Re: The Real Causes of Income Inequality
First, a business, any business has to meet its costs, the costs of goods sold. If a business makes zero in profit, that means after all costs, including labor, the owner was paid, the workers were paid and the suppliers, etc, were paid. If the owner payed himself an upper middle class wage, or even a middle middle class wage, he is doing real well. He works from himself, he gives others a livlihood to feed their kids, and he is making a good living off of owning his own business. But beyond this, the desire is of course to accumulate more wealth, beyond his own salary, but also to have liquid capital on hand. When I owned my own small manuf business, my accountant advised me, or rather advised my wife, of HOW much we should intelligently keep on hand. Anything over this fund, was realized as income, for me. It was the creme, and it was mine. And to be honest, I did not make a fortune from this non wage money. I realized it as a bonus, every quarter, invested it things like mutual funds, a few bank cds, etc.
Originally Posted by dnsmith
From my own veiwpoint my business was a great success. Now, understand something. I could have made much more in profits if I had paid my workers less, with less fringe benefits. And since I was an anomaly in my own sector, I could have easily gotten away from the higher wages. I was quite a bit above industry average in wages. But, I had the best employees in this sector. To the point that it was a cold day in hell before anyone would call in sick. I personally made this business the best place in the world to work, by paying more, by fringe benefits I have not listed, by treating them like valued human beings, by going to the funerals of their family and friends, and by including them in the business. Then last quarter's profits were given to them as a xmas bonus, and through meetings with them having copies of our quarterly P an L statement, over time they got schooled in the basics of making a profit. The role of materials cost the waste factor, the importance of getting a job done within a timeframe, and coming in under that production time. And up until I sold out, my work family and I did real well, and had fun doing it.
That is one type of capitalism, as it applies to a small business operation. The other type, of which I personally knew scores of the owners is what is more common, and in fact, the rule in capitalism. This other type is only concerned with the size of the bottom line, after all bills are paid, and the workers go home. In order to get wealthier, by this bottom line being as large as possible, there are various ways to do that. First, at least in any business that requires human bodies, you have labor costs, which direly affect that bottom line. In fact, in my own business, labor costs trumped everything! So there is a lot of lost profits in wages. Now, if I really want to add to that bottom line, to make it fatter, I must save money in labor costs. Like the defense spending, the social safety net spending, this part of doing business is large, and the first place one attacks when trying to maximize the wealth that this business can yield. (and of course, this was the reason big business left for china)
To lower labor costs a business can move to china, but if it stays here it has to have cheaper labor than american labor. So, you along with other businesses join together, perhaps under the national chamber of commerce, and you do what is required to get work visas for cheap labor, to go lax in enforcing illegal immigration, you try to keep from having to make business accountable for hiring illegals, and you do what you can to go after any remaining unions, to pass right to work laws in the states, etc.
Now, this greed that is driving these capitalists, is what you consider to be the only viable, worthwhile capitalism. Yet I am proof that this ain't necessarily the only type of capitalism that has existed. And in fact, if my type of capitalism was what we were using, America would have to put up fences and put our military on our borders to keep people out. Our middle class would be larger than ever, our poverty class only inhabited by the generational poor, the mentally inferiour.
But my type of capitalism does not have vulgarly rich people at the top. Oh, they are still rich, because wealth is always relative to the rest of society. But you would not have billionaires, just measely millionaires. The greed of the few, will not settle for this, unless they are herded into it, by a gov't that refuses to allow the exploitation of the rich upon the poor. Yes, I am afraid like the sex drive of humans, there must be rules to channel that human nature, or otherwise some men are breeding children because they don't give a shit about other people. Their hyper sex drive controls their actions. Greed is absolutely just as powerful, if not more powerful than the sex drive. The sooner our leaders again know this, as earlier leaders did, the sooner we can return to some kind of sanity.
"Like every other good thing in this world, leisure and culture have to be paid for. Fortunately, however, it is not the leisured and the cultured who have to pay." Aldous Huxley.