Good, good, we're getting to the meat of the discussion here. In fact, we're in agreement over most of what you have to say. Let's take a look at some of the things you bring up in the last paragraphs though, where I think there is more to be said.
Now, my argument is that the people who provide the capital are getting an awful lot more than they used to get out of the arrangement, and the people who do the work are falling behind as a percentage.
First off, I will stipulate that this is actually happening, as you've said. The thing is, we have to examine if it is a bad thing and if so, we have to know why it happens before anyone can realistically propose changes intended to correct the problem.
If XYZ Inc has a natural economy of scale where there are no restrictions to entry into the market then there is no reason to begrudge whatever compensation anyone involved in XYZ receives, no matter how much of a difference there is between the least paid employee and the most paid. It is none of "the public's" business — literally. On the other hand, what if we have a tax and regulatory structure that disfavors smaller competitors with flatter hierarchies and distorts the nature of production and finance in ways that favor more layers of bureaucracy and management than would be necessary in a free market? What if we have a market regulatory structure that actually promotes immediate bottom-line stock-price thinking instead of long-term profitability for the firm? These are things that can be attacked and changed. They are distortions of the free market.
In contrast though, simply voting for government to redistribute wealth adds more distortions to the market and unleashes hosts of unintended consequences, some of which are not really visible, involving the forclosing of alternative arrangements that never happen or perverse economic incentives that are hard to trace out.
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Re: The nature of wages
Date: 9/4/11 21:23 (UTC)First off, I will stipulate that this is actually happening, as you've said. The thing is, we have to examine if it is a bad thing and if so, we have to know why it happens before anyone can realistically propose changes intended to correct the problem.
If XYZ Inc has a natural economy of scale where there are no restrictions to entry into the market then there is no reason to begrudge whatever compensation anyone involved in XYZ receives, no matter how much of a difference there is between the least paid employee and the most paid. It is none of "the public's" business — literally. On the other hand, what if we have a tax and regulatory structure that disfavors smaller competitors with flatter hierarchies and distorts the nature of production and finance in ways that favor more layers of bureaucracy and management than would be necessary in a free market? What if we have a market regulatory structure that actually promotes immediate bottom-line stock-price thinking instead of long-term profitability for the firm? These are things that can be attacked and changed. They are distortions of the free market.
In contrast though, simply voting for government to redistribute wealth adds more distortions to the market and unleashes hosts of unintended consequences, some of which are not really visible, involving the forclosing of alternative arrangements that never happen or perverse economic incentives that are hard to trace out.