Republicans and conservatives (AKA orthodox capitalists) love to quote Adam Smith when they find a passage that suits their ideology. Free Markets! Invisible Hands! You’ve heard it all, I am sure. But what about this:
If there ever was an endorsement of a living wage, this would be it. We can forgive Smith his chauvinistic tone and assume he would say today that any family ought to be able to be sufficiently supported by one working adult, not only a living wage, but a lifelong sustaining wage is seen by Smith to be critical to the survival of capitalism.
Now some Republicans and their ilk will no doubt call into question the fancy sneakers, big screen TV sets, cell phones and other things (usually with racist undertones) as to why the working poor are poor. They just do not need those things. They can live a humble life.
Adam Smith would not agree. He writes:
So how does today’s American version of capitalism avoid all this? Easy. Our wealthy class has been able to rig the system and externalize the true cost of labor. For example:
Walmart Workers Cost Taxpayers $6.2 Billion In Public Assistance. Now I don’t shop at Walmart, but I do pay taxes. So in my own way, I am helping Walmart externalize its labor costs. And this is just the top of a very large iceberg in a sea of icebergs.
I don’t mean to single out Walmart. Well actually I do, but I do not mean to leave out all the others. Any company that does not pay its labor force a living wage is picking the pockets of the taxpayers. Think of that the next time you do to a drive up window for coffee, pick up a few sheets of drywall at the big box store, or walk into a nice clean office building with an outsourced night cleaning crew.
is capitalism that works for all involved, not just the owners of the means of production. (Unless we make the transition to where all the workers are the owners)
No economist has this definition of “true” capitalism.
…but I for one would love to get rid of the stock market/shareholding aspect. Businesses should be owned by those who invest their own money, time, and reputation into actually building the business rather than faceless shareholders just interested in their bottom line. A free market should simply mean that you and I can set up similar businesses across the street from each other. Maybe my products are better, but yours cost less. Consumers will determine by their patronage if either or both of us succeed.
You would like to build a factory to produce your better product. Where do you get the $500 million to do that?
They are more likely to feel like they have actual skin in the game.
You seem to have acquired the utopianism of our OP, christopher.
Like it or not, shedding shareholding would make our economy significantly less dynamic. Sure that might some kind of pleasant moral sheen to the idea that if Jones’ business goes down the tubes, well, only Jones will be affected. However what does that mean in the real world? Does it mean that Jones will lose house, car, and furniture? So, maybe before Jones goes into business he’d better be utterly sure of success given his fondness for shelter, transportation, and sitting. That means a lot less business activity, a lot fewer jobs, a lot more poverty.
*
I’m amazed at my utterly amazing (amazing!) ability to disagree with you without downrating a single one of your comments. TheBestDefense lacks this immensely difficult skill.
Not lacking the skill. I downrate when a comment is ridiculous but not worthy of wasting my time on commentary. But since you mentioned it, Christopher’s comment was so devoid of understanding how capital markets work that it need a thumbs down.
See, I did not downrate your comment but simply called it out for its nastiness.
You don’t think it’s nasty to go around communicating that a large chunk of comments here are beneath you.
Really?
Nope, not nasty at all. If someone has the time to post ten or twenty times per day then they have enough time to put some thought into one or two good posts instead. Frequent bad posts cheapen BMG and serious political discussion.
There is a reason that every post gives readers an opportunity to give a thumbs up and a thumbs down rating.
If nothing else I expect you to assume I comment in all sincerity. If you have an issue with what I say then for crying out loud use your words! Sometimes I think you should start your own blog and offer exclusive membership only to policy wonks that meet your impossibly high standards. I come to BMG to have conversations and to learn from others, not to get berated when a casual comment has not been vetted by all the experts (real or wannabe) or thoroughly researched as I would a term paper or journal article.
-use mechanisms to penalize short term trades and reward long term trades, so shareholders actually *do* care about the company, and aren’t just looking to hang onto it long enough to sell high. A “Robin Hood” tax on Wall St would be a good way to do that, particularly because they would do a lot to dissuade microtrades — where software buys stocks for nanoseconds and then sells again, to artificially raise the price.
-tax stocks like income, particularly stocks that are ‘second hand’ in the market, so there wasn’t significant added incentive to invest in stocks as opposed to new investments that actually grow the economy. (Buying and selling in the stock market isn’t really an investment in the business who’s share you’re buying. That investment has already been made. It’s like buying a used Ford — that doesn’t help Ford’s bottom line. IPOs and Venture Capitalism are real investments and grow the economy, but they represent a tiny slice of the pie.)
See, TBD, that wasn’t so hard – and I noticed you uprated his comment, so next step is to try it yourself!
I don’r always have the time to correct your mistakes but I do not want to let them hang out in public as if they are true.
Good for ryepower for taking the time to correct you. But as I noted above, there is a reason for this site to include both an update and a downrate button on every post. I use both often when I don’t feel the need to add additional words. I use the update button when I like the details and/or opinion expressed. I use the down rate button when I disagree with the opinion or recognize a mistake of fact. Nothing personal about it from me.
auto-correct switched “uprate” to “update”. sorry.
…the downrates per se I’ve learned to take in stride. Just understand I do sometimes “think out loud” on this blog, so my thoughts aren’t always fully formed and need the feedback.
For contacting all the economists on this. That must have taken you quite a long time. Really, thanks.
is among followers of Ayn Rand.
Adam Smith founded his ideas as upon Christian gentlement, not Mammon’s thralls. The current plutocracy would likely disgust him!
That’s what Adenauer called the pose-war German embrace of ordoliberalism, free market tempered by a strong social safety net and worker representation on corporate boards. It’s done wonders for the German economy which has been consistently stronger and more resilient through recessions than ours. They also still have an export based high quality manufacturing sector.
Chesterton embraced cooperatives and an ethos called distributionism where we could “solve the problem of capitalism by making more capitalists”. Private property was respected, but recentered around family life and local community. It also inspired ordoliberalism and the ideology of Christian Democracy which has never really gained a foothold in the states, other than social insurance for the disabled, unemployed, and elderly. It’s distinct from social democracy since it focuses on making more individuals and families owners rather than state ownership.
Interesting stuff in theory, what about practice? Mondragon, Correfor, and other chains including some American ones are competitive with Wal Mart and entirely worker owned. Locally, Trader Joes, Costco, and Market Basket have shown its possible to compete while still paying living wages.
Has a lot to say about what he calls a catholic economy. He uses the term “catholic” not as a religious word but as “working for all” and “inclusive” when he talks about his preferred sort of capitalism.
… in fact, the original meaning of the word and quite like the actual application of it to the (early) christian church… and look how well that turned out.
There is no capitalism that is catholic in this sense. There cannot be. Capitalism is not a prescriptive system that guides individual actions to a desired goal. There is, in fact, nothing to ‘include.’ Capitalism is proscriptive: it has no ‘goal’ only allowances and regulation in which no one is required to be helped and the hurt is (supposedly) limited and (ostensibly) punished.
If there is a component of our economy that is, or ought to be, ‘catholic’ in this sense, it is trade/labor unions. And the times of greatest growth and vibrancy in the US Economy are fairly coincident with the size and scope of unions. It’s kinda sad to see so much virtual ink spilled against capitalism without understanding the role and scope of unions.
Unions can create an us versus them company culture. What we need are employee owned companies. THE CITIZEN’S SHARE is a book I would recommend to anyone wanting to know more about it and how employee ownership is part of our nation’s history.
This reply suggests, however, that you’ve not thought much about unions. The adversarial nature of unions is a direct function of both the US laws (which I’ve long advocated should be changed) and capitalist antipathy to unions (because they are a direct check on capitalist rapacity) Contentious relations are not something inherent to unions. Any such contention is, rather, inherent to a capitalists view of unions.
Not only do we have many such companies, there is no law, statute, regulation, edict, dictum or decree against having more. This is not an answer to the question you asked. You have swallowed the reddest of herrings fed to you by a barely plausible capitalist insurgency: They want you to think that the only thing that can stop a bad capitalist with a company is a good capitalist with a company.
congratulations, you’ve read a book….
Thanks for the friendly comment.
… and I’ll withdraw that part of the remark, with apology.
Just, please, don’t let the snark prevent you from reading and responding to the substance…
Winner-Take-All Politics is what we’ve become. We’ve accepted the false story of the self-made man, the entrepreneur, the sacred innovators, the “job creators”…..as the engine driving our capitalist economy.
Unions are fine, were fine, but not enough. We ought to make the next step towards stakeholders and away from shareholders.
You are correct in that there are no laws against having more companies like this, but we need more than that. We need laws, tax codes, and trade agreements that encourage having more companies like this.
It’s in our best interests, even the best interests of the present day owners. Funny thing is that I have two good friends who own or have owned rather large successful businesses. The first one saw that he had very little in equity to sell once he decided to retire. The business was service related. So, over the years, he gave key employees a piece of the business, a share. In doing do, he owned less and less of the company each years but the value rose as the “owner” employees worked harder. Finally, when he was ready to sell, he had a business with a committed number of key employee/owners and the next buyer was not hard to find. On the other hand, my other friend is more than reluctant to go this route. He’s very worried that he has no real equity to sell and that keeps him up at night. When I mentioned to him “Why not give your key employees a piece of the action” he bristled and said, “I’ve worked for this, I sacrificed and struggled to get here. If they want a business, let them do it themselves as I did”…….He’s wrong, but he can’s see it. Part of the reason is the culture he’s been brought up in.
You’ve asserted several times to the effect that unions “are not enough.” Yet you do not explain how unions fall short in their stated aims of advocating for union members and, thus, keeping corporations from either exploiting their workforce or misusing them in some other way. There is an ‘us versus them’ mentality largely because they can be very effective in keeping corporations from riding roughshod over the employees and, in todays business climate, riding roughshod over the employees is the very definition of successful leadership.
Some people want to work an honest job and make an honest paycheck. They do not want to own a company. They don’t want to be ‘stakeholders.’ They merely want to work without being exploited. Unions are an honest and robust way of letting them do that.
I fear you missed my lame pun from upthread: “They want you to think that the only thing that can stop a bad capitalist with a company is a good capitalist with a company.” This is a play on the talking points of Wayne LaPierre and the NRA whose (rankly insane) reply to gun control measures is to say “The only thing that can stop a bad guy with a gun is a good guy with a gun.” The important thing for them, you see, is the gun. They care little for public safety in general and less for those in the cross fire specifically. The important thing is the gun. The arguments you posit here are much the same: Honestly, I do feel a little like what your most getting from the books your reading is the sacred untouchability of corporations. I don’t think you would so readily dismiss unions if that wasn’t at the heart of their argument.
are not owners. That’s key. Once an owner, the chances of exploitation are greatly reduced. Again, I am not saying that unions are all bad. They just have flaws that are hard to work with. As to corporations, if they are majority owned by the stake holders and not the shareholders, voila, another problem solved. A corporation with a majority ownership of stake holders would be less likely to send jobs overseas, pollute the local rivers, or do anything to injure the local community.
One thing about a living wage is where you live. I would never move to Boston (too crowded), and I wouldn’t pay $30 to park my car. But because someone wants to live there doesn’t mean the system has to provide them the means to do so. The urban/rural divide is growing. Here’s an example of a place to live (2 acres of land), you can grow your own food(pot), get some chickens, and live like a king.
109 Harrington Rd, Charlton, MA 01507
2 beds 1 bath 776 sqft
FOR SALE
$134,500
Price cut: -$5,400 (9/5)
EST. MORTGAGE
$472/mo
This adorable two bedroom bungalow has many updates; including brand new septic system, roof, water heater, oil tank, plumbing, and updated electrical. . The property has a large barn with a workshop and garage. Why rent when you can own this comfortable home, with a yard with room to explore? Conveniently located, getting to major highways is just a moment away!!
…who work in Boston at the coffee drive-ups, burger joints, drug stores and the rest…..where do they live?
If the burger joints cannot find anyone to work there then they will have to pay more, until someone can either afford housing in the area or is willing to travel into Boston to provide the labor. Do you think the landscapers in Wellesley, live in Wellesley? No they travel in, charge higher than normal rates to cut a lawn, and go home. If the wealthy weren’t willing to pay more their lawns wouldn’t get cut.
If you provide subsidized “affordable” housing you’re perpetuating a life of serfdom for the poor because if they suddenly get a huge raise, win the lottery, receive an inheritance, they are kicked out of their home because they are now too well off.
I wouldn’t have worked in Boston for less than $75 per hour, it’s all what you’re willing to put up with.
Sooner or later, something’s got to give, eh?
.
My youngest son shared a 3 BR Somerville apartment with 4 roommates. He worked as a food-runner in a Boston restaurant.
He ended up with rent of about $500/month. That’s comparable to what my other son pays for his 1BR in Manchester, NH.
I think people do what they have to do.
Not sure if your kids are close to my age or older, but I’m tired of all these “millennials don’t buy cars or houses or stick around in careers cause they’re weird” articles. It’s because we’re broke! It’s a system where we pay the equivalent of a small house to earn 40/50k at entry level white collar jobs (for the lucky) or less.
I’ve yet to outearn my parents and they didn’t go to college. So I sympathize with porcupine and other Republicans that want to emphasize military service or vocational jobs, since frankly the guard/firefighter I’m subleasing from is doing a lot better than Mr. Fancy Liberal Arts degree over here.
It would be nice if renters could get the tax deduction homeowners do for their mortgage, it would make a real difference in dropping down the ridiculous costs of living in this state. There is no better place to be a nurse (her future job) or a teacher (mine), but boy is it going to be wicked tight on us for a little bit longer. She still thinks we can find a studio for under 1k here, but I’m already feeling out potential couples to split the rent with. We hosted my college roommate for nearly a year on our couch in Chicago and he was on our last least there when we split a 2BR, so we’ve been down that road before. I was hoping we’d be past it after marriage, but it’ll be awhile longer.
For what it’s worth, those of us who choose to buy owner-occupied multi-families don’t usually benefit from the homeowner’s tax deduction. This is because it can only be applied to the portion of the property occupied by the owner, as a ratio of the total property. My wife and I bought our owner-occupied two-family (in 2012) because it was the only way we could afford to live in the city. We are each well-educated professionals with good jobs (she is a geneticist with a PhD in biology).
This economy is broken for pretty much everybody, not just millennials. I don’t mean to minimize the pain on millennials, I’m just reminding us that the 1%/99% split hurts everybody across the board.
My wife and I are very fortunate, and we still have inadequate retirement savings, very expensive health care costs (that are skyrocketing), and essentially no way to survive a loss of either of our incomes of more than a few months.
ALL of us are suffering, while the 1% continue to sock away record gains.
I am looking forward to having both of us (wife and I) in unionized professions too, it’s shocking how few of my friends even know what their rights are with or without a union. I think that education loans are the next subprime mortgage crisis waiting to burst. Another reason I’m glad Sec. Clinton has adopted much of Sen. Sanders college plan.
Your generation of MA residents, and many others, would be well served by the legislature removing the age restrictions on access to the property tax circuit breaker for renters. It would be expensive but age should not be a factor in fair taxation.
N/T
I talked with two people at opposite ends of the political spectrum in the last couple of days. Both are Massachusetts residents and are quite upset about the inability of their adult children to find steady jobs and lodging.
…when other people do what they choose to do. The problems arise because the latter group is holding all the cards.