Capitalism implies income inequality.

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So, there is a lot of debate about income inequality. Like about the top 1 % control like 40% of the wealth. I say no, we should not no be surprise. Overtime, we should expect capital, and not labor to be more productive, as labor shortening innovation develops. This means the development of technologies that makes it less necessary for accountants, lawyers, engineers etc. Over time, this would create a society with an over supply of labor, which if we let the normal rules of economies work its magic, there ought to be a downward drive in the real wage in the years to come.

Now, a lot of people are happy that the economy is growing again, and the unemployment is dropping. The issue I am talking about is structural. Sure, people are employed, but they are probable employed in a job with some low wage job. This structural problem leads to some with very high wages, but most with low wage jobs, thus creating a bifurcation in the labor market, and thus, the shrinking middle class.

Different view:

real output = (output per capital) * rent + ( output per labor) * wage.

On the left, it is gdp, also can be interpreted as national income. As we know, capital, and labor are the factor of production. Y=F( K, L ). With the progress of technology, output per capital increases relative to output per labor. Investors would accumulate tech capital, instead of labors. The capital owners would absorb a few of the smart computer engineers, but rest work in minimum wage jobs.

My prediction:

In the next 10 years, we would expect more people with minimum wage jobs. The furthering shrinking of the middle class. Consumption in the US will bifurcate toward the top earners, and the low earns. Expect to see more people driving BMW rosters, and shopping at dollar tree stores. Since the lower class in American either have no money to spare, or waste their money on 50 cent CDs, they can' t buy stocks( The best way to grow wealth), thus leaving the top income earners to grow even more wealthy.

My solutions:

It is counter-intuitive. We need more capitalism. We need to lower the difficulty in starting enterprises, and challenging the big guys. Lowering the prices of capital goods. Lowering taxes to zero, and shrinking the government to only national defense, and enforcement of the law. We need a perpetual state of war, where we sell, sell, and sell. Shrink the size of the largest companies. Government should focus on directing resources toward national labs.

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@TuringEquivalent,

Prediction my ass. What you call a prediction has already become fact.

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@TuringEquivalent,

Why single out capitalism? Are you aware of any economic system in which all incomes are equal? I'm not.

1 Reply

There is a lot of debate about income equality? I hadn't noticed. You lost me immediately with that. As in everything i've seen you post in these fora, you begin your screed with assumptions you haven't substantiated, and therefore, responding to your foolish remarks would constitute accepting your undemonstrated premises. I'll pass.

I prefer to go make a nice sammich.

1 Reply

@TuringEquivalent,

I think your assumption that the service sector will leak jobs is flawed - it continues to expand and we are heading toward an information economy (if we aren't there already). However it is fairly clear at the moment that there is an undercurrent of unrest resulting from greater expectations from increased numbers of participants in higher education finding on graduation that even being underemployed is a challenge - whether that's a temporary glitch or not we'll see.

I found this interesting in highlighting how much of national wealth is tied up in the service sector:
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

1 Reply

@Thomas,

Thomas wrote:

Why single out capitalism? Are you aware of any economic system in which all incomes are equal? I'm not.

What if there is no jobs, period? what is the wage if you do literally, nothing?

1 Reply

@Setanta,

Setanta wrote:

There is a lot of debate about income equality? I hadn't noticed. You lost me immediately with that. As in everything i've seen you post in these fora, you begin your screed with assumptions you haven't substantiated, and therefore, responding to your foolish remarks would constitute accepting your undemonstrated premises. I'll pass.

I prefer to go make a nice sammich.

Who the hell say a poster need to substantiate every single detail, and claim made? How ******* ridiculous is that? The issue about income inequality should be commonly known piece of fact in common culture if you watch the damn ******* news. What do you thing 'occupy wall street" is all about? Income ******* equality? You **** tard need to find yourself a brain, or stop living like a ******* hermit.

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@hingehead,

hingehead wrote:

I think your assumption that the service sector will leak jobs is flawed - it continues to expand and we are heading toward an information economy (if we aren't there already). However it is fairly clear at the moment that there is an undercurrent of unrest resulting from greater expectations from increased numbers of participants in higher education finding on graduation that even being underemployed is a challenge - whether that's a temporary glitch or not we'll see.

I found this interesting in highlighting how much of national wealth is tied up in the service sector:
http: //en.wikipedia.org/wiki/List_of_countries_by_GDP_sector_composition

I am not sure if it is against what I am saying. The service sector is certainly big, but I bet the majority are things like McDonald. As you know, these McDonald jobs are not known for paying good income, and how are people going to sustain a middle class life from McDonald income?

The best proof is in your local retail store:

http://www.pbs.org/newshour/bb/business/july-dec11/makingsense_12-22.html

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@TuringEquivalent,

income implies income inequality

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@TuringEquivalent,

Quote:

but I bet the majority are things like McDonald

I'd bet against you - certainly in terms of where jobs are growing - it's in new quaternary areas relating to telecoms, information management etc. I think the fast food market boom has pretty much stabilised in terms of a demand for labour (in developed economies anyway).

It was your assertion that we wouldn't need as many accountants and lawyers due to improvements in tech that I was referring to - I think we will still need people with those skills but they won't be called lawyers and accountants - a skills convergence with another profession if you will.

1 Reply

@TuringEquivalent,

Quote:

I am not sure if it is against what I am saying. The service sector is certainly big, but I bet the majority are things like McDonald.

You would be wrong..
Lawyers are in the service economy. Doctors are in the service economy.

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@parados,

I've been trying to find definitive data on which parts of which industry sector are the biggest employers/income generators and which are growing and which are shrinking. No joy at all - but Health is constantly mentioned as huge - and tourism is constantly mentioned as 'not that huge'. I hope someone has more luck than me with that quest.

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@hingehead,

hingehead wrote:

Quote:
but I bet the majority are things like McDonald

I'd bet against you - certainly in terms of where jobs are growing - it's in new quaternary areas relating to telecoms, information management etc. I think the fast food market boom has pretty much stabilised in terms of a demand for labour (in developed economies anyway).

It was your assertion that we wouldn't need as many accountants and lawyers due to improvements in tech that I was referring to - I think we will still need people with those skills but they won't be called lawyers and accountants - a skills convergence with another profession if you will.

Service sector like McDonald type jobs cannot be stabilizing. Why? Since US population is still growing, thus, McDonald type jobs must grow at the same rate to capture the increasing demand.

My friend owns a restaurant, and legally, he is to give all the books to a third party accountant. I also used to work for a company that make software for accountants ( like E-file, income taxes etc). Combining the software I created, and my friend 's accountant, there are so many different type of jobs I help destroy. This example shows that information technology, thought increase the productivity of each accountant, or lawyer, have reduce the number of such jobs in need for those professions. The result is a few high income earners, and a mass of unemployed workers.

I think the industry that creates good jobs are aviation, and defense contractors. These jobs will probably not be outsourced, but require permanent fund from the government( A sink for tax payer money).

From here:http:

//247wallst.com/2011/04/24/americas-ten-largest-employers/2/

10: bank tellers

9: truck drivers

8: sales, and truckk drivers

7: IT support( outsourced to India)

6: sales.

5: McDonald --Can you say daddy?

4: deliver guys

3: IBM outscource to India, and China, because the Chinese are smarter.

1: Sales.

You see a pattern, Son? All the good jobs ( IBM, and HP) are outsourced to China, Israel, and India, because they are smarter. All the sales, and delivery guy, bank teller jobs are left. You see any accounts, and lawyer jobs? No.
Sears don 't need that many ******* lawyers.

2 Replies

@parados,

parados wrote:

Quote:

I am not sure if it is against what I am saying. The service sector is certainly big, but I bet the majority are things like McDonald.

You would be wrong..
Lawyers are in the service economy. Doctors are in the service economy.

I don 't think Lawyers are in demand at that much. Doctors will always be in demand, but the government has a lot of unfunded liability in this sector.

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@TuringEquivalent,

Quote:

You see a pattern, Son? All the good jobs ( IBM, and HP) are outsourced to China, Israel, and India, because they are smarter. All the sales, and delivery guy, bank teller jobs are left. You see any accounts, and lawyer jobs? No.
Sears don 't need that many ******* lawyers.

You couldn't help being a cock could you? Dad?

I was talking about faster than population growth rates in jobs.

Not outsourced to them because they are smarter but because they are cheaper.

Unlike you I've been focusing on what your thesis means in a global context, not a US one - it's not an economic island.

You are so ******* clueless. I said people with lawyer skills, and accountancy skills, not lawyers and accountants. Think outside the box - I don't know how about the field of computer audit?

You work with computers but you don't know how many new jobs are being created on the back of the massively networked infrastructure we've developed. How many truck drivers will we need when oil hits a $1000 a barrel? Then all the business models that rely on far ranging cheap transport are no longer cheap compared to localised models. Think of the jobs created by moving to a renewable energy base.

You live in a tiny world (and mind) if you think all jobs are, and always will be, bank tellers and delivery guys.

1 Reply

@hingehead,

hingehead wrote:

You couldn't help being a cock could you? Dad?

I was talking about faster than population growth rates in jobs.

Not outsourced to them because they are smarter but because they are cheaper.

You live in a tiny world (and mind) if you think all jobs are, and always will be, bank tellers and delivery guys.
[/quote]

The link I gave you( if you had look at it) listed the top 10 biggest employers in the US. The wage they pay have the greatest impact, and thus, reflective of the nature of American middle class.

I actually studied a year at Caltech, and got degree from UCLA. All the departments in CS, Math, engineering, Science, and business are dominated by Jews, Chinese, and Indian. Even all the new tenure professors are foreign born, and the graduate students are also foreign. I worked in Silicon valley, and 80% of the work force is Asian. So, yes, the Chinese, and Indians( and Jews) are getting the high pay jobs, because.... they are smarter!

Quote:

Unlike you I've been focusing on what your thesis means in a global context, not a US one - it's not an economic island.

You are so ******* clueless. I said people with lawyer skills, and accountancy skills, not lawyers and accountants. Think outside the box - I don't know how about the field of computer audit?

You work with computers but you don't know how many new jobs are being created on the back of the massively networked infrastructure we've developed. How many truck drivers will we need when oil hits a $1000 a barrel? Then all the business models that rely on far ranging cheap transport are no longer cheap compared to localised models. Think of the jobs created by moving to a renewable energy base.

What the ****? "computer audit"? Are you retarded beyond repair?
Networking thing is foolish. I worked in Cisco, CA Milpitas. They hire a lot of people, but that is not enough to sustain a middle class in America. You have few high pay jobs, but many many low wage, average jobs. Even Cisco( 2/3 Asians by the way) , because most native Americans are too lazy to study engineering. People have this perception that computer jobs have high wages. Not really. You look at the streets, and they all drive average cars.

All the new industry jobs you mention makes you more of a intellectual **** tard. By the way, California have an umemployment rate of over 10 %! This fucked up your theory that these new industry creates jobs, idiot.

1 Reply

@TuringEquivalent,

You do live in a tiny world - you're focusing on the nuts and bolts end of computing. That's like manufacturing in the 2oth century - or like someone in 1890 saying 'If I get into manufacturing phonographs and cinema cameras I'll make a fortune' not realising that the real money was in the creative film and music making industries.

Hmmm Jews are Asians now are they? - you can't even hold to your own poor thesis. You crap on about Americans being too lazy to study engineering and in the same sentence complain that the wages of engineers are low - who's smart again?

And you are still trapped in a tiny geographic mindset.

Take a look at what you proposed in your original post - how would that work if every country adopted it?

PS I'm not an American so don't think I'm arguing against you out of some sort of misplaced patriotism.

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@TuringEquivalent,

TuringEquivalent wrote:

Thomas wrote:

Why single out capitalism? Are you aware of any economic system in which all incomes are equal? I'm not.

What if there is no jobs, period? what is the wage if you do literally, nothing?

Starvation for all, and a system without people to constitute it. Okay, you technically answered my question. But when I asked it, I had an economic system consistent with survival in mind.

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@TuringEquivalent,

ROFLMAO..

Your list is bogus Turing..
It is the ten largest COMPANIES that employ people which has nothing to do with what service industries employ the most people.

I would suggest you check out the census bureau.
http://www.census.gov/compendia/statab/cats/labor_force_employment_earnings/employed_persons.html

limited service restaurants like McDonalds make up less than half of food service workers. Food service doesn't even make up 1/4 of the service industry.

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Capitalism implies income inequality.

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