CEO raises wages significantly above market rates... Predictions?

[WasatchMan]

A CEO in Seattle has raised his labor costs significantly above market rates, making himself unable to compete while creating unrealistic future expectations for his employers (don't buy that house!!)...
 
Predictions?
 

 
Sorry, trick question. Math will sink this battleship.

[cab21]

so he still projects his company to be profitable, do you think people will stop being a customer of his business? do you think his employees will change in ways that the business will lose business?

 

 

if one company has 2 million profits

and another company has 400k profits, can't both companies be ok?

[WasatchMan]

so he still projects his company to be profitable, do you think people will stop being a customer of his business? do you think his employees will change in ways that the business will lose business?

 

 

if one company has 2 million profits

and another company has 400k profits, can't both companies be ok?

 

Competition is tough stuff, especially when it comes to running a business directly facing the public. If I was his competition, I would undercut his business by using part of my 2 million in profits to lower the cost of my product for anyone that wanted to switch from his company to mine.  In order to compete with this move, he would in turn have to offer a competing price, which if I played my cards right would mean operating at a loss.

 

Profit is what allows a business to grow and compete.  It is their seed stock.  Sure you may be able to maintain a small foothold in a market by making significantly less profits than your competition, but it usually doesn't work out that way for long.

 

This idea that you can just raise wages, I believe, comes from someone with a pretty hateful opinion of your fellow man.  I have never had a employer that didn't want to pay everyone that did good work more money.  Most employers celebrate the ability to give their employees raises just as much as the employee.  The premise behind the idea that you can just pay people more money, is the premise that greed and a willingness to exploit others is the core character of a significant number of other employers, because it asserts that it is not reality that sets labor rates, but the whim of the employer to grub money.  Which believe me, it is not - a billion calculations are happening all around us which results in the market rate of labor.

[labmath2]

Competition is tough stuff, especially when it comes to running a business directly facing the public. If I was his competition, I would undercut his business by using part of my 2 million in profits to lower the cost of my product for anyone that wanted to switch from his company to mine. In order to compete with this move, he would in turn have to offer a competing price, which if I played my cards right would mean operating at a loss.

 

Profit is what allows a business to grow and compete. It is their seed stock. Sure you may be able to maintain a small foothold in a market by making significantly less profits than your competition, but it usually doesn't work out that way for long.

 

This idea that you can just raise wages, I believe, comes from someone with a pretty hateful opinion of your fellow man. I have never had a employer that didn't want to pay everyone that did good work more money. Most employers celebrate the ability to give their employees raises just as much as the employee. The premise behind the idea that you can just pay people more money, is the premise that greed and a willingness to exploit others is the core character of a significant number of other employers, because it asserts that it is not reality that sets labor rates, but the whim of the employer to grub money. Which believe me, it is not - a billion calculations are happening all around us which results in the market rate of labor.

After watching a video yesterday about "the banality of evil" i am skeptical of the idea that employers are doing these calxulations and operating at some pseudo effecient rate. How many people have used the phrase its my job, to do things they would otherwise avoid in their personal lives.

[cab21]

Competition is tough stuff, especially when it comes to running a business directly facing the public. If I was his competition, I would undercut his business by using part of my 2 million in profits to lower the cost of my product for anyone that wanted to switch from his company to mine.  In order to compete with this move, he would in turn have to offer a competing price, which if I played my cards right would mean operating at a loss.

 

 

how do you know that a lower price strategy would convert his clients?how many of his clients are clients because they could not find a lower price elsewhere?

 

i mean, like looking at wallmart and whole foods, does the lower prices of wallmart have whole food customers  switch to wallmart? i'm going to guess that wholefoods has a very different compensation philosophy from wallmart, as well as a whole different philosophy of what products it sells. the labor costs at a whole foods are going to be higher than the labor costs at a wallmart. both stores aren't doing so bad.

 

Profit is what allows a business to grow and compete.  It is their seed stock.  Sure you may be able to maintain a small foothold in a market by making significantly less profits than your competition, but it usually doesn't work out that way for long.

 

he would not expect his profit to stay static, and if his investment in employees helps the company gain more clients and market share, than the profits can rise further than the drops. if he is correct about the higher compensation helping his employees perform better work, that might all add up to higher growth than before fore the company.

 

i don't think the only way to have clients is to have lower labor costs, or that having lower labor costs is the reason why anyone should start a business.

 

This idea that you can just raise wages, I believe, comes from someone with a pretty hateful opinion of your fellow man.  I have never had a employer that didn't want to pay everyone that did good work more money.  Most employers celebrate the ability to give their employees raises just as much as the employee.  The premise behind the idea that you can just pay people more money, is the premise that greed and a willingness to exploit others is the core character of a significant number of other employers, because it asserts that it is not reality that sets labor rates, but the whim of the employer to grub money.  Which believe me, it is not - a billion calculations are happening all around us which results in the market rate of labor.

 

well if you said the pay is now way above "market rates", that sounds like market rates are supposed to pay the lowest amount possible. what about paying above market rates and expecting a above market performance?

 

lets contrast this with the lower price strategy above to convert customers

here, the company would offer the best employees the competing company better wages if the employees switched employment

 

saying 70k is way over market, is like saying there are jobs in the company that could never give that much value back to the company.

[WasatchMan]

how do you know that a lower price strategy would convert his clients?how many of his clients are clients because they could not find a lower price elsewhere?

 

i mean, like looking at wallmart and whole foods, does the lower prices of wallmart have whole food customers  switch to wallmart? i'm going to guess that wholefoods has a very different compensation philosophy from wallmart, as well as a whole different philosophy of what products it sells. the labor costs at a whole foods are going to be higher than the labor costs at a wallmart. both stores aren't doing so bad.

 

I don’t “know”, it was just one strategy I came up with off the top of my head on how I would compete for his customers if we were competing for the same customers and I had the knowledge about his new wage plan.  Nobody can “know” these things with any certainty.  All we can do is make educated guesses based on previous experience, and an understanding of certain characteristics of a market.  Sure there are micro mitigation issues around quality, branding, etc. as in the Whole Foods and Walmart example, however I am not trying to do a micro economic analysis, just a macro analysis on how significantly raising wages above the market rate will impact the success of a business.

 

We do know that price is a huge factor in consumer choices, so I would personally take the risk in my prediction that I could attract a portion of his current customers by offering lower prices.

 

 

he would not expect his profit to stay static, and if his investment in employees helps the company gain more clients and market share, than the profits can rise further than the drops. if he is correct about the higher compensation helping his employees perform better work, that might all add up to higher growth than before fore the company.

 

It is a big “if” (“his investment in employees helps the company gain more clients and market share“), given that is untried and goes against basic market economic principles.

 

i don't think the only way to have clients is to have lower labor costs, or that having lower labor costs is the reason why anyone should start a business.

 

I didn’t make a claim to this point and I am not trying to put forth an opinion on why anyone should start a business. 

 

All I am predicting is failure of a business that artificially raises its production costs significantly above market rates.

 

 

well if you said the pay is now way above "market rates", that sounds like market rates are supposed to pay the lowest amount possible. what about paying above market rates and expecting a above market performance?

 

lets contrast this with the lower price strategy above to convert customers

here, the company would offer the best employees the competing company better wages if the employees switched employment

 

 

Well I would say market rates are “suppose” to pay the highest the market can sustain, but I am a glass half full kinda guy. 

 

Market rates really aren’t “suppose” to be anything, they are a result of a billion correlated inputs predicting the previous relationships between supply and demand.  The Federal Reserve could print money and pay everyone in the U.S. a million dollars a year, do you think that would end poverty?

 

 

saying 70k is way over market, is like saying there are jobs in the company that could never give that much value back to the company.

 

I wouldn’t say that.  I am sure there are positions in the company that don’t only make that much in revenue but make three times that (and therefore earn that pay).  However there are also positions in that kind of operation that don’t earn that level of compensation.  You also have to think of the secretary, or non skilled employee, that decides NOT to make further investments in their skill set to get a job that actually would earn the $70K because they are currently getting the signal from the market that they already command that level capital and are content with that.

[cab21]

I don’t “know”, it was just one strategy I came up with off the top of my head on how I would compete for his customers if we were competing for the same customers and I had the knowledge about his new wage plan.  Nobody can “know” these things with any certainty.  All we can do is make educated guesses based on previous experience, and an understanding of certain characteristics of a market.  Sure there are micro mitigation issues around quality, branding, etc. as in the Whole Foods and Walmart example, however I am not trying to do a micro economic analysis, just a macro analysis on how significantly raising wages above the market rate will impact the success of a business.

 

 

so how is market rate defined?

is it the minimum wage a person will start to or continue to work for a employer, combined with the maximum wage a employer is willing to pay to hire or continue to employ a employee?

 

now with that definition, a company could never overpay on it's own end, but could pay more than the minimum that a employee requires to stay with the company or sign with the company. so paying more than this minimum might be seen as a cushion and also a trade for higher expectations than a employee giving say the minimum effort to stay hired.

 

if a company says "we won't pay more than X for a position", is the company looking for get the best value overall in the long term, or looking for the best the company can hire for under X? it might be more efficient for the company in the long run to raise how much the company is willing to pay for a position, providing the company find the person worth paying more than x.

 

now if another company consistently has more effective, and lower paid employees, that's going to be a problem. so what a company might look for is effectiveness per dollar paid over a period of time.

 

i think ford motor company is a company said to have paid wages higher than other companies at the time and had higher productivity and lower turnover for it.

 

 

We do know that price is a huge factor in consumer choices, so I would personally take the risk in my prediction that I could attract a portion of his current customers by offering lower prices.

 

sure that can happen, but he would also have strategies to get new or the clients of the competitor. he would also have to consider what the cost of keeping the client, vs the cost of getting a new client. if he is not using a portion of those profits now to retain customers from competitors undercutting his prices, then i'm not sure he would need to if later someone makes a extra big effort to undercut his prices.

 

if operating at a loss to try and convert customers is a better strategy than paying employees more, will see how long that last as well.

 

I'd have to look into it, but in the insurance industry, the companies will themselves tell you that a competitor has a lower cost.

 

 

It is a big “if” (“his investment in employees helps the company gain more clients and market share“), given that is untried and goes against basic market economic principles.

 

 

what basic economic principles is it going against?

 

I didn’t make a claim to this point and I am not trying to put forth an opinion on why anyone should start a business. 

 

All I am predicting is failure of a business that artificially raises its production costs significantly above market rates.

 

 

so a natural wage increase would be?

 

i mean this is a employer choosing what to pay his employees. would it only be natural if he was forced to by losing his current employees and not being able to find any replacements if he did not raise wages?

 

Well I would say market rates are “suppose” to pay the highest the market can sustain, but I am a glass half full kinda guy. 

 

Market rates really aren’t “suppose” to be anything, they are a result of a billion correlated inputs predicting the previous relationships between supply and demand.  The Federal Reserve could print money and pay everyone in the U.S. a million dollars a year, do you think that would end poverty?

 

so we will see in years to come if the company can sustain its wages,

the company won't even have these wages until another 3 years.

 

federal reserve printing more money of course won't end poverty.

 

supply and demand wise, we will see if the employees make themselves more in demand enough for the increase to be worth it, or if he attracts different employees that are worth it.

 

I wouldn’t say that.  I am sure there are positions in the company that don’t only make that much in revenue but make three times that (and therefore earn that pay).  However there are also positions in that kind of operation that don’t earn that level of compensation.  You also have to think of the secretary, or non skilled employee, that decides NOT to make further investments in their skill set to get a job that actually would earn the $70K because they are currently getting the signal from the market that they already command that level capital and are content with that.

 

 

would have to look at his employees and their job descriptions

 

 

i'm not sure what kind of nonskilled jobs the company has, or if the company will even retain people that decide not to make further investments in skill sets. if the lowest it currently pays is 40k, it's a 30k jump to 70 k over 3 years.

 

if the ceo choose to raise his salary 1.5 million to 2.5 million over these three years, would there be the same discussion of if he was paying himself significantly over market value?

[Daniel Unplugged]

so how is market rate defined?

is it the minimum wage a person will start to or continue to work for a employer, combined with the maximum wage a employer is willing to pay to hire or continue to employ a employee?

Yes on both counts. Interestingly though, the maximum price an employer is willing to pay is the minimum he can hire the worker for, which is also the minimum the employee will work for, and also the maximum price the employee can get for his labor.

 

...hope that makes sense.

 

Note that the above assumes all actors are acting solely upon their own financial best interest, which is not necessarily the case, but in economics we always assume that.

 

More generally, the market price of anything, including wages, is the price at which supply=demand. All that means is that if you want to buy, someone will sell to you at the market price, and if you want to sell, someone will buy from you at the market price.

[Daniel Unplugged]

 

I think it is important to note that when talking about market wages, we are very much not talking in absolutes. Employees are not fungible and neither are jobs. We can say the market rate is $20, but there will certainly be employees that can't get hired at $15, and there will certainly be jobs that can't get filled at $25.

[WasatchMan]

I think it is important to note that when talking about market wages, we are very much not talking in absolutes. Employees are not fungible and neither are jobs. We can say the market rate is $20, but there will certainly be employees that can't get hired at $15, and there will certainly be jobs that can't get filled at $25.

 

Yes, of course there is a range in price, just like everything.  This case is not about the margins we are talking about people who were making $30K a year being raised to $70K a year based on the whim of the CEO.  This is more than doubling of a yearly salary not $20 to $25/hour, and therefore is enough of an outlier that we don't have to talk about the fuzziness of price, this is a whole magnitude jump.

[cab21]

http://radio.foxnews.com/2015/04/20/price-70k-minimum-wage-for-employees-is-not-a-slam-dunk/

 

here is a interview with the ceo.

[J. D. Stembal]

Schiff contends that the $70,000 minimum salary story is a publicity stunt to expand the company's client base, but in the long run when the novelty wears off, all the previous sub-$70,000 employees will eventually be outsourced or automated.

 

[Frosty]

The video explained that he took the difference out of his own wage, so their ability to remain competitive in the market has not gone down, in fact they will be a bit more competitive because they'll attract more talent interested in positions at the company and having a bigger pool of talent to pick from gives you a better shot at getting workers who add more value to your business, staff turnover is likely to be less as well which means less wasted money on hiring and whatnot.

[webdever]

http://www.foxnews.com/us/2015/08/01/seattle-ceo-who-set-firm-minimum-wage-to-70g-rents-house-to-make-ends-meet/

 

 

The Times article said Price’s decision ended up costing him a few customers and two of his “most valued” employees, who quit after newer employees ended up with bigger salary hikes than older ones.

“He gave raises to people who have the least skills and are the least equipped to do the job, and the ones who were taking on the most didn’t get much of a bump,” Gravity financial manager Maisey McMaster, 26, told the paper.

 

She said when she talked to Price about it, he treated her as if she was being selfish and only thinking about herself.

“That really hurt me,” she said. “I was talking about not only me, but about everyone in my position.”

Approaching burnout, she quit.

Grant Moran, 29, also quit, saying the new pay-scale was disconcerting

“Now the people who were just clocking in and out were making the same as me,” he told the paper. “It shackles high performers to less motivated team members.”

[J-William]

http://www.foxnews.com/us/2015/08/01/seattle-ceo-who-set-firm-minimum-wage-to-70g-rents-house-to-make-ends-meet/

Not terribly surprising... I think a russian author might have predicted these results in her book about atlases.... or wass that a book about atlus....

I forget

[Carl Green]

All I am predicting is failure of a business that artificially raises its production costs significantly above market rates...

 

Winner winner chicken dinner!

[mlsv2f]

Two schoolmates of mine are social media were going on and on about how big of dickheads the more productive employees who left were.

 

"like why do they care about what someone else makes? It doesn't effect them!" was the main theme.

 

I wanted to interject by pointing out the irony in their statements, and add that their entire political view on taxes is that people who make more owe more, but sometimes you can't fix stupid

[Carl Green]

I don't like him saying "the market dictates," as if the market is a government prescribing activity, rather than those activities emerging naturally (as they do, in a free market). He's twisting the market to sound like an overlord, rather than a natural pattern of voluntary interactions.

 

Hypocrisy is a favored tactic of the asshole.

[NumberSix]

It depends on the business model.  If you want quality employees you have to pay well.  I had some employees I was paying $15 an hour off the books (in NYC) and still had a hard time finding anyone worth a damn.  If a business can be systematized so that the employees don’t have to exercise judgment, then you can hire the cheapest labor possible.  If you need intelligent motivated employees you have to pay above market rates.  Also, a smaller business would be more attuned to market conditions and this advantage might offsite the higher labor costs. It is his business and he is free to manage it as he sees fit, he isn’t using government to force higher wages. Henry Ford paid double market rate to his factory workers, and became insanely wealthy.

[cab21]

so he lost a few employees and contracts.

he has also gained people applying to be part of the company, and gained clients.

 

this case will have to be a long term study

 

it's still a voluntary market transaction for a boss to pay his employees whatever the boss wants to pay, this is not government dictated.

[mlsv2f]

so he lost a few employees and contracts.

he has also gained people applying to be part of the company, and gained clients.

 

this case will have to be a long term study

 

it's still a voluntary market transaction for a boss to pay his employees whatever the boss wants to pay, this is not government dictated.

 

What type of people do you think apply to a company where they know they will be overpaid regardless of performance?

 

What type of employees leave?

 

What type of employees stay?

 

Taking care of your employees is great, rewarding idiots isn't always as great.

[WasatchMan]

What type of people do you think apply to a company where they know they will be overpaid regardless of performance?

 

What type of employees leave?

 

What type of employees stay?

 

Taking care of your employees is great, rewarding idiots isn't always as great.

 

Reminds me of the story of the 20th Century Motor Company from Atlas Shrugged.

 

Its long.. but what the hell.

 

 

“Well, there was something that happened at that plant where I worked for twenty years. It was when the old man died and his heirs took over. There were three of them, two sons and a daughter, and they brought a new plan to run the factory. They let us vote on it, too, and everybody – almost everybody – voted for it. We didn’t know. We thought it was good. No, that’s not true, either. We thought that we were supposed to think it was good. The plan was that everybody in the factory would work according to his ability, but would be paid according to his need.

 

“We voted for that plan at a big meeting, with all of us present, six thousand of us, everybody that worked in the factory. The Starnes heirs made long speeches about it, and it wasn’t too clear, but nobody asked any questions. None of us knew just how the plan would work, but every one of us thought that the next fellow knew it. And if anybody had doubts, he felt guilty and kept his mouth shut – because they made it sound like anyone who’d oppose the plan was a child-killer at heart and less than a human being. They told us that this plan would achieve a noble ideal. Well, how were we to know otherwise? Hadn’t we heard it all our lives – from our parents and our schoolteachers and our ministers, and in every newspaper we ever read and every movie and every public speech? Hadn’t we always been told that this was righteous and just? Well, maybe there’s some excuse for what we did at that meeting. Still, we voted for the plan – and what we got, we had it coming to us. You know, ma’am, we are marked men, in a way, those of us who lived through the four years of that plan in the Twentieth Century factory. What is it that hell is supposed to be? Evil – plain, naked, smirking evil, isn’t it? Well, that’s what we saw and helped to make – and I think we’re damned, every one of us, and maybe we’ll never be forgiven …

 

“Do you know how it worked, that plan, and what it did to people? Try pouring water into a tank where there’s a pipe at the bottom draining it out faster than you pour it, and each bucket you bring breaks that pipe an inch wider, and the harder you work the more is demanded of you, and you stand slinging buckets forty hours a week, then forthy-eight, then fifty-six – for your neighbor’s supper – for his wife’s operation – for his child’s measles – for his mother’s wheel chair – for his uncle’s shirt – for his nephew’s schooling – for the baby next door – for the baby to be born – for anyone anywhere around you – it’s theirs to receive, from diapers to dentures – and yours to work, from sunup to sundown, month after month, year after year, with nothing to show for it but your sweat, with nothing in sight for you but their pleasure, for the whole of your life, without rest, without hope, without end … From each according to his ability, to each according to his need …

 

“We’re all one big family, they told us, we’re all in this together. But you don’t all stand working an acetylene torch ten hours a day – together, and you don’t all get a bellyache – together. What’s whose ability and which of whose needs comes first? When it’s all one pot, you can’t let any man decide what his own needs are, can you? If you did, he might claim that he needs a yacht – and if his feelings are all you have to go by, he might prove it, too. Why not? If it’s not right for me to own a car until I’ve worked myself into a hospital ward, earning a car for every loafer and every naked savage on earth – why can’t he demand a yacht from me, too, if I still have the ability not to have collapsed? No? He can’t? Then why can he demand that I go without cream for my coffee until he’s replastered his living room? … Oh well … Well, anyway, it was decided that nobody had the right to judge his own need or ability. We voted on it. Yes, ma’am, we voted on it in a public meeting twice a year. How else could it be done? Do you care to think what would happen at such a meeting? It took us just one meeting to discover that we had become beggars – rotten, whining, sniveling beggars, all of us, because no man could claim his pay as his rightful earning, he had no rights and no earnings, his work didn’t belong to him, it belonged to ‘the family’, and they owed him nothing in return, and the only claim he had on them was his ‘need’ – so he had to beg in public for relief from his needs, like any lousy moocher, listing all his troubles and miseries, down to his patched drawers and his wife’s head colds, hoping that ‘the family’ would throw him the alms. He had to claim miseries, because it’s miseries, not work, that had become the coin of the realm – so it turned into a contest between six thousand panhandlers, each claiming that his need was worse than his brother’s. How else could it be done? Do you care to guess what happened, what sort of men kept quiet, feeling shame, and what sort got away with the jackpot?

 

“But that wasn’t all. There was something else that we discovered at the same meeting. The factory’s production had fallen by forty percent, in that first half year, so it was decided that somebody hadn’t delivered ‘according to his ability.’ Who? How would you tell it? ‘The family’ voted on that, too. We voted which men were the best, and these men were sentenced to work overtime each night for the next six months. Overtime without pay – because you weren’t paid by time and you weren’t paid by work, only by need.

 

“Do I have to tell you what happened after that – and into what sort of creatures we all started turning, we who had once been humans? We began to hide whatever ability we had, to slow down and watch like hawks that we never worked any faster or better than the next fellow. What else could we do, when we knew that if we did our best for ‘the family,’ it’s not thanks or rewards that we’d get, but punishment? We knew that for every stinker who’d ruin a batch of motors and cost the company money – either through his sloppiness, because he didn’t have to care, or through plain incompetence – it’s we who’d have to pay with our nights and our Sundays. So we did our best to be no good.

 

“There was one young boy who started out, full of fire for the noble ideal, a bright kid without any schooling, but with a wonderful head on his shoulders. The first year, he figured out a work process that saved us thousands of man-hours. He gave it to ‘the family,’ didn’t ask anything for it, either, couldn’t ask, but that was all right with him. It was for the ideal, he said. But when he found himself voted as one of our ablest and sentenced to night work, because we hadn’t gotten enough from him, he shut his mouth and his brain. You can bet he didn’t come up with any ideas, the second year.

 

“What was it they’d always told us about the vicious competition of the profit system, where men had to compete for who’d do a better job than his fellows? Vicious, wasn’t it? Well, they should have seen what it was like when we all had to compete with one another for who’d do the worst job possible. There’s no surer way to destroy a man than to force him into a spot where he has to aim at not doing his best, where he has to struggle to do a bad job, day after day. That will finish him quicker than drink or idleness or pulling stick-ups for a living. But there was nothing else for us to do except to fake unfitness. The one accusation we feared was to be suspected of ability. Ability was like a mortgage on you that you could never pay off. And what was there to work for? You knew that your basic pittance would be given to you anyway, whether you worked or not – your ‘housing and feeding allowance,’ it was called – and above that pittance, you had no chance to get anything, no matter how hard you tried. You couldn’t count on buying a new suit of clothes next year – they might give you a ‘clothing allowance’ or they might not, according to whether nobody broke a leg, needed an operation or gave birth to more babies. And if there wasn’t enough money for new suits for everybody, then you couldn’t get yours, either.

 

“There was one man who’d worked hard all his life, because he’d always wanted to send his son through college. Well, the boy graduated from high school in the second year of the plan – but ‘the family’ wouldn’t give the father any ‘allowance’ for the college. They said his son couldn’t go to college, until we had enough to send everybody’s sons to college – and that we first had to send everybody’s children through high school, and we didn’t even have enough for that. The father died the following year, in a knife fight with somebody in a saloon, a fight over nothing in particular – such fights were beginning to happen among us all the time.

 

“Then there was an old guy, a widower with no family, who had one hobby: phonograph records. I guess that was all he ever got out of life. In the old days, he used to skip lunch just to buy himself some new recording of classical music. Well, they didn’t give him any ‘allowance’ for records – ‘personal luxury’ they called it. But at the same meeting, Millie Bush, somebody’s daughter, a mean, ugly little eight year old, was voted a pair of gold braces for her buck teeth – this was ‘medical need’ because the staff psychologist had said that the poor girl would get an inferiority complex if her teeth weren’t straightened out. The old guy who loved music, turned to drink, instead. He got so you never saw him fully conscious any more. But it seems like there was one thing he couldn’t forget. One night, he came staggering down the street, saw Millie Bush, swung his fist and knocked all her teeth out. Every one of them.

 

“Drink, of course, was what we all turned to, some more, some less. Don’t ask how we got the money for it. When all the decent pleasures are forbidden, there’s always ways to get the rotten ones. You don’t break into grocery stores after dark and you don’t pick your fellow’s pockets to buy classical symphonies or fishing tackle, but if it’s to get stinking drunk and forget – you do. Fishing tackle? Hunting guns? Snapshot cameras? Hobbies? There wasn’t any ‘amusement allowance’ for anybody. ‘Amusement’ was the first thing they dropped. Aren’t you supposed to be ashamed to object when anybody asks you to give up anything, if it’s something that gave you pleasure? Even our ‘tobacco allowance’ was cut to where we got two packs of cigarettes a month – and this, they told us, was because the money had to go into the babies’ milk fund. Babies was the only item of production that didn’t fall, but rose and kept on rising – because people had nothing else to do, I guess, and because they didn’t have to care, the baby wasn’t their burden, it was ‘the family’s.’ In fact, the best chance you had of getting a raise and breathing easier for a while was a ‘baby allowance.’ Either that or a major disease.

 

“It didn’t take us long to see how it all worked out. Any man who tried to play straight, had to refuse himself everything. He lost his taste for any pleasure, he hated to smoke a nickel’s worth of tobacco or chew a stick of gum, worrying whether somebody had more need for that nickel. He felt ashamed of every mouthful of food he swallowed, wondering whose weary nights of overtime had paid for it, knowing that his food was not his by right, miserably wishing to be cheated rather than to cheat, to be a sucker, but not a blood-sucker. He wouldn’t marry, he wouldn’t help his folks back home, he wouldn’t put an extra burden on ‘the family.’ Besides, if he still had some sort of sense of responsibility, he couldn’t marry or bring children into the world, when he could plan nothing, promise nothing, count on nothing. But the shiftless and irresponsible had a field day of it. The bred babies, they got girls into trouble, they dragged in every worthless relative they had from all over the country, every unmarried pregnant sister, for an extra ‘disability allowance,’ they got more sicknesses than any doctor could disprove, they ruined their clothing, their furniture, their homes – what the hell, ‘the family’ was paying for it! They found more ways of getting in ‘need’ than the rest of us could ever imagine – they developed a special skill for it, which was the only ability they showed.

 

“God help us, ma’am! Do you see what we saw? We saw that we’d been given a law to live by, a moral law, they called it, which punished those who observed it – for observing it. The more you tried to live up to it, the more you suffered; the more you cheated it, the bigger reward you got. Your honesty was like a tool left at the mercy of the next man’s dishonesty. The honest ones paid, the dishonest collected. The honest lost, the dishonest won. How long could men stay good under this sort of a law of goodness? We were a pretty decent bunch of fellows when we started. There weren’t many chiselers among us. We knew our jobs and we were proud of it and we worked for the best factory in the country, where old man Starnes hired nothing but the pick of the country’s labor. Within one year under the new plan, there wasn’t an honest man left among us. That was the evil, the sort of hell-horror evil that preachers used to scare you with, but you never thought to see alive. Not that the plan encouraged a few bastards, but that it turned decent people into bastards, and there was nothing else that it could do – and it was called a moral ideal!

 

“What was it we were supposed to work for? For the love of our brothers? What brothers? For the bums, the loafers, the moochers we saw all around us? And whether they were cheating or plain incompetent, whether they were unwilling or unable – what difference did that make to us? If we were tied for life to the level of their unfitness, faked or real, how long could we care to go on? We had no way of knowing their ability, we had no way of controlling their needs – all we knew was that we were beasts of burden struggling blindly in some sort of place that was half-hospital, half-stockyards – a place geared to nothing but disability, disaster, disease – beasts put there for the relief of whatever whoever chose to say was whichever’s need.

 

“Love of our brothers? That’s when we learned to hate our brothers for the first time in our lives. We began to hate them for every meal they swallowed, for every small pleasure they enjoyed, for one man’s new shirt, for another’s wife’s hat, for an outing with their family, for a paint job on their house – it was taken from us, it was paid for by our privations, our denials, our hunger. We began to spy on one another, each hoping to catch the others lying about their needs, so as to cut their ‘allowance’ at the next meeting. We began to have stool pigeons who informed on people, who reported that somebody had bootlegged a turkey to his family on some Sunday – which he’d paid for by gambling, most likely. We began to meddle into one another’s lives. We provoked family quarrels, to get somebody’s relatives thrown out. Any time we saw a man starting to go steady with a girl, we made life miserable for him. We broke up many engagements. We didn’t want anyone to marry, we didn’t want any more dependents to feed.

 

“In the old days, we used to celebrate if somebody had a baby, we used to chip in and help him out with the hospital bills, if he happened to be hard-pressed for the moment. Now, if a baby was born, we didn’t speak to the parents for weeks. Babies, to us, had become what locusts were to farmers. In the old days, we used to help a man out if he had a bad illness in the family. Now – well, I’ll tell you about just one case. It was the mother of a man who had been with us for fifteen years. She was a kindly old lady, cheerful and wise, she knew us all by our first names and we all liked her – we used to like her. One day, she slipped on the cellar stairs and fell and broke her hip. We knew what that meant at her age. The staff doctor said that she’d have to be sent to a hospital in town, for expensive treatments that would take a long time. The old lady died the night before she was to leave for town. They never established the cause of death. No, I don’t know whether she was murdered. Nobody said that. Nobody would talk about it at all. All I know is that I – and that’s what I can’t forget! – I, too, had caught myself wishing that she would die. This – may God forgive us! – was the brotherhood, the security, the abundance that the plan was supposed to achieve for us!

 

“Was there any reason why this sort of horror would ever be preached by anybody? Was there anybody who got any profit from it? There was. The Starnes heirs. I hope you’re not going to remind me that they’d sacrificed a fortune and turned the factory over to us as a gift. We were fooled by that one, too. Yes, they gave up the factory. But profit, ma’am, depends on what it is that you’re after. And what the Starnes heirs were after, no money on earth could buy. Money is too clean and innocent for that.

 

“Eric Starnes, the youngest – he was a jellyfish that didn’t have the guts to be after anything in particular. He got himself voted as the Director of our Public Relations Department, which didn’t do anything, except that he had a staff for the not doing of anything, so he didn’t have to bother sticking around the office. The pay he got – well, I shouldn’t call it ‘pay,’ none of us was ‘paid’ – the alms voted to him was fairly modest, about ten times what I got, but that wasn’t riches, Eric didn’t care for money – he wouldn’t have known what to do with it. He spent his time hanging around among us, showing how chummy he was and democratic. He wanted to be loved, it seems. The way he went about it was to keep reminding us that he had given us the factory. We couldn’t stand him.

 

“Gerald Starnes was our Director of Production. We never learned just what the size of his rake-off – his alms – had been. It would have taken a staff of accountants to figure that out, and a staff of engineers to trace the way it was piped, directly or indirectly, into his office. None of it was supposed to be for him – it was all for company expenses. Gerald had three cars, four secretaries, five telephones, and he used to throw champagne and caviar parties that no tax-paying tycoon in the country could have afforded. He spent more money in one year than his father had earned in profits in the last two years of his life. We saw a hundred pound stack – a hundred pounds, we weighed them – of magazines in Gerald’s office, full of stories about our factory and our noble plan, with big pictures of Gerald Starnes, calling him a great social crusader. Gerald liked to come into the shops at night, dressed in his formal clothes, flashing diamond cuff links the size of a nickel and shaking cigar ashes all over. Any cheap show-off who’s got nothing to parade but his cash, is bad enough – except that he makes no bones about the cash being his, and you’re free to gape at him or not, as you wish, and mostly you don’t. But when a bastard like Gerald Starnes puts on an act and keeps spouting that he doesn’t care for material wealth, that he’s only serving ‘the family,’ that all the lushness is not for himself, but for our sake and for the common good, because it’s necessary to keep up the prestige of the company and of the noble plan in the eyes of the public – then that’s when you learn to hate the creature as you’ve never hated anything human.

 

“But his sister Ivy was worse. She really did not care for material wealth. The alms she got was no bigger than ours, and she went about in scuffed, flat-heeled shoes and shirtwaists – just to show how selfless she was. She was our Director of Distribution. She was the lady in charge of our needs. She was the one who held us by the throat. Of course, distribution was supposed to be decided by voting – by the voice of the people. But when the people are six thousand howling voices, trying to decide without yardstick, rhyme or reason, when there are no rules to the game and each can demand anything, but has a right to nothing, when everybody holds power over everybody’s life except his own – then it turns out, as it did, that the voice of the people is Ivy Starnes. By the end of the second year, we dropped the pretense of the ‘family meetings’ – in the name of ‘production efficiency and time economy,’ one meeting used to take ten days – and all the petitions of need were simply sent to Miss Starnes’ office. No, not sent. They had to be recited to her in person by every petitioner. Then she made up a distribution list, which she read to us for our vote of approval at a meeting that lasted three-quarters of an hour. We voted approval. There was a ten-minute period on the agenda for discussion and objections. We made no objections. We knew better by that time. Nobody can divide a factory’s income among thousands of people, without some sort of a gauge to measure people’s value. Her gauge was bootlicking. Selfless? In her father’s time, all of his money wouldn’t have given him a chance to speak to his lousiest wiper and get away with it, as she spoke to our best skilled workers and their wives. She had pale eyes that looked fishy, cold and dead. And if you ever want to see pure evil, you should have seen the way her eyes glinted when she watched some man who’d talked back to her once and who’d just heard his name on the list of those getting nothing above basic pittance. And when you saw it, you saw the real motive of any person who’s ever preached the slogan: ‘From each according to his ability, to each according to his need.’

 

“This was the whole secret of it. At first, I kept wondering how it could be possible that the educated, the cultured, the famous men of the world could make a mistake of this size and preach, as righteousness, this sort of abomination – when five minutes of thought should have told them what would happen if somebody tried to practice what they preached. Now I know they didn’t do it by any kind of mistake. Mistakes of this size are never made innocently. If men fall for some vicious piece of insanity, when they have no way to make it work and no possible reason to explain their choice – it’s because they have a reason that they do not wish to tell. And we weren’t so innocent, either, when we voted for that plan at the end of the first meeting. We didn’t do it just because we believed that the drippy, old guff they spewed was good. We had another reason, but the guff helped us to hide it from our neighbors and from ourselves. The guff gave us a chance to pass off as virtue something that we’d be ashamed to admit otherwise. There wasn’t a man voting for it who didn’t think that under a setup of this kind he’d muscle in on the profits of the men abler than himself. There wasn’t a man rich and smart enough but that he didn’t think that somebody was richer and smarter, and this plan would give him a share of his better’s wealth and brain. But while he was thinking that he’d get unearned benefits from the men above, he forgot about the men below who’d get unearned benefits, too. He forgot about all his inferiors who’d rush to drain him just as he hoped to drain his superiors. The worker who liked the idea that his need entitled him to a limousine like his boss’s, forgot that every bum and beggar on earth would come howling that their need entitled them to an icebox like his own. That was our real motive when we voted – that was the truth of it – but we didn’t like to think it, so the less we liked it, the louder we yelled about our love for the common good.

 

“Well, we got what we asked for. By the time we saw what it was that we’d asked for, it was too late. We were trapped, with no place to go. The best men among us left the factory in the first week of the plan. We lost our best engineers, superintendents, foremen and highest-skilled workers. A man of self-respect doesn’t turn into a milch cow for anybody. Some able fellows tried to stick it out, but they couldn’t take it for long. We kept losing our men, they kept escaping from the factory like from a pesthole – till we had nothing left except the men of need, but none of the men of ability.

 

“And the few of us who were still any good, but stayed on, were only those who had been there too long. In the old days, nobody ever quit the Twentieth Century – and, somehow, we couldn’t make ourselves believe it was gone. After a while, we couldn’t quit, because no other employer would have us – for which I can’t blame him. Nobody would deal with us in any way, no respectable person or firm. All the small shops, where we traded, started moving out of Starnesville fast – till we had nothing left but saloons, gambling joints and crooks who sold us trash at gouging prices. The alms we got kept falling, but the cost of our living went up. The list of the factory’s needy kept stretching, but the list of its customers shrank. There was less and less income to divide among more and more people. In the old days, it used to be said that the Twentieth Century Motor trademark was as good as the karat mark on gold. I don’t know what it was that the Starnes heirs thought, if they thought at all, but I suppose that like all social planners and like savages, they thought that this trademark was a magic stamp which did the trick by some sort of voodoo power and that it would keep them rich, as it had kept their father. Well, when our customers began to see that we never delivered an order on time and never put out a motor that didn’t have something wrong with it – the magic stamp began to work the other way around: people wouldn’t take a motor as a gift, if it was marked Twentieth Century. And it came to where our only customers were men who never paid and never meant to pay their bills. But Gerald Starnes, doped by his own publicity, got huffy and went around, with an air of moral superiority, demanding that businessmen place orders with us, not because our motors were good, but because we needed the orders so badly.

 

“By that time a village half-wit could see what generations of professors had pretended not to notice. What good would our need do to a power plant when its generators stopped because of our defective engines? What good would it do to a man caught on an operating table when the electric light went out? What good would it do to the passengers of a plane when its motor failed in mid-air? And if they bought our product, not because of its merit, but because of our need, would that be the good, the right, the moral thing to do for the owner of that power plant, the surgeon in that hospital, the maker of that plane?

 

“Yet this was the moral law that the professors and leaders and thinkers had wanted to establish all over the earth. If this is what it did in a single small town where we all knew one another, do you care to think what it would do on a world scale? Do you care to imagine what it would be like, if you had to live and to work, when you’re tied to all the disasters and all the malingering of the globe? to work – and whenever any men failed anywhere, it’s you who would have to make up for it. To work – with no chance to rise, with your meals and your clothes and your home and your pleasure depending on any swindle, any famine, any pestilence anywhere on earth. To work – with no chance for an extra ration, till the Cambodians have been fed and the Patagonians have been sent through college. To work – on a blank check held by every creature born, by men whom you’ll never see, whose needs you’ll never know, whose ability or laziness or sloppiness or fraud you have no way to learn and no right to question – just to work and work and work – and leave it up to the Ivys and the Geralds of the world to decide whose stomach will consume the effort, the dreams and the days of your life. And this is the moral law to accept? This – a moral ideal?

 

“Well, we tried it – and we learned. Our agony took four years, from our first meeting to our last, and it ended the only way it could end: in bankruptcy. At our last meeting, Ivy Starnes was the one who tried to brazen it out. She made a short, nasty, snippy little speech in which she said that the plan had failed because the rest of the country had not accepted it, that a single community could not succeed in the midst of a selfish, greedy world – and that the plan was a noble ideal, but human nature was not good enough for it. A young boy – the one who had been punished for giving us a useful idea in our first year – got up, as we all sat silent, and walked straight to Ivy Starnes on the platform. He said nothing. He spat in her face. That was the end of the noble plan and of the Twentieth Century.

[LibertarianSocialist]

Competition is tough stuff, especially when it comes to running a business directly facing the public. If I was his competition, I would undercut his business by using part of my 2 million in profits to lower the cost of my product for anyone that wanted to switch from his company to mine. In order to compete with this move, he would in turn have to offer a competing price, which if I played my cards right would mean operating at a loss.

 

Profit is what allows a business to grow and compete. It is their seed stock. Sure you may be able to maintain a small foothold in a market by making significantly less profits than your competition, but it usually doesn't work out that way for long.

 

This idea that you can just raise wages, I believe, comes from someone with a pretty hateful opinion of your fellow man. I have never had a employer that didn't want to pay everyone that did good work more money. Most employers celebrate the ability to give their employees raises just as much as the employee. The premise behind the idea that you can just pay people more money, is the premise that greed and a willingness to exploit others is the core character of a significant number of other employers, because it asserts that it is not reality that sets labor rates, but the whim of the employer to grub money. Which believe me, it is not - a billion calculations are happening all around us which results in the market rate of labor.

Sounds a lot like the argument in this clip:

https://youtu.be/WGqkyHd1cZk

 

Only the percentage of profits reinvested into the business acts as a seed stock. The percentage of profit which goes to supporting the capitalists exorbitant lifestyle hardly contribute to remaining viable on the market.

But if a capitalist were required to reinvest all his profit back into the business, what would be his motive for taking this burden upon himself? He would have no incentive. We see then that the capitalists only motivation is the ability to make profit above what is needed to remain solvent. His desire to maximize the wellbeing of his employers is in direct opposition to his own personal gain.

 

What that guy is doing is simply giving a larger share of profits to the employees. It is hardly impossible given the average GDP per employee (in Aus) is roughly something like 120k a year (I think). The only limit to salary is worker profit productivity minus cost of production and distribution. Of course all this is dependent on the willingness of the employees to sacrifice their own profit potential, something which not many do.

[LibertarianSocialist]

The CEO has to rent out his house to make ends meat mere month after putting this plan into action. Does he need to be living on the street asking for quarters in order for this to be seen as a clear failure?

Why is it a failure? He is sacrificing the ability to extort others (he still does, but less than usual). Of course he will be financially disadvantaged compared to others in his position. How many working class people even own a house to rent out? He is forced to live in conditions the majority of people normally experience, hardly a sob story. What is sad is the employers who don't have to rent out their house because they can afford it through wealth they have stolen from their workers.

 

Edit: This is why I hate this forum, why the down-votes? Are you so biased you are impervious to logical statements? Nothing I have said is incorrect. Where is the failure in what he is doing? As another mentioned, he is redistributing money which would otherwise be consumed by himself, he is not taking any money from the capital needed to maintain and expand his business. If he wants to live in conditions like his employees, that is a noble choice, and hardly unsustainable. Fuck all you guys, seriously, why don't you just censor me a little more for making factual statements opposed to your ideology.

[WasatchMan]

The CEO has to rent out his house to make ends meat mere month after putting this plan into action. Does he need to be living on the street asking for quarters in order for this to be seen as a clear failure?

 

Some people appear to have no reading comprehension when it comes to issues they are emotionally invested in.

[cab21]

What type of people do you think apply to a company where they know they will be overpaid regardless of performance?

 

how can a person know the person is being overpaid?

 

if the owner says

" everyone that works here can earn 70K or more a year, depending on individual and team performance measurements", is that going to still have a "overpayment" problem?

 

i don't think everyone's performance is exactly measurable.

say the salesman makes a 500k sale, but what if it was the secretary that did most of the work to sell and connect, and the salesman was just the person the company had who signed the paperwork and got the credit for the sale, or the reputation of the IT team to solve problems quickly, or the person that built the website? how do we give objective performance measurements to the value that each person on the team brought?

 

 

What type of employees leave?

 

it's not like 100% of commission only employees outperform 100% of salaried employees

people that don't like the compensation system leave, is there really a coralation between compensation systems and performance where companies with 100% commission put salaried companies out of business? salaries do still exist even for jobs where there are 100% commission spots.

 

 

What type of employees stay?

 

people that like the culture and company enough to stay.

Taking care of your employees is great, rewarding idiots isn't always as great.

 

if the employees are idiots, why are they employees?

 

people can be fired. he did not say rewards with no expectations and 100% job security. it's not like these employees get tenure.

[LibertarianSocialist]

i don't think everyone's performance is exactly measurable.

say the salesman makes a 500k sale, but what if it was the secretary that did most of the work to sell and connect, and the salesman was just the person the company had who signed the paperwork and got the credit for the sale, or the reputation of the IT team to solve problems quickly, or the person that built the website? how do we give objective performance measurements to the value that each person on the team brought?

Yeah, it's like if one were to pay soccer players according to how many goals they score, completely undermines teamwork as each jostle for the goal spot.

 

I would go further, what role did goods friends play, that helpful librarian or the guy that told the bus to wait for you? What percentage are they responsible for your successes? Not to mention the countless deceased builders, inventors and shapers of the world we see around us.

[WasatchMan]

Where is the failure in what he is doing?

 

ummm.. reality... His business is failing in reality.

[MagnumPI]

Why is it a failure? He is sacrificing the ability to extort others (he still does, but less than usual). Of course he will be financially disadvantaged compared to others in his position. How many working class people even own a house to rent out? He is forced to live in conditions the majority of people normally experience, hardly a sob story. What is sad is the employers who don't have to rent out their house because they can afford it through wealth they have stolen from their workers.

 

Edit: This is why I hate this forum, why the down-votes? Are you so biased you are impervious to logical statements? Nothing I have said is incorrect. Where is the failure in what he is doing? As another mentioned, he is redistributing money which would otherwise be consumed by himself, he is not taking any money from the capital needed to maintain and expand his business. If he wants to live in conditions like his employees, that is a noble choice, and hardly unsustainable. Fuck all you guys, seriously, why don't you just censor me a little more for making factual statements opposed to your ideology.

How exactly are we defining extortion, again?

[LibertarianSocialist]

How exactly are we defining extortion, again?

Don't forget we are talking about a "corporatist" economy here. I am talking about all the privileges the privileged classes have gained through the various "spooks" which have been cemented into law. These privileges have distorted the free market from its real equilibrium to one which allows the privilege classes to extort wealth from the oppressed classes above what is their rightful share.

 

My own belief is that the abolishment of all monopoly, including the capitalist monopoly, will allow equilibrium levels to fall to their real rates, that is, price will fall to cost of production (cost the limit of price) and wages will rise to embody their entire product.

ummm.. reality... His business is failing in reality.

Okay I did some research.

2 out of 120 people left, he is hiring even more, not a bad retention.

He is facing a bunch of customers bailing on him for his "political actions", they think he is setting a dangerous precedent with his wage increases. Others think higher wages will make the cost of service go up.

He has already got enough new customers to replace the old, but it will take a year to see a profit from them.

He is using both his personal salary and company profits to pay the wages.

 

The last point is an issue, without constant growth, capitalist businesses die. He could perhaps encourage workers to buy into the company, but he couldn't force them to.

 

All in all, it is not so clear what will happen, we will have to wait and see.

[regevdl]

Why is it a failure? He is sacrificing the ability to extort others (he still does, but less than usual). Of course he will be financially disadvantaged compared to others in his position. How many working class people even own a house to rent out? He is forced to live in conditions the majority of people normally experience, hardly a sob story. What is sad is the employers who don't have to rent out their house because they can afford it through wealth they have stolen from their workers.

 

Edit: This is why I hate this forum, why the down-votes? Are you so biased you are impervious to logical statements? Nothing I have said is incorrect. Where is the failure in what he is doing? As another mentioned, he is redistributing money which would otherwise be consumed by himself, he is not taking any money from the capital needed to maintain and expand his business. If he wants to live in conditions like his employees, that is a noble choice, and hardly unsustainable. Fuck all you guys, seriously, why don't you just censor me a little more for making factual statements opposed to your ideology.

But wait a minute.  If $70,000 was going to be everyone's salary, including his and now even he isn't earning that.  Then how is that fair.  you state that he is sacrificing the ability to extort others..... but where is the equality in that?  How many jobs did his employees create to even offer $40,000 let alone $70,000?  You mention that "if a capitalist were required to reinvest all of his profit...what would be the incentive"... exactly. It is silly and unrealistic to reinvest ALL profits back into the business and not take some to live on.   but the moment he makes a profit, everyone yell exploiter! or...extorter...which  doesn't mean what you think it means...you are using the word incorrectly.   So just as employees are motivated by profit (turning their time/energy/skill into money for the least amount of work), he too is motivated by profit.  I mean you admit that owners are motivated by profit yet oddly ignore that employees are also driven by profits.  Earning the most for the least amount of work.  It doesn't make them bad...it's just the reality.  If they hated profits, they would be sitting at home.  Even tribes in the middle of africa love profits.  They plant seeds and try to do so the most effecient way (even if in a more primitive way compared to industrialized nations) andfor their work, they are rewarded with a proportionate amount of food.  In that scenario the plants wouldn't take sympathy on the farmer and say....we will produce 30,000 more vegetables because we see you are struggling.  lol  I mean clearly that is impossible.  if the farmer wants 30,000 more veggies, he needs to put in that amount of work, so he is re-investing his profit (seeds from earlier crops, rather than eating them) to create more output.  If he undersells or overeats his output, then yes....his work won't produce enough but his lifestyle is adjustable.  how much one seed can produce is not.  that is the overall point.

 

I am going out on a limb here and guess you have never owned a business with employees.  If that is not accurate, please let me know and I apologize for the assumption in advance.  

 

When owning a business with employees, before that business even gets to a point to hire anyone, it's typical to live in very poor conditions, sometimes working 2 jobs WHILE getting the business started.  In order to earn seed money to even create my company with my husband, he and I worked 2 jobs each.  I worked as a server in 2 restaurants. One was a shi^^y diner working shitty hours and the other was at a more upscale.  Using your definitions on extorting and exploiting, I was then trying to exploit the customers to spending as much as possible while in the shortest amount of time (so I can turn tables over and have more profit opportunity).  Are individuals not deserving to be compesated for that time they sacraficed to even CREATE jobs for people?  I never understand why business owners are always bad. I mean in the very least.  Can one socialist at LEAST give the tiniest of credit that they created jobs that didn't exist?  They created an opportunity to someone who was earning $0 to now earning more than $0?  Even if that new income is still low...it's ABOVE $0.  if there is room to improve, great but admit that more than $0 is better than $0.

 

Also, non-salary earnings (benefits) MUST be taken into consideration.  One of my employees had a terrible drinking problem.  He tried to quit and couldn't afford help.  he would spend his rent money on booze, etc and get evicted and then couldn't find housing because of his bad history.  So, we made a deal. We lowered his salary BUT put a downpayment on housing and paid his rent.  If you calculate the cost of downpayment and monthy rent and utilities plus his small weekly paycheck it came to the exact amount or slightly above what he was paid in his previous weekly payments.  

 

He could go and show people his new paycheck and call us evil capitalists  and people would believe him from this sliver of evidence if he chose not to show or explalin that we also paid benefits that were customized to his needs.  So when people don't take time to consider if benefits are attached to the 'low' salary, it really bothers me.  

 

My husband worked at a job in the same industry we were opening a business in....his boss was as crooked as they come so our 'fight' against crooked employers is to use them as a paycheck and seed money to create a more ethical business to compete and drive business AWAY from them.  And it worked!  

 

So, after we had seed money to start the business, we still didn't earn a decent income for many years, however when we began hiring, of course we have to pay our employees ON TIME and IN FULL.  We deferred our salary in order to pay them.  This is how businesses work.  Finally....when we finally started making a profit, we set our salary higher than our employees because if you calculate the hours we spend consistantly running the business each week, it works out.  The employees trade immediate pay and comfort (weekends off, clock out at 5pm, etc) for lower pay. We trade harder work, longer hours, more stress FULL RESPONSIBILITY of lawsuits/customer complaints, employee complaints, etc) for higher pay.  

 

In the video, the woman said $40,000 was barely enough because Seattle is expensive.  Ok.  Does she own a car? she could downsize just as the owner....who...admit it...without him she wouldn't even have $40,000.  He downsized to make his $70,000 make due...she is exempt from that?  That's not very consistent.  Does she live downtown or is there a less expensive neighborhood she could live in and commute?  We know it's an expensive city but we don't know that she made the best economical lifestyle choices.

 

But mathmatically a employees need to bring in more than they make in salary because their salary is an expense to keep the business up and running but there are other expenses, accounting costs, taxes, electricity/utilities, furniture, general overhead.  Then if the business is part of any merit-organizaztions specific to their trade. BBB or the like. Don't underestimate the expenses to keep the business up and running.  

 

So yippie!  they got a huge bonus and now they don't have money.  was that worth it?  Even if the owner liquidates ALL of his personal assets (again....that is one of the reasons I feel you have never had business owning experiences because a good business owner keeps their personal expenses separate from business.  every competent accounting will tell you this.  

 

Anyway, even if he liquidates all of his assets and uses that to sustain the business and his salary promises.... you do realize it still won't sustain itself.  He could be living on the streets eating cockroaches and giving up EVERY conceivable exploitive opportunity and it still won't work because he will run out of personal assets.  So how many he has or not is moot because it's finite.  The ONLY way they can sustain that is by the employees performing in such a way that brings in more than they earn.  If they cannot, then their salary needs to be adjusted to their performance.   

 

And don't underestimate the microcosm of the macrocosm of this situation.  You do realize that those who were already earning more than $70,000 because they offered more experience/higher education etc were actually pissed off by this offer.  So even though they are the employees earning this salary, it's because they invested to make them more marketable and worthy of that salary and in one day someone just handed their co-workers the same amount. How hard will that make the guy work who was earning $70,000 he earned on his own merits?  Probably not hard at all which then plays back into what I described...he stops bringing in more than he earns and it's not sustainable. 

 

This is a perfect illustration how people will always tend toward comfort in the here and now at the cost of self sacrafice. How?  No one objected, no one took even 2 seconds to think it through.  Only about me  me me and not....we we we. because the WE is the company, their job security and the job security of their co-workers.  Isn't that what socialism is about?  the WE not me?  But in their testimony...now I can start a family.  Now I can buy a car, now I can buy a house.  There was NO thought or comment of the microcosm of the working community.  Not, wow, this is comfortable for me and my co workers which makes us want to work harder to bring more prosperity to all of us and maybe hire more employees so there are more people included in this prosperity rather than stuck at low paying jobs or on the street.  

 

none of that was discussed yet this is suppose to be an argument for socialist ideals?  I only hear me, me me and then somehow the owner is selfish?  lol he's the only one that downsized while the others upgraded.  Aren't they all suppose to be equal?  

 

So they self sacraficed for the short term gain.  They couldn't see down the road nor were willing to ask the challenging question....how will you pay for this boss? Is this sustainable?  Because they gained an extra $30,000 for one month and now are earning $0 if he goes out of business for probably a good 6 months according to the average unemployment search.  So.....sustainability IS a vital question.  He can be as equal and socialists as he want. it's his business, I don't care but if I were the employee I would feel pretty stupid to be blinded by a one month $30,000 increase in trade for 6 months of no pay or pitiful unemployement checks to find another $40,000 job since that is the value of my skill.  

[MagnumPI]

Don't forget we are talking about a "corporatist" economy here. I am talking about all the privileges the privileged classes have gained through the various "spooks" which have been cemented into law. These privileges have distorted the free market from its real equilibrium to one which allows the privilege classes to extort wealth from the oppressed classes above what is their rightful share.

My own belief is that the abolishment of all monopoly, including the capitalist monopoly, will allow equilibrium levels to fall to their real rates, that is, price will fall to cost of production (cost the limit of price) and wages will rise to embody their entire product.

Okay I did some research.

2 out of 120 people left, he is hiring even more, not a bad retention.

He is facing a bunch of customers bailing on him for his "political actions", they think he is setting a dangerous precedent with his wage increases. Others think higher wages will make the cost of service go up.

He has already got enough new customers to replace the old, but it will take a year to see a profit from them.

He is using both his personal salary and company profits to pay the wages.

The last point is an issue, without constant growth, capitalist businesses die. He could perhaps encourage workers to buy into the company, but he couldn't force them to.

All in all, it is not so clear what will happen, we will have to wait and see.

Wanna know why downvotes? I asked a pretty simple goddamned question. I got a screen full of propagandist poster drivel.

[LibertarianSocialist]

 

If someone uses the violence and legal privilege inherent in the system to extract surplus labour, that is extortion. This is is a corporatist economy, no vulgar libertarian picking and choosing.

 

I've never had employees in a financial situation. I don't like the family business example much, it casts to many false allusions to a romantic Jeffersonian Yeoman, it is is a poor representation of the real state of capitalist relations.

I actually am pretty relaxed about medium businesses. Most of the owners barely get by. I used to help my mother in her business running a kiosk. In her case the profits would not even cover a minimum wage, and I was basically working gratis. Such a business owner is more a worker, In that they perform a necessary role and are reimbursed a fair amount for their labour. What I oppose is the big money kings and factory owners, you know, the 1% who don't even know where their businesses are, much less how to run them. The incompetents who benefit off daddy's hard work, and of the toil of their workers, but act like they were the reason they are so successful, despite never doing a single bit of work. The banker who moves money around and somehow turns that Into tangible things. If he didn't produce anything real, from where did those real items come? From labour. Capital is dead labour to me, and has already received it's pay in full, to get any more is usury in my eyes.

 

My own ideal for a transitional society is one where everyone is a self owner of independent means, and come together in mutual free associations as appropriate.

 

Of course everyone is selfish and wants to make money for themselves, selfishness is the root of all motivation, even altruism. What I argue is that everyone should have equal standing to ensure no one has the strength to impose his selfishness on others, at their expense. Liberty demands equality, the only rights a man has is what he can take.

 

I never said using seed capital for paying wages was smart.

 

I will post again my fundamental beliefs about why capital-labour relations are unjust, address them as they are the root of our contention:

 

"From Smith’s principle that labor is the true measure of price – or, as Warren phrased it, that cost is the proper limit of price – these three men made the following deductions: that the natural wage of labor is its product; that this wage, or product, is the only just source of income (leaving out, of course, gift, inheritance, etc.); that all who derive income from any other source abstract it directly or indirectly from the natural and just wage of labor; that this abstracting process generally takes one of three forms, – interest, rent, and profit; that these three constitute the trinity of usury, and are simply different methods of levying tribute for the use of capital; that, capital being simply stored-up labor which has already received its pay in full, its use ought to be gratuitous, on the principle that labor is the only basis of price; that the lender of capital is entitled to its return intact, and nothing more; that the only reason why the banker, the stockholder, the landlord, the manufacturer, and the merchant are able to exact usury from labor lies in the fact that they are backed by legal privilege, or monopoly; and that the only way to secure labor the enjoyment of its entire product, or natural wage, is to strike down monopoly." -State Socialism and Anarchism

[LibertarianSocialist]

Wanna know why downvotes? I asked a pretty simple goddamned question. I got a screen full of propagandist poster drivel.

So you deny the existence of an organizational body with a monopoly of force which manipulates the market in the favour of a chosen class? I know you don't. Or is it that government policy is dominated by the machinations of single black mothers on welfare?

 

Also, you might want to examine the basic principles of a free market. One of the requirements is zero barriers to entry. Capitalist monopoly is a barrier to entry. The closest example to a stateless capitalist free market I know is eve online, feel free to show me a better example.

 

http://justinandrewjohnson.com/gaming/The-EVE-Online-Monopoly-Part-1

[cab21]

 free market capitalism by definition cannot exploit or extort.

 

so if we have a government that does not practice free market capitalism, we cannot blame free market capitalism on a government that breaks the principles of free market capitalism through a mixed market.

 

what do you mean by capitalist monopoly?

in free market capitalism anyone can start a  business, as long as the person does not violate individual rights to do so.