Wage slavery is a real thing in America today. I'm in almost the 95th percentile of income in the US today (although I wasn't always so lucky), and, if I were to somehow lose my job tomorrow, my first priority would be to find a new one ASAP, because I wouldn't be able to pay rent after less than 6 months of unemployment. Most people are not so fortunate. Even the most well-off Americans only have about $164K saved in their retirement accounts [0]. Real wages have been flat for decades [1]. Half of Americans don't have $500 in emergency savings [2].
My employer has nearly 100 employees; I have one employer. The job "market" is designed to create information asymmetry between me and my employer that ensures I'm not getting the best deal I can when negotiating for a job. I'm expected to give a reasonable amount of notice before leaving my job, but no such expectation generally exists on the other side of the table. I can be fired for almost any reason, or no reason. When I was hired, I had to sign an agreement signing away any right I had to ever sue my employer in court for any reason.
Now, even granted that some of these things are not necessarily going to be relevant to my particular situation (e.g. I don't really foresee any need to sue my employer, and I don't think they're going to fire me for no reason at all), what side of the table does the huge majority of the power lie on?
The solution is pretty straightforward. Replace all taxes on labor and earned income with a land value tax. This will increase disposable income of workers by directly decreasing taxes on wages, by lowering the cost of housing by disincentivizng speculative land investment, and by increasing the supply and margin of production of rent-free land, the later of which increases the bargaining power of workers per Ricardo's Law of Rent. The lack of private savings can also be addressed by creating a Citizen's Savings account for all citizen residents over the age of 21, into which a dividend is regularly deposited raised from natural resource rents.
The supply of land, and the degree to which land has been monopolized, is still the primary determining factor of wages even in a high-tech economy.
The price of rent for access to land in proximity to capital and dense concentrations of skilled workers of complementary skillsets determines how much savings one has to have before they can start a competing business or work for themselves, and the ease at which people can create a new business and go into competition with their previous employer determines the fairness at which equity is distributed in the average firm.
Isn't a land value tax punitive to poor people who buy cheap land which then becomes valuable for some reason?
Let's say I have low cash flow and bought a reasonably priced house in silicon valley in 1975. Should I basically be forced out of my house in 2010 because a bunch of ultra wealthy companies opened offices a few miles away?
So your example of poor people that it affects punitively is a rich person who owns millions in assets?
I guess that answers your question that it doesn't affect poor people. It's almost directly analogous to saying that the estate tax affects poor people who win the lottery. Both have received massive benefits unrelated to their efforts and are no longer poor, so talking about them as if they were seems like sophistry.
On one side, you would have elderly people who would be forced out of homes they've lived their entire lives in and raised their families in. On the other side, there would your pragmatic but rather cold-hearted analysis. Which side do you think public opinion is going to come down on?
A home is more than a structure that one happens to reside in and its value has other dimensions than what the market might be willing to pay in dollars for it.
Most land value tax proposals have exemptions for a person's personal home. But even if they didn't, we have financial instruments that can release the value stored in an asset like a home. If the owner looks at the situation and decides to sell and move somewhere cheap and have lots of money to spend then great, if they decide to unlock the value in their land via a mortgage because living exactly there is worth more to them then what they pay in taxes then that's also great. In both situation they are richer, and they have the opportunity to decide how to spend these riches they have accidentally acquired. Either way, they're not poor people.
Poor people would be affected by the lack of affordable housing in areas close to work though.
I think we need to better manage expectations of living space. Renters have no right to live forever in the same apartment, and if they can't pay rent, they have to move. Homeowners pay rent in the form of property taxes to the government, and likewise: if you can't pay your rent, you gotta move.
So you won a lottery ticket?
You pay your taxes or go to jail.
So you got lucky with your home purchase?
You pay your taxes or lose your home.
Property is pretty fungible - if your taxes go up, you got lucky, now you probably are sitting on hundreds of thousands more dollars. Stop being stubborn. You've had your turn in that property. Sell. Move to a cheaper place, own it free and clear, and free up housing stock for people who are willing to pay for it.
- Sincerely, the rest of us.
PS - a commenter writes:
> That ignores the possibility that you bought your house as an investment, because you recognized the potential of a neighborhood, or that you were responsible (in part) for building the value of the neighborhood.
Oh, you expected the neighborhood to improve and didn't expect your property taxes to go up? That seems really disingenuous.
> Luck
We all have luck, and for the most part, we make it ourselves. The reality of life is that you shouldn't expect to live in the same place forever. If you've had your turn in one place, but the economy is saying your turn is over, don't fight it. It's not worth it. Make your own luck. Move where the taxes and crime-rates are lower and where the schools and streets are better.
This seems antithetical to the concept of ownership. If it's my house, why do I have to give it up just because someone with more money wants it? Why should my taxes go up, just because people value my property at an increased rate? Property taxes are supposed to fund the services provided by the local government, not evict poor people for the benefit of the rich.
You suggest that buying a house that people want is like winning a lottery ticket. That ignores the possibility that you bought your house as an investment, because you recognized the potential of a neighborhood, or that you were responsible (in part) for building the value of the neighborhood. Setting those possibilities aside, being rich is a matter of luck too. Your parents were well off, you happened to study the right thing at college, get involved with a startup at the right time, or were even born with the genetics and upbringing to generate a high iq. That's all luck too. Why should the rich person's luck be rewarded by forcing the poor to give up their home and move somewhere worse?
1) Someone's getting taxed, somewhere. The question is what we want to incentivize.
Working hard for a living? Saving money and investing it to grow the economy? Purchasing food to feed and garments to clothe your family? Trading with people outside the country who make things more efficiently than you can?
Or sitting on underutilized land?
No matter what, someone's ox gets gored. The key is that it should be oriented around good public policy, and that people should have the time to incorporate policy changes into their decision making process.
2) You seem unrealistically worried about government coming in and removing people from houses they own at gunpoint. The actual worst case scenario is someone gets a reverse mortgage from the bank to pay property tax with equity from the home, and they end up bequeathing a smaller proportion of wealth to their heirs when they pass.
I disagree with this. This idea is based on the implicit assumption that the purpose of taxation is to change behavior.
As I alluded to earlier, I think the purpose of property tax is to help fund the local government. We need waste disposal, food inspectors, schools, police, fire department, etc. These things are, in part, funded by property taxes.
If people value my house at a greater rate, that doesn't change the amount of education local kids need, I don't get better police protection, and the amount of government services don't necessarily increase. Why am I paying more in property taxes then?
>You seem unrealistically worried about government coming in and removing people from houses they own at gunpoint
My main concern is the idea that we would use property taxes as a tool for taking people's property.
My main concern is the idea that we would use property taxes as a tool for taking people's property.
If I buy a wrench, it is mine, outright, forever. Owning a home isn't like that. You only get to keep the home for as long as you can afford to pay the property taxes. there are different meanings of the phrase "property ownership". I think the misunderstanding here is that you are applying the expectations of the wrench kind of property ownership to the housing kind of property ownership.
Maybe a thought experiment is useful. Imagine owning a car, where at any point in time, the market can decide to magically upgrade your car to a high-end luxury sports car. On the one hand, your car is now much more valuable, but on the other hand, gas and insurance rates just exploded, and you may no longer be able to afford the car anymore. Home ownership is less like owning a wrench, and more like owning a magical transforming car.
If I was applying the expectations of the wrench kind of ownership, then I would be arguing that property taxes should not exist. That's not what I wrote in the comments above. In fact, I specifically articulated the reason why property taxes exist - to pay for the services of local government.
Instead, I am arguing that property taxes should change based on their reason for existence, funding the local government, and not be used as a tool to deprive people of the ownership of their property.
For example: A storm blows over a big tree, which severely damages the local elementary school. The school has been underperforming anyway so we need to hire new teachers and outfit the classrooms with better technology. All of this means the school needs more money. Local government officials decide that this may be funded by an increase on property tax. This is the reason that property taxes exist, so the argument to raise it here may be good, even if the value of my property hasn't changed.
As a different example: A big tech company comes to town and hires many thousands of workers. The high paid tech workers want houses in town, and the additional demand drives up house prices. Why should I pay more taxes? People with more money may want my house, and they are free to offer me their money. Using their demand for housing to justify asking me to pay more money or lose my property is unreasonable and unethical. This is what I'm arguing should not be done.
I'm trying to envision the details and consequences of the alternative system of property taxes which you have in mind.
Are you suggesting a system where adjustments to property taxes only happen each time property is sold (i.e. when speculation of a property's change in value becomes real)?
Or are you suggesting a property tax system driven by need, rather than based on the value of the land? The neighborhood needs a new school, so everyone's property taxes are up that year?
The part of your argument which I agree is a bummer is the variability and unpredictability of property taxes, and how that disrupts one's ability to plan and set up something permanent (i.e., retire to a workshop out in the woods -- a sudden increase in value would force you to pack up shop and sell).
However, while I agree its a bummer, I disagree with your unreasonable and unethical angle. Imagine a neighborhood where someone bought a house for $50k in the 1980's, and it is now worth $2 million. Should he still be paying property taxes based on the $50k sale value? How is it reasonable or ethical that the owner of that house should get away with paying a tiny, tiny fraction of the property taxes which his neighbors (who just bought the place next door for $2 million) are paying?
Edit: I think what I'm saying is that any alternative system I can imagine is only going to encourage dynasties -- you live in the house your ancestors bought in the 1800's because it allows you to pay $10/yr in property taxes. Same goes for businesses -- stubborn mom-and-pop shops just barely staying afloat downtown could prevent skyscrapers from being built, etc.
> The actual worst case scenario is someone gets a reverse mortgage from the bank to pay property tax with equity from the home, and they end up bequeathing a smaller proportion of wealth to their heirs when they pass.
In other words, a permanent and widespread subsidy that enriches the banking industry at the expense of the public. Don't we have enough of those already?
Reverse mortgages don't happen for free. The interest and all those fees go to the banking & other industries. By making reverse mortgages a considerably more frequent scenario, those industries clearly benefit.
>Property taxes are supposed to fund the services provided by the local government, not evict poor people for the benefit of the rich.
Not so from my observations.
But your taxing authority would like you to think so. They actually have always been rich too, and that's who they favor even if none of their people are individually paid that much.
Property taxes are directly based on "socage" and "quitrents" which provided a clear legal framework to formalize the right to evict poor people for the benefit of the rich.
OTOH inheritance or estate tax is based on the medieval concept of "relief" where the tenant's next-of-kin is supposedly giving relief to the landowner who would otherwise not know where his next Shilling was coming from once the previous tenant passed away. Or the landowner is giving relief to the surviving inheritors so they will not be evicted as long as they pay what amounts to a windfall bonus for the taxing authority who can then celebrate the death of a taxpayer in appropriate style. Whatever.
US states originated as British colonies under this system and it has changed as little as possible with the continuous enforcement of your local constable.
There was also the effect which requires a tenant (owner or lessor) to produce enough from the land itself or remit in some other way, otherwise the parcel will be confiscated and someone else will be given a try.
The idea was to keep "all men are created equal" from coming true financially for the disadvantaged at a time when the King held ultimate title to all land. His local representatives would be today's county judge and tax assessor-collector, with the enforcer being the county sheriff and whatever his punishment at the time happened to be. No surprise that it seems so medieval to almost be unbelievable today, but that is the unbroken history.
Property taxes would not actually be necessary in a truly free country based on commerce, free enterprise and fairness.
Rather than perpetuating the differential between landowner and peasant as much as possible, untaxed land would tend toward flatter stewardship of the most desirable parcels allowing the maximum utilization of a limited resource when needed without the landowner requiring such a high income from the property itself to support all of today's effective "middlemen" just to retain title to it.
> The central issue in American politics is the economic security of the middle class and their sense of opportunity for their children.
Maybe for Mr. Summers, it is. And maybe as well, for liberals generally.
But there are at least a couple problems. First, many Americans are apparently convinced that some other issue is central in American politics. Maybe it's threats from foreigners. Or from Satan, or some proxy of his. Or perhaps, it's losing their guns. Or whatever.
Second, even among those who agree that the economic security of the middle class is the central issue in American politics, many have been convinced that rewarding wealthy capitalists is the best strategy.
So it goes.
Edit: Indeed, many middle-class Americans think that they're wealthy, and so don't care so much about the middle class.
The article is from a while ago, but I wouldn't be surprised if it were still true: 19% of Americans think they are in the top 1% and 20% more expect to be one day [1]. So a full 39% of Americans either suck at math or actually believe that by rewarding wealthy capitalists they are actually rewarding themselves!
Maybe ~20% of Americans are well-enough off that they feel wealthy. But they have no clue what real wealth is. And indeed, in day-to-day life, it's pretty much invisible.
Edit: Gotta quote this:
> All of this adds up to a terrain incredibly inhospitable to class-based politics. Every few years a group of millionaire Democratic presidential aspirants pretends to be the people's warriors against the overclass. They look inauthentic, combative rather than unifying. Worst of all, their basic message is not optimistic.
> They haven't learned what Franklin and Teddy Roosevelt and even Bill Clinton knew: that you can run against rich people, but only those who have betrayed the ideal of fair competition. You have to be more hopeful and growth-oriented than your opponent, and you cannot imply that we are a nation tragically and permanently divided by income. In the gospel of America, there are no permanent conflicts.
I think measuring "real wealth" by some relative metric like "top 1%" is misguided. To me, being wealthy means being able to live a comfortable life without worrying about your next paycheck.
I'm from Germany, but studying in China on a scholarship. The 1000 euros per month I get wouldn't put me among the German 1%, but in a country with a lower cost of living, I spend only half of what I get. When the scholarship runs out next month, I have a year of runway at my current spending level. That's wealthy enough for me.
> To me, being wealthy means being able to live a comfortable life without worrying about your next paycheck
Americans generally use middle-class to refer to this state. Things are good, you have a paycheck or two of slack, you can make a healthy retirement contribution and save a little each month, own (via debt) a decent house and car, go out to eat a few times a month, not pinch pennies at the grocery store, etc. Major changes like moving, getting a new car, putting a kid through college, etc. require some planning, maybe some financing, but are doable.
Real wealth would be owning a grand house and luxury car, not needing to work to sustain the same lifestyle (before retirement age; after retirement age this is baseline for not being poor), ability to self-fund a capital intensive business, casually owning multiple residences, frequent international travel, etc. Luxury cars are toys and putting a kid through college is painless. That kind of stuff.
I have no debt, some liquid assets, but still rent. I know I'm better off than a lot of the country but being in the top n% of income in the wealthiest country in the world but enjoying little of the amenities besides basic infrastructure seems difficult for me to think of myself in any way as "wealthy." Unencumbered is ahead of many but I think I'd far rather have $400k income (and, more importantly, the social status and connections that kind of occupation or niche implies) with $1MM in debt than some low six figure income with much more in common socially with the homeless and nonfunctional mentally ill.
With the increasing number of the middle class including full-time workers becoming homeless (especially now in Houston) some homeful people would be best to become less rejecting of the homeless and/or mentally affected who lost traction before them. Especially in such a case where it's so obvious that there but for the grace of god they go.
Regardless of natural disaster or not, the prevailing cutoff line is coming after your low six-figure income, since there's not much foundation remaining below that level.
If you are providing shelter or a more extensive domestic environment those are not functionally very much like six significant figures anyway, but you knew that.
Nah. Someone with $25k assets and $20k debt is substantially wealthier (i.e. can use their money to accomplish more purposes) than someone with only $5k.
Having a major asset (like a house) owned outright might be closer to "real wealth" territory.
Not always true when someone having only $25K in assets is servicing a challenging $20K debt.
Someone else without debt having $5K in cash can sometimes jump at an opportunity that would be completely out of reach for such an encumbered debtor. They usually wouldn't have the $20K debt unless they had already spent all or more than all of their cash at one point, up to approximately $25K already spoken for.
Right on target with a house owned outright until the exponential rise in your pesky property tax gains enough momentum to become an actual threat.
that's not right. real wealth is having a low cost of capital.
the wealthy tend to carry debt because it's plentiful and cheap for them. access to cheap money gives them access to better returns than the average bear. if you are not wealthy, debt is expensive and not nearly as rewarding.
but having debt, of course, doesn't imply you are wealthy.
I agree that there's far more to life satisfaction than money. But that's a different conversation. The point here is that people support policies that favor the top 1% because they foolishly believe that they're part of that top 1%. Or because they believe that they will be. Or because they believe that said 1% drives the economy.
> The point here is that people support policies that favor the top 1% because they foolishly believe that they're part of that top 1%.
Or because they do not believe in taking from others in order to themselves have something.
You literally ascribe people's actions and beliefs to foolishness, when a little introspection will show that others are not necessarily being foolish.
As far as I'm concerned, real wealth is the point at which you no longer have to work because your money is working for you AND that money is producing enough for you to be in the top 1% of earners in your country. (I believe that is $250k/year in the US, though I'd be fine with $100-150k)
Why is this important? Because at that point, you can do, say or believe WHATEVER YOU WANT without fear of losing your job and you have the capital and network to influence others.
To me, that's about $20M ($10M in my case) invested in a boring old three headed portfolio (50% index, 25% bonds, 25% international index).
Earning $20M for the sole purpose of saving it is not easy. The only ways i know of acquiring that wealth is through an inheritance, a significant liquidity event or by stealing it.
>>Maybe ~20% of Americans are well-enough off that they feel wealthy. But they have no clue what real wealth is. And indeed, in day-to-day life, it's pretty much invisible.
I suppose you could be in the 1% in your community and not nationally.
Well, those 20% aren't so deluded. In fact 12% of all Americans do enter the top 1% at least for a year. [1] (Granted it's not clear from the above link whether the poll question was worded to clarify this ambiguity.)
You don't "enter the top 1% at least for a year". To be part of the 1%, you at least have enough capital to live off interest indefinitely. Indeed, enough for your children to live off interest indefinitely.
I think you mean "to be rich". To be in the top 1%, you, by definition, need only to have an income which is in the top 1% of the US income distribution. However, the lacuna between the income distribution and the power distribution is exactly what is misleading about the term "the 1%" when it is used to complain about the power of the wealthy in modern America.
Some people use top 1% to refer to income. Some use it to refer to wealth.
For range majority of people income relies on a job, and by doing it harder/longer/smarter you get a higher income. Our tax system peanalisies hard work.
The other option is to treat rich people as those with a lot of money, not those who are most productive.
When I think of someone who is rich, I think of someone who is wealthy. That means having a lot of wealth, more than 99% of the country. To do that you need assets of over $8m (2013) {1}
That amount of assets should be able, long term, to grow with inflation and still deliver over $100k a year to live on. Even if it didn't just withdrawing the cash at $100k a year will see you through for life.
There was this year that my friend sold her apartment... It was a lot more money than she originally paid for it. She got an awesome income that year.
For the article:
> Using data from the Internal Revenue Service, Mr. Carroll showed that between 1999 and 2007, half of those who earned over $1 million a year did so just once during this period...
I think these kinds of misconceptions people have about themselves are quite common, in fact. Like that the vast majority of people think they are above average drivers.
>>But there are at least a couple problems. First, many Americans are apparently convinced that some other issue is central in American politics. Maybe it's threats from foreigners. Or from Satan, or some proxy of his. Or perhaps, it's losing their guns. Or whatever.
This is very much by design. The state and controlling money interests are happy if people are complaining about guns, weed, LGBT rights, neo-Nazi marches, and so forth as long as the complaining does not involve economic insecurity and/or civil liberties.
More to the point, those interests are very good at manipulating people. And doing the old divide and conquer ploy. Creating a crisis, and reaching a false resolution.
I'm guessing that they'll become our AI overlords.
In order to supplant an ideology, you need a new ideology. A coherent set of ideas, rather than a disparate list of complaints. When people understand (or at least think they understand) where their beliefs are taking them they're more likely to work together, which is necessary to accomplish anything. That's why communists, fascists, Christianists, Islamists, and anarcho-capitalists have organizations and magazines whereas people who are concerned about how behavioral economics affects modern capitalism do not. There's no such thing as Tverskyism.
I've been thinking about this for a while now, and the core of the divide seems to be that people divide themselves into groups and seek advantages from one another as if they're playing a zero sum game. That may or may not be by design, but it's what I believe to be the "how" of it.
The only solution that's ever worked to turn that around is sacrafice. People need to start intentionally engaging in "losing" propositions to win hearts and minds to a cause. It's only by delivering gifts that you can turn a competitive game into a cooperative game where everyone wins together. If everyone insists that they win first, then you're stuck.
Those are complaints about specific issues and outcomes.
The inquiry at hand touches on the fundamental dynamics of the system that those issues and outcomes occur in. How people get manipulated into favoring the interests of the wealthy, over their own.
You have also left out an interesting third group, who are interested in the welfare of the poor, and believe the middle class have gotten far too much airtime and are basically the same as the super-rich with respect to the poor's concerns.
These folks don't come out much on a national level, but are prevalent in urban housing debates, defending the poor and rich alike against the (upper) middle class.
100 years ago in Australia, there was a 'great strike'. It was about a lot of things, but the straw that broke the camels back was timecards. Workers felt like management were 'Americanising' labour, and the pressure of worsening or stagnant conditions wasn't helped by the country being in the middle of contributing to the war.
Anyway the strike was overall 'a failure', but filling in the outline I've given above was some wonderful bits of colour and detail to the story that were on the national radio here in Australia recently. I hadn't heard before - and while I can't find the radio link just now, a summary is here [1].
I thought it was interesting to note that the issues from 1917 are remarkably similar and understandable to those in 2017, for employees and employers.
I'm an American labor lawyer and often find myself thankful when an employer actually keeps accurate time cards. "Time shaving" and wage theft are so rampant today and are a significant part of the billions of dollars that workers lose each year in this country [1]. It's a lot easier to do that when you fudge the time records, or don't keep any at all.
I don't understand why there are not more co-ops in this world.
In Canada, Mountain Equipment Co-Op (MEC) is the all-in-one kick-ass outdoor store (like REI). It is a co-op, so you pay $5 for a lifetime membership.
The place does not make a profit. All expenses are paid, all employees earn their living. At the end of the year, if they accidentally made a profit, they simply return the extra money to all the members of the co-op as a percentage of whatever that person spent for the year, thus they make no profit.
This, to me, is brilliant. Customers get what they want, employees get paid. Win. Win.
Why do we need stores that make profit?
Why do we need banks that make ever-increasing billions in profit?
I imagine a world where banks, Apple, Ford, etc. all worked like this. I want to live in that world.
There are many cooperatives that you don't know about. For example, State Farm is a "mutual insurance" cooperative, so are many mid-western Blue Cross & Blue Shield (Anthem is private). Credit unions are cooperatives. Here's the problem: people don't choose cooperatives over non-cooperatives, and, even if they did, they do not participate in the governance of these cooperatives.
I think there is huge technology opportunity here: (a) increasing usage of cooperative services, and (b) giving consumers/producers "users" of the cooperative a real say in these organizations.
The question is never about why something doesn't exist - it's about if it can be made to exist. I.e. how can we get from here to there. Economy is a dynamic system; for coops to thrive, they not only must be good coops, but also better or equivalent to regular companies, in order to survive on the market.
I'd rephrase your question as: under what conditions can coops survive and thrive among regular businesses? After figuring those out, the next question is: how do we get from here to there? I.e. is there any way we can nudge the market, be it bottom-up or top-down, towards that future?
REI is a coop as well, with a somewhat similar dividend structure. However I doubt that all of the profits are fully distributed at the end of the year to members. I would bet that there are 'members' who are investors/owners, not typical consumers, who actually take some of the profit home (but that is a guess, I am happy to be wrong). And of course any business should have savings as well, for multi-year capital expenditures, incidents and accidents, etc.
The interesting thing about MEC is that they have had pretty good growth in the past 25 years. I started going to the one in Ottawa in the 90s. It was the fourth store. MEC started in 1971 and Ottawa's store open in 1992. There are now 22 locations. The buildings they built aren't cheap either.
Looking at their most recent financial statement, it looks like they have $284 million in assets ($164 million being property). They did $365 million in sales with ~$110 million in gross margin. They made $3 million in earnings. So pretty darn healthy, especially with their current aggressive growth. ~3% profit from gross margin is quite reasonable. The company owes ~$190 million to its share holders, but they have no way to redeem it...
I wonder what the executives pull in. "Selling and administrative expenses" are $110 million (which I guess includes all the salaries and executive compensation). So not too shabby.
If you want to live in that world... it might be worth giving it a try.
In the current economy I feel co-ops are bit too radical to remedy the imbalances of power within large businesses (where it really matters). We might need something less aggressive like the widespread promotion of Employee Stock Ownership Programs (ESOPs) as a start [1]. Also co-ops might come across to business people as something along the lines of "loony-leftist Marxist idealism". Instead one can speak their language by saying things like "decentralizing planning" and "capitalism where everyone is a capitalist" and show how there is indeed common ground. An excellent example of this is The Capitalist Manifesto by Luis Kelso [2] (the creator of ESOPs).
Here Finland we have couple very large Co-ops eg https://en.wikipedia.org/wiki/S_Group and there is not really any difference between large corporation and large Co-ops at daily life.
Should link the whole Democracy at Work channel: https://www.youtube.com/user/democracyatwrk I think it offers a refreshing viewpoint that many people on HN should consider
For the record, Valve is a very different company today than it once was. It's hard to produce any reasonably backed-up insights into their modern culture.
I'm not sure if that structure even still exists. The article mentions that half life projects failed to gain support from "upper echelons", a group that does not exist under the alledged organizational structure.
I've seen other allegations that it's nominally flat, but informally hierarchical in practice. There are cliques that each have their leader, and you can't get anything done without having influence within the social circle of leaders.
The US has weak unions because labor law enforcement is so weak. No administration has done much about that in decades. 11% of US employees belong to a union. 32% in Canada. Read "Confessions of a Union Buster" for background.
In theory, whether to organize a union in the US is entirely up to the workers. The employer has no say in the matter. Few people even know that. Employers try hard to maintain that ignorance and keep workers from organizing.
In many European countries, McDonalds is unionized. The SEIU is trying to unionize it in the US.
Unions are implemented differently in the US and elsewhere. IMHO the case law around unions in the US sets up a perverse incentive structure that results in an antagonistic relationship between capital and labor, ex: Supreme Court ruling requires that unions protect all of their members from firing, even the obviously terrible ones, this has resulted in huge inefficiencies for workers AND capital alike. Other countries like Germany have better union implementations, such that the union usually has a seat on the board of directors and is able to better set company policy in a non antagonistic non zero sum way.
> Supreme Court ruling requires that unions protect all of their members from firing, even the obviously terrible ones, this has resulted in huge inefficiencies for workers AND capital alike.
This is one of the reasons I never liked unions - they protect the low performers and smooth out the pay scale regardless of performance. I believe in them now though. They are a sorely needed check between capital and labor. The concentration of capital has gotten out of control. Unions force some of the distribution back to the workers.
Let's not forget that unions can also become detrimental to employees' working environment. In France unions are very powerful and unionists when going on strike, prevent non-unionists from working, and retaliate against folks who do not agree with their agenda - this goes against individual employee freedom and becomes another form of coercion. And unionists, no matter how piss poor a job they do, can never be fired (in theory they can, but in practice it never happens).
> And unionists, no matter how piss poor a job they do, can never be fired (in theory they can, but in practice it never happens).
Do you mean union leaders or regular members? Because if it's the latter, then you have a counterexample in every 100% unionized company that ever fired anyone.
> Do you mean union leaders or regular members? Because if it's the latter, then you have a counterexample in every 100% unionized company that ever fired anyone
This is an interesting point. In countries with well functioning high organization such as Sweden (but unlike France) the key to the situation is the peace agreement (yes it's literally called that) between unions and employers.
Basically: unions promise to work during the whole contract period.
So when strikes happen, it's when the contracts are renegotiated, which happens e.g. every two years. If the parts can't reach a new agreement, unions go on strike.
Unions don't just strike willy nilly in the middle of the contract period. Employers actually quite like this: it gives them stability and a competitive edge over countries where production might be disrupted by a strike at any point.
Strikes that happen in the middle of a contract period are called "wild strikes" and are usually not sanctioned by unions. These are very rare, compared to e.g. Denmark and France.
The union's power is tremendous when it's actually allowed to use it. For example, it typically blockades everyone from working. Even if a non-union member would want to work, the employer usually doesn't dare letting them. And even if the employer would want to keep operating with other employers, the union usually gets help from all other unions to ensure the employer can't do anything (deliveries don't work, garbage collection doesn't happen etc).
One example of the power of Swedish unions is that Sweden has no minimum wage law. Sure an employer could pay less than the union rate by why wouldn't the worker go to a union shop instead?
> Sure an employer could pay less than the union rate by why wouldn't the worker go to a union shop instead
They couldn't. They would be blockaded. Unions demand that all shops pay union rate, regardless of whether employers of the other shop are happy to not be union. So unions decide rates for all employers and all employees.
He means "delegates", kinda like union leader but not exactly.
But they can absolutely be fired, they are simply a protected class of workers, meaning they cannot be fired because of their delegate status, but can be because of anything else. It's very similar to the US protected classes of workers.
The guy got fired for cause after 26 years in the company, because of a coffee break that lasted too long. Due to his protected status, a court has to validate the firing, and in this case they did.
@ekianjo is simply dwelling on the common French entrepreneurs narrative that the law is anti-business, etc.
Things that could actually be done to make for a more level playing field:
* 'Single Payer' healthcare (tax everyone for basic healthcare)
* Allow all kinds of debt to be discharged via bankrupcy
* Have the government complete as (several) providers in all 'basics'.
The last one includes (some of these are already utilities):
* Water
* Sewer
* Power
* Transport (of all kinds, including last mile data)
* Housing / organizational locations
* Education
* Medicine
Maybe private businesses can be more efficient than a not-for-profit government owned (and run) organization; if so let them actually compete.
> Allow all kinds of debt to be discharged via bankrupcy
Credit would dry up overnight and interest rates would go through the roof on many loans.
Also why would anyone ever offer a student loan under these conditions?
>'Single Payer' healthcare (tax everyone for basic healthcare)
We are about to have net neutrality repealed over the objection of everyone except ISPs basically. Medicare isn't even allowed to negotiate drug prices, but our govt run single payer system will definitely be immune from regulatory capture. Right?
Instead of this single payer fake solution I would much rather hear real solutions from the left. Such as, no medical service or prescription can cost more than the average price from a basket of oecd countries. If we could cut through all the bullshit and just implement that one idea it would solve most of our healthcare issues.
> why would anyone ever offer a student loan under these conditions?
Are you saying that it's not possible to offer profitable rates on student loans that could be forgiven in bankruptcy like other debts are? If so, how is that not saying the same thing as "to fund the education of the successful requires perpetual funding from the unsuccessful"?
I'm saying why would you extend a massive loan to someone who is broke, has no credit, and can immediately discharge the debt. They could and many of them would immediately discharge the entire balance of the loan upon graduation by declaring bankruptcy.
They don't offer 40k+ loans to people with no credit at any rate.
There are different ways to do that by redefining the way bankruptcy works. E.g. Personal bankruptcy could result in 2-3 years of handing over most of your income to the state (which distributes across the original loan providers), expect any major assets to be liquidated (e.g. Your house), before you're considered debt free.
If you just graduated from college with no money and debt how could you have a house? Also that is currently how bankruptcy works anyway.
>Personal bankruptcy could result in 2-3 years of handing over most of your income to the state (which distributes across the original loan providers)
That is even worse than how bankruptcy works right now for most debts. There already is loan forgiveness after so many years for student loans.
Also even if they did offer some faster path to discharging student debt the interest rate on the loans would go up to handle the increased loss from defaults. That would not really make the situation better either.
> Credit would dry up overnight and interest rates would go through the roof on many loans.
That's a silly thing to say. Will the Moon fall down too?
> Also why would anyone ever offer a student loan under these conditions?
Probably profit. Don't you think? Isn't that usually why loans are made? You understand that this is a recent change to the law (1998) and prior to that, student loans still existed and worked fine?
Why would you extend a massive loan to someone who is broke, has no credit, and can immediately discharge the debt. They could and many of them would immediately discharge the entire balance of the loan upon graduation by declaring bankruptcy.
They don't offer standard 40k+ loans to people with no credit at any rate.
Also even if they did offer that the interest rate would be insane because you are dealing with so many defaults. That would not really make the situation better.
Student loans wouldn't be required for an education since the government would be competing with private entities, at least for fields of training that the government felt were useful for society.
For medical care, no, I don't mean the current broken compromise and comparing the regulatory environment in other nations to our own is insanity. I meant what I said in the /government/ providing a market baseline. If we have to start out with massively expanding military medicine and educating doctors that want to serve in the military for a bit (and be paid normal wage for that) for no extra charge then that's where we go.
This observation came to a head for me during a conversation with my fiance about tuition costs.
I went to Stevens Institute of Technology, a private engineering school in New Jersey. When I started my schooling in 2005, the average tuition, not including room and board, was a little under $27,000. [1] It is now a little over $50,000, again, excluding room and board. [2]
I studied Computer Engineering. The average salary for a computer programmer in 2009 (I didn't graduate until 2010 but had a job starting in 2009) was $64,036. [3] Today? $79,840.
So despite the average wage for my work increasing by 20%, my school's tuition went up by over double that.
After factoring in rapidly increasing housing costs, it became evident to me that (a) I'm in a race to increase my compensation before everything else goes up, and (b) unless our government does something to curb these rapidly increase college tuition prices, there is a significant chance that unless I make and save A LOT of money in the next 20 years, my future children, should we have any, will either not be able to attend the same college as me (or similar), or they will be in debt for MUCH longer than me.
Unions are useful for more than just better pay. If that's a concern, charter some new type of union-like organization that doesn't touch salary/wages.
One of the most important reasons for unions is to fight back against abusive employment practices that are unrelated to employee compensation. While software development doesn't have anywhere close to the problems mining or factory jobs, we it might be a good idea to address the culture of working long hours with chronic sleep problems. A union could also fight unfair hiring practices like age discrimination or the scandal from a couple years about hiring collusion to between several Silicon Valley companies.
I was just having this conversation on HN about a week ago.
I think a union for web developers would be a fantastic idea. Like you said, not necessarily for negotiating pay, but that could be part of it. It would be nice if a developer could rise from being paid close to minimum wage to an average software engineer's salary without having to switch jobs 6 times.
As an industry we need to address the problem of endemic project failure. Companies who aren't in the software industry generally don't understand how to produce software. Usually it falls on individual developers to teach the rest of the organization how to do things like write stories, build a deployment pipeline, etc. How to trust programmers to do things at their own pace and not resort to cracking the whip all the time. Anyone who's done this knows it's an uphill battle. Usually programmers just choose to leave a dysfunctional org rather than stick around and get punished for trying to do their job. Then you have dying projects full of code no one understands or wants to understand.
It would be great if we could come together to take control of our industry and really turn it into a profession. If it's what people want, we could try to engineer a profession where it's reasonable for a developer to expect to hold the same job (or at least work on the same codebase - even as a contractor) for at least 5 years without a major upheaval. Or one where you can expect to use at least some of what you learn in university / boot camp on the job. Or one where workers are expected to have different output levels and they don't fear being let go for not being a natural fast learner like John. Things we don't have that other professions take for granted. All these things aren't going to happen in the current dev culture, but would in fact be beneficial developments not just for employees but for employers as well.
If we don't do this type of thing ourselves, companies like Google, Amazon, and Facebook will remake the industry in their image as they have done and are doing. This will result in a great worker pool ready for them to draw from, and a broken industry for everyone else.
I think the argument goes: We make table scraps compared to the amount that a corporation rakes in. Yet we're the sole reason they're able to rake in that amount of money.
I think we're fully in the "see what little you can pay someone to get them to do a job" optimization mode. The marginal cost=marginal benefit argument doesn't seem to apply anywhere.
On the contrary, if you're actively making something (burgers, computers) then you're usually not paid enough to actually consume those things on a regular schedule. I think that's a symptom of an emergent caste system.
What reason do we have to think that for e.g. Google, marginal cost of hiring another engineer is not equal to the marginal benefit? Be careful not to confuse marginal benefit with average benefit, which as for almost all inputs in the economy, is always higher than marginal benefit.
I believe OP repeated a good sounding slogan ("workers should be able to buy the things they produce!") they had heard, without having spent any thought to what it would mean in reality.
My example is meant to show that principle is absurd, not that OP actually believes in that consequence. I admit the point could have been delivered friendlier.
As for charitability, we are all prone to agree to what fits with what we already believe without critical thought. This time OP slipped up, many times it's been me.
That's not how I perceived your comment. You took the statement and came up with another statement and claimed it was a logical extension of the first. But it was not faithful to the original statement. Nor was that my only point. You essentially found a logical exploit and dumped the rest of my meaning. That's violent.
Well, there are "reductio ad absurdum" arguments - which attempt to show that an argument is bad because it leads to absurd conclusions. And as its fancy latin name suggests, its as old as the ages, and is often a reasonable form of argument.
My core substantial point is that there should be no connection between the unit price of what a worker produces and their wage.
To take an example at the other end, should someone working in the paper clip industry be happy as long as they can afford to buy one paper clip?
I can understand an emotional reaction to people working on goods just outside the reach of their spending power. But if you think about it, those two numbers have nothing to do with each other.
I'm not so sure most people can fly for leisure. Setting aside the miseries of air travel, and whether it constitutes "leisure" or not, according to an AP-NORC[0] survey, 43% of Americans were not vacationing this past summer, and, of them, 49% cite cost as the main reason. Only 12% of non-vacationers said they weren't vacationing in the summer because they were planning on taking a vacation another time of year. Putting that all together, 38% of Americans say they simply can't take a vacation for such reasons as cost, and "can't get time off."
Given our culture of consumer debt, this doesn't speak to whether people can afford to vacation, just whether they intend to do so or not. And, it doesn't really break down flying vs other modes of travel to vacation destinations. Nonetheless, I think this suggests that "many" people, in fact, cannot "afford" to fly for leisure.
Good concept here where there should not be misunderstanding.
When Henry Ford attempted to build the first commodity private motorcar for the middle class worker whilst also paying his assembly line workers enough to afford one of their own from their wages alone it was by design a very delicate balance. The idea was to enable someone, even without significant resources or higher education, who had the aptitude and is a hard worker to become an employee and in a measurable way start to join the middle class their own self. The assembly line was engineered to be profitable enough to accomplish this to begin with. What this meant was being able to gradually afford a house, a car, a spouse, and kids on one worker's income of course. Could be accelerated with overtime. Upward mobility financially by productive labor alone without having to receive a promotion in the workplace, or having to rely on family or other resources to become established.
Ford's factory as a system was created to be a value- and money-making-machine with everyone involved moving ahead together.
This element of mass-production of a new commodity for a large target class while simulaneously enabling new workers to enter the target class from their labor alone is one of the things that allows it to scale so well, and when this element is compromised the scaling may be unsteady and/or unsustainable.
This element is also not very present on the Boeing assembly line. Mass-produced commercial aircraft are still commodities but no middle class person is expected to purchase one using their labor alone. Balance is required but at a different pivot point. With Ford starting at a 0X target the degree of balance should be more obvious and easier to maintain. Boeing is a good example of the opposite extreme, those aircraft are so expensive who knows what multiple would be required just to get something like that off the ground. The higher the labor multiple like this you would think the more difficult the balance would be to maintain, but of course any multiple is huge compared to zero. And there's no more benchmark for anybody since the US dollar is so compromised now, a worker may have to do lots of overtime just to afford a car that's reliable enough to get to work in the first place, which can keep a home itself out of reach for their forseeable future.
Anyway, there have always been craftsworkers who build unique things for royalty, others who mass-produce commodities intended for the middle class, and anything in between. Either way the most successful can sell all that they can make.
New cars and aircraft are not designed for those whose resources are so low that they are below middle class. Such low-resource individuals can only maintain economically by doing without the full-price commodities of the middle class, substituting with second-hand and surplus commodities when possible. For them, higher expenditure levels can be unsound but are often entertained in order to give the appearance of full middle-class status. For instance the purchase of a brand new car or brand new home instead of second-hand may provide some degree of comfort but can seriously hamper any true progress up into the full middle class, especially for someone who is making a credit purchase.
You're not truly in the middle class unless you can actually afford to pay cash for the true middle class commodities. Extravagances on credit maybe but not necessities or common commodities.
Seems to me that when assembly lines are truly bettering the wealth of their workers, everything goes well until you can no longer sell all that you can make.
Uh-oh.
Employers are always going to have the upper hand, but during cutbacks even the truly generous payers can seldom recover anything significant by limiting employee compensation without being quite destructive to the structure that the founder had built. Employee cutbacks beyond a certain level, or in the case of employers who are on the edge by paying "market" or "competitive" rates, will end up generally halting employee's upward mobility in a tangible way. Even under the most severe conditions, shareholders with strengh and conviction are supposed to be there to absorb almost all of the financial fluctuations. Capitalists who fail to intentionally restore prosperity to their employees as soon as possible seem to be a great source of opportunity for a union to become competitive in offering more to the employees in bulk than the actual employer is doing on their own at the time.
Balancing the employee's entire financial opportunity versus a relatively small percentage of the bottom line is not easy even when it's intentionally generous.
Employee prosperity is always at the discretion of the involved capitalist, and the labor market is suposed to be set by comparison to how productive those workers would be if in business individually or teaming in a way that allows them to absorb almost all of the gains or losses from operations themselves.
Looks like without undue extraneous influence, capitalism involving other people's money would not be as rewarding compared to plain entrepreneurialism where the worker has the resources to fund the venture independently of other people's money.
>>I think the argument goes: We make table scraps compared to the amount that a corporation rakes in. Yet we're the sole reason they're able to rake in that amount of money.
I know you don't agree with it, so I'm not ascribing this to you, but of the set of people who believe that, then why are so many startups failing left and right and laying off workers because their products don't hit critical mass? Millions of dollars paid out to the workers who churned out a failed product. Their downside is being out of a job. The entrepreneur's downside can be and often is much larger.
Larger? You mean, they find another investor and start a new failed company? I don't know, but one of the few things these people seem perfectly competent at is pitching.
Yes, not for themselves but for society. If you like the way Germany, The Netherlands, and the Nordics do things, you should know that these countries have very high levels of union membership, up to 80%. Their broad labor movements created the societies they have today. Unions in America never had that much strength and never accomplished as much.
It's not only membership levels, it's cleverness. In France unions are often explicitly anticapitalist. There's little you can do to work with them. Most people believe their pay could be doubled without harming the company, because there's a stash somewhere [1].
Whereas in Germany, unions seem to have a clever dialogue with employers. Probably most people have been educated to economics, in a pro-capitalist way?
[1] Ironically they're not so wrong: Because of our mandatory contributions, our compound tax rate is 63%.
I think they do, yes. A few generations of kids growing up learning programming from kindergarten onwards is going to ensure that programming is put on par with welding, carpentry, painting, etc.
Those of us commenting here today may not be around to see it happen, but I believe it will happen eventually.
For now things are good. We got lucky and we found ourselves in a relatively new profession that not a lot of people are trained in and we're making good money (and some of us don't even have college degrees)
It really isn't. Programming is still a niche skill - we've had a generation now that's grown up with their eyes glued to computer screens and now smartphones, and the average user still isn't any good at troubleshooting, let alone programming.
Also, the trades historically haven't been particularly well-paid, but that's not the case anymore.
A minority of developers get the rockstar wages of Silicon Valley, the majority are paid typical middle class saleries from 25 to 35, a substantial number have been tossed away by 50.
Moreover, a substantial number work in such high stress situations that they have to get out after a bit and suffer serious burn-out as a result.
A union, professional association or better labor standards might be able to address all this.
Well yes and no. Unions for white collar workers are pretty different from "traditional" unions.
I'm a software developer making nearly $100k (That's probably $200k in Silicon Valley dollars) and I'm a union member.
Now, my union isn't a blue collar union in the traditional sense. My union is just an employer organization to e.g. push mandatory contract contents like flexible pension age, insurance issues etc. It's a white collar union. They don't negotiate salaries for their members. If I ever end up in a situation where I need legal help, e.g. I'm quarantined when leaving an employer and think it's unfair - I can ask my union for legal help. They also provide an unemployment insurance to bolster the public insurance for their members (if the public provides 50% of income, the union one adds to that so get maybe 80 or 90% of your income).
Blue collar unions on the other hand represent people who are replacable. The union is their only way of achieving bargaining power against employers. Blue collar unions typically negotiate wages and raises for all members at the company. Blue collar unions may have to go on strike etc, whereas white collar unions rarely do. That means my union fee might be 1/4 of what a blue collar union costs per month, since the white collar unions don't need a stash of money to live through a strike.
So these are fundamentally different organisations. My union is more like a legal aid + insurance deal that costs me a few bucks per month.
Now: you could argue that with my relative power over my employer, shouldn't I be able to just negotiate this myself? I should be able to retire when I want? I should be able to just hire a lawyer when I need one? And buy unemployment insurance at market rate?
Well yes, I suppose. But the insurance is actually pretty good valuye for union members (we are considered less likely to be unemployed so the premium is much lower) and I'm happy to buy all that stuff as a package deal. I like the idea of someone representing my group and not just me.
Software developers are already highly paid with lots of perks
In a few hotspots yes. But the vast majority of programmers are just office workers like any other. But unlike HR and so on, they face the threat of offshoring...
It's like saying all musicians are highly paid and have loads of perks because look at Jay-Z.
I think that is a horrible argument. It always bothered me that my employers could ask a lot of money per hour to their clients and I would only receive a very small part, even though I did most of the work.
So in the end I decided to become freelancer. I can ask much higher rates and now I feel I get a fair compensation for my work (perhaps 2x or 3x my previous wage). And apparantly my clients believe so as well.
>>So in the end I decided to become freelancer. I can ask much higher rates and now I feel I get a fair compensation for my work (perhaps 2x or 3x my previous wage). And apparantly my clients believe so as well.
That's fine. I'm an entrepreneur as well and I make my own rules.
But there are a lot of people who just want to cash a check and do the work put in front of them. I employ a lot of them. And they're great. They have no aspirations to strike out, to deal with healthcare as a freelancer (have you tried being a father of two with kids or a spouse with chronic medical issues?), to deal with financial windfalls and insecurities, and so forth.
>I think that is a horrible argument. It always bothered me that my employers could ask a lot of money per hour to their clients and I would only receive a very small part, even though I did most of the work.
Did you? Are you ignoring all the work that went into landing the contract? If your work was really the major effort the smart thing to do would be to strike out on your own.
>> So in the end I decided to become freelancer. I can ask much higher rates and now I feel I get a fair compensation for my work (perhaps 2x or 3x my previous wage).
I'm pretty sure that wasn't edited in in response to your comment, since it's quoted in another comment much older than yours is.
Yes, we need better conditions in the workplace, do you know how many people in the HEALTHCARE industry of all places go to work every day and have to touch another person's MUMPS? Often times they take kids right out of college. Sickening.
What should be the proper expectations for someone entering the workforce?
Is everyone actually equal?
Certainly not.
Some earn qualifications to do various types of "Knowledge Work" and others don't.
Some will take smart risks, work hard, create value, build capital, and be able to employ others. Others take dumb risks, create little value, and go from personal bankruptcy to personal bankruptcy.
And still others will take their qualifications and work for large companies or organizations, and get used to not taking on any risks. They put in their time, create marginal value, and go home.
If they're not earning what they think they deserve, they can take their complaint to the marketplace, line up interviews, put their best face forward, and see if they can convince an employer to see it their way.
I'm disappointed in Larry's pandering to the "I'm a victim" mentality. We need more people with an "I can do anything" mentality.
One thing I'd been wondering about was how minimum wages interacted with the obvious power imbalance between low-skill, low-wage workers and their employers. If I'm right then employers would basically be compelled by competition to take advantage of their most powerless employees, in the absence of such legislation.
In the free market ideal, the wages would be getting forced higher than is ideal by government intervention, but apparently reality hasn't supported this theory, and one obvious reason to me is that the wages were being suppressed below their true level due to this asymmetry.
Tangential aside: is this the same Larry Summers that suggested we should ship toxic waste to 3rd world countries because their lives were worth less? Things must be getting pretty grim if he's speaking out in favor of unions.
If only we could figure out and implement some kind of system where every person had one equal say in choosing leaders, regardless of wealth or social position. Then those who were disadvantaged could outvote the privileged few and elect leaders who would set policies to make things more fair.
The problem is that there's no one to choose. First past the post prevents voting for your favorite and party control prevents populist candidates. Trump broke past but Bernie didn't despite his popularity. Gerrymandering and voter restrictions disenfranchise and secret $ flows from corporations to astroturf campaigns. We exist in a mirage of democratic control, vote reform is necessary.
This is pretty unrealistic. We can make those rules, but wealth and social position can influence so many people moreso than many other sensible factors.
Jeff Bezos doesn't have time to micromanage all of his enterprises. It's also likely that some individual writers and editors at the Washington Post disagree with Jeff Bezos on nearly everything. These are managed by people who do have time to micromanage if they choose, but these managers are optimizing for more local goals such as making the Washington Post profitable, not large-scale goals like shaping society to Jeff Bezos' overall profit. Given current trends, it might indeed be profitable for the Washington Post to take this side on this issue. And Jeff Bezos might see that profit as worth it, or might not even notice in the midst of his other investments.
Larry Summers is also a huge voice in establishment economics.
The WaPo would implode if (many) people thought Bezos was coloring the editorial decisions of the paper to such an extent that such an opinion piece was discarded.
Perhaps the election of Trump and the near-election of Sanders showed him and people like him that current economic practices were creating an unstable sociopolitical environment. It's in the best interest of the rich to keep people from revolting.
Edit: To those who are downvoting me, could you please explain why? If there's a flaw in my statement, I would love to learn it.
Or maybe Larry Summers just wrote this for the newspaper and having influential people like Summers on the bylines is good, regardless of what he writes? Why does it have to be a political thing for every op-ed writing? Bezos isn't hand-approving every single post.
> Why does it have to be a political thing for every op-ed writing?
You're right, but most media companies in the US pretty much act as spokespeople for one political wing or another. They are all generally very biased towards the direction of their donors or owners. I also find it interesting that no(or few) major media outlets were so against big business until this recent election cycle. Why else would the recent election cycle trigger discussion on the declining quality of life for the lower and middle classes?
Or perhaps I am just too pessimistic nowadays. That is why I appreciate the feedback on my comments.
>>They are all generally very biased towards the direction of their donors or owners.
Yes, I agree with that. But Larry Summers' article would have been welcome anywhere, probably even Fox News. He is accomplished like few others, and having him write for you is good no matter what. It is important to separate the cases indivdually.
>>I also find it interesting that no(or few) major media outlets were so against big business until this recent election cycle.
Cases like Uber help for sure, and the income gap is ever-widening. I think it's just a natural state of being. It couldn't last forever. An opinion of a significant number of Americans was that HRC/Trump offered us no real alternative in regards to labor/business reform, and the media is playing that up after the fact.
I don't think there is anything nefarious going on or anyone trying to get on the right side of history. I think in large part the media is reflecting what most Americans are feeling right now: Malaise.
(For the record I am upvoting you, I have no idea who is downvoting your posts.)
Finding a solution to the returns of labor vs capital would essentially solve the worker v employer phenomenon. (See: basically anything piketty has ever written).
Right now, labor is double taxed. You are taxed in the form of your time and mental energy to perform it, as well as on your return by the government. Accounting for the time tax of labor and putting the combined tax on par with capital taxation would go a long way to correcting this imbalance.
i am working on a labor platform to help educate labor as well as provide, and develop, tools to assist labor in understanding and asserting their rights
I don't disagree with anything in TFA, but a cynical devil on my shoulder is whispering that one way of discrediting these ideas might be to put them in Larry Summers's mouth. It would be difficult to select anyone more "talented" at over-arguing a point until everyone is tired of hearing about it.
Isn't the balance of power between workers and employers in Silicon Valley massively lopsided in favor of the former? We have companies that are losing money paying their engineers six-digit salaries. Restoring the balance is the last thing this place needs.
> We have companies that are losing money paying their engineers six-digit salaries.
I assume that's a tactical decision on their part to bootstrap a new company. A brief analysis I did a few months ago suggests that six digit salaries aren't bankrupting established companies. The largest SV employers could arguably double or triple engineer salaries without dipping into negative salary territory:
Facebook Employees: 18,000 Profit: 11.51B Profit per employee: ~$600,000
Google Employees: 57,000 Profit: 20B Profit per employee: ~$400,000
Apple Employees: 115,000 Profit: 45B Profit per employee: ~$390,000
Microsoft Employees: 114,000 Profit: 17B Profit per employee: ~$150,000
And for comparison:
IBM Employees: 380,000 Profit: 11B Profit per employee: ~$29,000
Wal-Mart Employees: 2.3 million Profit: 13.64B Profit per employee: ~$5,000
And yet we have cartel-like behavior from SV's largest firms agreeing not to bid up the price of engineering talent not all that long ago.
Where are people getting the notion that engineers should be paid whatever the current profit per engineer is? Engineers are not shareholders.
You can't have it both ways where employees get to take all of the upside of a business without all of the risks of being an investor. When IBM has a bad year, would you be okay with clawing back all of the salary paid out that year?
Employees take on a lot of risk. They risk being laid off and they have to put all their eggs in one basket. They also risk damage to their career if their company assigns to them work that doesn't look good on resume. In my view investors have less risk.
>Employees take on a lot of risk. They risk being laid off and they have to put all their eggs in one basket.
That's not a lot of risk. If they get laid off, they don't lose an initial investment like the shareholders do. If I get laid off today, I will just go find another job. I don't lose my previous wages.
>They also risk damage to their career if their company assigns to them work that doesn't look good on resume.
Doing something shitty is entirely the employees choice. If they aren't happy with the compensation they get for doing that thing, then they should move to a different company.
Most of us live in a world where it's not so easy to just take another job if the current doesn't meet expectations. In addition you have almost no way tell upfront if the new job will be any better.
Leaving aside the fact that many engineers are sharedholders, or bonus structures based on company performance, it's more a metric of the ceiling these companies have for increased wages. Obviously there's a risk premium that shareholders should be compensated for, but at the same time, Google has more or less explicitly structured themselves around their reliable profit stream with no obvious place to reinvest the profits. Those Other Bets are essentially all funded through Google's ad network profits.
Obviously my simple model has pitfalls, but it's fairly apparent that, absent an illegal covenant preventing it, there would have been more upward pressure on wages in SV. The economic principle of wages tied to productivity has gone off the rails recently, and the investor entitlement you've demonstrated seems to be part of the problem.
>The economic principle of wages tied to productivity
That's not an economic principle. There are no economic theories that make sense to support it. Why would anyone engage in a transaction where they give away all of the money they would gain as a profit?
Labor is a market good like any other. Companies don't pay more than the market rate for bolts just because they are doing well. It's silly to think employees are any different.
>but it's fairly apparent that, absent an illegal covenant preventing it, there would have been more upward pressure on wages in SV
The upward pressure exists when companies can't hire at the rate they want to pay and still have more to compensate. Even if companies have a wide gap where they could compensate more, the upward pressure will not exist if there are enough qualified employees to fill the positions at a lower wage.
>Why would anyone engage in a transaction where they give away all of the money they would gain as a profit?
Companies still fail to profit on some transactions whether intentionally or not. Probably not sustainable except for a non-profit corporation.
Even giving away part of the money does seem to be so much less common that it is understandable for there to be not much remaining general perception that it occurs any more at all.
But generousity can span the complete spectrum from compassion to empowerment to downright charity all the way to absolute philanthropy.
Of course greed has its own spectrum too based around money-motivated indivduals having very little worthwhile to offer while also having very little interest in anything else. This should be able to be completely avoided by truly productive operators, whether capitalists or employees.
But leaving money on the table can be very revealing about the generousity or greed of the other party. There should be enough to go around that you should be be able to avoid cutthroat negotiations especially when relative to the stronger party what you are leaving on the table amounts to table scraps for them.
If you blink and someone rich as hell makes it disappear faster than a common thief could rob you I would consider that a bad sign.
>Companies don't pay more than the market rate for bolts just because they are doing well. It's silly to think employees are any different.
If a hardware company can truly afford to pay more than the market rate for components, and no one else is doing it, many times they should be able to gain a competitive advantage by leveraging the generousity to their suppliers into a much more productive and/or higher quality supply chain. For a very small premium on top of your minimum component cost you can virtually double the resources your suplier has to work with on your behalf, all they need to do is leverage it back in your favor and everybody wins.
> Why would anyone engage in a transaction where they give away all of the money they would gain as a profit?
I sure you get this, but traditional model is that an employer's willingness to pay is tied to productivity. Not necessarily at a 1:1, as there's risk, capital costs and other factors to consider. But anything meeting the hurdle rate is theoretically fair game, including labor. And on the margins, if an employer wishes to expand their employee base -- because it's profitable to do so[1] -- they'll have to offer candidates a better opportunity than they have now. US unemployment is low, and presumably tech even lower[2].
Over time, we would expect that growing companies raise wage rates in the labor markets they draw from. As you say, no different than any other market, all else held constant, an increase in demand leads to a new equilibrium price. A higher market rate for bolts, so to speak.
> Companies don't pay more than the market rate for bolts just because they are doing well.
Well, many clearly have bonus programs tied to overall corporate welfare. I think we're talking past one another. I'm suggesting the market rate could be higher, and that the demand side potential limiter of wages -- profitability of large labor market buyers -- doesn't seem to be a factor. You're pointing out that the supply side is equally important, and well, duh.
And to bring the discussion back to the comment I was responding to originally, the fact that startups have to compete with established profitable firms for talent doesn't explicitly mean employees have too much bargaining power.
> Even if companies have a wide gap where they could compensate more, the upward pressure will not exist if there are enough qualified employees to fill the positions at a lower wage.
Certainly, the fact that they chose to secretly form a cartel doesn't support the 'flooded with qualified candidates' position. That's a lot of risk to take on (and eventually be slapped on the wrist for) if there's no upside.
To add to your point, it's also not linear -- maybe the first 100 MS employees are responsible for half the value and the next ~100,000 are responsible for the other half.
Most investors have the privilege to take risks because they have pre-existing wealth; but yeah their investments carry risk. Workers also carry risk; they invest resources to establish and maintain their employment with a company.
It's a bit muddier with technology workers, though. Engineers do invest in their employers, by specializing in the relevant tech stack. To the extent that the employer uses a marketable and generally useful tech stack, that's not saying much, but if you specialize in some legacy garbage processes and systems it could be a net negative on your career prospects. Likewise if your employer wants you to repeat the same year of experience over and over without any realistic advancement prospects.
The risk being that you are a proficient line employee for BigCo maintaining their systems written in BigCoLang and then you have a hard time getting a similarly paying gig after you're laid off. And nobody else uses BigCoLang.
Sure, we can argue that talented engineers can retrain, but I don't see many weak senior engineer candidates being offered junior engineering positions so they can bone up on a new tech stack. Typically they just say "technically weak" or "not a good fit" and interview the next candidate.
I really don't like the framing of that. Good countries get the hell out of the way while people use their inherent power of self-determination. If someone powerful spends their time "empowering" you, it means you had none in the first place.
>If someone powerful spends their time "empowering" you, it means you had none in the first place.
Is that not reasonable? The 'inherent power of self-determination' is pretty weak all things considered. Governments exist to help 'empower' in the myriad of ways that can undermine self-determination.
As an American and having lived (not visited - lived) in a number of countries besides the US, I can say with some certainty that the American ideal of the 'inherent power of self-determination' is greatly exaggerated in the US and far weaker in other places. Government policy and leadership absolutely has an effect on this behavior.
Nobody had any power in the first place. Have you SEEN a baby? My parents raised me to who I was today. They empowered me. They have no power over massive monopolistic corporations though, so I don't see why it's so horrible with further empowerment.
Well, there are some countries with no rule of law, and large ungoverned areas. You are welcome to move to one of your like, then you could have all the empowering you want! (To be clear, that's a joke, as I'm not suggesting you go get yourself killed by a warload or pirates somewhere).
That point was unsubstantive, but your response is much worse. When commenting here, please address others respectfully regardless of how wrong they may be, and please don't use HN for ideological battle. That's destructive of what this place is for.
My employer has nearly 100 employees; I have one employer. The job "market" is designed to create information asymmetry between me and my employer that ensures I'm not getting the best deal I can when negotiating for a job. I'm expected to give a reasonable amount of notice before leaving my job, but no such expectation generally exists on the other side of the table. I can be fired for almost any reason, or no reason. When I was hired, I had to sign an agreement signing away any right I had to ever sue my employer in court for any reason.
Now, even granted that some of these things are not necessarily going to be relevant to my particular situation (e.g. I don't really foresee any need to sue my employer, and I don't think they're going to fire me for no reason at all), what side of the table does the huge majority of the power lie on?
[0]: https://www.cnbc.com/2017/04/07/how-much-the-average-family-...
[1]: http://www.pewresearch.org/fact-tank/2014/10/09/for-most-wor...
[2]: https://www.creditdonkey.com/average-american-savings-statis...