The Rich get richer, much richer1

[L00b]

"The going rate" is an interesting concept. If business owners were prepared to accept less money then the going rate for employees would be higher

Says who? Not the shareholders

The going rate is at least in part dictated by the desire of some to have as much for themselves as they can get, not some neutral, impersonal economic law.

The desire of some to have as much for themselves as they can get is part of that 'economic law' (not so much a law, as a basic principle about resource equilibrium)...which applies to employees just as much as to shareholders, neither of whom operate in a competitive vacuum (there are competing firms with other employees and competing or shared shareholders <etc>). Round & round she goes, market forces in motion.

Here's a question for you: At today's prices what is objectively wrong with earning £35k pa? (I've got to go out in a minute so will have to get back to you later on it)

Nothing, seems a bit of an arbitrary amount, not sure why you ask?

[Bob Arctor]

Nothing, seems a bit of an arbitrary amount, not sure why you ask?

 

Well, for example, if a business owner has 10 employees each on £20k pa and the owner pays themselves £100k pa, there would be nothing wrong with them paying themselves £35k pa and upping their employees to £26.5k pa, a much more liveable wage, would there?

[RonJeremy]

Anyone genuinely interested in this question might find much of interest in Mister M's recommendation (#66):

 

Richard Wilkinson and Kate Pickett, The Spirit Level,

Penguin (London, 2010)

 

where they will find many references to the Scandinavian states, and their impressive social and economic record.

 

For anyone inspired to look in more detail, I can thoroughly recommend the following:

 

Patrick Kingsley, How to be Danish,

Short Books (London, 2012)

 

Knud J. V. Jespersen, A History of Denmark,

Palgrave Macmillan(Basingstoke, Second Edition 2011)

 

So perhaps you could answer a question.

At what figure does a wage/income become too much?

[Cyclone]

Well, for example, if a business owner has 10 employees each on £20k pa and the owner pays themselves £100k pa, there would be nothing wrong with them paying themselves £35k pa and upping their employees to £26.5k pa, a much more liveable wage, would there?

 

There probably would be from the business owner's point of view.

 

He's risked his capital to start that business and he's created jobs for 10 people from scratch.

If the skills he needs to hire are available at a market rate of 20k then why should he take a 65k pay cut in order to pay over the odds to people with a low value skill?

If he'd wanted to run a charity then he'd have started that and not a business.

If the employee's don't feel like 20k is enough, they should skill up and/or find a better paying job, or simply not have taken the offer of a 20k role in the first place.

 

When I hire someone, a gardener, a cleaner, a decorator, whoever, they give me a quote and we agree on how much I will pay. I try to keep that low, they try to get as much as they can. I don't then voluntarily pay them some extra and they don't voluntarily give me a discount.

 

---------- Post added 13-05-2016 at 08:28 ----------

 

 

"The going rate" is an interesting concept. If business owners were prepared to accept less money then the going rate for employees would be higher.

No it wouldn't. The market rate for a job is determined by supply and demand, not by how much the business has spare after paying the owner/CEO.

The going rate is at least in part dictated by the desire of some to have as much for themselves as they can get, not some neutral, impersonal economic law.

I completely disagree.

The market rate is defined by the market, small business can't impact that at all, and larger businesses only in a limited way.

 

Here's a question for you: At today's prices what is objectively wrong with earning £35k pa? (I've got to go out in a minute so will have to get back to you later on it)

 

I don't really understand this question, how can a specific income be objectively right or wrong? I can tell you that I wouldn't work for 35k/annum because I know I can work for more with my skills. But in the past I did work for that, when I was more junior, and I was happy with it then. But I'm not sure that's what you're getting at.

[L00b]

Well, for example, if a business owner has 10 employees each on £20k pa and the owner pays themselves £100k pa, there would be nothing wrong with them paying themselves £35k pa and upping their employees to £26.5k pa, a much more liveable wage, would there?

In principle, no.

 

But if the market rate according to the industry, position, tasks, qualifications <etc.> is £20k pa for each of the 10 employee, then that's what is paid.

 

The business owner could also pay him/her -self £35k and reinvest 65k into the business to improve the business survivability and the security of these 10 jobs.

 

Or pay him/her -self £80k and pay each of the 10 employees £22k to make the business more appealing to attract higher-quality employees.

 

Or pay him/her -self £80k and create a extra 11th job at £20k to help grow the business.

 

Or <...>.

 

Or combinations of all these in proportion.

 

And all of it subject to a very vast multitude of factors and variables. For employee pay itself, the constant is the market rate.

Edited May 13, 2016 by L00b

[Staunton]

Or could structure the enterprise as a cooperative.

[Cyclone]

Or could structure the enterprise as a cooperative.

 

Yeah, and ask all the employee's to put in the start-up money and time and take the risk.

 

Or, you could put in the startup money yourself, take all the risk and take most of the reward, whilst the employee's have employed status and exchange a given amount of labour for a given recompense.

 

---------- Post added 13-05-2016 at 09:06 ----------

 

How would cutting or capping the pay of Sorrell help struggling care homes?

 

No answer to this yet Staunton?

You're not even trying...

[the_bloke]

Anyone genuinely interested in this question

 

I thought you might have been, and given us your own opinion?

[Staunton]

That's not my argument Cyclone. This thread is drawing attention to the lie at the heart of Conservative policy, that we are all in this together, and the evidence I marshalled drew attention to the stark inequalities that are emerging, demonstrating that the rich are getting richer and the poor poorer.

 

To paraphrase a Saatchi & Saatchi campaign strap: 'Neoliberalism isnt working', at least not for ordinary people. No surprise there though, that's not what it was designed to do. It is working for the rich, it's working just fine for those in a position to exploit the system.

 

---------- Post added 13-05-2016 at 09:45 ----------

 

I thought you might have been, and given us your own opinion?

 

I'm content to let the implications of my recommendations speak for themselves.

[tzijlstra]

Anyone genuinely interested in this question might find much of interest in Mister M's recommendation (#66):

 

Richard Wilkinson and Kate Pickett, The Spirit Level,

Penguin (London, 2010)

 

where they will find many references to the Scandinavian states, and their impressive social and economic record.

 

For anyone inspired to look in more detail, I can thoroughly recommend the following:

 

Patrick Kingsley, How to be Danish,

Short Books (London, 2012)

 

Knud J. V. Jespersen, A History of Denmark,

Palgrave Macmillan(Basingstoke, Second Edition 2011)

 

Denmark is a lovely country, but the Danish model is not all joy and hosannah. 30% of the workforce works for the public sector, paid for by the highest taxes anywhere in the world. Houses are expensive and Denmark is at severe risk of a mortgage crisis simply because net income is so low.

 

A friend of mine lives in Copenhagen in a 4x5 meter studio, she earns really well, but after all the taxes and rent, she is left with the equivalent of around 200£ to spend on food and anything else. A quarter of everything she spends from that is subject to 25% VAT as well. She doesn't mind too much, but several of her friends have moved to other countries to pursue their career, mostly to Germany.

 

As a result Denmark has a huge amount of people who work in R&D and science (academics) but a comparatively small output in terms of patents and start-ups in high-tech: It simply doesn't pay to run the risk of starting your own company.

 

The UK have a far greater amount of high-tech companies and patents with far fewer people working in R&D and science - it pays to have your own business here.

 

Source:http://www.bloomberg.com/graphics/2015-innovative-countries/