[quetzalcoatl]

It turned out to be piling on, but my intention was comic diversion.

[Drlee]

I know. I took it that way.

[Alchemy]

I have noticed that workers who produce ten times the product of their peers only make three to four times as much as their peers. Is this expected in capitalism? Why does this happen?

This is especially true in the case of the manufacturing sector and specifically countries like China and Taiwan. Its also the reason why trade wars between countries are rife. The interesting thing about China is that there are claims that they have reached the Lewis turning point, when it runs out of access to a cheap labour reserve at a near constant real wage has gained currency.

[Truth To Power]

Because we shouldn't foster social inequality among the working class, so they all should receive more or less the same wage in spite of how much they produce.

He who wishes equality without tyranny wants what never was, and never will be. Enabling your anti-justice, anti-liberty parasitism will simply lead directly to the Soviet system: "We pretend to work, and they pretend to pay us."

I don't know why a comrade would want to destroy the brotherhood and friendship among workers by stimulating greediness and jealousy.

Well, comrade, some of us understand that greed and jealousy are part of the human condition, and rewarding people commensurately with their contributions does not stimulate them. Greed is excessive desire for more than one needs or deserves (NOT a desire to deserve more than one has), and rewards commensurate with productive contribution simply secure workers' just deserts. Jealousy comes from a perception of injustice, and evident justice offers no occasion for it.

Sorry, but you can't reduce greed and jealousy by Procrustean egalitarianism; you can only divert them into even more destructive channels. Competition to be more productive than one's brother worker is a positive-sum game that enriches society. It is diverting the competitive urge into other forms of competition -- for status, for privilege, for political power, for undeserved wealth -- in negative-sum games that destroys the brotherhood and friendship among workers.

The real answer lies in individual situations.

No, the real answer lies in understanding land.

The employer must pay a landowner for access to the publicly created economic advantages that make it possible for the worker to be so much more productive. While this excess seems to be his product, it is actually produced by the services and infrastructure government provides, the opportunities and amenities the community provides, and the physical qualities nature provides. The landowner takes it, but the worker hasn't earned it any more than the landowner. The problem is that the worker is taxed to pay for the government services and infrastructure that his employer then has to pay the landowner for. The productive sector of the economy must pay for government TWICE so that landowners can pocket one of the payments in return for nothing.

Moreover, the worker must pay a landowner for a place to live that enables access to the employment opportunity that allows him to make enough money to pay the taxes that are then given to the landowner, too. So the employer has to pay the worker enough to enable him to support both the government and the landowner, as well as himself. Drlee has at least a superficial understanding of this:

Sometimes wages are driven by local economies. I know one person who was transferred from San Francisco to Arizona and allowed to keep her San Francisco wages. She earns about four times what the Arizona hires earn. For now anyway.

The short answer is that most wages are driven by job description and prevailing wages rather than productivity.

No, they are driven by landowner privilege and the taxes that support it. Market wages are equal to the productivity of labor ON MARGINAL LAND, as all the rest of the worker's production is taken by landowners in rent. Once you understand landowner privilege, everything else falls into place.

[Drlee]

No, the real answer lies in understanding land.

You really need to stop studying to be a on-trick pony.

[Truth To Power]

No, the real answer lies in understanding land.

You really need to stop studying to be a on-trick pony.

When there is an elephant in the room, and everyone else is ignoring it, or insisting it is a wall or a billiard table, or indeed may even have found some way to make themselves unaware of it, it is not a "trick" to point it out as the cause of the broken furniture and demolished ceiling, and the source of the gamy smell and the pile of elephant shit on the floor. It is just honesty -- and moreover, it is THE ONLY WAY to be honest.

All the greatest feats of dishonesty in human history have been performed to prevent people from understanding land. And they obviously worked.

[Ummon]

Littlefinger is clever, but rather too sleazy and untrustworthy for my liking. I'm a Stannis man all the way - he is a harsh and inflexible man, but with a strong sense of justice. It is this sense of justice, of course, which makes him such a terrifying figure to everyone else. For most people, there is nothing more terrible in this world than justice, mercilessly delivered. Apart from having one's grammar corrected, of course.

Everything is a joke because I am not serious. I will never do the work necessary to have the mind of one of the great intellectual and creative men I admire, therefore you are a ridiculous joke and your are funny because I am 'better' than you.

[Senter]

I have noticed that workers who produce ten times the product of their peers only make three to four times as much as their peers. Is this expected in capitalism? Why does this happen?

"Peers"? Who are "peers"? Maybe you could use a more descriptive term that indicates the relationship of the person to the means of production, like "worker" or "manager" or "business owner"?

[Senter]

I have noticed that workers who produce ten times the product of their peers only make three to four times as much as their peers. Is this expected in capitalism? Why does this happen?

As was said above, all economies utilize pay scales of some sort. But let's break it down for the U.S.: The form of economy dictates most everything including pay scales. Under capitalism there is a tendency to pit worker against worker and so we have a range of wages from the minimum wage (or less) to that of top paid workers, like some managers, top engineers, those who accept greater risk while performing specialized tasks, etc.

But dwarfing all that is the difference in income between the average middle class worker and the top 1%. A few short years ago that difference was such that the top 1% was raking in 90% of all gains in income as their average income continued to shoot skyward relative to that of the middle class average as seen >here<.

Most people think income disparity has gone too far and should be corrected. I am among those people. Such extreme income inequality is damaging to the economy and to the majority of people, and before someone objects that I want to "steal rightfully earned income from those who earned it with their hard work and great intelligence and redistribute it to me", let me point out that everything that happens in an economy happens due to laws. Law determines it all: tax level, trade laws, the primary obligation of a corporation (earning income for shareholders today), minimum wage, corporate law, etc, etc, etc. And among the main ones that have allowed for the current level of disparity is income tax law.

This extreme disparity began developing when the top tax bracket was reduced below 50% and offshore bank accounts were allowed to be tax-free and regulated by the host country.

Probably 99.999% of Americans would oppose laws that funneled 100% of all income to the top 1%. In fact, it is so obvious that the statement, alone, strikes one as being absurd. So how about 99.9% going to the top 1%? Still absurd? The point is that at some level the disparity becomes more acceptable to more and more people. So how should we decide what level is the "right one"? In a democracy, should it be when the level hits 51% acceptability? I submit that the current level of income disparity would fail that test miserably.

Laws need to change to bring it all back in line.

[Beren]

I think the short and blunt answer is that this is because the capitalist system, or class society itself, is in favour of the capitalists, or the ruling class, not the workers. The system is rigged indeed to enable the capitalists to pay less and less for each additional unit of productivity, so they can realise more profit. The system is so effective that many or most of the more productive workers don't even think of demanding to get paid according to their productivity. However, now it seems the ruling class will have to make concessions.

[Truth To Power]

I think the short and blunt answer is that this is because the capitalist system, or class society itself, is in favour of the capitalists, or the ruling class, not the workers. The system is rigged indeed to enable the capitalists to pay less and less for each additional unit of productivity, so they can realise more profit. The system is so effective that many or most of the more productive workers don't even think of demanding to get paid according to their productivity. However, now it seems the ruling class will have to make concessions.

Read my post above for a more informed perspective. The wealthy ruling class is the PRIVILEGED class, not the capitalist factory owning class. The capitalist factory owner does NOT pay less and less for each additional unit of productivity, that is impossible. He just pays more and more to the LANDOWNER for it, instead of the worker or the government and community that actually make it possible. This result is a mathematically inevitable consequence of the Law of Rent (q.v.). You will never understand anything about capitalism, wages, productivity, or anything else in the economy until you understand the role of land, I promise you. That is why neoclassical economics totally fails to understand them: it was created and designed from the outset to prevent understanding of the role of land in the economy.

[SueDeNîmes]

I have noticed that workers who produce ten times the product of their peers only make three to four times as much as their peers. Is this expected in capitalism? Why does this happen?

Impossible. In capitalism, competitive firms are price-takers and can sell all they can produce at the prevailing market price. If a worker were paid less than his marginal revenue product, another firm would poach him.

I can only imagine that you're talking about distortions created by labour unions and government.

Econ 101.

(.. )

[Saeko]

Impossible. In capitalism, competitive firms are price-takers and can sell all they can produce at the prevailing market price. If a worker were paid less than his marginal revenue product, another firm would poach him.

I can only imagine that you're talking about distortions created by labour unions and government.

Econ 101.

(.. )

Why? If they were to poach him only to pay him his entire marginal revenue product, then there would be no increase in profit. So why go through the trouble?

[SueDeNîmes]

Why? If they were to poach him only to pay him his entire marginal revenue product, then there would be no increase in profit. So why go through the trouble?

They, of course, wouldn't.

And even that is irrelevant since the first assumption is wrong for 90 odd percent of real firms anyway. The wage won't even tend asymptotically toward marginal revenue product (an alien concept to most real firms), but toward how little an unemployed would accept.

As folks with jobs in the real world know.

[Rancid]

Google has studied this before. Basically they say that pay doesn't reflect the 80/20 rule. That is, if you look at any company, 20% of the employees are creating 80% of the value/productivity. Yet, those 20% aren't paid all that much more than the 80%. Just a few percentage points more, even though they are responsible for the majority of the revenue that is being pulled in. Google is actually look at changing that up a bit, and paying the 20% much more to match up with what they are producing.

It will be interesting to see how that plays out.

[Saeko]

They, of course, wouldn't.

And even that is irrelevant since the first assumption is wrong for 90 odd percent of real firms anyway. The wage won't even tend asymptotically toward marginal revenue product (an alien concept to most real firms), but toward how little an unemployed would accept.

As folks with jobs in the real world know.

Oh ok, I missed the sarcasm.

[Truth To Power]

Maybe you could use a more descriptive term that indicates the relationship of the person to the means of production, like "worker" or "manager" or "business owner"?

How about "contributor of labor to production," "contributor of capital to production," and "idle collector of rents for land nature contributed to production"?

As was said above, all economies utilize pay scales of some sort. But let's break it down for the U.S.: The form of economy dictates most everything including pay scales. Under capitalism there is a tendency to pit worker against worker and so we have a range of wages from the minimum wage (or less) to that of top paid workers, like some managers, top engineers, those who accept greater risk while performing specialized tasks, etc.

Competition is the most effective and reliable stimulus to efficiency and excellence. The problem arises when most people have to compete, but a privileged few don't.

But dwarfing all that is the difference in income between the average middle class worker and the top 1%. A few short years ago that difference was such that the top 1% was raking in 90% of all gains in income as their average income continued to shoot skyward relative to that of the middle class average as seen >here<.

Because overwhelmingly, they are collecting rents, not contributing commensurately to production:

http://evonomics.com/they-dont-just-hid ... re-wealth/

Most people think income disparity has gone too far and should be corrected. I am among those people. Such extreme income inequality is damaging to the economy and to the majority of people, and before someone objects that I want to "steal rightfully earned income from those who earned it with their hard work and great intelligence and redistribute it to me", let me point out that everything that happens in an economy happens due to laws.

The laws that create privilege: land titles, IP monopolies, bank charters, etc.

Law determines it all: tax level, trade laws, the primary obligation of a corporation (earning income for shareholders today), minimum wage, corporate law, etc, etc, etc. And among the main ones that have allowed for the current level of disparity is income tax law.

True: income tax law means you are taxed according to what you contribute, and the money is given to the privileged for contributing nothing.

This extreme disparity began developing when the top tax bracket was reduced below 50% and offshore bank accounts were allowed to be tax-free and regulated by the host country.

No, making the tax rate on income from non-contributory rent seeking lower than the rate on wages of labor just made the injustice and disparity more blatant.

Probably 99.999% of Americans would oppose laws that funneled 100% of all income to the top 1%. In fact, it is so obvious that the statement, alone, strikes one as being absurd. So how about 99.9% going to the top 1%? Still absurd? The point is that at some level the disparity becomes more acceptable to more and more people. So how should we decide what level is the "right one"? In a democracy, should it be when the level hits 51% acceptability? I submit that the current level of income disparity would fail that test miserably.

But first, they would have to understand how it is being done to them. And they don't WANT to understand.

[Atlantis]

Why on earth should we accept fate and not fight? Even if the fight is futile. The fight to live is equally futile, we will all eventually die anyway, yet we fight on.

The destruction of the social consensus does have a price, sometimes an exorbitant price. Compared to that, differences in salaries really are irrelevant, especially if we do have collective bargaining and an open labor market.

[Potemkin]

The destruction of the social consensus does have a price, sometimes an exorbitant price. Compared to that, differences in salaries really are irrelevant, especially if we do have collective bargaining and an open labor market.

What social consensus?

The social consensus in Germany depends on the existence of a 'Mittelstand', the maintenance of good relations between workers and management, an education system geared to produce the best outcomes for the majority of the population, and a generous system of social welfare. None of these factors apply in either the UK or the USA, and I suspect in few other places either.

[Rugoz]

Google has studied this before. Basically they say that pay doesn't reflect the 80/20 rule. That is, if you look at any company, 20% of the employees are creating 80% of the value/productivity. Yet, those 20% aren't paid all that much more than the 80%. Just a few percentage points more, even though they are responsible for the majority of the revenue that is being pulled in. Google is actually look at changing that up a bit, and paying the 20% much more to match up with what they are producing.

It will be interesting to see how that plays out.

That sounds like nonsense. How do you even measure how much revenue an employee "pulls in".