How to deal with the economically redundant? Tax the rich

[rjwjr]

Re: How to deal with the economically redundant? Tax the rich

I take the exact OPPOSITE point-of-view as you express in your blog above. The United States is the laughing-stock of the world to-day, and "greed is NOT good". The American capitalist system is a complete 100% FAILURE.

But just wait, gang war and civil strife come next. The discontent in America is boiling. Here in California, there are already drive-by shootings on the freeways, day and night, nearly everywhere.

I could not give one sh*t about the "founding fathers" of America. Life now in America is about one thing and one thing only: SURVIVAL. And you Republicans brought this state-of-affairs on with your tax revolts, your supply-side economics, and your "greed is good" philosophy.

We need some socialism just to survive, and you Republicans to-day do NOT understand that, nor do you Repukes even care to understand that. The American winner-take-all capitalist system has led America over a cliff.

If the US were the laughing stock of the world then our net immigration would not be the second highest of the G7 major economic powers (we attract fewer immigrants than Canada, but more than Germany, Italy, UK, Japan, and France). We also attract more immigrants, by far, than China, which actually has negative immigration. And of the major countries that are considered to be some of the most socialist (Cuba, Venzuela, Vietnem, Norway, Sweden) according to a quick Google search, our net immigration is higher than all of them! If the US was a laughing stock then so many individuals would not be coming to "the land of opportunity" and/or so few people would not be leaving. The argument that the US is a laughing stock can not be supported with the facts of population movement.

California is an interesting example for you to use. California is considered one of, if not the most liberal State in the Union. I think that the chaos in California proves my point more than it proves yours. California also has negative immigration, having lost almost 700,000 residents in 2007 (the most current year I could find).

Your disdain for the Founding Fathers is miguided. Your disdain for Republicans is misguided. Your belief that socialism is the answer to your problems is dangerous. Read Democracy in America by de Tocqueville. Read Road to Serfdom by Hayek. Or, feel free to move out of California if the chaos is too great. There are many terrific towns in the Midwest; Des Moines, IA? Springfield, IL? Not many drive-by's there. Or, feel free to move to one of those socialist utopias that you admire. There is no need to wait for America to "see the light", you can move to Cuba, or Canada, or Sweden, or France or wherever you think they are doing a better job of running a country. Why would you stay in a place that you disdain when there are supposedly better alternatives available?

[Starving Steve]

If the US were the laughing stock of the world then our net immigration would not be the second highest of the G7 major economic powers (we attract fewer immigrants than Canada, but more than Germany, Italy, UK, Japan, and France). We also attract more immigrants, by far, than China, which actually has negative immigration. And of the major countries that are considered to be some of the most socialist (Cuba, Venzuela, Vietnem, Norway, Sweden) according to a quick Google search, our net immigration is higher than all of them! If the US was a laughing stock then so many individuals would not be coming to "the land of opportunity" and/or so few people would not be leaving. The argument that the US is a laughing stock can not be supported with the facts of population movement.

California is an interesting example for you to use. California is considered one of, if not the most liberal State in the Union. I think that the chaos in California proves my point more than it proves yours. California also has negative immigration, having lost almost 700,000 residents in 2007 (the most current year I could find).

Your disdain for the Founding Fathers is miguided. Your disdain for Republicans is misguided. Your belief that socialism is the answer to your problems is dangerous. Read Democracy in America by de Tocqueville. Read Road to Serfdom by Hayek. Or, feel free to move out of California if the chaos is too great. There are many terrific towns in the Midwest; Des Moines, IA? Springfield, IL? Not many drive-by's there. Or, feel free to move to one of those socialist utopias that you admire. There is no need to wait for America to "see the light", you can move to Cuba, or Canada, or Sweden, or France or wherever you think they are doing a better job of running a country. Why would you stay in a place that you disdain when there are supposedly better alternatives available?

I'm sure the Midwest (or the South) is lovely if, especially if one has $20 million or $30 million in a bank account, available to buy a functioning and productive farm. No wonder the Republicans ( who call each other, "the folks" ) love the Farm-Belt and the South.

But let's talk about the idea of Medicare in the USA being expanded to cover EVERYONE, REGARDLESS OF AGE OR PRE-EXISTING CONDITION. Why do the Republicans oppose this idea? Why do the Republicans in America claim the U.S. has the "best healthcare system" in the world?

And why do the Republicans oppose even the modest proposals for healthcare reform that Obama has offered?

And why the shouting at town meetings? Why the rubbish from Republicans that the Obama Plan calls for, " 'death panels' to decide to pull-the-plug on Grandma"? Why the interjection at town meetings about "abortion" when the issue is about healthcare?

And every single Republican in the U.S. Senate has stood against President Obama's healthcare proposals.

Shall we talk about your for-profit U.S. healthcare system that you say is the "best in the world"?

Let's talk about America's shortest life-span now of any nation in the industrial world. Let's talk about the outrageous cost of America's healthcare--- which is double the cost of Canada's healthcare. Let's talk about the fifty million people in America without access to healthcare. Let's talk about the lawsuits in the U.S. healthcare system, the profits made by health insurance companies, the un-necessary and defensive medicine required and practiced in U.S. hospitals and clinics?

Let's talk about the average cost of a health insurance policy in the USA, now $600 per month. Let's talk about the co-payments and add-ons on top of the monthly premiums. Let's talk about the 16% share of the American GDP now going just to healthcare. And let's talk about the profits U.S. health insurance companies have made.

Or maybe we should be talking about the money paid by U.S. health insurance companies to lobbyists to keep the Congress from passing healthcare reform of any kind. Let's talk about six decades since the Truman Administration that the Republicans have blocked healthcare reform of any kind.

Or maybe we should talk about private health insurance and the things they might not cover, things that might get excluded especially in cut-rate insurance policies--- things like cancer?

We need to really look at what the Republicans have done to America and why the country now is laughing-stock of the entire world.

And where are the Republicans elected? Where is their base of support? And no surprise, the answer is the Farm Belt, especially the South.

[unlucky]

Re: How to deal with the economically redundant? Tax the rich

Your argument is unclear as to what it supports.

If entrepreneurs are truly motivated by non-economic factors, then the need for them to monopolize proceeds is even less.

I've never said management nor entrepreneurs do not need to be paid well.

But there is a wide space between monopoly on proceeds over costs and being paid well.

Hmm, well I guess I'm responding to your view that failure of a business (or loss of a job) has an equal or greater impact on labor than on entrepreneurs, or on senior management. I don't believe that's the case. Most non-owner employees pursue their dreams outside the sphere of their employment. If you lose your job, you can keep pursuing your dream so long as you can find new employment. But for an "entrepreneur" pursuing a business or other project, failure means the dream is gone. A major adjustment of ambition is required before you can move on. In practice this means that the entrepreneur will fight much harder and give up more to keep the project going. This demonstrates, I think, that the impact of failure is much greater on some than on others. And those who are prepared to give up the most to prevent failure, deserve the greatest rewards in the case of success. At least in my book. They don't always get them.

[Starving Steve]

Starting one's own business or creating one own's job is the best thing about capitalism. I have no problem with small business.

The problem that I have with America's unregulated (post- Bush) capitalism is lobbyists for big business paying-off the Congress--- literally paying bribes for votes in the House and Senate.

Another problem that I have with America's unregulated capitalism is insiders on Wall Street get information that should be available to everyone, but isn't. That violates SEC rules, but under Bush Jr, the SEC was ignored. Instead dark markets replaced the free market, and the dark markets still trade after-the-bell on Wall Street, even now in 2009.

Another problem that I have with America's (post-Bush) unregulated capitalism is that insiders get bailed-out by the Federal Reserve Bank. No-one else gets bailed-out.

Another problem that I have with America's unregulated capitalism is that it preys upon the poor and the middle class; its mantras are, "greed is good" and "winner-take-all".

Post-Bush capitalism, the way it is now in the U.S, is a cancer killing the country. That kind of "winner-take-all" capitalism is even killing small business.

[c1ue]

Re: How to deal with the economically redundant? Tax the rich

Unfortunately, the facts and the realities don't support your beliefs. Our starting rate for unskilled labor prior to 2005 was $6.75 and we had all of the workers we needed. We grew with the construction boom into early 2008, but due to very low unemployment in the area, had to raise our starting rate to $8.50 to attract enough laborers for our growth. Today, I could replace every single unskilled worker that I employ with replacements at $6.75 again. It doesn't matter that you think that $6.75/hr, or even $8.50/hr, is not a moral wage and that those workers deserve more, including a share of profits. All that matters is that individuals are choosing, by their own free will, to accept that wage for the work involved. Your opinion of that fact is of little concern to me as the employer or the individual that needed that job and was willing to fill it.

I'm unclear on how your ability to replace your workers makes any difference on the inherent fairness in splitting proceeds in a company.

Are you saying that because you can boot them, therefore you deserve it all?

As for the difficulty - again you fail to recognize that being paid more is not the same as being paid everything.

Sure, your unskilled labor might not command more and that is fine. But by the same token, should some aspiring factory owner in China decide to take on your little business sector, perhaps you might reconsider.

After all, he'll only have to pay his employees $2 a day.

And he won't have to live amongst all the unemployed and underemployed Americans.

My advice is for you to start a business of your own and use it as a vehicle to make the world a better place, one employee at a time. Let me know what industry you choose because you'll be some soft competition.

Ah, yes, you assume I don't have a business. In fact I have several.

I just don't let my inherent greed get in the way of my sense of fairness.

If I have to screw someone - I tell them its coming and why.

I don't dress it up and pretend it is due to some inherent superiority.

[thousandmilemargin]

Re: How to deal with the economically redundant? Tax the rich

As I've said earlier, is not the point of innovation to save time in doing a specific task (i.e. growing food)?? At what point do you sit back and say "Well, now Ive worked enough so I can sit here and do nothing"?

I think human civilization has advanced enough to begin understanding and answering that question, but there are those who have a hard time letting go of the past and seem to think we still live in a medieval world where you have to work 100% of the time or starve to death. I detest the notion that if you are not "working" then somehow you are "unproductive". ...

.

Put it this way. Suppose you have a 100 acres in the country. And at some time in the future, someone invents a a cluster of robots that are completely self-sustaining (they can produce their own energy, make replacement parts for each other from dirt, and repair each other) and do all the work around your farm, down to mending the fences, milking the cows and weeding the garden beds. Some rebel programmer puts an GNU version on the web, you download the stuff you need to get started, and from that point on all you need to do for the rest of your life is to think up interesting stuff for the robots to build.
Most people would devote their energy from that point on to artistic hobbies, or building projects, or tinkering of some kind. You wouldn't really work as such, you'd just play and keep busy, for the sake of fun and personal development.
You wouldn't think you were IMMORAL because you know longer worked. Any more than someone who retires when they have made enough money thinks retirement is immoral. You'd let go of the notion that work was required to give a person value - you'd believe that being a decent person was enough.

Well, suppose a nation finds itself in the same position. I'm not thinking of the USA here. Maybe Norway or Australia. Somewhere with a democratic centrist goverment and western legal traditions.

So imagine that our liberal national goverment downloads the GNU software for self-replicating robotic clusters (assume for a moment that society hasn't collapsed yet), puts them to work on a million square kilometres of goverment land, and constructs a "cornucopia machine" network capable of providing all the basic material needs of all its needy citizens.

It then declares every citizen to be a shareholder (non-transferable) of the National Cornucopia Corporation of Oz, entitled to annual dividends in the form of Cornucopia Points, which can be redeemed for goods of any kind or freely traded on open markets.

At this point all citizens are now part-owners of major corporation and are able to live off their dividends. Work thus becomes optional for everyone. Everyone is a trust-fund kid, free to pursue whatever bohemian pathway of self-actualisation they prefer.

Funny thing is, some people will read this and think "socialism". But it is actually the triumph of capitalism. Everyone becomes an owner.

Would technology actually be used this way? Or would the powerful prefer to liquidate the useless eaters? I'd expect the answer to be "yes" - there are 180 odd different countries in the world, and things won't play out the same way in the USA, Sweden, India, Korea, Brazil, Australia etc.

[ThePythonicCow]

Re: How to deal with the economically redundant? Tax the rich

Any more than someone who retires when they have made enough money thinks retirement is immoral.

I disagree with this comparison.

There is an important difference between someone retiring with perhaps modest but adequate means after decades of productive contribution, and someone in their twenties, thirties and forties living in a society which has no essential creative or productive role they must fill.

People who have too much money too soon, but too little essential motivation, have a high probability of becoming spoiled and corrupt. It is in the very nature of humans, and other higher animals even, to go do something of consequence. If that enormous creative energy is not spent one way, it will be spent another.

Retired old folks such as myself may be content to spend too much time on iTulip, having mellowed in our creative zeal to make our mark. We have, for better or worse, already created the greater proportion of what works or descendents we are destined to create.

But having much of working age adults be inessential would result in a catastrophy. It may be that the next twenty years in America will demonstrate this. It could get ugly.

There are many ways to become inessential or at least insufficiently essential to compel one to ones best efforts. Many inner city young black men know this. Many workers doing mind-numbing jobs in government bureacracies know this. Many recently fired Chinese factory workers know this. Many young Chinese men with little prospect of marriage (too few young adult Chinese females) know this. Laid off American auto workers know this.

[snakela]

Re: How to deal with the economically redundant?

Machines and productivity raise all standards of living, but won't eliminate relative differences. One day machines will provide all basic needs at such a pittance it may as well be free, leaving the dullest indiviuals everything they need.

For more insight, watch the documenary idiocracy

[flintlock]

Re: How to deal with the economically redundant? Tax the rich

If I remember correctly, rjwjr, you are in manufacturing? What I find surprising is that there is anything being made by minimum wage workers in the US isn't already being made in China. Generally speaking, there is nothing made by truly low skilled workers here than cannot be made elsewhere for less. RJWJR, do you feel threatened by foreign competition, or is your product something that would not lend itself well to production overseas?

Congratulations, you are the last of a dying breed.

I understand exactly where you are coming from. Just don't expect these guys who feel profits should be "shared" to change their minds.
In some businesses you can see a benefit from paying a little higher than the prevailing wage. In my business that was true. I could get a higher caliber employee who made a better impression on the customer and generally were easier to work with, and that paid dividends over the long term. No unhappy, surly employees to turn off the customer. But with some businesses that really won't play out. Look at GM. Highly paid assembly workers but you still had notorious stories of a disgruntled and unmotivated work force. So it really depends on the particular business you are in whether higher pay can produce noticeable benefit to the company. And sorry, but the bottom line is the benefit to the company, not the employee.

[flintlock]

Re: How to deal with the economically redundant?

Machines and productivity raise all standards of living, but won't eliminate relative differences. One day machines will provide all basic needs at such a pittance it may as well be free, leaving the dullest indiviuals everything they need.

For more insight, watch the documenary idiocracy

Idiocracy was a documentary?

Great movie btw.

Anyone who has been "greeted" at stores like Home Depot or Walmart can appreciate this scene.

[media][/media]

[mesyn191]

Re: How to deal with the economically redundant? Tax the rich

There are robots in industry, but by and large robots so far are an uneconomic proposition. Because while robots don't have to be paid, don't take breaks, don't strike, don't need health care, etc etc, robots also need maintenance, are extremely difficult (if not impossible) to retrain, and cost a whole lot more up front than a human worker. Robot ongoing costs are also fairly high and will go higher should commodity prices rise.

This equation may change but will not until some type of truly cheap power is available (fusion et al).

This situation is changing right now as we speak, you don't need very cheap/free energy for it to happen.

There have been many advances in programming and robotics, robots aren't nearly has hard to "retrain" as they used to be. You only need a few programmers and script writers to configure hundreds or even thousands of robots at a time, the advances in wireless networking tech. have made this as easy to do as a few keystrokes. You don't even need people to open up the robots to update the firmware anymore, the updates are done in minutes/seconds, and then they go right back to work.

There have also been advances in cheap, reliable, and accurate motor designs as well. Now, we're still a few decades away from anything like C3P0 to say the least, but I think you're going to see more and more robots doing menial/moderately skilled labor that used to be given to teenagers and the vocational workers.

As an example, you can now build your own decent sized multi-axis CnC machine for about $2,300. Even a simple CnC machine that size used to cost several times that less than a decade ago, and 15 years ago you'd be talking about some serious money to get one. There are even DIY 5-axis CnC machines for not much more, they aren't as good as a proper commercial machine of course, but they aren't bad either.

Looking at machines like this, its not hard to imagine automated stockers, automated burger fast food (these already exist actually, just not in the US yet), automated inventory systems, etc. becoming commonplace within 10 years. People will still be needed to fix them of course, but a handful of people are all that is needed to service hundreds of machines. Particularly when you build them to be taken apart like legos. So instead of replacing the intricate parts of a complex motor or circuit board the whole section/part would be pulled, a new one slapped in its place and the old one would be sent to a automated repair facility for detailed refurbishment.

If that sounds crazy to you then you should consider that this is what is already done for many computer parts, and more and more often, various types of electronics and appliances.

[Munger]

Re: How to deal with the economically redundant? Tax the rich

It is easy for Management to say that their contribution is greater, but again management itself is worthless without labor. Labor also is worthless without management.

I don't agree. There are a very, very few individuals that could do what Henry Ford did. There are over 5 billion people (current world population being around 7 billion) that can do what his laborers did.

Reminds me of this:

Most of his former colleagues probably can't fathom why Wall Street bankers make tens of millions of dollars in salaries and bonuses each year. How would he justify these fat pay days? "It's simple," he lectures, sounding very much like the Texas A&M economics professor that he was in the 1970s: "In economics, we define labor exploitation as paying people less than their marginal value product. I recently told Ed Whitacre [former CEO of AT&T, who retired with a $158 million pay package] he was probably the most exploited worker in American history because he took Southwestern Bell, which was the smallest of the former Bell companies, and he turned it into the dominant phone company on earth. His severance package should have been billions."

Thanks for the memories, Phil.

[rjwjr]

Re: How to deal with the economically redundant? Tax the rich

Quote:

Originally Posted by rjwjr Quote: It is easy for Management to say that their contribution is greater, but again management itself is worthless without labor. Labor also is worthless without management. I don't agree. There are a very, very few individuals that could do what Henry Ford did. There are over 5 billion people (current world population being around 7 billion) that can do what his laborers did.

Reminds me of this:

Quote:

Most of his former colleagues probably can't fathom why Wall Street bankers make tens of millions of dollars in salaries and bonuses each year. How would he justify these fat pay days? "It's simple," he lectures, sounding very much like the Texas A&M economics professor that he was in the 1970s: "In economics, we define labor exploitation as paying people less than their marginal value product. I recently told Ed Whitacre [former CEO of AT&T, who retired with a $158 million pay package] he was probably the most exploited worker in American history because he took Southwestern Bell, which was the smallest of the former Bell companies, and he turned it into the dominant phone company on earth. His severance package should have been billions."

Thanks for the memories, Phil.

Munger,

Just so my opinion isn't misconstrued, allow me to emphasize that my belief that any company can not afford to over-pay for labor is not limited to unskilled and/or production type laborers. I maintain the same belief for CEO's, Presidents, VP's, etc.

To use the example you reference above, I don't have a problem with Ed Whitacre of ATT&T getting $158mil if he was the only one that could have created the billions in value for ATT&T shareholders like he did. As the author states, he may have even been a bargain (underpayed) based on his results. If, however, another CEO could have created the same shareholder value, and been willing to take $40mil in compensation, well then, we just overpayed Mr. Whitacre by $118mil. I have a real problem with that. In that instance, the owners and/or board need to fire Mr. Whitacre and bring in Mr. 40mil.

One gist of my belief, however, is that there are very, very few people who can do what Ed Whitacre, or Henry Ford, or Michael Eisner, or Jack Welch are able to do, thus there is a tremendous demand for their services and a very minute supply, which of course results in very high compensation for these lucky few. On the other hand, there are billions of people worldwide that can do what a production line laborer can do. Since the supply is so large and the demand, especially today, is small compared to supply then, of course, that results in lower compensation.

Whether someone thinks that this is morally wrong is irrelevant. It's the nature of worth via the nature of supply and demand. As long as people are willing, under their own free will, to take jobs for minimum wage, then who are we to say that it is unfair to those people? As soon as too few people are willing to work for minimum wage, then the market will adjust and wages will start to rise. In a global economy especially, we can not expect to pay $75/hr to an automotive production worker in Detroit, for exemple, and remain competitive with a Chinese or Japanese citizen that is extremely happy doing the exact same work in their country for $15/hr or even $15/day.

In my opinion, the management of GM is more at fault for continuing to pay workers at $75/hr and allow the company to get in this bad of shape than they would have been if they had adjusted over time to the realities of the global wage market. Sure, many production employees would have suffered, but I am confident that their suffering would pale in comparison to the suffering, sacrifice, and cost that it will now take to try and save GM.

Creative destruction isn't fun, and it's not without casualties, but it is a necessary process of economic progress and is the better process in the long run.

[c1ue]

Re: How to deal with the economically redundant? Tax the rich

To use the example you reference above, I don't have a problem with Ed Whitacre of ATT&T getting $158mil if he was the only one that could have created the billions in value for ATT&T shareholders like he did. As the author states, he may have even been a bargain (underpayed) based on his results. If, however, another CEO could have created the same shareholder value, and been willing to take $40mil in compensation, well then, we just overpayed Mr. Whitacre by $118mil. I have a real problem with that. In that instance, the owners and/or board need to fire Mr. Whitacre and bring in Mr. 40mil.

I may be reading incorrectly, but the original article and Munger were both very blackly satirical about Whitacre.

As for his performance - not clear how his maniacal empire building was in any way different than any other empire building CEO or CEO wannabe.

One gist of my belief, however, is that there are very, very few people who can do what Ed Whitacre, or Henry Ford, or Michael Eisner, or Jack Welch are able to do, thus there is a tremendous demand for their services and a very minute supply, which of course results in very high compensation for these lucky few.

Interesting group you chose: Whitacre the empire builder. Ford the labor crusher. Eisner who figured out you can charge the sky for 40 year old entertainment IP. Welch the financializer of GE (FIRE-man in chief?).

Not sure which of these are unique - to me none of these were non-replicable by any of dozens if not thousands of others.

In my opinion, the management of GM is more at fault for continuing to pay workers at $75/hr and allow the company to get in this bad of shape than they would have been if they had adjusted over time to the realities of the global wage market.

Ah, the mythical $75/hr.

The actual average base wage for a GM worker is $28/hr. The remainder comes from vacation, taxes, overtime, health care, retirement, etc etc.

As an owner of a manufacturing company, surely you realize that labor costs are not the same as labor's wages?

In any case, the real point is this: how can GM fix the health care cost issue? How can GM fix the retirement issue?

The point is that in Japan and most of the rest of the world, the health care component is handled by the government. Ditto for retirement.

http://www.npr.org/news/specials/gmvstoyota/

North American Workforce

Source: GM & Toyota, Dec. 2005

GM:

White collar: 36,000
Production: 106,000.
Retirees: 460,000

Toyota:

White collar: 17,000 Production: 21,000 Retirees: 1,600



Average Hourly Salary for Non-Skilled, Assembly Line Worker

Source: Center for Automotive Research

GM:

$31.35/hour
NOTE: Includes idle workers still on payroll and those on protected status.

Toyota:

$27/hour
NOTE: Includes year-end bonus.



Health Care Costs per Vehicle in 2004

Source: 2005 Harbour Report & A.T. Kearny Inc.

GM:

$1,525

Toyota:

$201



Average Labor Cost per U.S. Hourly Worker

Source: GM & Toyota

GM:

$73.73

Toyota:

$48

Note this is for equivalent North America workforces even; Toyota's advantage there is more one of having less retirees and no unions. But even in this case Toyota's primary reason for US plants is to get around import restrictions.

To this I'll add:

http://www.oanda.com/products/bigmac/bigmac.shtml

Country	Big Mac Price		Implied PPP rate +	Today's Exchange Rate 1 USD =	Over(+) / Under(-) Valuation against the USD, % ++
	in Local Currency	in US dollars
United States	$ 3.57	3.57	---	1	---

Japan

¥ 320

3.4133

89.6

93.7516

-4.4283

Note that the above 4.42% currency undervaluation is with the yen at a near 25 year low of 93 yen/dollar. In the decade prior to last year, the yen was consistently between 110 and 125 to the dollar implying a much higher currency advantage.

While creative destruction definitely has its place, the point is that its use in this case is ridiculous.

The destruction occurring is due to factors other than the inherent business/management.

I'm not saying GM hasn't made mistakes - but if you look closely you realize that the mistakes made were at least partly, if not mostly, due to short term tradeoffs to compensate for the above factors. That these decisions were made and agreed upon is a reflection of American management thinking but in no way absolves the macro situation.

And again, if you think about this hard enough, you'll realize that the equation applies equally to any and every other non-FIRE business in the United States.

[Raz]

Re: How to deal with the economically redundant? Tax the rich

...Uh, sorry, but laborers DO share in the losses. They in fact share more - loss of a job for a laborer is a far more destructive impact than loss of capital for an 'entrepreneur'.

I worked 60 hours each week and lived off 2/3rds of my net with no social life for eight years in order to have seed money with which to start a business. Any worker I hired didn't have anywhere near that much to lose if that first business of mine had failed !!!

As for sharing in profits - again you (rjwjr & Raz) both have Capital blinkers on your eyes. The net gains after cost of production, cost of capital and taxes are the net pool by which Management and Labor BOTH obtain their payment: options and salary in the former and hourly wages in the latter.

Uh, sorry, but wages are a component of cost of production. Net gain after cost of production, capital costs, depreciation, amortization and taxes belongs to the stockholders. The stockholders through their directors should be making wage, benefit and bonus policy.

An example of an outstanding company in terms of salaries, wages, benefits and bonuses is Nucor Steel (NUE). This company has something of an egalitarian compensation and benefit structure with which I strongly agree (I'm also a shareholder). No one for any reason is allowed to earn more than $1 Million per year in salary, there is a generous profit-sharing plan for ALL employees, an ESOP, and no bonuses can be paid to management unless the company is (a) profitable and (b) non-managerial employees receive a bonus likewise. This is why all attempts to unionize Nucor's workforce have failed: union membership has its own costs, and since management isn't allowed to satiate greed or screw the employees, there is no need for a union. Most American companies could learn a lot by studying the corporate culture of Nucor.

To say that profits are all the former and obligations are all the latter is exactly why labor unions arose.

I never said that. And stockholders who abdicate their rights to a corrupt board and greedy management will see the long-term profitability of their company suffer, not to mention the moral problems inherent in screwing the people who work for them.
And surely you know that labor unions suffer from the exact same selfishness, corruption and greed as the mangement of many companies.
The Wagner Act and Taft-Hartley Act were both necessary, and the flip-side of Walter Reuther was a Jimmy Hoffa.
Management not greedy and bad, labor selfless and good; mankind is corrupt - all of us.

It is easy for Management to say that their contribution is greater, but again management itself is worthless without labor. Labor also is worthless without management.

Without capital, entrepreneural skill and effective management most workers would be scratching the ground in subsistence agriculture.
Selfish, greedy and callous business owners are fools, and they seem to be "in the news" now, but the root cause of GM's demise was greedy labor demands, along with a cowardly and innefective management.

Or are you fine gentlemen trying to say that the CEO pay vs. worker pay ratio today is justified?

Well thanks, c1ue. I don't think of myself as "fine" in any regard.
If you've been reading my posts for the past eighteen months I think you know I don't believe it is even remotely justifiable.

The point is that in an ideal situation, Management and labor would both have a clear situation on the true size of the pool and agree upon a fair distribution. Otherwise in a dog eat dog competition, both sides just fight for anything and everything that can be gotten which is how you end up with GM, with outsize government pensions, etc etc.

Now this last paragraph of yours is something we can wholehardedly agree upon! ;)