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...The driver for real income growth is productivity, primarily from advancements in technology, and the infrastructure that goes along with that. It takes many decades to develop the infrastructure even if the technology already exist (China for instance).
You are correct. For example, one of the most important advancements in technology in an historical context was the steel-tipped plow (in contrast to a wood plow or a plow tipped with a soft metal).
Quote:
Originally Posted by rruff
Who "deserves" the benefits of these productivity gains? Everyone.
You are incorrect.
The economic impact of an increase in tax or subsidy, or a decrease in tax or subsidy, depends on the elasticity of demand and elasticity of supply of the good, the cross elasticity with respect to other goods (substitutes & complements), and other secondary effects. This is widely understood. For example, in the following chart you can see the tax incidence:
You can use the same framework to evaluate a change in technology. It looks like a subsidy to the standard model. It works the same way: the return for a deployment in technology & capital will accrue both to the owners of the capital and labor that is a factor in production in relation to the relative elasticities of demand and elasticities of supply of various alternatives.
By the way, you used a word that does not belong in an economics forum: "deserves". That word is undefined in economics and shouldn't be used in an economic discussion. It can be used in other forums, of course. Just as "dividing by 0" doesn't belong in a mathematics forum, "deserves" doesn't belong in an economics forum.
Last edited by SportyandMisty; 04-21-2015 at 09:37 AM..
...It's obvious that the US based oligarchy is not interested in improving the living standards and democracy in any of these countries, but only controlling them and using them for profit when possible.
Source for your assertion? I don't find evidence that the Obama Regime "...is not interested in imiproving the living standards and democracy in any of these countries..."
It works the same way: the return for a deployment in technology & capital will accrue both to the owners of the capital and labor that is a factor in production in relation to the relative elasticities of demand and elasticities of supply of various alternatives.
Precisely. Unfortunately the supply of labor will never *naturally* become scarce. It is the nature of "pure" capitalism to drive wages to subsistence or below. *Consumer* capitalism (when the economy is a closed system of production and consumption) is highly ineffective in this environment. Aggregate production, wealth, and military power will be much higher if workers share in the productivity gains via wage boosting schemes and public benefits. The "ideal" level, if aggregate wealth is your goal, is where the share accruing to capital is just enough to entice investment and sensible risk taking. It is no mystery why every developed country conforms to this model.
On the negative side, government bureaucracies take productive resources away from other tasks, so ideally you'd want the administration to be simple and take as little manpower as possible. You also want the wage boosting and benefits to be considered "fair" and not a disincentive to productivity. This goes for all other "necessary evils" in our society, like courts, prisons, police, the military, etc. The wealth and well being in a country is highly dependent on how well they manage this, and minimize corruption.
Regrading who "deserves" the gains, you mentioned that there was no reason why incomes should rise unless employees increase in education and skill. That statement implies that the owners of capital deserve the gains. The owners of capital didn't contribute anything but money. The employees contributed their time and labor. Why is simply having money primary?
And in reality, the US workforce increased in skill and education more in the last 40 years than the prior 100, yet wages did not rise. Why? Because that is what the oligarchy wanted. Don't have time to go into details, but the globalization and debt escalation project that has been going on for 40 years, is how they made themselves massively richer, and incidentally made us poorer. The US consumer is no longer important to them.
If we are a democratic country, then shouldn't we have a government and economic system that tries to create a playing field that benefits everyone?
What countries? If they are they must be all drunked up since it doesn't make sense to work hard to try to make a better living. Why bother?
Prior page.
Yes, I was amazed too to find out that in some countries taxes and benefits are so high that money isn't really a motivator. And yet their societies are as wealthy as ours for most of the people. I guess people will strive to succeed just for the hell of it, if the environment supports that.
Precisely. Unfortunately the supply of labor will never *naturally* become scarce. It is the nature of "pure" capitalism to drive wages to subsistence or below. *Consumer* capitalism (when the economy is a closed system of production and consumption) is highly ineffective in this environment. Aggregate production, wealth, and military power will be much higher if workers share in the productivity gains via wage boosting schemes and public benefits. The "ideal" level, if aggregate wealth is your goal, is where the share accruing to capital is just enough to entice investment and sensible risk taking. It is no mystery why every developed country conforms to this model.
On the negative side, government bureaucracies take productive resources away from other tasks, so ideally you'd want the administration to be simple and take as little manpower as possible. You also want the wage boosting and benefits to be considered "fair" and not a disincentive to productivity. This goes for all other "necessary evils" in our society, like courts, prisons, police, the military, etc. The wealth and well being in a country is highly dependent on how well they manage this, and minimize corruption.
Regrading who "deserves" the gains, you mentioned that there was no reason why incomes should rise unless employees increase in education and skill. That statement implies that the owners of capital deserve the gains. The owners of capital didn't contribute anything but money. The employees contributed their time and labor. Why is simply having money primary?
And in reality, the US workforce increased in skill and education more in the last 40 years than the prior 100, yet wages did not rise. Why? Because that is what the oligarchy wanted. Don't have time to go into details, but the globalization and debt escalation project that has been going on for 40 years, is how they made themselves massively richer, and incidentally made us poorer. The US consumer is no longer important to them.
If we are a democratic country, then shouldn't we have a government and economic system that tries to create a playing field that benefits everyone?
Of course business owners deserve it because they build these businesses. Want to see what happens when they don't? Close down Businesses and let's see if these employees have jobs
It isn't just the business owners will get paid a lot. It is also the high skilled workers who adds a lot of value to the products and services and they do deserve to get paid more than those who don't have nearly as much value
I do not want a society where Low skilled workers are overpaid and high school workers are underpaid
There you go, making stuff up again. Hey, I'm a business owner, and my wife has started and still owns three of them.
Consumer capitalism is symbiotic. Business owners can't get richer unless consumers do. That's why since the industrial revolution until ~1975 *all* groups experienced about the same rate of gains from increases in productivity. What changed since then is a scheme to extract middle class wealth in the US to support globalization.
High skilled workers wages haven't increased either. Neither has the profits of most business owners. We can look at statistics and see that the great majority of gains for the last 40 years have gone to to the top 0.01%, but even that obscures where it is really gone. All you can say is that it is a very select group of mega-wealthy. For the most part, these aren't people who have jobs or are starting businesses or inovating, they are people who make money because they have money, power, and influence.
That the countries with high taxes are wealthy and happy? I think you can look that up yourself.
I have seen this argument over at the political board, the flip side that seem to always be forgotten is that the countries with the highest taxes AND most happiness ALSO have very regressive tax structures. One example always asked at the political board is why can't we have taxation/redistribution/social programs like Norway/Sweeden and Switzerland, as soon as it is pointed out that in those countries, especially Switzerland, the less you make the higher the effective ta rate you pay, the promoters go silent.
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