An additional negative aspect of this mentality is that effort, rather than value, is praised.
Working hard should never be a goal. It should be a means to a goal.
Working hard should never be a goal. It should be a means to a goal.
(And btw., no, we're not where we are because of your grandparents' hard work. If your grandparents had anything to do with humanity's progress, it was ONLY through insight, not through hard work.)
How is this an argument against what ekianjo wrote? Yes, there has (almost?) always been a privileged upper class that had much more leisure than the masses. Still, the fact remains that living standards would have been lower had a majority of the population not worked their asses off.
Should the distribution of work be adjusted? Absolutely! In our current world, inequality is so high, and to a large extent unjustly high, that it's sickening. But there is still a whole lot of work that needs to be done to maintain our living standards.
In the modern world, I unequivocally agree with this statement.
But, I find this to be a fascinating question when applied to less recent periods throughout history. Would we be where we were today if the ancient Greeks didn't have a ruling class and a slave class? If the Europeans didn't have the same 1500 years later? It's largely been the working (I use this term quite loosely: consent is not implied) class that has enabled (a small number of) the leisure class to make the majority of societal and technological progress. How true is this today? I'm willing to bet those making technological and societal progress are now largely in the working class.
Sorry my comment is inconclusive; it's something I've been long meaning to investigate further.
>Leisure is essential to civilization [...]
Haha, to wake up and see that is really entertaining. You're a guy who has made money in IT and you think everyone can live the same way as you. You don't realize you are living in a small bubble that does not apply to 99.9% of all other workers out there. You don't realize there is a whole working class below you who's working to make sure stuff gets cleaned, garbage gets collected, meals get cooked, tables are waited and so on ?
> The correct answer, of course, is: machines.
Amusing, again. There's just so much machines can do, and there are still many jobs where it's completely irrealistic to replace people by machines (mostly because the investment is not worth it). If you think otherwise, I'd recommend you go out and visit actual industries making stuff, not just IT related ones, and try to understand why most of them still employ people no matter how many machines they have.
We will see an increase in automation for jobs that we didn't expect to be so. The speed of this transformation depends on our creative and technical ability.
If you think that work defines you, read up about the Puritans in America. They had an extreme motto that 100% of your waking life must be allocated to work. You could say they are the only religious that had a fear that someone around them was having a good time.
I don't, and I've never implied that.
> We will see an increase in automation for jobs that we didn't expect to be so.
We've seen increases in automation for hundreds of years, yet there was never a depletion of jobs for people. There's more jobs now that there has ever been before (not talking about short time scale here). Industry automation has led to the creation of the expansion of the Services industry. And there will still be tons of professions where you can't automate stuff - at best you can improve people's work using computing aids, make them work more efficiently, but at some point of the supply chain you still need human action. For the services industry, there's also the bias that most people want to deal with other people and not with computers, so automation will face cultural limits as well in some areas. I'm not worried.
And that's just one company. Sure, it's the biggest one. Sure, they're probably jobs nobody would do given better alternatives. All the same, those are now 1,452,000 fewer people employed in a world replacing human capital with physical capital.
Nobody in China nor other country is working their ass off to make cheap stuff for developed countries. They're working their asses off to feed themselves and their families. The effort: very high. The value: not so much for them.
I get what you're saying, but covering the effort in valor and moral superiority as opposed to the value realized from that effort just seems to be a way to separate the worker from the fruits of their labor.
How is a "dramatic reduction in poverty" not of much value?
http://filipspagnoli.wordpress.com/stats-on-human-rights/sta...
It is like (to be hyperbolic) living a life of luxury, but on giving the starving man who labours for you a bit of food, suggesting that that is ample reward for his efforts, because of how much value that bit of food has for him. Then, you can top that off by saying that it doesn't matter how much food he produces for you, it isn't of much value because you have so much already.
People reject the labour theory of value, probably correctly in fundamental terms, but the marginal and subjective theories of value both seem to promote (and justify) this kind of structural inequality.
An example from the relatively recent NPR Planet Money t-shirt project [0] suggests that for that product just under 12% of the cost (6% of the sale price) went to the people who made the yarn, cut the cloth, and sewed it all together.
[0] http://www.npr.org/blogs/money/2013/12/13/250747279/episode-...
At which end of the economic ladder do you think improvements occur for there to be a dramatic reduction in poverty within a whole society?
Your rhetoric doesn't address the point though, which is simply that there are (quite dramatic) unequal returns to labour which in turn persist poverty.
All this focus on economic inequality is misguided. The focus should be upon breaking chains of economic mobility.
You state "all this focus on economic inequality is misguided" very brazenly, but what evidence do you have that the two aren't linked? From my position they intuitively are linked, and pretty strongly - sure, intuitions can be wrong, but why are you so confident that we can ignore the effects of inequality on poverty?
At the most basic level, wage growth for those in poverty provides better housing, better nutrition, better healthcare, and better education, which all in turn lead to better economic prospects, because those things make you significantly more employable in all sorts of ways (you're more reliable, you're not weak, you're more healthy, and you're not stupid).
It's interesting that you use the word "employable" instead of the more general term "capable of creating wealth". Someone who thinks of themselves primarily as an employee is always going to be less wealthy than someone who thinks of themselves primarily as a wealth creator. That's because having employees is not necessary for wealth creation, but wealth creation is necessary for having employees. So if you're an employee, you're in a relationship that is always going to be fundamentally asymmetric.
So if you really want to focus on economic inequality, you need to focus on getting people to stop thinking "how employable am I?" and start thinking "how much wealth can I create?" Ultimately, the only way to get real economic equality is for everyone to be an entrepreneur. And even then you won't have complete economic equality because people differ in entrepreneurial skills. Which is why focusing on economic inequality is misguided; what we should be focusing on is wealth creation.
Your final statement "focusing on economic inequality is misguided; what we should be focusing on is wealth creation" is disingenuous, unless you mean focusing on how to improve wealth creation for those people in poverty. Otherwise, it is just a false equivalence - you are suggesting that by focusing on wealth creation for ourselves, we improve their chances for wealth creation, for which there is no evidential route beyond trickle down economics. If you do mean promoting wealth creation for people in poverty, or indeed people who are 'merely' poor, then that is a form of alleviating inequality that I wholly support.
To be precise, I meant focusing on making people in poverty better at wealth creation. If that's what you meant, then we're in agreement.
However, I'm not entirely sure that's what you meant, because you talk about wealth creation "for" people in poverty; you use that expression twice. That could mean what I meant, or it could mean "creating wealth and then giving it to people in poverty", which IMO does not help--unless it's just the first step, and the second step is "here are ways to use what you've just been given to get better at creating more wealth for yourself".
This can include a range of things, like better access to healthcare and improved nutrition, as well as schemes to help people start businesses. Things are still pretty dire for an upsettingly large number of people in the world.
Ok, cool, we're in agreement.
Economics is (at least most of it) a science. It doe not promote or justify anything; it tries to describe the real world, and tell you what consequences any input would have.
The Labor Theory of Value is just not real.
Your claim that economic theory "does not promote or justify anything" is clearly wrong, because theories are co-opted as policy, and then have enormous impacts on people's lives. Would you claim that the economic theory contained within communism did not promote or justify particular courses of action in the Soviet Union?
My point was that the marginal and subjective theories of value, taken narrowly, promote structural inequality, by claiming that when a price is accepted it is fair. I don't think that real economists are so dogmatic, but people who cling on to that idea doctrinally, forgetting the caveats that must be applied (i.e. lack of any kind of coercion, perfect information, etc.) can end up saying that equality of value is all that is necessary for fairness.
And what about the people who took the completed T-shirts and moved them to where they were wanted? That somehow has no value? People who ordered the T-shirts didn't order T-shirts sitting piled up in a factory; they ordered them so they could wear them. That means making the product is only the first step: then you have to move the product to the end user (shipping and handling), but before you can do that you have to figure out where the end user is and make sure he has paid for the product (order fulfillment).
For those three activities (production, order fulfillment, and shipping/handling), I get, respectively, $2.00, $1.79, and $2.36 (note that I've included both stages of shipping in the shipping/handling cost)--i.e., all roughly equal. That seems fair to me. In fact, if we include "printing" in production (which seems reasonable--people ordered a T-shirt with a design printed on it, not a plain one), that cost goes up to $2.90, more than the total shipping/handling cost. (Note, btw, that graphic design was only $0.12 per shirt, basically negligible.)
The real message of the cost breakdown, to me, is how much overhead there is: $1.21 per shirt in Kickstarter fees, $1.04 per shirt in Amazon payment fees, $0.33 per shirt in tariff, and $2.67 per shirt in "jockey costs" (presumably meaning company overhead for Jockey itself). That adds up to $5.25 per shirt in overhead, or about 42% of the cost.
I don't really see why it is contentious - poor people have less bargaining power, because they have less to bargain with (e.g. poorer health, less education, less to fall back on), so will come off worse in trades, including trades for their labour. It makes economic sense, but that doesn't make it good. Also note that overall efficiency can become irrelevant if the returns on efficiency gains are unequally distributed.
Addressing those problems, which are structural not individual, will improve the lives of people who are under-compensated by the current system. Claiming those problems don't have any effect on outcomes requires explanation.
If this is true, then based on the cost breakdown (which is all the evidence we have in this case), it's also true for the people who do order fulfillment and shipping/handling. Are all of those people also "at the bottom of the labour chain"?
> poor people have less bargaining power, because they have less to bargain with (e.g. poorer health, less education, less to fall back on)
It's true that poor people have worse health, education, etc., but that's not why they have less bargaining power. They have less bargaining power because they cannot perform higher-value work. Improving their health, education, etc. helps because it makes them capable of doing higher-value work, not because it magically increases the value of the same work they were doing before. A T-shirt doesn't become more valuable because the person making it is healthier or has a better education; but if better health and education enables the person to operate a T-shirt making machine that makes 10 shirts per hour, instead of making 1 shirt per hour by hand, then that person is doing higher-value work and should be paid accordingly (and will be, in a competitive free market).
So if people want to have more bargaining power, they need to bring more value to the bargaining table. Helping people to do that is certainly worth doing. But it's no use pretending that just improving people's health, education, etc. is enough. It isn't.
Lots of things go into it, and looking at individuals doesn't really address the wider problem. The only reason that people accept the low wages is because they have nothing else, and once things improve enough to drive wages up the industries that rely on low-wage labour move on.
Now, you can take that two ways, and I see both as true (whereas you might only see one). Firstly, the jobs have (eventually/sometimes) improved conditions, up to the point where people demand too much, and the manufacturers have to move on. Note that this wasn't a benevolent act on the part of the manufacturers - they came there because that was where they could get the best return on their investment. It isn't quick, and the manufacturers have absolutely no interest in making it quicker - uprooting an industry is expensive, so they are incentivised to stop people attaining economic independence.
The other way to look at it is that the only reason that the manufacturer could extract such a low price is because the people they came to employ were in such a desperate position that they had no other choice. The only argument is that it is still fair, because it was a mutual agreement, a point which I addressed in another sub-thread: it is not fair, because it relies on coercion. We go around the world, coercing people into doing work for us for as little pay as we can get away with.
I don't know if you listened to it, but the NPR t-shirt podcasts had some of this stuff in there - including a guy from the t-shirt industry saying precisely that they go to wherever the poverty is, because it's cheaper (which makes sense!)
The typical refrain is that, as I already mentioned, it makes things better. Yes, sure, it sometimes does, only much slower than it could do. There are also a host of other positive and negative effects that aren't covered by these ridiculous generalisations I'm making, that can make things either much better, or much worse, for the people involved.
My belief is that we should use our combined wealth to mitigate the risks of uncertain negative events, and that it doesn't cost very much to do so for people who are poor.
edit: I've enjoyed the discussion btw! :)
But how do you define "paid enough"? Enough for what? I'll agree that they aren't being paid enough to improve their situation materially, but that doesn't mean they aren't paid enough for the value they actually create, doing the work they're actually doing.
> The only reason that people accept the low wages is because they have nothing else
Yes, but again, that doesn't mean the low wages aren't an accurate reflection of the value those people are currently creating.
> once things improve enough to drive wages up the industries that rely on low-wage labour move on
Yes, by automating their processes so that a single worker is much more productive and therefore can command higher wages. Not by paying people higher wages for doing the same work they were doing before.
> uprooting an industry is expensive, so they are incentivised to stop people attaining economic independence
This is true, but note that it only actually works if the manufacturers have no competition. Which basically requires governments to be complicit in stopping their people from attaining economic independence.
If there is free competition, then there is economic value to be captured in helping people become more productive, because the limiting factor in how much wealth can be created is almost always human productivity. So the manufacturer that comes to a poor country and builds a factory where people make T-shirts by hand won't last very long in free competition with another manufacturer that comes to that country and builds a factory where people make T-shirts by machine...and then builds a factory where people make trousers by machine...and then builds a factory where people make bicycles by machine...and so on, and so on; and thereby makes much more profit than the manufacturer who couldn't be bothered to invest in increasing workers' productivity.
> I've enjoyed the discussion btw! :)
So have I. :)
For "Yes, by automating their processes so that a single worker is much more productive and therefore can command higher wages. Not by paying people higher wages for doing the same work they were doing before." - automation absolutely is the only route to long term prosperity: it is what has create civilisation as we know it.
However, like I said there are strong incentives to stop people becoming more productive, because it is to our benefit, even in a market, once we have invested in a certain kind of productivity (indeed this goes both ways, with workers wanting to protect outdated forms of labour well beyond time). A lot of money gets sunk into developing places, and that money needs a healthy return. So although in principle, yes, there is something to be gained by helping people become more productive, that is on the assumption that the cost of doing so is negligible, which it often isn't.
Indeed, paying those costs, the ones that help people become more productive, are exactly what should be happening, and what will be avoided by whoever it was who previously invested in those people, until the investor(s) have got their return (which is essentially an indefinite period), or until the return on a new investment will be greater than its cost (and given that we're talking about moving cities, or often countries, those costs can be large indeed).
Just to (try and) be clear, I fully agree that what is required is helping people to be more productive. I don't agree that "free" competition is the optimal way to accomplish that. (I quote free because making competition free requires significant effort and enforcement, which is often lacking in the kind of environments that we are talking about)
As a small provocative thought: companies are legal entities, so how about requiring companies to be licensed, prohibiting them being owned, and thus requiring all returns to be either reinvested in the company or distributed to the people who work there. Investment would be entirely through bond issue, which is perfectly sensible, can be adjusted for any desired level of risk, and has good market efficiency. Lots of our structures today aren't defined by natural law, they are just arbitrary, and perhaps they have negative effects?
I'm afraid I'm off to bed, so I won't respond, but I'd be interested to read your reply if you write it. Good night/morning/afternoon/evening.
The problem with this hypothesis is that there's no way of proving it. And the claim becomes questionable anyway if the company's response when labor is no longer available at the low wage they were paying is to automate rather than to pay higher wages. If the work the people were doing before really was more valuable, it would have been easier to just pay the workers higher wages.
> A lot of money gets sunk into developing places, and that money needs a healthy return. So although in principle, yes, there is something to be gained by helping people become more productive, that is on the assumption that the cost of doing so is negligible, which it often isn't
It's not quite that simple. Yes, the cost of helping people become more productive is often not negligible, but neither are the benefits. Forgoing those benefits because of what's already been invested is just the sunk cost fallacy. A major reason businesses still get away with it is, as I said before, that governments prevent fair competition. Another reason is that corporate governance is screwed up, so that any investment with a payback time horizon longer than the next quarter's returns has to run the gauntlet before being considered.
> (I quote free because making competition free requires significant effort and enforcement, which is often lacking in the kind of environments that we are talking about)
But any method for helping people become more productive is going to require significant effort and enforcement. Otherwise it's just another system that people will game. Free competition is like democracy according to Churchill: the worst system except for all the others.
> companies are legal entities, so how about requiring companies to be licensed, prohibiting them being owned
I think that would just make the screwed-up-ness of corporate governance worse. A key reason it's screwed up now is that the people in control of large corporations are not "owners" in any meaningful sense; sure, they own large blocks of stock (mainly because of being granted big blocks of options for no good reason), but they don't have the sense of ownership of the business that, say, a startup founder or the proprietor of a mom-and-pop grocery store has. If the business does well, great--they get big bonuses and they can exercise their options and sell their stock for more. If the business does badly--meh; they have their golden parachutes.
So I think we need more ownership, not less, because ownership forces accountability, which is what's sadly lacking now. Unfortunately I don't have an easy answer for how to do that, because a big reason for the current lack of a sense of ownership of corporations is that much of the stock ownership now is with large mutual funds, not individuals. This has at least two negative effects. First, it shortens the effective time horizon--even if you are investing for retirement in 30 years, your mutual fund is looking for returns right now, otherwise it will move its money to a different stock. Second, it means that most shareholders are now corporations themselves, not individuals, so the original idea of corporations ultimately being responsible to the individual humans who were its shareholders is gone. And mutual funds aren't going anywhere because they serve a huge and important need--retirement investing.
One possible way to help is to use technology to reduce the need for large corporations, by making more and more things doable by smaller and smaller groups of people. Making more and more things available as services helps with that. (Pg talks about this in one of his essays, where he wonders how small you could make a company if you outsourced everything except product development.) The smaller the average corporation is, the harder it is, on average, to abuse corporate governance.
Possibly, but I'm not sure we should take that at face value. There's another Planet Money story[0] about the efficacy of just giving money to people. If you accept that reducing poverty lets people become more productive by applying more of their available effort towards actions that do more than just sustain life, I think this at least puts enough question to that assertion to make it something that needs qualification.
One possible way to help is to use technology to reduce the need for large corporations, by making more and more things doable by smaller and smaller groups of people.
How does that account for the increased efficiencies gained from being large, e.g. bulk logistics? Walmart, split into 5,000 smaller individual stores, would likely not be able to match the prices of Walmart the mega-corporation, even if only due to bulk shipping and purchasing efficiencies (and leverage) gained by the single larger version.
Great discussion though, +1's all the way up the stack for you and mrow84.
[0]: http://www.npr.org/blogs/money/2013/10/25/240590433/what-hap...
It does look like many of these people used the money to increase their productivity, yes (for example, by starting businesses). But from what I can see, GiveDirectly has only been in existence since 2010. I'll be interested to see what their numbers look like ten years from now, if they're still around. (My prediction, for what it's worth: (1) the fraction of people receiving their money who actually become more productive will go down (more people trying to game the system); (2) their overhead will go up (more money being spent on trying to prevent people from gaming the system).) It's definitely an experiment worth trying.
> How does that account for the increased efficiencies gained from being large, e.g. bulk logistics?
I said "more and more things", not "all things". Yes, there are probably some areas in which economies of scale are large enough that large corporations are more efficient on net than smaller ones. But I suspect there are fewer such areas than most people believe, and I think technology can make there be fewer still.
Value relative to effort. Compare your level of effort to your level of PPP received in return. Would you consider 1.25 USD@2005 a day to be an achievement for them in comparison to you, or an abysmal failure of society to justly allocate its rewards to the people who put in the effort?
In other words: is a just reward for doing the work that supports the lifestyle of the developed world a 'reduction' in the worst sort of abject poverty?
society to justly allocate its rewards
Your arguments ignore the failure illustrated by history of the strategy of society proactively allocating anything. Decades and decades of programs that spent billions of dollars giving money and sustenance impoverished groups across the globe, yet what finally begins to pull China out of poverty? Capitalism.
Letting people trade freely within a legal framework that protects everyone's property rights without regard to political and financial power is just. Everything after that is gravy.
I'm not sure what you think Chinese people did before they moved to the cities. Farm labor is backbreaking work, and they did it from sunup to sundown. Working in a factory for ten or twelve hours a day is a step up.
But robots are only going to get better; this process has already started and is having a huge impact. Manufacturing is only going to get cheaper; this process has been going on for centuries and will not stop just because we want to have more jobs.
The total comfort available in the world today requires less total off-ass-working than it did in my grandparents' day, and it will take even less work in my grandchildren's day.
Let's begin a gradual transition instead of just assuming the status quo is a fixed constant.