Hi y'all know me as Janus; and I'm too far up my own anus to play along with games like this. ;) — Janus

>:) I corrected it.

Individuals are far more complicated than gas molecules therefore we can't treat them as random and use their aggregate properties to study their properties as a whole? — fdrake

No, since they have free will. You cannot extend your analogy from purely determinisic - actually not even that, but rather fatalistic - molecules to people.

But on the other hand, if you are interested in what happens to society, rather than to individuals, sure.

If you're savvy you'll know that 90% of business start ups fail. Then you'll see what their business model is, see what their ingoings and outgoings are, evaluated how likely the business is to expand - see what evidence there is that the start up is doing the things that make a business successful, and how long that is likely to continue. If the latter process appears to outweigh the initial high failure rate, if they impress you and provide good evidence that they're a good investment - you'll give them the money. This is placing a bet on what you believe to be good odds: a conditional probability. — fdrake

I don't see it working that way. I will totally ignore that 90% of business start ups fail, and simply ask myself what makes a business successful, if it's the right time for their particular business, if I can do something to make them successful apart from capital and what's the upside vs the downside.

Regarding the last point, clearly, even if something has a 90% chance of success but the potential upside in case of success is 10% return, and if it fails, then -100% return, it would be stupid to invest cause negative expected value.

Oh yeah I do remember that exchange now you mention it. I had assumed all the little tweaks and features, like ‘internal replies’, would have meant customisation, but I’m not a programmer, so, maybe not. — Wayfarer

The issues on that site had to do with how the connection between the user's actions and the database were laid out. I presume they were made in an antique early 2000s kind of way and never properly updated. So very easy for an error to creep up and screw everything. Paul coded the whole software from the ground up from what I remember.

What's wrong with doing this Aug — fdrake

Well, multiple things. Firstly and most importantly, society is made of individuals. Individuals aren't like gas molecules - they have free will. That doesn't mean their behaviour may not be predictable, but it is still marked by the presence of free will and hence moral responsibility.

Second of all, when we're interested in what's possible for an individual, just like when we're interested in what an individual gas molecule does - we don't use a statistical analysis. We only use a statistical analysis when we're interested in the behaviour of all individuals taken together.

You literally just skim read the wikipedia article to find the first thing you could say to me that looked like a counterpoint. — fdrake

I didn't skim anything, it's the first phrase. And I do understand how statistics are used.

Parameter estimation is used to assess the accordance of theoretical prediction of deterministic systems with their experimental behaviour. — fdrake

"Estimation theory is a branch of statistics that deals with estimating the values of parameters based on measured empirical data that has a random component"

You're saying that statistics only works when the thing it's applied to is random. I gave you a counter-example. Parameter estimation is used to assess the accordance of theoretical prediction of deterministic systems with their experimental behaviour. You're just wrong on this one I'm afraid. — fdrake

I gave you exactly the same example. The movement of gas molecules is deterministic. But yet we use statistics to assess certain gas properties - why? Because we're interested in the behaviour of the gas as a whole - WHICH CAN BE MODELLED AS RANDOM, although quite evidently it is not random in reality, but merely approximates what we would identify as random behaviour.

Haven't you noticed the boilerplate Marxism I've been peddling? — Bitter Crank

Yah, but you keep talking as if you were in the stone ages of business when you put the whip on workers and forced them to work while starving in your factory... Today it's not the same, at least not in the West. That may happen though, unfortunately, in places like China. Business has evolved and changed.

Physical models are fit to data which are generated deterministically. — fdrake

Yep, like gas molecules so what? In the case of gas, we're interested in what happens to the gas as a whole, not what happens to an individual molecule. That's why we use statistics. If we were interested in what happens to a molecule individually, then we would use F = ma combined with elastic collisions, conservation of kinetic energy and momentum, etc. And we can actually predict this, deterministically, using computer simulations. We could also - given enough computing power - derive the same collective properties of gases out of the individual behaviour of each gas molecule, but why waste so many resources, when we have a shortcut?

The statistics are part of the map. They're like signposts, signalling and quantifying relationships in the territory. — fdrake

That is only if the territory is random - ie if there is no directly identifiable efficient cause.

Supplementary post: declaring that some statistics don't apply to individuals is essentially flipping the table we're sitting around to discuss this. Every part of the discussion depends on properties of aggregates of people - specific statistics - and their relationship to each-other. — fdrake

Yeah I want to flip the tables, since there is free will when it comes to human behaviour, hence why there is moral agency and responsibility for one's actions.

Also your claim that a phenomenon has to be 'truly random' to have statistics applied to its study is just false. — fdrake

I never claimed that :s . Either you start representing what I say truthfully, or there's no point discussing.

Model fits from experiments in physics follow the same principles as ones which are used to model asset returns and goods prices. — fdrake

Yeah, so what?

So, for base rates: if you're healthy and don't smoke, your probability of smoking is a downward adjustment from the base rate - but still pretty close to it. P(you get cancer) is proportional to P(you get cancer given base rate)*P(base rate). In a similar manner, P(you commit a crime given that you're in a ghetto) is proportional to P(you live in a ghetto given you commit a crime)*P(crime base rate). I'm not conflating 'different notions of statistics' at all - you're ignorant of how to manipulate probabilities. If you were a mine worker, your probability of lung cancer would be an upwards adjustment of the base rate. — fdrake

I don't see what this has to do with anything else. This is just obfuscation. For example:

P(lung cancer | ~smoker ) = P(~smoker | lung cancer) x P(lung cancer) / P(~smoker)

That's true. So what? Of course you can calculate a specific probability that applies to you by and large. But that requires that you analyse the particular features of your own situation, not that you look at what generally happens. There surely might be such a thing as a base rate, or there may just be our lack of knowledge of what causes those things - so we stick a number on it, and that remains the number until whatever causes that thing changes.

You getting cancer given that you're healthy is (generates, really) exactly the same type of random variable as you getting cancer. — fdrake

No, it doesn't mean it IS that, but it can be modelled as that. That's a big big difference. The map is not the territory. I'm interested to get to know the territory, not approximations on the map.

I understand it quite well, statistics apply to individuals insofar as they support your arguments, and they do not apply to individuals to the extent that they do not support your arguments. — fdrake

No, they only apply to individuals in-so-far as you don't know what you're talking about.

Quite frankly, you're not worth my time with this nonsense.

If you cannot see that you're equivocating on two different notions of statistics, that is your problem.

If I take 1 billion people and see that the average life risk of lung cancer is X%, then that doesn't necessarily apply to me as an individual (so long as I don't smoke, I live an active lifestyle, not exposed to radon gas, etc. etc.)

Now if I take a group of products and see how much their price increases on average, then in-so-far as I buy those products, that price increase (or inflation) applies to me and any individuals equally.

There are two different notions of statistics there. In one case, there are underlying causes which lead to lung cancer, which have ZERO to do with your particular statistic, and a lot to do with the individual (whether they smoke like a snake, etc.) . In the other case, the underlying cause leading to your money's devaluation actually is the price increase observed statistically.

Now stop wasting my time.

Wealth, in the relevant sense, is a broad term relating to monetary worth, not what Agustino rigidly defines it to be. It can of course be measured, and it can of course be measured in various ways. — Sapientia

Money is a fictive commodity though. It only gets its value because we agree, collectively, to give it value and to respect that value in order to facilitate trade with each other. Without money, I would only be able to give you my corn for your wheat and so on so forth.

What is important is the real productive capacities and distribution networks that underly money. That is what real wealth is. And it's not because I define it that way, rather I define it that way because that's what my analysis reveals wealth to be. If you understand that money is fictive - that it gets its value only because we collectively agree to give it value and respect that value for the purpose of trading more easily - then you perceive at once that something isn't valuable because it is worth a lot of money, BUT RATHER it is worth a lot of money BECAUSE it is valuable. So that value is the underlying kernel, the inner essence of money as Karl (or Hegel) would say.

But that doesn't matter, because we both know roughly what the results would be if I did, and it wouldn't make much of a difference. — Sapientia

No, no, it wouldn't make much difference, just of the order of a couple of 1000s :-}

16,000 million vs 30K
50 million vs 30K

Right. No big difference.

but play by the rules — Sapientia

What are the rules?

There would be others who are competent enough and willing to take over. Why would you think that I expect the paramedics to run the business, rather than, at least initially, after the redistribution, receive a share of the profits thus far amassed? — Sapientia

Why would it be fair for the paramedics to receive a share of the profits of a business that they do not run and are not involved in? :s - so basically you have these people who do almost 0 for those factories, and yet they get to have a part of the profits... I cannot see how that is fair.

That would be a waste of time. The chances that my expectations would be wildly mistaken is very slim. And if, despite all of the odds, that turned out to be the case, I would just pick a better example. — Sapientia

So if you were mistaken, then in this particular case it would be okay to let them have so much wealth right?

The Hinduja family would be proportionately rewarded. The Hinduja family are replaceable. If the Hinduja family were not willing to work under the system I propose, then the Hinduja family would be replaced. This isn't a negotiation. — Sapientia

Everything in society is some sort of negotiation, if we don't negotiate then we're effectively at war. Negotiation prevents conflicts which can lead to a lot more damage. And the wealthy can negotiate as much as the poor for that matter. It seems that you imagine yourself to be somewhat like Putin, walking into town, meeting the billionaire (Oleg Deripaska), and telling him what to do or otherwise...


But even Putin negotiates. When someone runs a business, they know all the ins and outs of it. Every business is different, it's not like anyone else has, at the time, the same expertise that the Hinduja family has in running their business. They know everything about it. So it's stupid to lose their talent and ability at running it on your side.

:-} don't make me laugh. You clearly do understand the way in which statistics do apply to individuals and they ways in which they don't.

No. Cite it yourself if need be. I'm certain that you know what I'm referring to. — Sapientia

No, I actually have no clue.

I spoke about balance and proportion, I gave you analogies, and I have given you concrete examples. — Sapientia

Yeah, and I asked you what does balance and proportion have to do with this? Why is it that things need to be proportionately distributed, and if they do, what does that mean? Does that mean equal? Maybe some do deserve to get a lot more than others.

You just don't recognise as fairness or unfairness what I do, and there's only so much that I can do about that. — Sapientia

I've just asked you to show me how it is unfair. You're just telling me that it is, you're not giving me any reasons why. You're just stomping your feet that it is. That's dogma, not thinking.

Elsewhere, I have seen you praise family values, yet here, you praise the individual in spite of family values. — Sapientia

Families are required to have a successful business. Who will run the business and continue your work after you die?

the average person — Sapientia

What stops your average person from starting a business and being successful? I want CONCRETE answers now, not bullshit 99% of businesses fail. I'm not concerned about that. I want to know why they fail, and hopefully amongst the reasons there will be a few which the average person cannot even access. That hasn't been my experience though.

But fdrake already did the legwork in terms of analysis on this and provided you with ample evidence of the negative effects of unequal distributions of wealth. — Baden

Right, and we discussed in what regards he is right and in what regards he isn't. He's not right that if 1% owns 99% of the wealth it's necessarily bad. That 1% of the wealth left may be enough - hypothetically - for the 99% to be able to have a decent life.

The issue here seems to just be the unequal distribution of wealth. There's nothing in principle wrong with it. — Michael

Yep, I agree. Sappy and Bitter Crank obviously don't like accumulations of wealth, but they have done precious little to rationally justify this dislike, apart from saying it's oppression, without being able to show how.

And how does the Hinduja family have control over production and distribution? They do it the old fashioned way. They own it. — Bitter Crank

Yeah, of course they own it, because they built the infrastructure of the value generation and distribution networks themselves from the ground up. Otherwise, they wouldn't get to own it.

It would be more accurate to say that 40-50 million people help the Hinduja family. Without their 75,000 employees and millions of consumers, the Hinduja family would be back in Karachi peddling used pots and pans from a small cart. — Bitter Crank

Right - and without the Hinduja family, the 75,000 employees and millions of consumers wouldn't have access to the products and services they do today.

Both depend on each other.

I think everybody understands that successful businesses are run by talented, hard-working, more-or-less honest opportunists and exploiters. — Bitter Crank

They are not opportunists and exploiters at all. That's where you have it wrong. You cannot eliminate the entrepreneur - even in communism, there would be people who CONTROL the value generation mechanisms and distribution networks. They are your capitalists, it doesn't matter that on paper it says that all the employees own the business. They may own it, but they surely can't all control it.

That's what wealth and ownership ultimately is. It is control over the production and distribution networks. All workers together cannot control production and distribution, since they're busy working on actually producing the products.

The legal and political systems of the West, and some developed/developing countries is structured to disproportionately favor and facilitate opportunism and exploitation. — Bitter Crank

It doesn't facilitate exploitation, at least not in this regard. If I, as Michael told you, make homemade brownies, start selling them making use of the internet say, and I'm doing this all alone, make my startup capital that way, and then I proceed to employ people to make them, while I'm busy growing my distribution network, getting more traffic to my website, etc. etc. until I have sold so many brownies, to so many willing customers, that I have become mega rich, what's the problem? And when I say I became "mega rich" all that means is that I own control of the (now big) production and distribution networks that I've created.

Capitalism is based in that legal and political framework. Without it, opportunists and exploiters would have to resort to crude and primitive methods (a la mafia) to succeed. Capitalism avoids individual mafia operations by legalizing and enforcing exploitation of both workers and consumers by the opportunistic companies it spawns. At least it does now. In an earlier era of capitalism, there wasn't all that much difference between a crooked operation and a righteous one. — Bitter Crank

How is someone exploiting consumers? Consumers aren't forced to buy, they surrender the money to gain access to a product that they desire, to something valuable that can help them. So for example, say you have arthritis. I come to you, and I ask you, "Do you have stiff joints and frequent joint pain?" you say yes. So then I'm like "Why not try this XXXX natural supplement that I sell, here's the research on it, and if it makes you feel better we can set up a monthly recurring fee and it's delivered to your door on the very same day, you don't have to do anything. If you don't like it, then I'll give you a 100% money back guarantee". You say yes. What's the problem with that? That's how marketing works. Build awareness of pain/problem, show a potential solution, and the customer flips out the wallet and buys.

Employees aren't exploited either so long as they get a fair share for the value that they produce. Most of the "heavy duty" work is carried by the SYSTEM that is created - that's what the entrepreneur works on - not by the individual worker. If you add all the workers together - all their salaries - you get probably what is the biggest single cost for all businesses. You add the raw material costs, and all other associated expenses, and you get the full costs. Where does the profit, the difference between revenue and costs come from? It comes from the system of automated production and the scale achieved by the distribution network setup by the entrepreneur.

I don't know how big your operation is. I am guessing you are more like a hard-working farmer who works by himself. He has to do all the hard work of running the small farm--and it is a lot of hard work. His profit at the end of the year are his own. — Bitter Crank

Right, that's how I currently am, pretty much, apart from accounting and some legal help.

If, however, he is a bright opportunist and owns many farms and employs many people, he will--of necessity, since he is a capitalist--exploit the people that work for him. He will get rich, they will not, though they are doing all the work and he merely cracks the whip. — Bitter Crank

To own many farms he has to set up the system, nobody will do it for him. Nobody comes to his house and tells him "wouldn't you like to own all these farms kind Sir?"

He will pay them as little as possible. He will fire them if they start organizing a union to protect their own interests. He will probably fire them if he thinks they are not working hard enough. He might not offer any health insurance. He might not give them vacation time. If unemployment in his neck of the woods is high, he will feel very secure. There's always somebody else who wants a job. If unemployment is very low, he might be forced to pay more, or offer benefits. If things get too bad, his employees might organize a walkout, leaving crops unharvested and several thousand cows waiting for their twice daily milking. — Bitter Crank

Depends on what kind of business you want to run. You can certainly opt for the high employee turnover model, where you don't give a damn about the people who work in your business, and every chance you get to screw them over you use to the fullest. The problem with that, apart from the moral issues, is that it doesn't work very well, and it increases your costs. Furthermore, you never entrench yourself as a pillar of your community, and therefore are always disposable - you're always the object around which everyone's anger is likely to focus. People aren't going to go die with you in battle. The first opportunity they get, they will betray you. Now if that's the kind of business you want to build, up to you.

But I think it's wiser to build a business where the people know they can trust you and you can trust them.

I did that in the other discussion: the discussion that you created, and which this discussion is responding to. You saw it with your own eyes. — Sapientia

Please cite it here.

I don't need no "value-quantity graph" to know right from wrong. — Sapientia

"No, I need no analysis, screw that, I've already decided it's unfair" :-}



You two, especially Sapientia, have some serious misunderstanding about what wealth is.

For example, in his very first post, Sapientia compares the yearly income of an individual paramedic with the total assets of the Hinduja family. Of course, that's like comparing apples and oranges, because the two are NOT the same.

Wealth is a measure of your control over (1) value-creating mechanisms (production), and (2) distribution networks that can make them widely available. Now when you two say something as idiotic as the "redistribution of wealth", you don't understand what you're talking about. What are you going to redistribute from the Hinduja family? :s You're going to shut down the factories, sell the land, buildings, inventory, etc. and then re-distribute the money or what? :s You're going to give each paramedic a piece of paper saying that he owns a teeny tiny part of the business and what will he do with it, use it as toilet paper? :s He has no time to check what the business is doing, nor is he capable to manage it to any extent.

Now you may think that the Hinduja family live very lavish lifestyles. Maybe, I don't know. You should check what their incomes are. Maybe their incomes are not fair, maybe they are. But I can tell you one thing for sure - they do deserve to take home many many many orders of magnitude more than a single paramedic. A single paramedic does not save lives alone. He saves lives by relying on instruments created by people like the Hinduja families, cars, oil, phones, etc.

Furthermore, the quantity of good done by a single paramedic is small. A single paramedic hasn't created a system of value-production and distribution of that value through society. Rather he participates in such a system. So he does a lot of good, but to how many people per year? 3000? And out of those 3000, only a teeny tiny percentage are actually "saved". Most people who call the paramedic are given a pat on their back and sent on their way.

https://emtlife.com/threads/how-often-do-paramedics-save-lives.30587/

Well someone like the Hinduja family, they would help maybe 40-50 million or more people per year. Even if they help each person less than the paramedic does, overall they do provide far more help to society than an individual paramedic, hence why they make more.

Let's say that the Hinduja family pockets $90 million per year in income (which seems quite excessive at first). That means they are equivalent to 3000 paramedics. That seems reasonable. They probably provide as much value as 3000 paramedics in a year.

Of course you don't see it. That's exactly what I expected. — Sapientia

No, it's just cause you're really not providing a reason why this is so. It may be so - I'm not saying that it definitely isn't, I haven't studied the Hinduja group to say it isn't.

You're just pointing to something and saying it's unfair without providing an analysis for that. You just decide, a priori, that it is unfair.

The rich should not get way way way fucking richer. That is not right. — Sapientia

Why? If the area under their value-quantity graph is much bigger, then of course they should get way way way richer.

I don't see how these facts illustrate that it's not fair that the owners of the Hinduja group have 16.2 billion while paramedics earn 37K.

You haven't analysed the contributions to society that the Hinduja group, through all of their businesses make or have made. Presumably, your paramedics need a lot of things, including phones, etc. in order to save lives. So society is all interconnected, the ones who do most for society aren't necessarily the ones who save lives directly, but rather the ones who are most responsible for the entire system functioning as well as it does - meaning the ones who play the biggest part. Paramedics may offer a lot of value, but they do so supported by a very large network, and, individually, only to very few people.

Wealth = Value x Quantity. If you deliver high value but to super few people, how can you expect to be wealthy? :s

No one is entitled to a grossly excessive share of overall wealth, like 99%. No one could have participated in society to such a great extent that that should be their reward. No one could have truly earned that much. And if you disagree, then I think that you're due a reevaluation. — Sapientia

So this is not a mathematical and scientific question that must be decided by actually looking at what the facts happen to be, it's something you decided a priori? :s

I got it, thanks!

Interesting, I never knew the industrial revolution happened without limited liability. But I can tell you that without limited liability things look quite scary, especially on a large scale where you can't really control what's happening in 100% of the cases.

30% to 40% — Bitter Crank

Yeah, here all taxes added up to 30-40% too on gross income for employees, and the employer is also responsible for deducting that. But that's very high - effectively you need gross income to be 30-40% higher than what you pay someone in hand. And people don't care what their gross income is, just what they get in hand anyway.

VAT is much lower than that though. It ranges from 15%-27%. And I think that's normal. VAT is passed unto the consumer anyway mostly, for most products, especially where the demand is inelastic (such as basic food). How the tax burden is split is determined by the relative elasticity of the supply (producer) and demand (consumer) curves.

Yes, some taxes do hit the tax payer twice. Maybe quite a few do. I really resented counting interest on savings as income (back when interest rates were worth thinking about). The savings came from wages; which had already been taxed. Bad policy, it seemed to me, discouraging saving. — Bitter Crank

Yeah, it's an interesting thing. We think most of our economy is based on consumption, but it's really savings and investments that drive the economy. Consumption is actually quite a negative thing in excess - it basically means simply consuming value that is produced, ie destroying value.

Also, the way consumption is calculated, it includes even some elements that are actually investments (or consumption for the sake of production) - those elements are actually good.

Here's a good article.

Some people say the individual tax payer ends up paying for most of the governments' requirements, because wage payers (businesses) reduce wages to help cover their own costs of taxation. — Bitter Crank

It's not necessarily reducing wages, it can also be increasing prices (inflation). But yes, taxes are in the end passed off from one actor to another.

Theoretically, if corporations were not taxed, they would pay higher wages. (I doubt it would work that way in actuality.) — Bitter Crank

It does happen actually, but not the entire tax saving is passed onto workers as higher wages, and the higher wages aren't distributed uniformly - meaning people at the top get bigger increases than people at the bottom.

Inequality in a society where upward mobility is the rule rather than the exception would be much more likely to be acceptable than the situation we find ourselves in now, where it is reversed. — Benkei

I agree with you on this.

Take corporations that have limited liability and therefore externalise costs to society at large yet protects capital who also pay lower taxes. — Benkei

Well, it makes sense for a corporation to have limited liability. I mean if I start a business, and something goes wrong and my company is taken to court, do you think I should pay with all of my personal assets too? Limited liability is the only way to make sense of it, and say that the company is only liable to pay up to whatever its working capital happens to be.

I currently work as self-employed and an individual contractor, so I don't have limited liability, but that's one thing I'm interested in acquiring.

The idea that capital risks more is also something I reject. A labourer loses his livelihood, which is worse than losing part of your savings. — Benkei

If the labourer cannot find employment elsewhere that is true.

The exercise of political power by means of capital creates an uneven playing field and this has become increasingly more uneven as power consolidates — Benkei

I agree with this. That's the problem of corruption and big government getting in bed with big business.

Any answer I give, you can just respond by questioning how or why that is fair. — Sapientia

No, I can't respond in that manner if you arrive at a basic truth that is unfair. What is unfairness? Unfairness is not giving to each what they deserve. So, first of all, we must understand what each person deserves. I would say that we all deserve access to the basic necessities of life - healthy food, clean water, access to education, access to healthcare, and shelter. Other things apart from those, must, to one extent or another, be earned by participation in society. It's okay if we provide these basic necessities for all, but no more. Providing more would be unjust, since we don't deserve more by default.

Individualistic aspirational nonsense. It's not sensible to disregard the data that 9/10 businesses fail on average. There's a fine line between being confident and being foolhardy. — Sapientia

Statistics don't work like this in this case. Events - such as business success - are not random. Statistics must be considered differently with regards to business success than you would treat them when applied to radioactive decay for example. The phenomenon underneath radioactive decay is truly random, with specific outcomes being impossible to predict in individual cases. That's not the case in business.

Now take something like health. The chance of getting lung cancer is an average calculated for the average person. Now I hope you realise that if you never smoked, if you have an active lifestyle, if you never drink, if you've never been exposed to dangerous smokes/chemicals or radioactive elements (such as radon gas) etc. then your chances of getting lung cancer are significantly lower than that average. Why? Because you're not average, you're an outlier.

Average life expectancy in the UK may be 82 years, but that is irrelevant for you as an individual. If you live a healthy lifestyle, you have grandparents who lived up to 100, etc. then, granted that no accident occurs to you and you don't commit suicide, you can expect to live well into your 90s.

Statistics do not apply to individuals. You have to understand the underlying causes. Statistics in these things, which are actually determined, blind you from gaining an understanding of what actually leads to failure and what leads to success. Statistics just show what happens to the average. Are you average? Maybe you're not. Maybe you have more knowledge than most people in that business. Maybe you've studied it for a very long time. Maybe you have the right connections. Etc. Etc.

There's a fine line between being confident and being foolhardy. — Sapientia

Understanding that statistics don't apply to individuals and that you need to gain a deeper, bottom-up and causal understanding of success and failure in business before starting out isn't being foolhardy. It's just being rational. If you are rational, then you always minimise your risks.

This is the difference between judging based on "that's what always happens" (convention, statistics) and judging based on a bottom-up causal analysis of the factors that play into success. You need to think for yourself and understand the phenomenon. Understanding is key. If you always let others think for you, you can never do anything innovative or new.

A very good source explaining what I've said above is this blog. The article is quite old (and very long - not all of it is relevant), but it's interesting. You don't have to buy the book to read this particular chapter, it's all available for free here.

Are you suggesting that those included in the 99% should each take a gamble with a 90% chance of failure by starting a business? That doesn't sound like good advice to me. — Sapientia

That's nonsense. It's not a gamble since the result depends on you and your skills to quite a large extent. I advocate that you educate yourself before doing that.

The indication that 9/10 businesses fail on average says nothing about you and your potential. Your chances may be worse or better than that. Starting a business isn't playing the lottery.

A sales tax, which can be targeted and vary with different products, seems rational to me, but why collect it at the check out? Why not back up 1 step and charge a tax on merchandise up-stream from retail? Tax it, for instance, at the point of wholesale purchase by the seller. Fewer transactions to monitor, that way. — Bitter Crank

Why a sales tax? What's the rationale?

VAT? — Bitter Crank

I think VAT should be eliminated honestly - you don't have it in the US do you?

A tax on sales or revenue doesn't make sense to me. Only profits should be taxed in order to encourage businesses to reinvest as much as possible and not run profits year after year. But I see no reason to tax revenues. For example, in EU you usually have to pay some taxes on employees too. So then you end up paying tax on the salaries you give employees and another tax on sales (which is what you give them salaries from). That's effectively taxing you two times on the same amount of money... And just basically makes you raise price for whatever the VAT is.

I would agree with all those suggestions I think.

If printing more money to finance government operations devalues the coin of the realm, isn't that a form of taxation? — Bitter Crank

No, because it leads to inflation and the devaluation of money. The poorest will be most affected anyway.

Unless a government engages in commerce to generate its own revenue, I don't see how you can avoid a tax of some kind, no matter how rococo the scheme. — Bitter Crank

I actually think the government ought to engage in commerce, especially in certain key industries. They should also lower taxes on businesses and reduce red tape with regards just to small businesses while raising taxes on profits from financial speculation and gambling for everyone.

The biggest problem is that the government never goes bankrupt, so basically the same people get to stay in power even when they screw up. They just print more dough, borrow money from the IMF, etc. etc.

I would also set a 0 tax on all individual incomes under a certain amount, though the tax should probably be progressive moving upwards, because lowering taxes very much leads to high economic growth based just on increased consumption, and that's not very sustainable.

Also, perhaps banking should all be nationalised.

This means of course, that a dollar will tend to decrease in value (deflation I think it is called?) because there are more of them in circulation every year to represent the "national cake" — Jake Tarragon

Inflation, but it's a terrible idea. Can you imagine the huge inflation that we would incur if the government had the Central Bank print all the money it currently needs? Prices would go up in a galloping manner that would be very difficult to predict & control - and thus it would be very difficult to do business in that environment.

40% tax. — tim wood

That is ABSOLUTELY insane. 40% tax on sales, meaning on revenue?! The government doesn't even need that much money, not to mention that such a tax would effectively cripple the economy.

(R-C)/R = P/R -> that's your profit margin.

Now if revenue is taxed at 40% that means that you need a profit margin of at least 40% to stay in business. Pretty much no one has such a profit margin. So everyone shuts down their businesses, and takes the dough home and sits on it. Or alternatively, everyone raises prices by 40% to swallow your tax, leading to a huge inflation. Either way, such an economy will fail.

http://fortune.com/2017/06/07/fortune-500-companies-profit-apple-berkshire-hathaway/

Please send me all of your fictive commodity (bank transfers are convenient) as it uselessly accumulates at AguCorp. — Bitter Crank

>:O

The problem with a small number of people owning the bulk of wealth (in the United States, in any economic group, or the world) is that they monopolize capital. They tend to sit on it. Consider Apple's $250 billion dollar savings account. It's been growing steadily over the last several years. What good is it doing? — Bitter Crank

Right, okay, now I see what you mean. Yes, that is a problem. What do you think can be done to motivate these people to invest that money in the economy and not just hoard it and sit on it?

The absurdly rich population can't put their extraordinary large share of wealth to productive use at the level where it would really make a huge difference (among the entrepreneurs at the bottom third of the economic distribution, give or take a billion people). They can't because the task of investing in a billion small entrepreneurs would exhaust their time-and-organizational resources. — Bitter Crank

I agree, so perhaps above a certain level it makes no sense to permit the accumulation of wealth since the person cannot put it to use anymore without basically employing an army of people.

So we have trillions of dollars accumulating, which are not benefitting anyone. Meanwhile, a couple billion small entrepreneurs need capital and can't get it. — Bitter Crank

Yeah, I agree with this. So what solution would you propose for the stagnation of capital, because it seems that that is the real problem, not only its concentration in a few hands?

No, that's not a fair assessment. Come on, Agustino, I think you know that that's not what I was getting at. I have already explained why it is unfair. I was pointing out to you the fact that explanation can only go so far, and that understanding is what is required. If you don't understand it the way that I do, despite explanation, then we might be at an impasse. — Sapientia

No, but I actually don't understand any possible reason for it :s . So far you have told me that it's unfair because:

It's a problem if it's excessive. That would be a problem because it's unfair and creates an imbalance. And an imbalance impacts people like me. That would be money in excess of what you've earned, which you do not deserve, could go to those who need it more than you do, and therefore ought to be redistributed.

So it's unfair because it's unfair. And it's unfair because it's excessive (what's the link between excessive and unfair?). And it's unfair because it's unbalanced :s - why is unbalanced unfair necessarily? It impacts people like you - how? Just because there are people who need the money more than me doesn't necessarily mean that it should be redistributed by force.

Yes, well, organized crime needs to be ummm organized ;)

I went on to explain that. At some point it's down to you. You either recognise it or you don't. If you don't recognise it, you don't recognise it. — Sapientia

So you're not able to provide a reason for why it is unfair? You're not able to put your finger on the harm that someone else having more than you does to you?

If you change the situation by altering factors such that the wealth is not excessive on one side, then we're talking about something else. I said that fairness means getting a proportionate slice of the pie, and I stand by that. — Sapientia

Right, but what is proportional isn't very clear to most people. So take the example I gave to BC:

Okay but go back to my previous point. So say I start a web development company. I will hire people, but I won't hire jack-of-all-trades like myself. I will hire, for example, an HTML/CSS expert, a javascript expert, a backend/PHP expert, a database expert, a Wordpress expert, a Node JS expert etc. etc. and put them to work. Now they will do the work a lot faster since they are experts at each individual component. They can probably do each individual component of the project much faster (and better) than I can.

So they are going to earn a fair amount for their individual work - but I will take for myself all the benefits that emerge from me having brought them together right? Any economies of scale, I will take for myself, since that was my work, to bring them together, and set the whole system up. So if they can finish projects faster than I can alone, then anything extra I will take. Isn't that fair? — Agustino

Consider another example taken from here.

In order to advance to large corporation, you have to collect the surplus value that employees have.
You start iff (by) buying $3 raw material per product and said product takes an hour to produce. Let's say your employees add $5 of value onto a $3 value product. You sell said product for its value: $8. You already sink $3 per product as the cost, so the max profit you can make is $5 if you pay your workers nothing. Obviously that isn't an option. If you give your workers the full value they add onto it ($5), then you have a cost of $8 and no profit to put back into the company to exoand. Let's say you set yourself up woth a modest profit margin: $1. That means you have to pay your workers $4 dollars when they made $5 worth of value. In a sense, you have to pay the workers less value than they create to be profitable. — Takarov

This Marxist framework doesn't portray the full complexities right. There was something that Karl Marx didn't realise, which represents the value of the entrepreneur, which isn't tied solely to owning the means of production. In other words, economies of scale do not result from the simple ownership of the means of production.

So say in my case, the product is a website, let's say a very simple one for now. It costs basically nothing in terms of raw material costs - people I employ would be people who own computers at home too, so they don't need me to access the means of production.

So all these people can basically produce and sell websites by themselves. I do not own the means of production as such - at least not in a way that they cannot individually access because of lack of capital.

Now the theory of surplus value has it that the worker is exploited because he doesn't have access to the means of production (the assembly line for example) himself. So he cannot, by himself, produce in as short a time as much as he can produce by working under the capitalist, having access to the capitalist's assembly line. So his labour under the capitalist produces a lot more value than he is given.

In my case, the advantage comes from specialization. The entrepreneur also creates something useful - he creates a system which employs specialised people and out of that individual specialization and the internal processes which ensure the smoothest flow possible, the time it takes to finish one website minimises. Let's say that this procedure minimizes the time it takes to finish one website individually by 70%.

The entrepreneur also ensures that there is continuous work. Now that production is 70% faster, there needs to be a bigger pipeline of willing buyers lined up outside. Who maintains that pipeline? Who works to bring the buyers in? The entrepreneur, of course. Without the pipleline, the other people have nobody to sell to (or at least not enough).

So suppose each person can produce 10 websites by himself in a month, and each website costs $200. So that means, if they were to work individually, they would make $2000 assuming they could source the work themselves.

Now, when they work in my team, they will produce faster due to their individual specializations and the team I have formed as entrepreneur AND also because they no longer have to market and look for business by themselves - the entrepreneur takes care of that. We'll quantify this time as 20% decrease in working time compared to working by themselves (meaning they will produce 20% more assuming they will work all that time). So, let's say I am employing 5 people.

5*(1+0.7)*(1+0.2)*10*200 = $20,400/month in revenue or total value produced.

So I will pay them what they can earn individually which is $2,000/month. For 5 people that is $10,000. But the benefits from increased production is due to my work as entrepreneur - I brought them together, arranged them in a team, and setup the whole marketing pipeline to get sufficient work so that we can achieve those numbers. So I pocket the other $10,400.

I make $10,400 and they make $2,000. Is that unfair? You could argue no. I pay them exactly what they would earn working by themselves for the same time, and I pocket what is the difference from bringing them together, arranging them by specialization, and organising the sales and marketing required to sell all the production - since I myself am not actually producing the products sold (websites).

And this remains true even if it would be a worker's collective. There would still need to be someone who does the entrepreneur's job. How much should that someone be paid, since he doesn't actually produce any of the products himself, all he does is make production faster and more efficient through his work. That person would effectively be responsible for the growth in numbers that are achieved, so it's fair that he pockets all of it.

But, let's say now that I want them to love their job and prefer working for me than working for themselves. So then I will share some of what I earn with them, so that we're both better off.

So I pay them $2,600 each, and I pocket $7,400. Now they make 30% more than they would have made working by themselves, without the risk of bad months (not finding work, etc.). It's a fixed wage, which wasn't the case if they would work for themselves. You think that's fair?

Unfortunately, I am not in a position to do so. Only a comparatively small number of people are in such a position, as you well know. So you're being unreasonable. I would much rather see that done than complain about it. In fact, if that was done, then I would have no reason to complain about the situation, and my complaints about it would cease. — Sapientia

I agree, but politicians want it to be like that, because they need the loopholes to launder money too. Why do you think tax codes, etc. aren't fixed? :s It's because the people in government are corrupt. If they were paragons of virtue, they would fix them, it's not super complicated.

The data on this is pretty complicated. It's often the case that poverty is used as the dependent variable in a study, then it's found that more educated implies less poor. That's a global trend AFAIK. But it's also the case that more poor implies less educated, and there's some evidence that people from poorer backgrounds are empoverished mentally as well as materially; they're worse at learning! It's also often the case that the available schooling is of a much lower quality in poor communities and countries. The effect of education on poverty and inequality is always relative to the average or expected education of a population, or relevant sub-population - like being the only Spanish tutor in an interested community would be quite profitable. — fdrake

I agree, but again, notice how this refers mostly to non-Western societies. The PMC article focusing on Canada & US is interesting, BUT we must note that I don't think education in a school / university is much relevant today. That's not what I mean by education - I don't think that piece of paper (degree) is relevant I know now you'll throw the stats now how the one with a degree on average makes like 20-30K/year more than the other, yadda yadda. Not super interesting.

Educational institutions today are super inefficient, and for the most part in terms of actual skills you obtain, not that great.

Also interesting to note that relatively poor nations - for example, Russia - do much better in mathematics than the US today. However, they are poorer in terms of creativity, but in terms of pure technical ability, these ex-communist nations are very very good in their schooling.

Not having a degree is becoming a large disadvantage, to the tune of 35% reduction in median income in the UK. — fdrake

Depends on what you want to become. If you want to become an entrepreneur, a degree by itself is probably useless. If you want to be a doctor or a lawyer or a professor, then it's absolutely a must (for the most part). If you want to become an engineer it's not absolutely necessary either, but can be helpful, etc.

Put 'being stuck in a rut' together with poverty - lack of food, shelter, basic living conditions, and you start getting some real motivation for crime. No other options, few skills, what you gonna do? — fdrake

Sure.

It's interesting to compare Norway to the US here, the minimum wage (enforced through union action rather than law) in Norway for a minimal full time Job gives you something like 21 USD per hour for at least 36 hours a week. This is enough to live and save, even considering the mark up in prices from the US. Despite Norway still having an income distribution with a similar shape, violent crime and theft are a lot lower there. — fdrake

Right, so we return to what I was saying from the beginning. Relative poverty is irrelevant, what is relevant is whether most people in the country have enough money, not whether 99% of the wealth is owned by 1% but the 99% still have enough.