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A Theory on Economics

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jimmypage9209
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A Theory on Economics Jan. 23rd, 2013 @ 12:48 AM Reply

So I've come to believe that a crucial issue in today's American economics and how our business works in a way. Simple way to put it, majority of people expect too much money for the actual work they do. Case in point, a big business that manufactures whatever with multiple factories etc. The people in that factory do all the actual labor while the business leader does less work, obtains a heavenly sum of money, and takes time off the most. Most of our business's work this way in some shape or form

The worker always having aspirations to make more joins a union demanding more pay etc creating a false inflation of the product their making so we are paying for their aspirated lifestyle. As a guitarist I know there are korean made guitars that of the same quality sometimes even greater are half as cheap as "American Made" guitars without even lesser quality components.

So the gist is our business leaders get paid more than to last them lifetimes, our workers have a false sense of entitlement for what they actually do and are mad when someones willing to do it cheaper with more enthusiasm so we alienate them demonize them. While artificially increasing product value for a nostalgia effect. I am in no means of insulting anyone and I admit I'm generalizing but to me it does sound plausible.

Thoughts?

Feoric
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Response to A Theory on Economics Jan. 23rd, 2013 @ 01:50 AM Reply

At 1/23/13 12:48 AM, jimmypage9209 wrote: So the gist is our business leaders get paid more than to last them lifetimes, our workers have a false sense of entitlement

Who has a sense of entitlement here? The workers who want to bargain collectively, or the business leaders who want to earn more money for themselves at the expense of their workers?

science-is-fun
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Response to A Theory on Economics Jan. 23rd, 2013 @ 03:21 AM Reply

What you are describing is negotiation in the economy, commerce basically. Let's say a miller has to sell a kilo of flour for $1 to make a profit and a baker can only get flour at the next town by spending $2 per kilo, including transportation costs. That means the price has to be somewhere between $1 and $2, so they negotiate. The baker could say "I will only pay $1.01 and will buy flour from the next town until you cave", you might think the baker has the miller's balls in a vice grip but then the miller could say "i will just sell the flour with baking powder and encourage people to make their own bread instead of buy your bread that is overpriced due to your expensive flour, also I know you're in debt to the bank and need money fast, you can't afford the loss of business" and they could go back and forth, playing all the cards they have until the finally agree on a price. Replace the miller with a union selling labor and the baker as a business and you have a similar thing going on, just with different parameters.

actual labor

Labor alone isn't economically productive. If I spent 12 hour days juggling marbles I would be working very hard but that won't feed a family.

You also need to work smart in order to figure out how best to use your labor, that is what the manager does, most managers earn modest 6 figure incomes and they pay a lot of tax, save and invest most of it rather than spend it on luxuries which uses resources in the economy.

jimmypage9209
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Response to A Theory on Economics Jan. 23rd, 2013 @ 09:19 AM Reply

At 1/23/13 01:50 AM, Feoric wrote:
At 1/23/13 12:48 AM, jimmypage9209 wrote: So the gist is our business leaders get paid more than to last them lifetimes, our workers have a false sense of entitlement
Who has a sense of entitlement here? The workers who want to bargain collectively, or the business leaders who want to earn more money for themselves at the expense of their workers?

I'd hate to say the workers for morale reasons, and love to point fingers at big business leaders for exploiting workers, but it seems as if both. Just the American mindset of bigger is better, more is better, got to get it all it's about me mindset. Just like a major wood/timber company that laid off its workers and shut down it's factories during hurricane Katrina then created a false inflation for their own product so they can come back when there is a wood shortage and they can jack their prices on an already devastated population. Not taking LIFE into consideration, but just numbers...

jimmypage9209
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Response to A Theory on Economics Jan. 23rd, 2013 @ 09:22 AM Reply

Great Analogy, couldn't agree more with your definition of labor.

Camarohusky
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Response to A Theory on Economics Jan. 23rd, 2013 @ 12:46 PM Reply

It all boils down to power dynamics, in ALL economic transactions. Supply and demand is merely a factor in the dynamic, not the guiding principle.

The owner of a business has all the power. A worker has none. When the workers come together they can become more powerful than the management and the owners.

When the manager goes up against non-union workers, the manager has all of the power because the manager has the ability to fire. This power gets even bigger when the economy is down and the workers feel that there are no other jobs for them.

When the workers unionize they have the ultimate bargaining chi[ of a strike, which is expensive for the owner. The owner could either cave, deal ith the strike shortages, or completely fire the entire union, all at great cost.

In regular transactions, consumers often have little power and retailers often have a great deal of power. In many small towns you either shop at WalMart or you go hungry. You either buy gas or don't leave your home. The stores that know they have a monopoly, or a low level of competition, will intentionally gouge cutomers because they know there is nothing the customer can do about it.

SO, in a capitalist society, one's worth has actually wuite little to do with their actual productive value. It has far more to do with their ability to gain and use power to their advantage. Those with power do not need to have any worth at all, and those at the bottom are usually nowhere near worthless.

theburningliberal
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Response to A Theory on Economics Jan. 25th, 2013 @ 03:19 PM Reply

At 1/23/13 09:19 AM, jimmypage9209 wrote: I'd hate to say the workers for morale reasons, and love to point fingers at big business leaders for exploiting workers, but it seems as if both. Just the American mindset of bigger is better, more is better, got to get it all it's about me mindset. Just like a major wood/timber company that laid off its workers and shut down it's factories during hurricane Katrina then created a false inflation for their own product so they can come back when there is a wood shortage and they can jack their prices on an already devastated population. Not taking LIFE into consideration, but just numbers...

First, there are some industries I would agree with you. Food service and retail sales (like Wal-Mart) are one. Those jobs are low-skill, low-education jobs, meaning that any Joe Blow on the street can work there as long as they are physically able and have a reasonable level of competency in basic reading, writing and arithmetic. You'll also notice that these industries generally don't have strong labor movements attached.

On the other hand, though, when you start looking at other industries - especially ones that require professional degrees, but also ones where a lot of time and effort is spent learning the trade, like some types of construction, plumbing, pretty much any kind of mechanical work, and others - there is a reasonable expectation that, once you obtain a job in the field, you shouldn't have to work 2 other jobs to be self-sufficient at a minimum level. And considering these fields often involve knowledge and skill sets that are critical to our modern society (for instance, we need electricians who are able to understand not only the mechanics of how to wire building, but also the laws governing how buildings should be wired in order to use any kind of electronic technology), I would argue that not only is it their right to collectively bargain for living wages, but that others who lack that knowledge should (and generally are) willing to pay for those people to use their knowledge to their benefit. At that point, it just becomes a discussion between the provider and the recipient about what fees are reasonable to both parties, balancing the recipients desire to obtain the best service at the lowest cost with the provider's desire to provide services at a pay rate that matches their abilities, knowledge and general skill sets.

I will also agree with you that there are certain elements of business organization that lend themselves very well to the human greed motive. I would like to see different regulations enacted that encourage businesses to look at the human aspect of the people they employ, but I don't honestly see that happening.

leanlifter1
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Response to A Theory on Economics Jan. 25th, 2013 @ 03:33 PM Reply

Oh here we go another "Opinion" on Econ. Better get another cup of coffee for this one LOL.


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blitztactics07
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Response to A Theory on Economics Jan. 25th, 2013 @ 04:01 PM Reply

Current economic status of the US is indeed, in peril, and not the kind of "stable" situation in which the media tries to get into our skin. Yes, we do have an issue with people's expectations being overly massed under green papers, but it's already too late to fix that system. As more and more people are in debt, it is normal for others to expect more pay from work and other bacon bringing activities. What has the bailout plans actually spread out for everyone in the US? I don't think that much have changed, only with the fact that our debt ceiling is over the trillions mark. Yeah, trillions of dollars that we CAN'T pay back. Our economics cannot circulate properly because of the debt crisis that our government is currently trying to deal with. Like a blood clot.


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Feoric
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Response to A Theory on Economics Jan. 25th, 2013 @ 04:47 PM Reply

At 1/25/13 04:01 PM, blitztactics07 wrote: I don't think that much have changed, only with the fact that our debt ceiling is over the trillions mark. Yeah, trillions of dollars that we CAN'T pay back. Our economics cannot circulate properly because of the debt crisis that our government is currently trying to deal with. Like a blood clot.

It's actually the complete opposite, at least right now. Our debt is literally one of the world's safest investments.

leanlifter1
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Response to A Theory on Economics Jan. 25th, 2013 @ 05:00 PM Reply

At 1/25/13 04:47 PM, Feoric wrote:
At 1/25/13 04:01 PM, blitztactics07 wrote: I don't think that much have changed, only with the fact that our debt ceiling is over the trillions mark. Yeah, trillions of dollars that we CAN'T pay back. Our economics cannot circulate properly because of the debt crisis that our government is currently trying to deal with. Like a blood clot.
It's actually the complete opposite, at least right now. Our debt is literally one of the world's safest investments.

You are not making yourself look smart by saying that. Debasing of currency is not safe or smart. I am starting to believe you think that it's a smart idea that the military forces other countries to stay on the petrodollar and trade with debased worthless debt based currency aka USD. Debt is not an investment unless you are tyrant looking to enslave a nation and world.


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Warforger
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Response to A Theory on Economics Jan. 25th, 2013 @ 05:08 PM Reply

At 1/25/13 04:01 PM, blitztactics07 wrote: Our economics cannot circulate properly because of the debt crisis that our government is currently trying to deal with. Like a blood clot.

Government deficits don't really annihilate the economy. Government spending increases economic growth because it's constantly re-spent throughout the economy since it's an employer too. Deficits just mean that they have to take in more money, this is preferable because if you for example have a balanced budget amendment the government can't do anything if the economy tanks. The main damage it does is deficit spending increases real interest rates, which can be remedied through monetary policy but that's a whole other story. But having a huge debt doesn't mean say "Oh no I won't buy anything anymore!" it essentially doesn't do much and is much preferable than alternatives. Having to cut your budget during a recession means you'll make the recession even worse since you'll fire more workers or give some people less money. Deficit spending merely hurts investment, but it doesn't kill a recovery.

The only worry is if the government will default in its payments, which it probably won't, since if it did that the world economy would crash.


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Feoric
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Response to A Theory on Economics Jan. 25th, 2013 @ 05:08 PM Reply

That's a good point. Ever wonder that the T in T-bill stood for? That's right, TYRANT.

theburningliberal
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Response to A Theory on Economics Jan. 25th, 2013 @ 11:55 PM Reply

At 1/25/13 05:00 PM, leanlifter1 wrote: You are not making yourself look smart by saying that. Debasing of currency is not safe or smart. I am starting to believe you think that it's a smart idea that the military forces other countries to stay on the petrodollar and trade with debased worthless debt based currency aka USD. Debt is not an investment unless you are tyrant looking to enslave a nation and world.

You know, perhaps the biggest problem with your views is that almost no one else shares them. I'm sorry but there are too many factors working against your arguments, the flow of time being the least among them. On this I think we hold fundamentally different views about the nature of how economics should operate. The banking system as it operates today has been structurall unchanged now for almost two centuries, the only major difference is the loss of the gold standard which, to be honest, allowed for an unprecedented growth in the amount of wealth available to be claimed, which was a critical part of the American growth of the latter half of the 20th century. Without it, would there have been enough to go around? If not, what parts of our own history as we know may be different as a result of America's struggles to manage economically for the population growth we've had.

So while there may be drawbacks (which, by the way, continued to be minimalized as we continue operating the economic system we have, the repeal of Glass-Steagall was obviously a horrible idea, but I believe Dodd-Frank reinstated it (could be wrong - either way, new reforms are on the books to help prevent the incidents that caused the financial meltdown).

And given how debt has historically been used (outside of Iraq/Afghanistan/supply side economics), it has always been a benefit to our country. Following the Great Depression, public programs were set up as a social safety net to at least help people at the bottom feed themselves. Health insurance, social security, not to mention public works projects (new debt funded the highways that we drive on, as well as much of the infrastructure that we use today, ESPECIALLY the infrastructure supporting the world wide web. All of this added new debt. This is one reason why Republicans threatening to default on our national debt pisses me off, because they are disrespecting what much of that debt was used to build.

Not to mention, ever been on a payment plan for anything? Payment plans operate on the same principle of fractional-reserve lending. In this case, however, the collector is able to put on their books what would amount to revenue (the total price of whatever you bought/paid for), while allowing you to make lower payments over time. A small down payment is taken to initiate the plan, along with an agreement on how to pay the remaining balance over time.

I would also like to point out at this point that the whole "government spends too much" argument is bullshit - per capita government spending increased around 950$ for Clinton over his 8 years, rose 3,300$ over Bush's 8 years, but has declined 80$ over Obama's first term. That may not sound like a lot, but consider what that means - the out of control spending has been slowed, and has actually gone down. With another round of deficit reduction on the table, our debt as a percentage of GDP will fall, as well as slowing the raw growth of the debt itself. Over time, given the right sets of policies, that can eventually be made to go down, and I do agree with you that long-term survival for the US (I'm thinking 100yrs+ from now) could depend on managing our debt. But having debt is okay, as long as there is enough free money in the economy to keep it stable.

That's one of the reasons for the sharp increase in the deficit during 2007-2009. After 12 trillion dollars of wealth disappeared in a matter of weeks, there was that much less in assets to be taxed by the government, resulting a severe shortfall in tax receipts compared to prior years, combined with the deficits we incurred through spending.

I don't know if you've had those lessons drawn out for you, but there you go. Hopefully you learned something.

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Response to A Theory on Economics Jan. 26th, 2013 @ 12:27 AM Reply

I always hated this. What, exactly, is the proper ratio of workers wages to executives and the like? I mean shit, I'd be pretty royally pissed if I built a wildly successful international company from the ground up, and people think that the unskilled easily replaceable workers should make more and I should make less, but I also see the opposite side of it where there's the fat lazy fucker who milked the work and dedication of his workers who are the backbone of the company and he ends up paying them jack shit while swimming in a pool filled with gold bars


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Response to A Theory on Economics Jan. 26th, 2013 @ 04:27 AM Reply

In investment heaven? While serving for the country, and travelling different parts of the world we have bases in, I've learned that in today's world's economy, there's not a single safest country/market to invest in. And yes, to some people government deficit is a view of positive outlook towards the economy BUT this is also a failsafe method to make sure that investors don't panic; what're you going to do with all the workers' pay and other covering costs when corporate revenues decline? As a taxpayer like everyone else, I wouldn't want my tax moolah to be spent just to safeguard minority groups' interests.


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Response to A Theory on Economics Jan. 26th, 2013 @ 05:36 AM Reply

At 1/26/13 12:27 AM, RacistBassist wrote: I always hated this. What, exactly, is the proper ratio of worker's wages to executives and the like?

That depends on the type of business and what is "proper".

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Response to A Theory on Economics Jan. 26th, 2013 @ 06:16 AM Reply

At 1/26/13 12:27 AM, RacistBassist wrote: I always hated this. What, exactly, is the proper ratio of workers wages to executives and the like? I mean shit, I'd be pretty royally pissed if I built a wildly successful international company from the ground up, and people think that the unskilled easily replaceable workers should make more and I should make less, but I also see the opposite side of it where there's the fat lazy fucker who milked the work and dedication of his workers who are the backbone of the company and he ends up paying them jack shit while swimming in a pool filled with gold bars

There is a difference in merely making more money than the workers do (which they should of course) and hoarding absurd amounts of money when you are already set for life rather than giving workers who actually depend on the paycheck some more money or benefits. Also, since the workers are much more numerous and also part of the day-to-day of a company I think they should get some say-so on how things are ran. Most workers don't get to decide a damn thing even when it only effects them.


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Response to A Theory on Economics Jan. 26th, 2013 @ 11:30 AM Reply

At 1/26/13 06:16 AM, Cootie wrote: Also, since the workers are much more numerous and also part of the day-to-day of a company I think they should get some say-so on how things are ran.

No they should not. They should have some control over how their specific duty gets done, but within strict limits. The average burger flipper does not have the knowledge to know how to set prices, or where to buy the material from, or what type of upselling works best across the board. The average factory worker doesn't know how to sell their good to the consumer, purchase the raw materials, design the aerodynamics of the final product, and so on.

Most workers don't get to decide a damn thing even when it only effects them.

That is the only case in which most workers should ever have the power to decide. Let the experts decide how to run the company and the workers decide how to work.

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Response to A Theory on Economics Jan. 26th, 2013 @ 11:38 AM Reply

At 1/25/13 05:08 PM, Feoric wrote: That's a good point. Ever wonder that the T in T-bill stood for? That's right, TYRANT.

Nobody cares about synthetic ideals and words that have no respect for anyone or anything but maximizing profit.


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Response to A Theory on Economics Jan. 26th, 2013 @ 11:54 AM Reply

At 1/25/13 11:55 PM, theburningliberal wrote:
At 1/25/13 05:00 PM, leanlifter1 wrote: You are not making yourself look smart by saying that. Debasing of currency is not safe or smart. I am starting to believe you think that it's a smart idea that the military forces other countries to stay on the petrodollar and trade with debased worthless debt based currency aka USD. Debt is not an investment unless you are tyrant looking to enslave a nation and world.
You know, perhaps the biggest problem with your views is that almost no one else shares them.

Perhaps if you take your narrow Nationalistic view of the world and expand it to include some morals and respect for Humanity first and not just American economics you will realize the bullshit you have been fed. Please don't insult me anymore as your propaganda will not fool me. Some ways you can prove to me how great your monetary system of economics is would be how it respects Humanity and natural rights as a whole as well as that which sustains us all. I hope I don't have to explain to you guy's just what is "That which sustains us all".

So while there may be drawbacks (which, by the way, continued to be minimalized* as we continue operating the economic system

There you go trying to mitigate the problem.


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