"QWERTY was designed to keep keys on mechanical typewriters from jamming, Dvorak should be much faster."
"engage", "present", "be adapted"
Why do any of these require a technological solution? AFAICT these terms are still perfectly applicable to a brochure or a paragraph.
However, with the government's intervention in the housing market via easy, cheap loans, and all of the other nonsense that caused the last boom/bust cycle
Hahahaha yeah it was government intervention that caused repackaged subprime mortgages and credit default swaps. Pull the other one.
I'm not sure how this would "ensure all citizens are nudged about the poverty line." Could you elaborate?
Under the fair tax, nobody pays income or payroll tax at the time of exchanging labor for money. Everybody pays (a much higher than currently exists anywhere) sales tax when money is exchanged for goods or services. Every citizen who asks for one receives a $10k (or so) check from the IRS each year in lieu of reporting income tax and receiving a tax refund or accounting for a tax liability. Basically: every citizen receives a 10k stipend to account for poverty-level spending and for the switch from progressive tiered income tax to regressive flat sales tax.
Nick also talks a little bit about this idea that "demand" is what somehow generates wealth and creates jobs (OK, he doesn't say it quite like that, but it's clear that he thinks "we need more demand"). How does this work? How does simply wanting something create wealth?.... Producing things that people want is what creates a healthy economy.
Not simply wanting something, but wanting something, having the funds, and acting on it. The demand curve of econ 101 doesn't measure what people want, but what they are willing and able to spend. I want solar panels on my house: that doesn't mean I can just have them without taking a lot of other things into consideration. Minimum-wage worker X wants to feed and clothe his children, but he has to choose one or the other this month.
The market system is the only system which allows consumers to vote with their wallets
I completely agree.
Until the wallets are all empty.
Contributing to the economy means providing value to your fellow man by producing goods or services that he or she is willing to pay for.
Again, completely agree.
But my fellow man must be willing and able to pay for my goods and services. People are already, right now, willing to pay for more than they are able to afford. When more people are able to afford more goods and services, my contribution via production can increase to meet that demand.
Curious, how do you come to the conclusion that prices at fast food restaurants and discount retailers are "artificially low"?
Largely because of two factors:
a) employees of such businesses are not paid enough to meet their needs, and they do not feel capable of asserting their needs and demanding higher wages or benefits on an individual level because of the enormous power differential between minimum wage worker with a lifeline job at stake and $billions profit multinational corporation with nothing to lose.
b) their products are artificially food and artificially clothing. Imagine a minimum wage worker with $10 to spend on clothes this month, who needs a new pair of jeans. This worker can't afford to wait for 4 months to buy the $50 jeans that will last 10 years, so he buys the $10 jeans that will only last 1 year. This halves his economic efficiency. Similarly for food, with the added bonus of reduced nutritional value, leading to a vicious cycle of poor nutrition <-> poor decision making.
your definition of oligarchy is quite arbitrary
I concede this: I intended this word as colorful metaphor rather than a precise descriptor. Perhaps you would be more comfortable with s/oligarchy/cabal/g. Obviously corporate executives do not have -archy level governmental power over citizens.
How do you measure productivity?
I tracked it down; yes this graphic uses GDP to measure productivity.
There is this silly notion that public sector consumption should actually be counted as production. Since there is no objective way to measure public sector "productivity" (since it is not part of a market),
I don't follow. Does not the private sector produce goods and services for the public sector to consume? Granted: there is a problem with no-bid contracts and inflationary billing to the government. Granted: the public sector is anchored to political power instead of floating on the economic sea as the private sector does. But the public sector participates in many markets.
Yes, the government distorts markets. Ideally it does so in such a way as to enforce an accounting for externalities like pollution with impacts that would otherwise be ignored or at best delayed until after their deleterious effects have already caused harm, or to ensure equal opportunity through such actions as trust-busting. I don't know a better way to accomplish these important goals other than government. Free markets don't do it: monopoly is a natural tendency of an unregulated market. Free markets don't account for the commons until they are already tragic.
also it is quite common for the public sector to be horribly inefficient with its "funds".
Also granted. This is an interesting approach to that issue.
The next top markets are real estate (13% [of GDP]),
Surely new construction and remodelling (5% of GDP) count as productivity? I'm not so sure about rental income and particularly 'imputed' rental income...
the financial/insurance industries (8%), and health care (8%).
and I'm a little squigged by these, too. It seems that "Gross Domestic Product" doesn't measure 'what we produce' so much as 'how much money we move', which is perhaps not as useful for comparative analysis of income level over time, but IMO is still an extremely important metric. Currency is the blood of the economy; the economy is healthy when currency moves and circulates, regardless of who moves it. The more hands it passes through the better. The economy is unhealthy when the flow of currency is dammed or forced to recirculate in small segments.
I believe that raising the average wage will have a better impact on the economy as a whole than raising executive compensation.
Please please watch this video if you haven't. The most evocative part IMO, paraphrased: "I make 50 times as much as [laborer X] but I don't buy 50 pairs of pants, 50 cars, 50 meals for each one he buys."
You may believe that income inequality is a social ill, but forcing its removal only serves to destroy the coordination required for a properly function market, thus lowering everyone's standard of living.
I don't necessarily agree that limiting the income ratio by law is the right approach. I do believe that it is an important metric for determining how fair, free, and just our economy actually is.
What I propose is removing barriers to entry and other mechanisms of the state that cripple competition in the market, thus reducing productivity and everyone's standard of living.
I agree. What do you think about the Fair Tax, under which, as I read it: we tax consumption instead of income and profit, ensure all citizens are nudged above the poverty line, and encourage a strong business climate with drastically reduced business taxes.
Oh, also one thing I couldn't pass up: Have you ever wondered why the price of tuition is so damn high, relative to 1950? Could it possibly be that the ridiculous ease of gaining access to student loans has pushed demand, thus prices, through the roof?
Could be. Demand has also increased because the value of a degree has been inflated via clueless HR departments and hiring managers.
I wonder your thoughts on the other half of the figures I gave:
1950: $0.75/hour * 20 hours * 50 weeks = $750 wages
$42 * 12 months = $504 rent
2013: $7.25/hour * 20 hours * 50 weeks = $7250 wages
$602 * 12 months = $7224 rent
Average rent has moved from 2/3 of a part-time worker's minimum wage to nearly 100%. Note that my part-time figure is half-time, making rent in 1950 1/3 of a full-time minimum wage worker's income. That's the rule of thumb I always heard: spend no more than 1/3 your income on housing.
Minimum wage workers cannot follow that rule of thumb today.
Increasing the minimum wage, which you seem to be implying would be good, can only ever accomplish one thing: increased unemployment by those whose labor cannot fetch such a wage.
Increasing the minimum wage increases the supply of money across a wider base of consumers, who by definition can contribute more to the economy than fewer, richer consumers. Ref: Hanauer's talk still linked above. Think of crowdsourcing capital investment. Increasing the minimum wage will likely also increase the artificially low prices at fast food restaurants and discount retailers, which while it sounds scary I think would be a net benefit for our culture, economy, and health.
The ratio of CEO compensation to average worker compensation is now approximately 10 times its value in 1950. This is approximately commensurate with the average increase in the Dow average adjusted for inflation.
As I see it, the problem has nothing to do with a free vs. a coerced market. The problem is that the market of executive compensation is entirely divorced from the market at large. "Stockholders... vote... for whatever the management recommends no matter how poor the management’s record of accomplishment may be". This is what I mean by oligarchy: a few privileged elites have control over this smaller market without the essential feedback cycles that stabilize prices in the larger economy.
The issue is that the market value of labor has plummeted in relation to productivity and in relation to the value of top earners. In the 50s one could work part time at a minimum wage job and pay rent and college tuition and walk away with a degree free and clear. Today, just to pay rent, one needs roommates or more than one part-time minimum-wage job, let alone any ability to pay for education in order to get a better job.
$0.75/hour * 20 hours * 50 weeks = $750 wages
$42 * 12 months = $504 rent
$35 * 4 quarters = $140 tuition
$7.25/hour * 20 hours * 50 weeks = $7250 wages
$602 * 12 months = $7224 rent
$3917 * 2 semesters = $7834 tuition
I believe that raising the average wage will have a better impact on the economy as a whole than raising executive compensation. I believe that income inequality is a social ill that should be addressed through policy -- not by Marxian state capture of the means of production and not through Randian private hoarding of the means of production, but through a hybrid realistic approach like "all employees should receive stock options or profit sharing if executives do".
I recognize that there are other valuable factors of production. The provider of land can be compensated via rent; the providers of capital can be compensated via interest or dividends. The provider of managerial skills and social capital is compensated via a higher salary.
I dispute the assertion that managerial skill and social capital is worth 50 times the value of labor.
I dispute the assertion that executive pay is decided in a free market; the ecology of shareholders and executives more closely resembles a feudal oligarchy. At the very least the executive market is an entirely different market than the labor market, and I assert that it should not be so different.
Do you think the CEOs of today are 10x more effective than they were in the 60s? Why do you suppose that executive compensation, and in particular the ratio of compensation between executives and labor, has raised so drastically?
Yes the brain consumes 20 percent of calories at resting metabolic rate -- i.e. when nobody else is doing anything. The percentage goes way down when work is being done. For animals with smaller cortices than humans, the percentage is lower still. The important part of my analogy is that when the fingers are falling off you'd better find some more calories or redistribute the ones you have, or you will soon go under or offshore in a last ditch attempt to sew some more fingers on.
This is despite the fact that you will have to pay the maintenance and replacement costs of the lawnmowers from your own pocket.
Not exactly from my own pocket; it comes out of the profits of the company. This operating cost comes out before the $5 per yard.
... have no savings to boot from because of the 12:1 rules
Maybe the company would have some savings if I had planned a little better, or if I hadn't been so greedy taking $700 an hour for... doing what exactly? Owning 140 lawnmowers?
enjoying the fruits of their labor
Do CEOs labor 50 or even 12 times harder than janitors?
in the end, it is telling companies they cannot pay someone over a certain amount
No, in the end it is telling companies that they must pay all employees closer to the average amount. Companies may freely choose to raise the average instead of limiting the top outliers.
Companies succeed or fail as an organism and rely on the performance of every part.
Your philosophy is like saying the brain deserves 50 times more calories than the hands because it's smart enough to negotiate a better salary from the stomach. And that this continues to be morally correct even when the fingers are starving and falling off.
Obviously, government need not "slavishly enforce" conditions which are against the law.
Remind me, who is it that decides what the law says?
You are asserting that "more utilitarian" == "better". Did you intend to do so?
What is the discounted marginal value product that a CEO brings to a company?
I have seen no evidence that the salary of the CEO has any correlation with the success of a company. Nor have I seen evidence that past success is any better than random chance as a predictive indicator of future success by a CEO.
The ecology of CEOs and shareholders has more in common with feudal oligarchy than it does with free market economics.
Probably Entry of the Gladiators
Absolutely. So why is the DOJ involved?
Sure he could buy one, but the higher ups won't let him wear it at work.