Creation of wealth, the ideal distribution

[Vince_Fiero]

In the Human Rights thread I came to the next: The socialist/capitalist discussion seems to be about the creation and distribution of wealth.

I introduce the next right:
° There is an objective right to get the wealth created by your actions.

Capitalists say that socialist systems do not respect the right on the wealth you create, by attributing wealth to people for being and not for creating wealth.
Socialists say that capitalist systems distribute the wealth disproportionate to the capital and insufficient to the labour, as such not respecting the creation of wealth that the labour does.

The point is indeed is there a system that distributes the wealth according to wealth creation? For me wealth is linked to value, thus subjective, what is the wealth created by the stock owner or the CEO? Clearly they provide tools and organisation for the labour so the whole can create the wealth, but is it not only the labour that creates the wealth, the tools and organisation without labour are theoretical and empty? How to get to a fair system between the 2?

 

[wfooshee]

I've never understood the idea that a CEO making millions and a plant worker making 24 bucks an hour is unfair. What skill does the plant worker contribute to the creation, development, marketing, and distribution of the product? None. He screws it together using parts, tools, and instructions given to him by those that did the development.

That doesn't make him worthless, it makes him worth whatever it takes to pay a guy with basic skills on the equipment he uses.

The CEO is not raking in his millions on the backs of deprived laborers. He's raking in his millions because the board of directors respects his ability to develop, design, promote, and distribute product for a profit.

Don't forget that between that line worker (or janitor, or whatever) are a whole lot of people who design, develop, prototype, and test the products. Some of those people make very good money at their jobs.

It is not ANYONE's responsibility to see to it that wealth is distibuted "evenly," "fairly," or whatever you want to call it. Market conditions will determine what a particular set of skills is worth.

Everyone has the right to pursue a comfortable life. No one has the right to have that comfort simply handed to them. There is no right to swimming pools, 500-channels of HD TV on an 80-inch screen, no right to Porsches, Ferraris or Lambos. If you want these things but cannot afford them, the blame does not lie with the person who can afford them. Improve yourself, get some skills you can sell back to an employer.

 

[XoravaX]

The person who has risen into a position good enough to earn huge amounts of money has the right to keep it.
Pouring money to people who didn't have what it takes to get into a good position is just plain stupid.

Factory workers need only to be told what to do and to be taught the manufacturing process. CEOs need to be wise on what to manufacture, whom to market, at what price to sell, etc unless they outsource all that, but they must have a vision and be creative, else they'll fail.
Factory workers don't need to spend ten years studying in the university like specialised surgeons - why should they earn the same amount of money?

Although, everyone should be equal in the beginning, and that requires equal chances to get educated, no matter how rich or poor the parents are. To achieve that, all education should be free or the cost should be percentually the same for poor and rich alike.

 

[Keef]

There is no "fair and square" compromise between the two. The fact is that if the economic system compromises peoples' life, liberty, or property, then it is immoral and therefore unfair and wrong.

Theoretically, pure capitalism is the only economic system which does not inherently violate human rights. What the people actually do in the system is another story (people have free-will, and capitalism is a system that supports free-will), but the theory itself does not violate human rights. No matter what people do in a socialist economy, the theory itself requires the violation of human rights in order to function. You can't even try to implement socialist economic principles without forcing the violation of the people's rights.

 

[RTSolvalou]

I've never understood the idea that a CEO making millions and a plant worker making 24 bucks an hour is unfair. What skill does the plant worker contribute to the creation, development, marketing, and distribution of the product? None. He screws it together using parts, tools, and instructions given to him by those that did the development.

That doesn't make him worthless, it makes him worth whatever it takes to pay a guy with basic skills on the equipment he uses.

The CEO is not raking in his millions on the backs of deprived laborers. He's raking in his millions because the board of directors respects his ability to develop, design, promote, and distribute product for a profit.

Don't forget that between that line worker (or janitor, or whatever) are a whole lot of people who design, develop, prototype, and test the products. Some of those people make very good money at their jobs.

It is not ANYONE's responsibility to see to it that wealth is distibuted "evenly," "fairly," or whatever you want to call it. Market conditions will determine what a particular set of skills is worth.

Everyone has the right to pursue a comfortable life. No one has the right to have that comfort simply handed to them. There is no right to swimming pools, 500-channels of HD TV on an 80-inch screen, no right to Porsches, Ferraris or Lambos. If you want these things but cannot afford them, the blame does not lie with the person who can afford them. Improve yourself, get some skills you can sell back to an employer.

Case closed 👍

 

[Grand Prix]

Lets use a car manufacturer as an example.

I've heard people say that that we really shouldn't be paying thousands of dollars for a car built from $1000 worth of materials. The thing is, car manufacturers have to charge the prices they do because of research and development costs. Why does R&D cost so much? Think about who does it.

These engineers and designers have a high demand with a premium price-tag, and they do need it. Badly. University is expensive. Why is university expensive? Because somebody has to pay for the instructors of these soon-to-be designers and engineers. Teachers and instructors have high price tags because they have years and years of experience to teach students effectively and prepare them for their field.

So, blame the instructors for the cost of automobiles.


So why do we need to pay so much for instructors? Because paying an instructor to teach you to do something is far easier than learning to do it yourself. They're essentially offering a service through the school.


Now let me tell you a story about a renovator/carpenter. A person has just bought a new house without noticing that part of the hardwood floor creaks. It drives him up the wall and he doesn't know how to fix it. He calls up said carpenter. The carpenter arrives and examines the floor, takes a nail, and BANG, the floor no longer creaks.

"Wow! Thanks so much!"
"That will be $100 please."
"WHAT!?! All you did was hammer a nail into the floorboard!!"
"That's right, $1 for the nail and $99 for knowing where to put it."

I'll let you figure out why it costs $99 for knowing where to put a nail.


Remember, as a professional you can offer three things: Good, Fast, and Cheap. In order to be profitable you can only offer two and not all three. You can offer a good and fast service but it won't be cheap. You can offer a fast and cheap service but it won't be good. You can offer a cheap and good service but it won't be fast.

Take your picks.


/rant

 

[Lizard]

I believe there is a line at which no one should drop below which is the bare minimum of living but not homeless, dying etc. But above that the current system is fine the only bad thing is a singer gets paid more than a scientist.
As long as the five giants of the Beveridge report are met then there is no reason for anyone to fall behind and if they are poor its their fault.

 

[lemansfanatic]

I believe there is a line at which no one should drop below which is the bare minimum of living but not homeless, dying etc. But above that the current system is fine the only bad thing is a singer gets paid more than a scientist.
As long as the five giants of the Beveridge report are met then there is no reason for anyone to fall behind and if they are poor its their fault.

the singer gets paid more because we as a society put more value into entertainment/sports than science and medicine. think of how much money you've spent on movies and music, and compare that to how much you've donated to a specific scientific research cause. its not your fault they dont match, its the way we are wired as humans

 

[Joel]

the singer gets paid more because we as a society put more value into entertainment/sports than science and medicine. think of how much money you've spent on movies and music, and compare that to how much you've donated to a specific scientific research cause. its not your fault they dont match, its the way we are wired as humans

As far as sports is concerned, it's supply and demand. There's only a handful of people in the world who can play each given sport at an elite level. Taking the NHL for example, there's lots of guys capable of being goons, but only a handful of superstars. As such, the goons get paid 525k on 1 year contracts, while superstars get 7-9M annually on long contracts. It just comes down to supply and demand. There's more people who can be researchers and brain surgeons than play a popular sport at a very high level.

 

[Sach]

Remember, as a professional you can offer three things: Good, Fast, and Cheap. In order to be profitable you can only offer two and not all three. You can offer a good and fast service but it won't be cheap. You can offer a fast and cheap service but it won't be good. You can offer a cheap and good service but it won't be fast.

Ha, interesting.

 

[niky]

There really is no such thing as fair. The problem with a socialist system is it supports more mouths than can be fed otherwise. Which encourages the making of more mouths to feed, whether the resources are there or not.

A capitalist system... well... there are issues with how you make people take responsibility and actually pay proper prices for resources used and pollution generated... but that's inherent in all modern systems... but a fully capitalist system is self-limiting. The non-competitive simply die off. It's harsh, it's not humane, but it's manageable.

The ideal distribution is that wealth is given for work given. And the utility and quality of that work determines the amount of wealth that is returned.

...the only bad thing is a singer gets paid more than a scientist...

Says someone who watches a sport in which hired drivers get paid tens to hundreds of millions of dollars to drive around in circles.

Entertainment has been given monetary value for a long time. Singers, instrumentalists, dancers, circus acrobats, athletes... even prostitutes have been making money for their "work" since time immemorial. The big difference nowadays is that with a huge audience, an entertainer who would otherwise top out in their career as a court singer can now earn enough money to rival a king.

 

[Omnis]

The thing is, labor doesn't create value. Labor is capital.

 

[Vince_Fiero]

There really is no such thing as fair. The problem with a socialist system is it supports more mouths than can be fed otherwise. Which encourages the making of more mouths to feed, whether the resources are there or not.

A capitalist system... well... there are issues with how you make people take responsibility and actually pay proper prices for resources used and pollution generated... but that's inherent in all modern systems... but a fully capitalist system is self-limiting. The non-competitive simply die off. It's harsh, it's not humane, but it's manageable.

I think this is going in the right direction on the subject.

1) Wealth is the assets you create - the liabilities you took for it.
However these liabilities are not always that clear.
2) The assets you create are a lot of the time wrongly priced IMHO. We spend a lot on luxury, this has nothing to do with wealth. More with waste.
3) Looking into the subject the discussion is a lot older then I thought:

Capitalist systems protect with property, but many have recognised that not all property assigned is really coming from action of the people, from their wealth creation.
Socialist arguments seem to support that capitalist systems impede a lower class to really develop their wealth creation, since when they have a good idea the large corporations will copy the idea outside of copyright (paying good loyers) and use their production apparatus in place to outprice the new initiative; capitalists actully kill the free market priniciple by dominating the markets.
Environmentalists seem to support that the liabilities are not represented well in the equation and it is exploitation of resources that is promoted, not wealth creation.

To come back on the pure capitalist view, are you prepared to let the dummest/laziest person in your family die of famine (not the admin) since nobody believes she creates sufficient wealth to survive?

 

[Azuremen]

To come back on the pure capitalist view, are you prepared to let the dummest/laziest person in your family die of famine (not the admin) since nobody believes she creates sufficient wealth to survive?

Charity does exist in capitalism, so not sure what you are actually trying to argue there.

Additional, lower classes can certainly make progress. Friend's father came here a few decades ago with eight dollars to his name. Now is worth millions and has several business, etc.

 

[shortcake57]

Error- Sorry.

 

[PeterJB]

Whilst I believe that those with more important jobs should be paid more than the average Joe, I really don't see why it needs to be so much. IMO no salary should exceed £1 million a year. It's completely absurd how much athletes and actors get paid. I realise it's supposed to show self worth or whatever, but how much of that money do they actually need? There are many people in this world that couldn't hope to earn in their whole lifetimes as much as these guys do in a month. It's barbaric.

 

[wfooshee]

Then stop watching sports, and don't let any of your friends watch sports.

Do you think Michael Shumacher would have taken Ferrari where he took them if his annual paycheck were less than what he actually made for a race weekend?

How fair is it if he and his brother were paid the same?

 

[Azuremen]

Whilst I believe that those with more important jobs should be paid more than the average Joe, I really don't see why it needs to be so much. IMO no salary should exceed £1 million a year. It's completely absurd how much athletes and actors get paid. I realise it's supposed to show self worth or whatever, but how much of that money do they actually need? There are many people in this world that couldn't hope to earn in their whole lifetimes as much as these guys do in a month. It's barbaric.

How is it barbaric? Athletes get paid what they do because the public puts money into those things. Quite a bit. It isn't just like the magically make money to pay these people. Paying an athlete 6 figures just to endorse a product, or more, doesn't seem crazy when that endorsement could pull in millions for the company, etc.

Someone like Bill Gates, who has made quite a bit of money, certainly earned it. He dropped out of college, played all of his cards right, and now is responsible for a creating a company that more or less generated the standard for the PC experience.

 

[Joel]

Whilst I believe that those with more important jobs should be paid more than the average Joe, I really don't see why it needs to be so much. IMO no salary should exceed £1 million a year. It's completely absurd how much athletes and actors get paid. I realise it's supposed to show self worth or whatever, but how much of that money do they actually need? There are many people in this world that couldn't hope to earn in their whole lifetimes as much as these guys do in a month. It's barbaric.

So why at 1 million? Why is that where you draw an arbitrary line? You're posting on GTP right now. Do you "need" a computer? Of course not, so by the same logic you should sell it and donate money to the homeless. It's such an arbitrary thing, people in developed countries like ours can make more in a week at McDonalds than a villager in Africa would make in his entire lifetime. Why isn't that barbaric?

Frankly, I find it more barbaric that people in the 1st world with cars, comfortable shelter, satellite tv, high speed internet, cell phones, and an abundance of safe food/water, have the audacity to say athletes' salaries are out of line, when there are people all over the world literally dying trying to make it to countries like ours.

As you said, there's people in this world who make less in their entire lives as actors do in a month, the problem for your argument is that it applies to the middle class (and the "poor") in developed countries too. Working 40 hours a week for 10 bucks an hour earns you $1600 a month, which is more than people in a lot of countries would make in their whole lives.

 

[Keef]

Whilst I believe that those with more important jobs should be paid more than the average Joe, I really don't see why it needs to be so much. IMO no salary should exceed £1 million a year. It's completely absurd how much athletes and actors get paid. I realise it's supposed to show self worth or whatever, but how much of that money do they actually need? There are many people in this world that couldn't hope to earn in their whole lifetimes as much as these guys do in a month. It's barbaric.

As Omnis said, labor is capital. It's a commodity. And like other commodities, such as gold or oil or sunflower seeds or toilet paper, it's value varies based on many factors, including desirability and scarcity. The more employers want it, generally the more they'll pay for it. The rarer it is, usually the more they'll pay for it.

That's Alan Mulally, the CEO of Ford Motor Company. While there are probably hundreds of millions of jobs in the world, there is only 1 CEO slot at Ford. There are over seven billion people in the world, but only 1 Alan Mulally. That's why he was paid $18 million in 2008.

The fact is that some people are better than others. Some people are worth more. Some people can do things that other people can't do. There are a lot of people who can do a lot but never get anything done, while there are only a few people who can do a lot and actually get up and do it. Just because you or anybody else aren't as capable as Alan Mulally doesn't mean you have a right to decide what his employers pay him.

 

[Villain]

Ayn Rand. Atlas Shrugged.

 

[PeterJB]

How is it barbaric? Athletes get paid what they do because the public puts money into those things. Quite a bit. It isn't just like the magically make money to pay these people. Paying an athlete 6 figures just to endorse a product, or more, doesn't seem crazy when that endorsement could pull in millions for the company, etc.

Someone like Bill Gates, who has made quite a bit of money, certainly earned it. He dropped out of college, played all of his cards right, and now is responsible for a creating a company that more or less generated the standard for the PC experience.

But the money they're being paid to endorse that product is often more than the athlete could even hope of spending in a lifetime. Most of that money could instead be used for further investment into the company, or for better causes such as helping the less fortunate.

Bill Gates is admirable because of the amount of money he has invested into worldwide charities and his contributions to fighting polio. He has given almost his entire wealth to charity. What it shows is that this money that he doesn't actually need, but is needed so badly by others in the world. I just hope all millionaires and billionaires could be as generous as him.

So why at 1 million? Why is that where you draw an arbitrary line? You're posting on GTP right now. Do you "need" a computer? Of course not, so by the same logic you should sell it and donate money to the homeless. It's such an arbitrary thing, people in developed countries like ours can make more in a week at McDonalds than a villager in Africa would make in his entire lifetime. Why isn't that barbaric?

Frankly, I find it more barbaric that people in the 1st world with cars, comfortable shelter, satellite tv, high speed internet, cell phones, and an abundance of safe food/water, have the audacity to say athletes' salaries are out of line, when there are people all over the world literally dying trying to make it to countries like ours.

As you said, there's people in this world who make less in their entire lives as actors do in a month, the problem for your argument is that it applies to the middle class (and the "poor") in developed countries too. Working 40 hours a week for 10 bucks an hour earns you $1600 a month, which is more than people in a lot of countries would make in their whole lives.

I said £1 million as an approximation as I realise that most high profile athletes, actors and businessman etc. have very expensive occupations. It costs a lot for them to travel all over the world, and they are horrendously busy compared to the average 9-5 office worker., so yes, they should have larger pay checks because of their important work, but shouldn't be nearly as large as some of them are.

I am aware that there people in the world less fortunate than I am, and I give what I can to charity. But it sickens me to see people who may have a seven or eight-figure salary and keep it all to themselves. I'll admit that my understanding of economics is fairly poor, but surely most of that money could go straight to starving children in Africa instead of going to buy someone a Yacht?

 

[Keef]

I'll assume that you didn't comment on my post because you don't have anything to refute it.

 

[PeterJB]

I'll assume that you didn't comment on my post because you don't have anything to refute it.

I was partially addressing your's in my other responses. As CEO of a one of the world's biggest companies, he should get a larger than average paycheck, but really, $18 million? I'm sure he could survive on far less than that. That money could instead be used for further investment in the company, or even better, it could be redistributed in some way to the less fortunate.

In this day and age we need money to survive, so it seems terribly unfair that so many are denied it when others have such an excess of it. I'm sure poverty in Africa for example could be solved, first of all by destroying the corruption spreading across that continent, but by making more equal distribution of money across the world.

 

[wfooshee]

Now you've brought up another issue that has nothing to do with distribution of wealth. The poverty in Africa is (generally speaking) the result of intense corruption by a very few. That is NOT a capitalist economy producing that poverty. Those people aren't denied wealth, they're denied opportunity. Go over, hand them some money, and see what happens. They'll get robbed by those with the guns and the power. Give them food, and the same thing happens.

As for athletes and "more than they can hope to spend," that's not necessarily the case, either. Sure, some of those guys just blow wads of cash on bling, but a lot of them invest in themselves, take care of their families, set up funds to live off of after they can't play. Say you're a professional athlete. You have a "life expectancy" of 4 to 8 years. After your time is up in the game, and you're all of 30, maybe 35, what are you going to live off of? You wanna be a Wal-Mart greeter, or maybe have a fund set aside that you can draw from for the next 50 to 60 years that you expect to be alive?

ANY system that proposes to limit the potential reward of success also limits the amount of success that is present. If I ain't gonna get paid, I ain't gonna produce. Seems like such a simple concept.

Instead, those that don't produce whine about not getting paid.

Waa!

What you propose, i.e. "Those people have too much and those don't have enough, and being one that doesn't have enough, I resent it, so that should be given to them!" is called socialism. Go back a hundred years and list all the thriving successful socialist economies that have been put into place.

(Hint: here's the list:








End of list)

There's a reason for that, and it's very simple. Those who could be successful resent having their success stolen from them, and thus restrict themselves to non-success. Why bother?

 

[Danoff]

I was partially addressing your's in my other responses. As CEO of a one of the world's biggest companies, he should get a larger than average paycheck, but really, $18 million? I'm sure he could survive on far less than that. That money could instead be used for further investment in the company, or even better, it could be redistributed in some way to the less fortunate.

It's apparently better spent managing the company well. Having a good CEO is an investment in the company and it helps keep everyone else in the company in a job.

Warren Buffet gives a lot of his money to charity and he should maybe consider keeping some of it. All he ever does with money is employ more people.

 

[Villain]

For me wealth is linked to value, thus subjective, what is the wealth created by the stock owner or the CEO?

Stock owners buy part of the company in order to recieve of dividend of profits - they contribute by being risk takers and their money goes towards the company's ability to expand, hire new employees, etc. A corporation cannot exist without stockowners.

The CEO exists to manage the operations and management of a corporation from a macro persepective. They do not build or directly supply the goods and services per se, but they make the large scale decisions which affect everyone in the company and decide which direction it should take.

Is a single police officer more or less valuable in your eyes than a police chief? The chief is not out writing tickets. Is a single private or seaman in an army or navy more or less valuable than the General or Admiral? The General does not fight on the front lines and the Admiral does not physically operate anything on the ships.

There is a reason why those at the top get paid more than those at the bottom. Those at the top are responsible for every single person below them. Greater responsibility, greater risk, and more impact in the scheme as a whole. Therefore greater reward for success (or higher salary/benefits).

 

[Azuremen]

I was partially addressing your's in my other responses. As CEO of a one of the world's biggest companies, he should get a larger than average paycheck, but really, $18 million? I'm sure he could survive on far less than that. That money could instead be used for further investment in the company, or even better, it could be redistributed in some way to the less fortunate.

Why do they deserve it for just existing? And who are you say what is "too much" money? How is it fair to put a maximum value on what people are willing to pay someone?

CEO's make the money they do because investors feel that person is worth that much. Their value is determined by their performance and how others evaluate it.

In this day and age we need money to survive, so it seems terribly unfair that so many are denied it when others have such an excess of it. I'm sure poverty in Africa for example could be solved, first of all by destroying the corruption spreading across that continent, but by making more equal distribution of money across the world.

You realize welfare doesn't really work? Many of the people at the bottom are there because they put no effort to change that situation. Africa is heavily the result of corrupt governments and such - putting money there would nothing right now. Not to say there isn't money going info Africa with the various charities and aid groups.

Really, all you are proposing is Robin Hood, but in this case, there isn't someone stealing money from the poor to give to the CEO's. Well, excluding places with extreme corruption, which we've gone over already. Honestly, what you are suggesting would make corruption even easier.

 

[niky]

Direct dole-outs don't work. Simply feeding the poor creates a feedback loop in which you have to keep feeding the poor. The best kind of aid is microfinancing. By enabling them to become contributing members of society, and making them responsible for paying back the investment made in improving their financial capability, you create more wealth instead of simply sinking it into an endless black hole. (Look up "Women's Banks" for an example of how this works).

I am aware that there people in the world less fortunate than I am, and I give what I can to charity. But it sickens me to see people who may have a seven or eight-figure salary and keep it all to themselves. I'll admit that my understanding of economics is fairly poor, but surely most of that money could go straight to starving children in Africa instead of going to buy someone a Yacht?

You give money straight to starving children who grow up hungry, and breed to have more starving children of their own?

-

While I personally believe that some of those high-paid athletes and CEOs don't earn their salary... what makes you or I any more worth ours? You live in the UK, and make (or will make) a salary ten times as much as someone else doing the exact same job elsewhere in the world. Are you intrinsically worth that much more than a comparable high-school or college graduate from China?

The amount a person is paid is the amount society is willing to pay them and reflects the value society places on their work. Maybe our society is sick in that it spends billions upon billions of dollars on mass entertainment, but that's not the athlete's fault.

It's not an athlete's fault he gets paid enough to buy a yacht, either. And at least he's putting money back into the economy. You buy a yacht, you are feeding craftsmen, builders and engineers who make a living off of building those yachts, as well as a whole host of support services, such as the guys who make the canvas, harvest the lumber and build the engines.

This is why the automakers were bailed out. Simply to keep the workers in the support services fed while the market stabilized. And said bail-out amounted not to a cash-dole out, but a loan, a loan which said companies have had to pay back over the past few years.

-

The level of their consumption looks egregious to you. But your consumption, with the ability to go on the internet and spend idle time there, to engage in expensive hobbies, and to enjoy a quality of life far above what most people can even hope to aspire to, is also pretty high compared to most people.

You give to charity. But what kind of charities do you give to? Do you give to enabling charities (education and microfinancing funds?) or do you give to charities that promote an untenable status quo?

 

[Danoff]

So the ideal distribution is what is asked for. I have a suggestion. People should get what they earn, and not get what they don't earn (unless it is a gift from someone who earned it). Sound good?