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Author Topic: Who earns what?
JoshuaD
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quote:
Red: Q.E.D.
I'm not sure what you mean by this.
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Greg Davidson
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I personally think that an income tax system that puts a 36% burden on 390K and a 25% burden on 40K has been tilted too much in favor of those with higher income. Does anyone want to argue the opposite case, that this is a fair an appropriate distribution of the tax burden?

And note that in our case we didn't use common tricks like having capital gains taxed at only 15% (because essentially we don't have any) - some in the financial industry can legally shuffle the books so that their compensation comes out as capital gains, and thus could be paying closer to 26% on 390K

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JoshuaD
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Greg: I don't know. Like I said, I consider what I get from the government for less than a quarter of my year's work a bargain. Safety, roads, an economy, rule of law.. the list is long and impressive.

When I made 26k a year (a few years ago when I worked at UPS), IIRC, I effectively didn't pay any income taxes. I'll check my old income tax returns and post the numbers when I get home. I think I took home around 22k a year, and the 4k was for stuff like medicare and unemployment.

I don't mind that you make a ton of money and get to keep 60% of it. You're paying a lot more in raw dollars than I am for the same benefits. I agree that your tax rate should be higher, but I don't know that anything over 40% is necessary or fair.

I absolutely agree with your implied assertion that the tax tricks need to be fixed. Our tax system needs to be simplified to avoid all the loopholes people take advantage of to pay lower tax rates. We need to stop treating it as a way to create incentives, and just use it as a method of raising revenue.

[ December 24, 2013, 03:17 PM: Message edited by: JoshuaD ]

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JoshuaD
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To be clear: I think my number is a bit less than 25% (before any outgoing taxes like sales taxes). I haven't filed for my refund, and I'm pretty sure I over payed significantly this year.
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Pete at Home
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quote:
Originally posted by G3:
quote:
Originally posted by Pete at Home:
"  Who's business is it what anyone's compensation is and what they do to earn it?"

Anyone to whom it is asserted that one "earned" that money. if you make a search in of fact you may be called on to support it. I'm sorry if you find thatt oppressive.

What do you make? What do you do to "earn" it?
I have two jobs.

At one, I "make" nothing, but receive the use of a trailer on the property where I am caretaker, plus the use of a cell phone with some internet, plus food which the property owners bring weekly. I do maintenance, mow fields, keep paths clear, and drive off trespassers during hunting season.

At another job, which I just started last week, I get paid $10/hr to do legal research and billing. This morning my boss told me that the bills that I prepared were paid immediately by a client who usually fights over line items, and that consequently the business was able to make payroll thanks to my efforts. I think that I can improve what this business takes in substantially over the next few months, and that I'll get a raise... which is why I offered to work for so little. I'd been discouraged, unable to find work even at a gas station or grocery store nearby because I have no car.

My new job is a 90 minute walk away.

I also get a big chunk of money tossed at me by the federal government at "tax" season. I do nothing to earn that money. I never voted to get that strange bonus. This year I'll probably use it to pay the $300 for SR22 insurance to get a driver's license, and for the down payment on a car, in order to improve my job option.

(I discovered to my dismay in 2012 that pushing a car while intoxicated is considered DUI, a rule which put me into the ugly world of SR22 insurance.)

I'll also use some of the "tax" return to pay to take the 2014 Georgia Bar Exam.

[ December 24, 2013, 04:25 PM: Message edited by: Pete at Home ]

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LetterRip
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Pete,

there are a lot of effed up DUI laws, that seem to have no purpose other than to screw people over.

DUIs should be based on the risk of harm to the public.

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Pete at Home
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Agreed, LR.

G3, as an independent contractor I pay double FICA on my $10/ hour. I have to pay child suuport on 3 kids, 2/3 of which goes TO THE STATE which has taken my 2nd son and has just told me they don't don't want to give him back to me because I live in a trailer. (And my ex can't handle him). So the state basically witholds my son BC I am poor, and will charge me for his upkeep per BillNewt welfare reform.

[ December 24, 2013, 07:56 PM: Message edited by: Pete at Home ]

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Pete at Home
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Oh and since I am an independent contractor, I don't get overtime if I'm ever luck enough to get more than 40 hrs in a work week.
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Charles in Charge
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Sorry if I'm a bit late to the conversation.

Wal-Mart has both positive and negative effects. No one has really mentioned any of the positive effects. Here are a few:

1) Wal-Mart reduces grocery food prices by 15-30%, with the largest reductions going to low income households. This effect saves households something like $40 billion per year. ($150 food budget/month * 12 months * 20% * 100 million households). study

2) It provides the world's poor with access to developed markets. A rough estimate from 2006 suggested that WalMart was raising 36,000 poor Chinese out of poverty every month. That's about half a million per year. link

3) The company has mastered logistics. It's response to Hurricane Katrina was probably faster and more effective than FEMA's. story

The Walton family probably isn't particularly virtuous. For all I know they drown puppies in molten gold. But the company they control has produced a huge amount of value to the world. If one of the side effects of raising millions of people out of poverty is that a few people become incredibly wealthy I can live with that.

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Pyrtolin
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quote:
I do nothing to earn that money.
You work, you raise children, you try to be a good citizen. Those are valuable community services, not nothing. Even more to the point, you detailed the ways you plan to use it to become more productive. That is also not nothing- in fact that is exactly what justifies such a community investment in you and others at your income level. Some may not pan out quite as well, but that's how investment goes, even if only a small fraction of people manage to use it to break out of the type of situation you're in, the long term benefits make the investment worthwhile, especially considering that, at the worst, if you do nothing but spend it, you've at least employed the people that worked to provide the things you spent it on and made it profitable for people with resources to invest them in providing you with things; even those, in and of themselves, are valuable behaviors, as markets cannot function properly without consumer input to direct them.
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Pete at Home
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Charles: has Walmart raised more people from poverty than it's plunged into it? This seems as wishful thinking as what you said about the PRC.

Pyr, I agree that I plan to use the money in a way that makes me more useful to society, and that I am probably not alone in that. But that's not the same as earning it. And I would be getting the same tax return if I was a drunken child beating degenerate gambler. I can sympathise with G3's reservations with that largesse. I would not scream unfair if it was taken away from me.nevertheless, I am grateful for it, and will use it the best way that I can.

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Pyrtolin
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You don't earn an investment- investments are made against the potential for future behavior that will return value.

quote:
I would not scream unfair if it was taken away from me.
You would be poorer twice over without it. Not only would you not have the funding you need to help improve yourself, but there would be fewer opportunities for you to find productive employment and less ability to pay those that do manage to secure it.

Even leaving aside looking at it an investment, your behavior has little to do with it, and only suggests that it's good that we make some legal effort to prevent such abusiveness. At the very worst, you earn it by your service as a minor procurement official when you choose to spend it. that action alone justifies paying you a baseline wage, rather than trusting some central planner to determine what they believe you most need, purchase those things for you and send them to you as a form of support. The only way someone could fail to earn the money at that baseline level is to withdraw it all and shove it under a rock somewhere where it provides no production signals at all to the market.

You spend the money, even completely wastefully, and you put other, more productive, people to work, leaving only yourself at the short end of the stick for your lack of foresight.

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Charles in Charge
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quote:
Originally posted by Pete at Home:
Charles: has Walmart raised more people from poverty than it's plunged into it? This seems as wishful thinking as what you said about the PRC.

What do you consider poverty? How direct of an action constitutes plunging?

If you clarify what you mean I'll take a stab at some rough numbers to answer your question.

Just for fun I'll provide my own answers and run through the math. I consider poverty to be an after-tax income of $800/year (roughly twice the per-capita income of China in 1950). I consider "plunging into poverty" equivalent to direct action such as stealing someone's savings, breaking their legs so they can't work, committing fraud to get them fired, etc...

By this standard I think WalMart has plunged at most thousands of people into poverty, mostly by killing them in workplace accidents.

As for raising people out of poverty, WalMart imports about $30 billion worth of stuff from China. Today's typical urban Chinese factory worker earns $2.85/hour. Assuming 60 hours / week that's about $9,000/year. assuming that labor costs represent half of total costs that translates to over 4 million Chinese jobs (roughly 4% of Chinese manufacturing employees which seems reasonable). So I'd say they've raised at least 4 million people out of poverty by directly or indirectly employing them.

But I'm sure you'll have your own definitions which will lead to a different answer. In fact, I won't be surprised if your answer ignores those 4 million Chinese workers completely just as my answer ignores the Americans you're probably concerned about.

As for my wishful thinking about the PRC - what do you disagree with? China has gone from $400/year in 1950 to $9,500/year in per-capita income with a population of 1.35 billion. That's a 60x increase from $218 billion to $13 trillion in total annual income. That seems pretty remarkable to me. Note that I don't give the government itself much credit for that increase since they mostly just stopped doing terrible things to their own people.

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TomDavidson
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quote:
I consider poverty to be an after-tax income of $800/year
Is that a typo? Did you mean "per month?" Or are you suggesting that we should judge American poverty by Chinese incomes?
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Charles in Charge
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quote:
Originally posted by TomDavidson:
quote:
I consider poverty to be an after-tax income of $800/year
Is that a typo? Did you mean "per month?" Or are you suggesting that we should judge American poverty by Chinese incomes?
Not a typo.

I tend to think of poverty relative to the global income distribution (using purchasing power parity to account for cost of living differences). Why don't you? Do you think someone making $20,000/year in America is actually worse off than someone making $1,000/year in China?

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Charles in Charge
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As a reference, someone making $23,500 (the official poverty line in America quoted in the original article) is earning more than 80% of the world's population.
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Pete at Home
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quote:
Originally posted by Charles in Charge:
As a reference, someone making $23,500 (the official poverty line in America quoted in the original article) is earning more than 80% of the world's population.

Such blithe numerical masturbation does not affect your ability to get fed, adequate housing, heating, and medical care where you are, Charles.
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Charles in Charge
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quote:
Originally posted by Pete at Home:
quote:
Originally posted by Charles in Charge:
As a reference, someone making $23,500 (the official poverty line in America quoted in the original article) is earning more than 80% of the world's population.

Such blithe numerical masturbation does not affect your ability to get fed, adequate housing, heating, and medical care where you are, Charles.
I stand by the assertion that someone earning $23,500/year in the US has better access to food, housing and medical care than 80% of the world's population. If you can show me how that's wrong then I'll have learned something.

The whole point of using purchasing power parity is to account for differences in such costs in different areas of the world.

[ December 26, 2013, 11:48 PM: Message edited by: Charles in Charge ]

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TomDavidson
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quote:
Do you think someone making $20,000/year in America is actually worse off than someone making $1,000/year in China?
No. But the reasons the American probably has it better in that scenario are unrelated to his personal income.
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Charles in Charge
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quote:
Originally posted by TomDavidson:
quote:
Do you think someone making $20,000/year in America is actually worse off than someone making $1,000/year in China?
No. But the reasons the American probably has it better in that scenario are unrelated to his personal income.
Sure, income is a pretty rough measure to determine how good someone's life actually is. But despite it's shortcomings it's one of few objective measures we have.

I'm still curious why you think we shouldn't compare Americans to the rest of the world, using whatever your preferred measure is. 15% of the world lives on less than $800/year or $2/day. I consider them poor. I have a hard time using the same term to describe someone who makes 30x that much, which would be $23,500/year or $64/day.

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TomDavidson
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Surely you recognize that when discussing poverty and class in America, we are comparing Americans to each other, yes?

Surely if we cannot call the poorest Americans "poor," then the word "rich" is ridiculously, laughably insufficient to describe the richest Americans. What would you prefer to use for them?

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Charles in Charge
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quote:
Originally posted by TomDavidson:
Surely you recognize that when discussing poverty and class in America, we are comparing Americans to each other, yes?

Surely if we cannot call the poorest Americans "poor," then the word "rich" is ridiculously, laughably insufficient to describe the richest Americans. What would you prefer to use for them?

Ignoring the rest of the world in a discussion of WalMart's positive and negative effects seems silly unless you actually don't care about the effects on non-Americans. Patriotic masturbation as Pete might say.

Also, I prefer percentiles when comparing wealth, income, etc... That's one thing OWS got right. And yes, the America's top 1% are "ridiculously, laughably" rich.

[ December 27, 2013, 01:26 AM: Message edited by: Charles in Charge ]

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AI Wessex
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"But despite it's shortcomings it's one of few objective measures we have."

It's not objective, it's numerical. And it means nothing except when compared to the costs of the items it buys.

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Pete at Home
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quote:
Originally posted by Charles in Charge:
quote:
Originally posted by TomDavidson:
Surely you recognize that when discussing poverty and class in America, we are comparing Americans to each other, yes?

Surely if we cannot call the poorest Americans "poor," then the word "rich" is ridiculously, laughably insufficient to describe the richest Americans. What would you prefer to use for them?

Ignoring the rest of the world in a discussion of WalMart's positive and negative effects seems silly unless you actually don't care about the effects on non-Americans.
It might alternately mean that we recognize that we don't understand those effects. As opposed to blithely assuming that dollars going to Chinese sweatshops and prisons actually make lives on the whole better for the poor there, rather than solidifying the grip of their oppressors.

I don't think that either of us has sufficient information to show definitively that Walmart has made things better or worse for the poorest Chinese. If I'm wrong and you can so demonstrate, then by all means dish, Charles.

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Pete at Home
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If I understand Charles' mythology, the Waltons are playboy robin hoods who rob the poorest Americans and give to the Poorest Chinese, padding their own fortunes as they do so, and that's a good thing. They should be commended. Have I understood you, Charles?

My response is that the analysis is factually as well as morally deficient.

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Charles in Charge
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quote:
Originally posted by AI Wessex:
"But despite it's shortcomings it's one of few objective measures we have."

It's not objective, it's numerical. And it means nothing except when compared to the costs of the items it buys.

What's your preferred measure Al?

I agree income should be compared to the costs of the items it buys. This is exactly what it means to adjust for purchasing power parity. Which, of course, the the data sources I use all attempt to do.

I don't know why everyone thinks this is a clever insight that destroys my argument. It's an obvious issue that has been well (though certainly not perfectly) addressed by the studies that measure global income.

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Charles in Charge
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quote:
Originally posted by Pete at Home:
If I understand Charles' mythology, the Waltons are playboy robin hoods who rob the poorest Americans and give to the Poorest Chinese, padding their own fortunes as they do so, and that's a good thing. They should be commended. Have I understood you, Charles?

Sadly no.
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Pete at Home
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Again, Charles, you fail to take into account the historical benefit that a prosperous America had provided the world, in terms of peace, technology and generosity. An America with economic hope doles out far more largesse than you can reasonably expect to trickle down from the laps of Walton playboys into hungry Chinese mouths. Not to mention the collateral damage to China's neighbors from enriching the PLA.
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JoshuaD
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Charles: It's not at all clear to me what your point is.

The words you typed seem to me to say that, ultimately, because the third world is developed so far behind us, we can't look at systemic economic problems at home.

I don't believe that's what you mean. Could you make your point more clear?

Particularly, can you tell me why China's relative level of poverty is important when we're discussing whether Walmart decreases or increases the wealth, prosperity, happiness, and upward mobility of its employees and America at large?

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Pete at Home
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Let Walmart heart your vegetables because there are hungry people in China. All very logical.
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Charles in Charge
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quote:
Originally posted by JoshuaD:
Charles: It's not at all clear to me what your point is.

The words you typed seem to me to say that, ultimately, because the third world is developed so far behind us, we can't look at systemic economic problems at home.

I don't believe that's what you mean. Could you make your point more clear?

Particularly, can you tell me why China's relative level of poverty is important when we're discussing whether Walmart decreases or increases the wealth, prosperity, happiness, and upward mobility of its employees and America at large?

We have gotten a bit into the weeds. Let me try to tie back to the original question, which was whether we should forcefully take the Walton family wealth.

If the wealth is simply ill-gotten gains generated by "rob[bing] the poorest Americans", then that strengthens the case for taking it away.

This leads naturally to the question of how Walmart generates that wealth and whether its net effect is positive or negative.

My initial point was that Walmart generates some very large positive effects in the world. I laid out three ways it does so, one of which was how it creates large benefits for a large number of Chinese workers.

The Chinese comment generated its own discussion on the nature of global poverty. And, as you point out, once you add poor Chinese workers who work 60 hours/week for $2.85/hour it becomes harder to paint American workers who work 40 hours/week for $9 or $11/hour as victims. But this wasn't my original intent. I do think the welfare of American employees of Walmart is a valid issue to consider when determining what benefits and costs Walmart creates. I just don't think it's the only issue.

To sum up, I assert that Walmart creates enormous net value. This implies we should be less eager to confiscate the portion of that value captured by the Walton family. A large chunk ends up with American consumers. Another large chunk ends up with Chinese workers.

Is that clear?

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Charles in Charge
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quote:
Originally posted by Pete at Home:
Again, Charles, you fail to take into account the historical benefit that a prosperous America had provided the world, in terms of peace, technology and generosity.

This is a good point. A large part of the economic gains in China came because of economic liberalization which was inspired in part by America's success.

On its own this liberalization would have led to large gains in human well-being. I think additional gains were possible because China gained access to world markets. This is where large international companies, such as Walmart, played a critical role as they helped build the business models, supply chains, factories and expertise within China that connected Chinese workers with international markets.

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Charles in Charge
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quote:
Originally posted by Pete at Home:
Where a public corporations has multiple tiers where the higher-tiered stock is limited only to family members, the percentage of the corporations' employees and/or contractors whose regularly scheduled pay would qualify them for on food stamps, is added to the capital gains tax, and all exemptions are prohibited with respect to gains [/QB]

Why don't you include private companies in your proposal? Why wouldn't the public companies you target just transition to private ownership?

Assuming they don't switch to private ownership, your proposal would raise the cost of employing low skilled workers. Companies would probably respond by hiring fewer such workers and reducing other benefits, such as working conditions, for the remaining employees. Do you think that's an acceptable trade-off?

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Pete at Home
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quote:
Originally posted by Charles in Charge:
quote:
Originally posted by Pete at Home:
Where a public corporations has multiple tiers where the higher-tiered stock is limited only to family members, the percentage of the corporations' employees and/or contractors whose regularly scheduled pay would qualify them for on food stamps, is added to the capital gains tax, and all exemptions are prohibited with respect to gains

Why don't you include private companies in your proposal? [/QB]
Actually my proposal was even more narrow than public companies. Talking specifically about double-tiered companies enables this specifically egregious abuse, creating a division between rich and poor that is literally Pharonic, creating a dynasty of playboys living off the sweat of others, separate from even the regular investment and management of the business that sustains their profligate living.

Double-tiered companies aren't always so abusive, e.g. Ford Motor Company also has the double-tiered stock but the family hasn't Waltonized, still works the company.

I target public companies because to take a company public you have to agree to a special far more restrictive set of rules to get that huge benefit. I'm far more accepting of imposing harsher rules in that situation than tweaking with private companies. Smaller companies are going under, and that hurts the middle class that is the heart and soul of the culture. Smash the middle class and America ceases to be generous and productive and kind. And then the whole world suffers.

Don't kill the goose that lays the golden eggs.

quote:
Companies would probably respond by hiring fewer such workers and reducing other benefits, such as working conditions, for the remaining employees.
Assuming that's practical.

quote:
Do you think that's an acceptable trade-off?
I don't. If I thought that my proposal would actually cause that to happen on a large scale, I would not have made the proposal. I certainly don't think it would happen within the narrow dual-tier public company whose scope I narrowed it to. If I applied it to private companies, as you suggest, then your prediction would be far more likely. Which is another reason to not apply it to private companies.

WalMart could not reasonably afford to hire fewer low-skill employees, and it already has a problem retaining mid-level management; it can't afford to lower work conditions for them.

Dual tier stock companies are empires built to stand the test of time.

[ December 27, 2013, 11:35 PM: Message edited by: Pete at Home ]

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Pete at Home
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quote:
Originally posted by Charles in Charge:
The Chinese comment generated its own discussion on the nature of global poverty. And, as you point out, once you add poor Chinese workers who work 60 hours/week for $2.85/hour it becomes harder to paint American workers who work 40 hours/week for $9 or $11/hour as victims. But this wasn't my original intent. I do think the welfare of American employees of Walmart is a valid issue to consider when determining what benefits and costs Walmart creates. I just don't think it's the only issue.

To sum up, I assert that Walmart creates enormous net value.

The trouble is, it doesn't "create" such value; it steals it. Walmart's $9/hr American workers (whose work is essential to the survival of the Chinese jobs you speak of) are subsidized by the US welfare system.

Walmart thus steals from the American taxpayer and only a very small portion of that trickles down to your Chinese workers. It would be literally cheaper for America to take the money right out of its' budget and put it into the pockets of those Chinese workers than to subsidize all those American Walmart employees to live on sub-subsistence level wages, while lining the pockets of the Waltons and a few hundred Chinese bureaucrats on the way.

And like I said, an America with a healthy prosperous middle class has in the past shown itself to be extremely generous. The stuff we did in the late 40s and early 50s during the heyday of the American middle class boom was unprecedentedly generous; made the modern Swedes look like grinches in comparison.

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" Let me try to tie back to the original question, which was whether we should forcefully take the Walton family wealth."

Not how I framed the question! I did not say take away what they have, but rather stop subsidizing Walton Family profits.

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Charles in Charge
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quote:
Originally posted by Pete at Home:
quote:
Originally posted by Charles in Charge:
To sum up, I assert that Walmart creates enormous net value.

The trouble is, it doesn't "create" such value; it steals it.
[Inigo Montaya Meme]Steal. You Keep Using That Word, I Do Not Think It Means What You Think It Means[/Inigo Montoya]

Seriously, how are you defining steal in this context?

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Charles in Charge
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quote:
Originally posted by Pete at Home:
quote:
Originally posted by Charles in Charge:
To sum up, I assert that Walmart creates enormous net value.

The trouble is, it doesn't "create" such value; it steals it. Walmart's $9/hr American workers (whose work is essential to the survival of the Chinese jobs you speak of) are subsidized by the US welfare system.
The consumer surplus generated by Walmart is estimated to be $284 billion a year. That's several times the size of the entire Food Stamp program. There's a lot more value created than could be stolen.
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quote:
Originally posted by Pete at Home:
And like I said, an America with a healthy prosperous middle class has in the past shown itself to be extremely generous. The stuff we did in the late 40s and early 50s during the heyday of the American middle class boom was unprecedentedly generous; made the modern Swedes look like grinches in comparison.

Your nostalgia seems turned up a bit high. Do you think the median family is worse off today than the median family in the 50s?

What's your best guess of how the incomes of the two families compare? their health?

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Read more carefully. I am not nostalgic for where we were in the 40s and 50s, but for the direction we were heading in.

Of course families were not better off then. But prosperity was growing among the middle class, hope was high, and America was consequently more generous. Spent a greater proportion of our wealth helping the world community out of the goodness of our hearts than the nickles and dimes that you cheer about trickling down to a few poor Chinese as the unintended consequence of Walton family self-enrichment.

Your man Mao was the primary reason that the poor Chinese whom you claim to care about are not living in a better world created by Western involvement, like, say, Taiwan, South Korea, or Singapore.

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