Kilkis wrote:I simply cannot follow your convoluted argument, Toebs. How does the average person become wealthier? He works, earns money, consumes less than he earns and saves the difference.
Well, income comes from three sources : rent, profit or wages.
What you've described is income from wages.
Let's use the word "gain" to mean the amount left from the money a company receives from selling its products after deducting all costs except labour. Some of that gain goes to the people who provide the labour, in the form of wages, and some goes to the people who own the business, in the form of profit.
If you change the situation from about 50 % going to each to a situation where 60 % goes to the owners of the company and 40 % to the people who provide the labour then those who own the company will get rich faster and those that provide the labour will get rich more slowly or get poorer. That is a transfer of wealth.
No. Transfer means (dictionary.com) "to convey or remove from one place, person, etc., to another".
The employer holds capital. It is their possession. They buy stock, they hire employees. The employees agree to perform work in exchange for a wage. The product (perhaps service) is them sold, and - unless perhaps specified in the employee's contract - the value of the sale is the property of the employer, who held the capital and took the risk and spent the time and effort to organize all this.
At no point has anything been transfered from the employee to the employer. Everyone agreed on everything every step of the way.
Now it certainly is the case wages change over time. There are many factors influencing wages, and these operate on all kinds of time scales. However, the wages paid are agreed between the employer and the employee. It cannot be said that there is a growing transfer of wealth between the employee and employer;
Firstly because there is NO transfer of wealth in that direction, at all, *ever*. It is employers who give money to employees.
Secondly, because to say so is to imagine somehow that the income of the company belongs to everyone in it, and then the part of it which is going to the employer when higher is being "transferred" to the employer from the employee, by dint of *not* going to the employee.
This is a misleading and incorrect framing.
The income of the company *belongs to the owner*. There IS no transfer from the employee to the employer.
As far as I can see, although I could be wrong, all that is being said here is that the portion of costs which consists of wages is lower now than it used to be. (And I have no idea if this is plausably true - I've not examined the source of the claim).
(In fact, looking more closely, it's not actually clear here if the change you're describing concerns change over time in the divison of *money* or the divison of *wealth*. It is entirely possible for people to receive less and less money while receiving more and more wealth.)
If the division had stayed the same those providing the labour would have accumulated more wealth but they haven't. The wealth that they would have accumulated has gone to the owners of the company.
I may be wrong, but I would say this is properly tantamount to saying wages are a lower proportion of company costs than they used to be.
What meaning would this have?
If wages are rising by 1% per year, compared to a historical mean of (say) 2%, but inflation is now 0.5% vs a historical 1.5%, everyone is getting richer *faster than ever before*, while at the same time wages *are still a lower proportion of company costs than they were before*.
In and of itself, *it means nothing*, because there is not enough information on what else is going on *for* it to have meaning.
If I say the main volcano in Iceland is sinking at the rate of 5cm a year, but I neglect to mention Iceland itself is rising at 10cm a year, then I have *not* to conveyed to you what will happen to the height of tha volcano.
A House of Commons library documents projects that if the current trend continues, and there is no sign of it stopping, the top 1 % will go from owning 50 % of world wealth today to owning 64 % of world wealth in a decade. How long before the top 1 % own 100 %?
Extrapolating trends beyond the limits allowed by data leads to unreliable conclusions. Wages vary over time for a large number of reasons, within a large and complex system, where I think the market as a whole tends strongly (when not forced into broken states by regulation) to dampen extremes and return to norms.