At Wealth Inequality In America: The Gap Between Rich And Poor | New Era Freedom

A person can only get rich by first serving consumers. This simple fact alone negates the idea that the rich can become richer, while the poor get poorer, in a free market.

And hypothetically, what is wrong with wealth disparity in the first place? The question is, do you believe in equal opportunity, or forced equality? Do you believe in helping the poor where they need it, or catering to the jealousy of the less successful?

So how do we know when our tax system is progressive enough? I think that it should be pretty obvious, once people set aside their issues about fairness. The answer is that when all income classes are growing in wealth and income at about the same rate.

The only way this would happen is by completely removing the earnings of the more successful. It is a fact that people are unequal in terms of talent, skill, drive, vision, etc.

It is naturally going to be the few who benefit the population as a whole through their innovation. A person whose skills keep pace with the changing and growing demands of industry will naturally be more productive and valuable than the unskilled worker whose productivity increases somewhat, but not as much.

It is through capitalism that this unskilled worker can have an increased standard of living at all -- despite the fact that his labor is no more valuable than it was 30 years ago.

Why should incomes for the most unskilled, and the leading edge, increase at the same rate? How is it just to say that the leading edge people should be penalized for contributing more -- all in the name of some collectivist value system like force equality?

Is it not enough for the average person to have equal opportunity (and for assistance in this department given where it is needed)?

Why is it unfair for people to keep the fruits of their own labor (aside from taxes needed to support government functions), especially when the rich entrepreneur has contributed far more than the average person in order to become rich?

 

[mtguy8787]

Safety nets are needed. Safety nets that encourage poverty are not. There should be incentives to climbing out of poverty.

On the other hand, this problem would be solved if companies were forced to pay a living wage and not exploit their employees. Just saying.

Define "exploitation". This is typically used in a highly ambiguous way, and typically rests on the idea that businessmen are somehow cheating people out of what they are worth.

Saying that the poor should be helped is one thing. I personally advocate empowerment and providing opportunity, rather than handouts.

To claim "exploitation", you have to have a criteria for what someone's labor is worth. In a free market, what you have to offer is balanced between the company's incentive to pay you as little as possible, and the competition for your skills, which results in you being paid less than the total value you produce, but not so little as to lose you to competition.

So in a free market, the criteria for what you get paid is what someone else is willing to give you, which is ultimately based on consumer demand. Voluntary exchange is by definition, not exploitation.

If you define exploitation as not being paid a "living wage" (whatever the f that is), and say that wages should be arbitrarily higher, where people are paid more than the market value they produce, this will simply be reflected in higher prices.

If workers were exploited by companies, as people like you claim, then you would not see higher pay for more skilled & more in demand workers.

 

[mtguy8787]

To provide some of the necessary redistribution so that all wealth and income doesn't accumulate with the rich, and to increase demand and thus create more jobs and more profits.

If people's nominal wages increase, and then purchase more while production has not increased, prices will simply rise...... Increasing demand cannot increase production, as you claim -- this is completely illogical. People purchasing more cars does not somehow make a new and more efficient means of production pop out of thin air. Purchasing more computers does not somehow accelerate the research that Intel is already working on.

Also, wealth does not accumulate with the rich, and it has not since at least 1995. The concept of accumulation implies a fixed pie.

Thats possible. Maybe like a mandatory profit sharing plan. It's also been suggested that wages at the bottom should be tied to wages at the top by some sort of formula. So if the CEO wants a 20% raise, he has to give a 20% raise to the lower paid workers also, and if the CEO gets a bonus of X% of the net profit, the workers also get a bonus based on profit.

Its called stock options -- and employees in large companies frequently recieve stock options as compensation

If a CEO gets paid more for increased company performance, why does this mean that a janitor -- who has not provided any increased value -- should be entitled to a raise?

 

[MusicAdventurer]

Define "exploitation". This is typically used in a highly ambiguous way, and typically rests on the idea that businessmen are somehow cheating people out of what they are worth.

Exploit defined: Benefit unfairly from the work of (someone), typically by overworking or underpaying them
https://www.google.com/#tbs=dfn:1&s...99,d.dmg&fp=ed00f48c8ebb41f2&biw=1366&bih=579

Saying that the poor should be helped is one thing. I personally advocate empowerment and providing opportunity, rather than handouts.

That is great news; I do the same things. Its good to hear.

To claim "exploitation", you have to have a criteria for what someone's labor is worth. In a free market, what you have to offer is balanced between the company's incentive to pay you as little as possible, and the competition for your skills, which results in you being paid less than the total value you produce, but not so little as to lose you to competition.

One word: Minimum Wage - this sums up the protection needed from exploitation. Consider the following analogy: A prisoner may admit to a crime after being tortured for hours even though he hasn't committed a crime at all. Does the fact that he agreed to admit to the crime make the situation fair or ethical? Of course not. Situations analogous to this can happen and have in relation to employment, however, we out the kabosh on that with Minimum Wage. Currently, minimum wage needs to catch up with living expenses.

So in a free market, the criteria for what you get paid is what someone else is willing to give you, which is ultimately based on consumer demand. Voluntary exchange is by definition, not exploitation.

Yes, in an ideal world, where employers were ethical and there were plenty of easily attainable jobs that pay living wages for candidates to choose from, then yes that highly theoretical premiss works. However, those situations are not the case and in the US we want our workers to be able to make a living when they work; we want to reward our citizens for working and contributing to society; we care about them because they are what makes everything possible. Therefore, we have a minimum wage to make sure they can make a living from the hard work they give us and that they aren't exploited by unethical employers.

If you define exploitation as not being paid a "living wage" (whatever the f that is), and say that wages should be arbitrarily higher, where people are paid more than the market value they produce, this will simply be reflected in higher prices.

True, greedy businessmen who want more profit would increase prices and ideally, minimum wage would be increased too and around and around we go. Of course, with the proper societal system all this nonsense would disappear.

If workers were exploited by companies, as people like you claim, then you would not see higher pay for more skilled & more in demand workers.

Just because some companies are forced to pay higher wages due to the fact that other companies have found it prudent and ethical to do so, does not mean they wouldn't exploit if they could. Additionally, just because some job markets are less exploitative than others does not mean that the most exploitative companies somehow magically do not exist anymore. I.E. Bob giving Sally a donuts does not make John's stealing Bertha's cupcakes any less criminal.

 

[mtguy8787]

Exploit defined: Benefit unfairly from the work of (someone), typically by overworking or underpaying them

You completely miss the point -- using the term "exploitation" requires you to arbitrarily define criteria for what is fair and what is not.

One word: Minimum Wage - this sums up the protection needed from exploitation. Consider the following analogy: A prisoner may admit to a crime after being tortured for hours even though he hasn't committed a crime at all. Does the fact that he agreed to admit to the crime make the situation fair or ethical? Of course not. Situations analogous to this can happen and have in relation to employment, however, we out the kabosh on that with Minimum Wage. Currently, minimum wage needs to catch up with living expenses.

Apples and oranges.

Yes, in an ideal world, where employers were ethical and there were plenty of easily attainable jobs that pay living wages for candidates to choose from, then yes that highly theoretical premiss works.

Neoclassical labor theory is not "highly theoretical". Ethics has nothing to do with it. Motives are irrelevant in the free market. There is nothing theoretical about the fact that people get paid based on the market value they deliver. The fact that a skilled data security expert makes much more than a janitor is not theoretical, much less highly theoretical.

However, those situations are not the case and in the US we want our workers to be able to make a living when they work; we want to reward our citizens for working and contributing to society; we care about them because they are what makes everything possible. Therefore, we have a minimum wage to make sure they can make a living from the hard work they give us and that they aren't exploited by unethical employers.

This is a purely emotional argument -- it is not an economic one. Also, the fact that very few workers earn the minimum wage, and that most who do are either young and/or uneducated undermines your belief that people would be exploited without it. If your belief were true, we would see far more people earning the minimum wage, due to these unethical businessmen that can somehow, magically, work against market forces simply by wanting to.

True, greedy businessmen who want more profit would increase prices and ideally, minimum wage would be increased too and around and around we go. Of course, with the proper societal system all this nonsense would disappear.

Its called competition and the price system. Educate yourself on how these work. When someone uses the word "greed" in economic discussion, this is more often than not a sign of economic ignorance -- no offense.

There is also no sound economic theory for how "greed" can undermine the market.

It is necessary for prices to rise and fall to reflect changing economic conditions -- greed has nothing to do with it. If prices were held artificially low, due to say, a government mandate, the result is shortages.

Just because some companies are forced to pay higher wages due to the fact that other companies have found it prudent and ethical to do so, does not mean they wouldn't exploit if they could.

One company is not forced to pay more because of another's prudence -- it is not one-sided that way. Also, ethics has nothing to do with it. Few businessmen pay above market wage because they find it ethical. Competition arises simply by there being more than 1 firm demanding the same skills-- prudence and ethics have nothing to do with it.

Talking about how companies would exploit if they could is meaningless -- the very fundamentals of the market work against this.

Additionally, just because some job markets are less exploitative than others does not mean that the most exploitative companies somehow magically do not exist anymore. I.E. Bob giving Sally a donuts does not make John's stealing Bertha's cupcakes any less criminal.

Please show an actual example of where workers are regularly exploited -- and please use an argument that relies on sound economic theory -- not emotional and subjective criteria of what constitutes exploitation.

A job market where supply is high relative to demand, and thus workers earn less is not exploitative -- it is reflective of the underlying economic reality.

 

[MusicAdventurer]

You completely miss the point -- using the term "exploitation" requires you to arbitrarily define criteria for what is fair and what is not.

The definition for the word "exploit" was not arbitrary... you saw where it was taken from

Apples and oranges.

Easily said when one doesn't want to consider the reality of the situation

Neoclassical labor theory is not "highly theoretical". Ethics has nothing to do with it.

Look, I'm not going to pretend to be an economics major or even well read on the subject. However, unless you are a robot that hasn't been programmed to take human life into consideration, ethics is very much a part of building and maintaining a society. You may be well versed in economics, but what depth have you in human ethics? Perhaps ethical considerations is where I can be of assistance to you and economic theory is where you can be of assistance to me. In this way we can work together.

Motives are irrelevant in the free market.

What truly free market exists?

There is nothing theoretical about the fact that people get paid based on the market value they deliver. The fact that a skilled data security expert makes much more than a janitor is not theoretical, much less highly theoretical.

You are right, nothing theoretical at all. I never intended to imply that.

This is a purely emotional argument -- it is not an economic one.

Unfortunately, humans have emotions and in a society, we deal with humans... so emotions come with it

Also, the fact that very few workers earn the minimum wage, and that most who do are either young and/or uneducated undermines your belief that people would be exploited without it. If your belief were true, we would see far more people earning the minimum wage, due to these unethical businessmen that can somehow, magically, work against market forces simply by wanting to.

Just because some companies are forced to pay higher wages due to the fact that other companies have found it prudent and ethical to do so, does not mean they wouldn't exploit if they could. Additionally, just because some job markets are less exploitative than others does not mean that the most exploitative companies somehow magically do not exist anymore. I.E. Bob giving Sally a donuts does not make John's stealing Bertha's cupcakes any less criminal.

Its called competition and the price system. Educate yourself on how these work. When someone uses the word "greed" in economic discussion, this is more often than not a sign of economic ignorance -- no offense.

No offense taken. As I mentioned, I am no economics major or academician. However, as I mentioned before, its not unheard of for economic folk like yourself to problem solve with a political advocate like myself. Someday you may need to problem solve for a high profile job or even inform political policies. At least that's how I believe it should be. I believe academicians of many most types should be involved in political decision making; but, that requires that everyone takes into consideration what others are saying, even if they are not versed in their own area of study. That being said... greed is a huge part of human emotion and behavior and it helps us predict what people will do under different situations.

There is also no sound economic theory for how "greed" can undermine the market.

I'm sure you are right. However, there are psychological and sociological findings regarding greed and the resulting unethical business practices that show how these emotions/motivations and behaviors can undermine a market. Beyond that, we do not have to look very far to find a market that failed recently due to unethical business practices.

It is necessary for prices to rise and fall to reflect changing economic conditions

I agree with you there. I don't believe I ever disagreed.

greed has nothing to do with it.

Sure... greed can motivate people to raise prices

If prices were held artificially low, due to say, a government mandate, the result is shortages.

Who said anything about that?

One company is not forced to pay more because of another's prudence -- it is not one-sided that way.

No one is forced, but they do it anyway don't they?

Also, ethics has nothing to do with it. Few businessmen pay above market wage because they find it ethical.

It only takes a few doesn't it

Competition arises simply by there being more than 1 firm demanding the same skills

Of course, no one is arguing that this isn't the case

prudence and ethics have nothing to do with it.

But they do... we just covered that above

Talking about how companies would exploit if they could is meaningless -- the very fundamentals of the market work against this.

Oh really? There's no human influence at all here? Do explain....

Please show an actual example of where workers are regularly exploited -- and please use an argument that relies on sound economic theory -- not emotional and subjective criteria of what constitutes exploitation.

If you want to use an economic theory to support your arguments, go ahead... I use my understanding of society, psychology, human motivation, biology, my own experience and common sense... you and I both know what it means to be exploited... don't try to play dumb

A job market where supply is high relative to demand, and thus workers earn less is not exploitative -- it is reflective of the underlying economic reality.

Unfortunately, the US and its people have deemed certain low wages exploitative and I agree, I'm sure you would too if you were one of those workers and that was all you could find for a job. That is why we have the minimum wage. We don't live in a bubble when we live and work in a society. We are talking about living breathing organisms, with... yes.. feelings.. there I said it lol! Its important to take feelings and motivations into consideration if we are to be a successful nation.

 

[imagep]

The problem with that idea is if you tax capital heavily then why would anyone invest here?

1) Because they live here
2) Because they are familiar with our culture
3) Because they used the products that US companies produce
4) Because the US has the most stable and safe economy in the world
5) Because the most profitable companies in the world are in the US
6) Because our taxes are comparable or often less than taxes on other countries
7) Because the US is the largest consumer market in the world
8) Because the US is the largest producer of manufactured products in the world
9) Because they are patriotic
10) Because taxes really don't matter to the rich because they already have the standard of living that they choose to have
11) Because they have more dollars than sense
12) Because they don't want to investigate investing in foreign companies
13) Because many idiots have so much money that they just hand it over to a money manager like B Madeoff

We already see corporations refusing to repatriate almost $2 trillion in retained earnings. Why would they ever invest it here if the U.S. is going to tax the dog piss out of it?

We also see record cash holdings of US companies already being held in the US. This is cash that they don't need for expansion as demand is not great enough for them to expand.

 

[Ahlevah]

1) Because they live here
2) Because they are familiar with our culture
3) Because they used the products that US companies produce
4) Because the US has the most stable and safe economy in the world
5) Because the most profitable companies in the world are in the US
6) Because our taxes are comparable or often less than taxes on other countries
7) Because the US is the largest consumer market in the world
8) Because the US is the largest producer of manufactured products in the world
9) Because they are patriotic
10) Because taxes really don't matter to the rich because they already have the standard of living that they choose to have
11) Because they have more dollars than sense
12) Because they don't want to investigate investing in foreign companies
13) Because many idiots have so much money that they just hand it over to a money manager like B Madeoff



We also see record cash holdings of US companies already being held in the US. This is cash that they don't need for expansion as demand is not great enough for them to expand.

Well, French people live in France, they're familiar with French culture, they're patriotic, etc., but, honestly, companies seem to be beating a path out of the country. The results of Hollande's policy of supporting a fat social welfare state by soaking the rich don't seem impressive so far: record unemployment and a shrinking economy.

 

[sangha]

Well, French people live in France, they're familiar with French culture, they're patriotic, etc., but, honestly, companies seem to be beating a path out of the country. The results of Hollande's policy of supporting a fat social welfare state by soaking the rich don't seem impressive so far: record unemployment and a shrinking economy.

 

[imagep]

Well, French people live in France, they're familiar with French culture, they're patriotic, etc., but, honestly, companies seem to be beating a path out of the country. The results of Hollande's policy of supporting a fat social welfare state by soaking the rich don't seem impressive so far: record unemployment and a shrinking economy.

So which already developed countries have an economy growing faster than that of the US? And how many have higher standards of living, or more millionares per capita? And how many of those countries have lower tax rates?

 

[douglas]

If this was true, then why has the share of wealth of the top 1% remained steady at around 35%, despite there being significantly lower taxes on the rich since 1986?

If capitalism makes people slaves to the rich, then why have we not become slaves since the industrial revolution? Your theory has no historical evidence, nor any sound economic theory behind it.

Another person being rich cannot take away the value of your labor, your skills, and your knowledge. Nor can others being rich stop you from obtaining education or bettering yourself in other ways. Nor can they, in the absence of government enforced barriers to entry, stop you from launching a new or novel business.





The overall standard of living and economic progress would happen with or without progressive taxation.

Progressive taxation simply meets the demand for aiding the poor.

Innovation and progress are not halted because of a lack of progressive taxation. Progressive taxation also is not responsible for the increased productivity of the worker.

They are two completely different things.



This claim is totally false. Median household income has increased by 30% since 1967. Real hourly compensation has increased over 50% since 1970. There are fewer poor households, and more households earning over $100,000. The income of the 1% is not out of control, and the share of wealth of the 1% is the same today as it was in 1995.

A Look At Wealth Inequality In America: The 1% | New Era Freedom
A Look At Wealth Inequality In America: The Gap Between Rich And Poor | New Era Freedom

A person can only get rich by first serving consumers. This simple fact alone negates the idea that the rich can become richer, while the poor get poorer, in a free market.

And hypothetically, what is wrong with wealth disparity in the first place? The question is, do you believe in equal opportunity, or forced equality? Do you believe in helping the poor where they need it, or catering to the jealousy of the less successful?




The only way this would happen is by completely removing the earnings of the more successful. It is a fact that people are unequal in terms of talent, skill, drive, vision, etc.

It is naturally going to be the few who benefit the population as a whole through their innovation. A person whose skills keep pace with the changing and growing demands of industry will naturally be more productive and valuable than the unskilled worker whose productivity increases somewhat, but not as much.

It is through capitalism that this unskilled worker can have an increased standard of living at all -- despite the fact that his labor is no more valuable than it was 30 years ago.

Why should incomes for the most unskilled, and the leading edge, increase at the same rate? How is it just to say that the leading edge people should be penalized for contributing more -- all in the name of some collectivist value system like force equality?

Is it not enough for the average person to have equal opportunity (and for assistance in this department given where it is needed)?

Why is it unfair for people to keep the fruits of their own labor (aside from taxes needed to support government functions), especially when the rich entrepreneur has contributed far more than the average person in order to become rich?

Hello, mtguy8787. Thank you for giving me so much information, it is appreciated.

The gist of your posts seems to be that inequality has been decreasing and the wage gap isn't widening on the whole. I call shenanigans;

The gini coefficient has been consistently growing since the 60's.

You say the top earners haven't been growing their share since 1995. Um, yeah. Yes they have;


Oh, and median wage income has risen 30% since 67? Absolutely, and stopped rising by 73. Here's the chart.

It only rises slightly higher if you take into account an increase in hours worked per week, and the trend towards 2 income households. That's as simple as trading more time for more money, not a great success of modern capitalism.

You say that automation has been decreasing the price of goods. I agree that it's expected, but I haven't seen these cheaper goods (but this is mostly due to inflation). When you compare CPI to the increases in Median wages, you do get a slight advantage over time. But, this isn't due to capitalism. Every time we've increased technology and automation, we've decreased the price of goods (whether an actual price or just the labor involved). The only way you can link this to capitalism is if you act like there'd be no new technology in any other system. The USSR gave us; Sputnik, The first astronaut, Mir space station, the first nuclear powered boat, countless technologies based on nuclear energies in general, and ear hats. There were atleast 7 nobel prize winners whose work was funded and handled by the USSR. I'm not the biggest fan of the USSR, mostly because of Stalinism, but the idea that they "needed" capitalism to have new technology is easily proven false by history. Most scientists are working for the sake of curiosity and their duty to humanity, not the money.

You say that the un-skilled worker has a greater quality of life. I agree, but only due to technology. If we're going by minimum wage or any comparable wages, it's kind of obvious that it hasn't been getting better. Inflation adjusted minimum wages are slightly lower than they were 30 years ago, and have been falling since the early 60's.


You gave me alot of posts, so I might need to re-read them and address other disagreements later. (Really, I do appreciate the posts, I just disagree with them.)
Alot of the disagreements between me and most libertarians/free-market-supporters, is that it makes the assumption that all poor people are poor because they "deserve" to be poor and all rich people are rich because they "deserve" to be rich. This isn't a problem in a free market, so they support it. My issue is that I've met too many people not only working at minimum wage jobs, but fighting each other to get into minimum wage jobs, after graduating from a 4 year university. Some of the smartest and most dedicated people I've met are poor. If people were actually paid by their deeds, there'd be a lot of poor people go to the top, and a lot of rich people go to the bottom.

You asked why we never have a problem with celebrities and entertainers, and I say you haven't been talking to us long enough. I think that this pay gap is just as disruptive as high CEO pay, and shuts good people out of the industry. I used to go to the dollar theater as a kid, sometimes with a 25 cent special. It's now $11 a ticket, with a $6 special. If you really thought that we didn't have a problem with it, you don't know us. The issue is as simple as priorities; I rather fix the economy as a whole before we fix the entertainment industry.

 

[mtguy8787]

The definition for the word "exploit" was not arbitrary... you saw where it was taken from

The definition of exploitation is unfair practices. You have to define criteria for what is unfair, and what is not.

Easily said when one doesn't want to consider the reality of the situation

In your example, the person is coerced against their will. In a voluntary market exchange, neither is coerced. I would argue that all voluntary exchanges (assuming that they dont harm others), are ethical, because person A is not justifiably morally obligated to provide person B with anything. When they do come to an agreement, they do so because they both believe they are better off.

It might be undesirable that some people earn a low wage, but unethical? By saying it is unethical, you are placing the moral burden on the employer to provide the employee with a certain outcome. In the case of any wages paid, and accepted, the employer is offering a deal that is better than the next best alternative. Unless you say that the employer is morally obligated to serve the employee, there is nothing unethical happening, because both parties are morally justified in offering what they will, and only what they will, in exchange for what another has to offer. As it stands, few people actually earn minimum wage, and most who do are young, or uneducated. If the minimum wage was really all that stood in the way of exploitation, we would expect to see most, or all low skilled workers earning a minimum wage.

Look, I'm not going to pretend to be an economics major or even well read on the subject. However, unless you are a robot that hasn't been programmed to take human life into consideration, ethics is very much a part of building and maintaining a society. You may be well versed in economics, but what depth have you in human ethics? Perhaps ethical considerations is where I can be of assistance to you and economic theory is where you can be of assistance to me. In this way we can work together.

I didnt say ethics werent important in general. I said that they arent required for market forces to work. Economists do not assume that people will behave ethically when they analyze a situation. Market forces operate regardless of the ethics of individual actors within the market. An unethical businessman cannot change the force of competition, the price system, or supply and demand.

What truly free market exists?

Market forces don't require a market to be completely free, or any arbitrary degree of free, in order to function. Competition between Intel and AMD, for instance, does not require all industries to be free. It only requires relatively free conditions in the areas that significantly affect their market. While the government may distort agricultural prices, for instance, with subsidies, this does not have any appreciable effect the price system of other industries. As it stands, different industries have varying degrees of freedom -- which is why you see more issues in some than others. Competition in the health insurance industry, for example, is highly curtailed (state to state competition is banned, for instance), which contributes to the problems we see here.

Motives are irrelevant because achieving an outcome in the market rests on only one thing: satisfying the conditions demanded. A cutthroat businessman and an altruistic one may be competing in the same area -- yet their motives do not determine the market outcome. The one who best meets consumer demand will be the most successful, greed & unethical motives aside.

Unfortunately, humans have emotions and in a society, we deal with humans... so emotions come with it

The problem is when arguments and positions are based purely on emotion, and not also on sound principles. Given that economics underlies almost everything we value, it is essential that these political stances be based on sound economic principle and thinking -- more often than not, they are not.

No offense taken. As I mentioned, I am no economics major or academician. However, as I mentioned before, its not unheard of for economic folk like yourself to problem solve with a political advocate like myself. Someday you may need to problem solve for a high profile job or even inform political policies. At least that's how I believe it should be. I believe academicians of many most types should be involved in political decision making; but, that requires that everyone takes into consideration what others are saying, even if they are not versed in their own area of study. That being said... greed is a huge part of human emotion and behavior and it helps us predict what people will do under different situations.

Sure greed plays a role in predicting behavior, i.e. game theory. In fact, economists generally assume that all businessmen are greedy. The question is whether someone's greed can work against market forces. Someone can do whatever they want -- you might even predict it -- but it won't allow them to ignore the market.

I'm sure you are right. However, there are psychological and sociological findings regarding greed and the resulting unethical business practices that show how these emotions/motivations and behaviors can undermine a market. Beyond that, we do not have to look very far to find a market that failed recently due to unethical business practices.

Please show an example?

The most common example I come across for supposed market failure due to greed is that concerning anti-trust. For the most part, historically, anti-trust actions have been ridiculous or outright damaging. This article here provides a good overview

http://mises.org/daily/436

In regards to collusion, which is one of the biggest areas where businesses can supposedly sustain their behavior in the face of competition, I would recommend giving this a read. Bryan Caplan is a first rate economist and thinker, IMO

http://econfaculty.gmu.edu/bcaplan/compet

Its also important to distinguish between overall & long term processes vs. short-term & acute incidents. Market forces don't automatically or magically prevent someone from attempting to "cheat the system". What it does do is to serve as an equalizing force that tends to negate the sustainability of any such efforts, or even make it such efforts counterproductive in many cases.

If we assume that businessmen are generally greedy and willing to engage in unethical practices to maximize profit, and it is believed that they can sustain such attempts against market forces, then we should expect to see this happening in general. Furthermore, we should expect to see this market failure, in general, throughout history. As it stands, we do not.

I'm not saying such incidents don't exist. I'm saying that they are often not very effective at actually working against market forces, and that they are generally unsustainable.

It's important to distinguish between questioning whether such incidents happen, and whether or not they are actually able to establish a negative trend that works to undermine market processes in the long term. This is important because if we give the government a mandate to go after such incidents, all roads suggests that more harm than good will result. The history of anti-trust regulation is one example.

Suppose we give government a mandate to go after all "unethical" behavior in business. We would see bureaucrats, driven by political bias and agenda, and subjective judgement and criteria, engage in sweeping regulatory behavior -- in which most cases, the supposed unethical behavior would likely be economically justified to begin with. CEO pay is an example of something that is widely considered to be unethical, yet the body of studies conducted show no evidence of rent-seeking in general.

A Look At Wealth Inequality In America: CEOs and Celebrities | New Era Freedom

Ironically, top celebrities, athletes, and news anchors make as much or more than top CEOs, and we hardly ever, if at all, see people claiming that their earnings are unethical.

Such claims that CEO pay is unethical, tends to stem from complete ignorance about how and why a CEO gets paid in the first place, or claims that "they don't do they much to earn their pay, anyways", which stems from ignorance about what it actually takes to be a successful top CEO.

Sure... greed can motivate people to raise prices

But of course. The primary purpose of business is to maximize revenue. The question is whether individual businesses can successfully raise prices in disregard to market prices, or whether greedy businessmen can systematically raise prices at will. The answer is that they cannot -- if they could, we would expect to see it happen in general. Consumers determine prices -- not the greed of businessmen.

Who said anything about that?

You said that with the proper societal system, the nonsense of greedy businessmen raising prices would stop. The only system that can change market prices is artificial price control. The system that exists, is the free market, which does not allow greedy businessmen to raise prices as they will.

I had originally said that if you increase minimum wage to the point where they are being paid more than they produce, prices would increase. You implied that this process was part of "all this nonsense". What I was saying is that this increase in prices does not reflect greedy businessmen -- it reflects the underlying economic reality. As it stands, prices tend to be sticky, and businessmen do not tend to immediately hike up prices every penny they can, at every change they get.

No one is forced, but they do it anyway don't they?

No, youre not getting it. People do not get paid market value for their labor because of the good deeds and ethics of a few businessmen, which force others to comply. That they get paid what they do, because the demand for what they have to offer exists, and competition for that commodity exists. Assume that no businessmen are ethical. People would still get paid what they do. Suppose the labor of a worker results in $100,000/year in revenue. Assume that all businessmen would love to pay that person 1 cent per year. Then suppose that one business offers 1 cent. Another, of course, will be willing to pay more, say, 10 cents. Others will be willing to pay more than that -- up until the maximum theoretical point of paying $99,999.99 (of course real world calculations are not so precise, due to imperfect information). This force is balanced by the fact that, just as competition for such skills exists -- competition among people who have those skills exist. Thus, while one person would be willing to accept $50,000, another might be willing to accept $45,000. These forces work in concert to cause the price of those skills to tend towards equilibrium.

It works, regardless of the existence of ethical businessmen.

It only takes a few doesn't it

Nope, the few who did this would not force everyone else to comply. A few businesses who did this would attract the most qualified individuals. The remaining supply of that labor, and the remaining demand for it, would not be affected by those outliers.

What does happen is that savvy businessmen offer exceptional benefits in order to attract and retain the most qualified workers. Henry Ford paying double the average wage is a perfect example of this. Another example in modern times is Google, which is renowned for their high standard of working conditions.

The interests of businessmen are not mutually exclusive from the interests of other actors in the market. In economics, it is generally agreed that market forces tend to push things towards equilibrium, and that this point is the most efficient overall configuration.

But they do... we just covered that above

No, as I've said, market forces work regardless of whether or not businessmen are ethical.

 

[mtguy8787]

Oh really? There's no human influence at all here? Do explain....

If you want to talk about human influence, talk about consumer demand -- because that is what drives business to do what they do.

What I said what that its meaningless to talk about what would happen in a hypothetical scenario, if that scenario is not going to happen. As said before, it is assumed that all businessmen would pay 1 cent if they could. Market forces are the reason they cannot, and do not. As I said before, the very fact that you see wages ranging from minimum wage, all the way to the top end, is proof that wages are determined by the market, and not by the greed of businessmen. Of course there is human influence -- the desire to maximize personal gains drives all market interactions.

If you want to use an economic theory to support your arguments, go ahead... I use my understanding of society, psychology, human motivation, biology, my own experience and common sense... you and I both know what it means to be exploited... don't try to play dumb

The problem with using what you just mentioned is that it lacks an objective means for analyzing what is, and what is not exploitation.

Are sweatshop workers being exploited? Using an arbitrary standard of living as your criteria, people can, and do commonly argue that they are. Yet what they earn is generally significantly better than the alternative.

Benjamin Powell, In Defense of "Sweatshops" | Library of Economics and Liberty

Is person A being exploited by person B, when person B offers a deal that is better than no deal? To claim that it is, is, as I said before, putting a moral obligation on person B to ensure a certain outcome for person A.

In the long term, if exploitation were the rule, we would not expect to see the standard of living increase for the so-called exploited. Yet, historically, up to this modern day, it has.

You say you use society, biology, etc.

Ok:

Using "society", how does one define when the actions of person B, is exploiting person A. I would argue that the only way exploitation can occur is through coercion.

Using psychology: Are you suggesting that employers regularly exploit employees through psychological manipulation?

Using biology: I don't see how this even makes sense -- what biological principles can be used to define which market transactions are unethical.

Your own experience: aka, a subjective criteria for what is exploitation.

Common sense is not a valid criteria for defining exploitation. "Common sense" would define exploitation from everything ranging from sweatshop labor, to CEO pay, to the ridiculous and untenable Marxist notion that anything less than earning enough to buy back the product is exploitation.

I would argue that exploitation occurs when, through whatever process, employees are generally made to work in conditions when the market would otherwise offer them a better alternative.

You keep talking about ethics, but you seem to be defining what is ethical based on your arbitrary criteria, and not based on any actual definition of what constitutes ethical behavior on the part of person A, or person B.

[quote[
Unfortunately, the US and its people have deemed certain low wages exploitative[/quote]

Argument by popularity is not valid. People have deemed that they are being exploited by CEO pay, that they are being exploited by the 1%, that they are being exploited by 'excessive profits', that they are being exploited by advertising, and by a host of other things

I'm sure you would too if you were one of those workers and that was all you could find for a job.

I've worked minimum wage, and I do not agree that I was exploited. As discussed before, people tend to get paid based on the market value of their production. You argue that people earning low wages exploitative. In other words, it is exploitative that they are not paid more, regardless of their market value. As said before, such "agreements" tend to lack any sound definition of what constitutes exploitation. Simply claiming that it is unfair is not a justification. You must define your ethical standard, and then define what is unethical about the voluntary exchange between person A, and person B, in this claimed case of exploitation. Relying on inconsistent "common sense" definitions of what is unfair would be laughed out of the room by any serious philosopher.

Now suppose you had a worker who is incapable of doing anything except the most rudimentary task -- suppose they could do nothing but wipe windows, and they could only do it at half the rate of the average worker. Would it be exploitation that they earn much less than the average worker? By saying yes, you are saying that an exchange based on the value received by both parties can constitute exploitation. Furthermore, by the inverse of this same logic, it is equally unfair that a skilled worker is paid more than the unskilled worker.

Now take it to the extreme, and look at someone who is incapable of doing anything productive. Are they being exploited if they are not paid a living wage? Essentially, what we have in the case of most claims of exploitation, is an underlying sense of entitlement. If you argument is essentially that people must be paid a living wage -- what is your basis for justifying that they are entitled to have this. If you want to talk about ethics, then if you talk about entitlement, then you must talk about the ethics and principles of what it means, in general, to be entitled to something.

People who talk about "common sense definitions" generally lack any such philosophical rigor whatsoever.

That is why we have the minimum wage. We don't live in a bubble when we live and work in a society. We are talking about living breathing organisms, with... yes.. feelings.. there I said it lol! Its important to take feelings and motivations into consideration if we are to be a successful nation.

I'll reiterate:

- Few people earn the minimum wage, and most who do are young (which means conditions will change for most as they gain education and experience), or are uneducated. In most cases, it is their own fault if they are uneducated -- of course there are some exceptions.

If someone does not do what is necessary to better themselves appropriately, when they are capable of it, and then suffers the consequences because of it, they do not deserve any special treatment or consideration. People who carelessly picked a major in college, or were more concerned with partying it up than anything else, and then complain about earning only $10/hour after college, do not deserve any pity.

- Two people earning a minimum wage can live just fine in most parts of the country

- Having to live with a roommate or family to cut costs is not being exploited.

- People earning a low wage can afford much more than they could 100 or 150 years ago. Thus, this supposed exploitation has decreased. But look 100 years into the future, and people will still be claiming exploitation, because low wage workers cannot afford upper class goods and amenities. Yet, in the economical sense, these people would be even better off than people today. There is no endpoint when it comes to such "definitions" of exploitation. At what point is there supposedly no more exploitation?

- People have every range of feelings about every range of subject. The way people feel about things does not constitute an ethical or economical justification for anything.

- Again, when you talk about people being mandated a certain wage, you are talking about entitlement. Claiming that someone is entitled to something is not a philosophical justification for why they are entitled, nor is it an argument as to why others are obligated to provide this for them.


Helping poor people is a good thing. Aiming to provide opportunity for people who lack it is a good thing. People doing this out of the goodness of their heart is a good thing.

The mentality of entitlement however, is contrary to the position of helping others out of compassion. The mentality of entitlement is also contrary to the approach of empowering people.

Ideally, there would be no entitlement mentality (and not simply because it is incompatible with a supposed land of the free, but because of the philosophical quagmire that supposing that people are entitled to things from others opens up). People who are truly in need would get assistance. Ideally this would be done as much as possible through charity. The claim that people are greedy, and so looking to charity, and so we need government, is inconsistent. If too many people are selfish and greedy, there would not be enough advocates of helping the needy in order to elect a government that would enact such policies. A mentality where people rely on government is counterproductive to people taking things into their own hands. Centralization is also counterproductive to charity, because charity is best done within the community, where people have a personal connection to what is going on around them -- i.e. people are much more likely to care about a local food bank, than to care about a national program that helps people in another state.

The mentality of entitlement causes people to overstate the supposed unjust conditions that low-wage workers live in. According to the official definitions of what poverty is, my family was in poverty for much of the time while I was growing up. I don't feel exploited, put down by the "big man", or entitled.

We should aim to empower -- and in exceptional cases, provide -- but nothing more.

Free classes on how to develop marketable skills is one simple example of a way to empower people.

 

[sangha]

What I said what that its meaningless to talk about what would happen in a hypothetical scenario, if that scenario is not going to happen.

You mean like talking about what would happen in a free market, even though a free market has never existed since the beginning of civilization?

Sounds like you're arguing for people to consider your arguments meaningless.

 

[mtguy8787]

Hello, mtguy8787. Thank you for giving me so much information, it is appreciated.

The gist of your posts seems to be that inequality has been decreasing and the wage gap isn't widening on the whole. I call shenanigans;

I was referring to the gap between the increase in productivity, and the increase in wages, not the Gini coefficient.

When using the Gini coefficient, there are a number of things you have to consider.

- Consumption inequality is arguably more important than wage inequality.
- Measures of inequality do not take upward mobility into account. If upward mobility exists, inequality is not a problem.

Massive inequality can exist, because of a massive inequality in the productivity of unskilled workers, and upper echelon workers. However, if equal opportunity exists for the unskilled worker to improve their lot -- how is this a problem -- aside from people's sense of outrage?

You say the top earners haven't been growing their share since 1995. Um, yeah. Yes they have;

Its interesting how your graph references data from 2007, yet goes all the way to 2011.

I this article, I explain why looking at such data isn't as clear cut as it seems to be. The Piketty-Saez data includes numerous variables, including pre-tax vs after tax, and income counted either by including or excluding capital gains.

My article uses CBO data, and it is different from the Piketty-Saez data. This data shows that the pre-tax share in 1986 was 13.2%, and actually lower, at 12.1% in 2003.

The fact is that the income share of the top 1% rises and falls largely with the stock market. When you understand this, the claim that the rich are becoming richer and richer, and at the expense of the poor, no less, becomes nonsensical.

A Look At Wealth Inequality In America: The 1% | New Era Freedom
View attachment 67150650

Oh, and median wage income has risen 30% since 67? Absolutely, and stopped rising by 73. Here's the chart.

1.) No source. Here is the official data for median household income

http://www.census.gov/prod/2007pubs/p60-233.pdf

2.) When it comes to wages, 2 things, as I already mentioned

- It depends which price deflator is used. The BLS typically uses CPI, which has a number of problems. When you use other accepted price deflators, the picture is different.
- Tax incentives have shifted compensation in wages, to compensation in terms of benefits. When looking at hourly compensation, you have to take this into account.


- Furthermore, the fact that your graph reveals that wages for female workers continued to rise, while those for males have stagnated, should immediately clue you in to suspect that it is a misrepresentation, or not presenting the big picture.

- When looking at the big picture, you must take into account the shift in household dynamics. Average wages can be misleading, because low-skilled wages could rise slowly (and justifiably so, as the market value of such work does not necessarily increase that much) -- while ignoring the fact that as a whole, the bulk of households are shifting to a wealthier class.

This article explains:

A Look At Wealth Inequality In America: Stagnating or Falling Household Income and Wages | New Era Freedom

It only rises slightly higher if you take into account an increase in hours worked per week, and the trend towards 2 income households. That's as simple as trading more time for more money, not a great success of modern capitalism.

Actually, the data shows a trend towards 1 person households

Historical Census of Housing Tables -Living Alone

You say that automation has been decreasing the price of goods. I agree that it's expected, but I haven't seen these cheaper goods (but this is mostly due to inflation). When you compare CPI to the increases in Median wages, you do get a slight advantage over time. But, this isn't due to capitalism. Every time we've increased technology and automation, we've decreased the price of goods (whether an actual price or just the labor involved). The only way you can link this to capitalism is if you act like there'd be no new technology in any other system. The USSR gave us; Sputnik, The first astronaut, Mir space station, the first nuclear powered boat, countless technologies based on nuclear energies in general, and ear hats. There were atleast 7 nobel prize winners whose work was funded and handled by the USSR. I'm not the biggest fan of the USSR, mostly because of Stalinism, but the idea that they "needed" capitalism to have new technology is easily proven false by history. Most scientists are working for the sake of curiosity and their duty to humanity, not the money.

Sir:

- It takes far more than theoretical scientific advancements to translate into improved functional technology. Scientist who are not in business play a large role. Scientists working for private enterprises also play a large role.

You give examples of technology not developed in a capitalistic setting, and then assume that, therefore, capitalism is not responsible for any increases in technology. This is completely non-sequitur.

Here are just a few examples of technological improvements due to capitalism -- which also happen to rank among the most significant. In fact, all of the examples you listed are NOT those that contributed significantly or at all to increased production.

- Computer hardware
- Computer software
- Farming technology
- Industrial technology
- Automotive technology
- Medical technology


Theoretical advances, where clear entrepreneurial benefit is not apparent is best served by government funding. Converting scientific advances into applications that will best serve consumer demand is best served by the free market.

There is far more that goes into increased production than theoretical and experimental advances by scientists.

Just like you ignore the role that retail stores play, here you ignore, or fail to comprehend, the assembly of capital that is required to ultimately produce the end-products.

What capitalism does, is to reward organizations that best meet consumer demand. Without this, you will have advances, but there is no efficient mechanism for up-regulating those that advance consumer welfare, and downreglate those that do not. In a state-controlled system, this is entirely decided by bureaucrats who do not have consumer's best interests at heart -- and if they did, they could not, even in principle, direct things to best meet demand.

It is true that some people, such as some scientists, do not work for primarily money (although this is largely not true). But you are again ignoring one of the most important tasks -- organization of capital (which includes human capital such as scientists) -- under the common agenda of developing things that meet consumer demand.

When it comes to this organization, you basically have two alternatives -- capitalism, and state-controlled decision making. Propositions such as complete democratic control of such things are completely unrealistic -- it is nowhere near feasible to have democratic decisions for the countless decisions made in an ever growing and diversifying economy. Your idea to use computers solves nothing, because it is people who must program and continually update them -- it is still people doing the decision making.

Its not that nothing can happen in a state-controlled system -- its simply that capitalism is superior -- and this is moreso the case when you have an expanding and diversifying economy, that is increasingly impossible for any state-controlled system to organize. Take, for example, the area of new and developing software for IT purposes. Capitalism rewards whichever developments are the most superior. The main challenge for any state-controlled system to do this is as follows:

1.) Any state controlled system is subject to a wide range of agenda's, subjective bias and judgements, politics, and more. The self-interest motive in capitalism means that consumer demand is the sole determiner. In a state-controlled system, something is deemed more successful by means of political and bureaucratic judgement. In a free market, the bottom line speaks for itself -- it is meaningless for the opinion of a bureaucratic board to change this.

2.) In a free market, every consumer decision conveys information -- by purchasing an item, a consumer is conveying preference not only for the item purchased, but he is conveying relative preference compared to similar items. He is also conveying priorities, through the purchase of one item over an alternative use. This entire aggregate of information is conveyed unconsciously through the market system.

Capitalism, through the profit motive, organizes capital into configurations where it will best meet consumer demand. The profit motive is efficient because it is based on the price system, which conveys the total aggregate of market information. The free market signals to people, for example, whether more computer scientists vs. computer engineers are needed -- and so on, and so on.

Without this, there is no efficient way to determine what to produce, or how much. The soviet union is a perfect example of this.

Even if many scientists are not primarily motivated by money -- the free market still works to sort out research that contributes to meeting consumer demand from those that do not. Its also a misnomer to say that scientists are not motivated by money -- while some may not care much about their living conditions as long as they can do their research, most scientists, like most people, want a higher standard of living.

You stated that scientists are motivated by their "duty to humanity". You've provided no evidence that scientists have a greater sense of duty than anyone else, or that they have a superior sense of greater duty that overrides their personal interests.

A scientist who wants to work on say, solar technology, will be able to make a better living as this technology becomes more marketable. A scientist would be able to make a better living doing pharmaceutical research, because there is a great demand for their product. This serves to direct research to areas that are more marketable, and not to whatever random curiosity that a scientist might have in your utopian fantasy.

On the other hand scientist who wants to study the mating patterns of birds, or string theory, is unlikely to produce anything marketable, and so, would have a hard time finding any firms to hire them, because although some great discoveries are accidents, most productive research is directed towards a productive goal. As I said, there is a place for theoretical research not immediately related to consumer interests, and there is a place for private research.

If we're going by minimum wage or any comparable wages, it's kind of obvious that it hasn't been getting better. Inflation adjusted minimum wages are slightly lower than they were 30 years ago, and have been falling since the early 60's.

Minimum wage is a horrible measure to go by, and does not reflect economic conditions because it is arbitrarily set. It is a poor measure to go by, because it does not represent the average worker.

As I explain in my article, different price deflators show that wages have increased, and that more importantly, real hourly total compensation increased over 50% from 1970 to 2004.

A Look At Wealth Inequality In America: Stagnating or Falling Household Income and Wages | New Era Freedom

Alot of the disagreements between me and most libertarians/free-market-supporters, is that it makes the assumption that all poor people are poor because they "deserve" to be poor

This is false. Free market supports hold that low income workers earn what they do because they provide low market value. Free market economists tend to refrain from making any such judgements

and all rich people are rich because they "deserve" to be rich.

False. Free market supporters support the earnings of the wealthy, because they have earned it through serving the consumer.

This isn't a problem in a free market, so they support it. My issue is that I've met too many people not only working at minimum wage jobs, but fighting each other to get into minimum wage jobs, after graduating from a 4 year university.

If you want to make money, choose a degree that is in demand. If you choose whatever degree interests you, be prepared if your degree is not as in high demand by other people.

Some of the smartest and most dedicated people I've met are poor. If people were actually paid by their deeds, there'd be a lot of poor people go to the top, and a lot of rich people go to the bottom.

What you are doing here is making a subjective judgement about what people are worth, based on your assessment of their character, and what it is worth.

If you were a real libertarian, you would agree that one person is under no obligation to make an exchange with another, by any means other than the value they gain from it.

A dedicated, hard working person -- call him person A -- who offers something that is not valuable to person B, is not going to get a lot in exchange from person B. If you were a true libertarian, you would agree that person B has the right to decide for himself how valuable he considers person A's offerings, as well as the right to be free to offer whatever he will, or will not for it.

By imposing your own judgement of what some poor people are 'really' worth, and what rich people are 'really' worth, you are imposing a value judgement on the decisions of person B in the above example -- hardly libertarian at all. By saying that a rich person is not 'really' worth what he gets paid, you are saying that the value judgements made by the people who pay him are not 'really' accurate.

You asked why we never have a problem with celebrities and entertainers, and I say you haven't been talking to us long enough. I think that this pay gap is just as disruptive as high CEO pay, and shuts good people out of the industry. I used to go to the dollar theater as a kid, sometimes with a 25 cent special. It's now $11 a ticket, with a $6 special. If you really thought that we didn't have a problem with it, you don't know us. The issue is as simple as priorities; I rather fix the economy as a whole before we fix the entertainment industry.

Good for you -- at least youre consistent, unlike most people.

Do a simple google search for proposals to limit CEO pay, vs proposals to limit celebrity or athlete pay. The disparity between these should tell you all you need to know.

What economic justification do you have for claiming that these high earners are unjustified? Movie stars earn alot because people prefer movies with their favorite star actors in them. The demand for high budget films has increased, hence why the prices have increased. The demand for the entertainment industry has soared, which is why prices are higher. The cost of going to a concert is much higher than the cost of going to say, a scientific lecture. What people like you tend to do is impose their own value judgements on the choices of consumers, and then declare the results to be "unjust". In the above example, the lecture is arguably more valuable than a concert that provides only a moment's pleasure. Nevertheless, it is what people demand, and the free market answers.

If you are judging this as unjust, you are declaring that consumer decisions as to what they want are unjust.