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Thursday, October 15, 2015

OLD LAZY BUSINESS OWNER BLAMES EVERYONE BUT HIMSELF. HE EVEN BLAMES HIS EMPLOYEES.

Today, I awoke to a Disqus comment directed toward me.

I won't argue with you on the facts, but I do question some of your assertions. As a small business person with five employees, my employees have had minimal wage increases over the last ten years. Also the products and services we sell have gone up in price very little in that time period, while experiencing significant increases in cost of almost all things. These same employees are ten years older and definitely not getting any faster or more efficient, actually getting less productive over time. How does MY business circumstances fit into YOUR theories of employers enjoying cheap labor? 
I would contend that an aging work force is deflationary in itself and the ONLY increase in productivity is due to technology that ONLY business owners are investing in.I see NO employees pursuing added education or work skills beyond what I am willing to pay for, and once that happens I am expected to pay them more for the trouble.
There are lots of factors driving our economy and without a doubt government intervention is a big one, but I still see INDIVIDUAL efforts to attain, achieve, advance as being a major factor and one that just no longer exists. Society has absorbed the indoctrination of entitlement, and that is not just direct payments from government, but more importantly the expectation that we all DESERVE some quality of life, something for just being alive, much less just showing up. Entitlements, something for nothing, is the disease rotting us to our core, from the bottom feeder on welfare to the coupon clipping "investor" letting their money "work" for them.
Here is my reply.

Old Deadwood: I won't argue with you on the facts, but I do question some of your assertions.

Me: So in so many words, you said, I don't believe you. Next time, man up and say so. Your situation is anecdotal. What has happened to you cannot be applied to the universe of commerce in America. However, let's go through your situation.

Old Deadwood:  ... my employees have had minimal wage increases over the last ten years.

Me:  Likely, you haven't made any significant investment (capital) in your business over that time beyond wear and tear replacement. So your employees have not produced more, substantially. Without new sources of sales, you haven't paid your employees more because there is no source from which you could.

Old Deadwood:  ...the products and services we sell have gone up in price very little in that time period

Me:  You lack pricing power in the marketplace. True prices are falling as I have claimed owing to falling bank credit (deflation) even though owing to cash accretion current dollar prices have risen, albeit slightly for you.

Old Deadwood:  ...while experiencing significant increases in cost of almost all things.

Me:  What are your inputs? Even if current dollar prices of things are up and that is what you should see, that doesn't mean true prices are up.

Since June 2008, dollars in circulation are up 69.8%! If output held constant, prices would be up 69.8% over those six years and three months. Roughly, that comes to is 11% a year or 11 cents additional on the dollar.

Old Deadwood:  These same employees are ... actually getting less productive over time.

Me:  And that is why precisely, their wages are stagnant and so are your earnings relative to the market for what you sell. Even in the face of a shrinking market for your product, your share of that market could be increasing if you were competitive.

Old Deadwood: I would contend that an aging work force is deflationary in itself ...

Me: You would be right if you restricted yourself to the quite limited case of aging men who dig ditches with shovels. The shovel was invented sometime between 10,000 BC ago and 2,500 BC ago — neolithic times.

But how do you explain an actor like Nicholas Cage would has worked in more movies as he has aged, not less? 

Does the aging accountant have more practical, real-world skills and knowledge than the fresh, college grad, 21, or less? 

Old Deadwood: ... and the ONLY increase in productivity is due to technology that ONLY business owners are investing in

Me: Heed my dictum. Labor makes property. Capital makes labor produce property efficiently.

You are only agreeing with me here and supporting everything that I have shared and taught others over these years — the one, true understanding of commerce (the trade of property in pursuit of profit) or what some might call authentic economics rather than the wrong economics taught in universities across America.

Old Deadwood: I see NO employees pursuing added education or work skills beyond what I am willing to pay for, and once that happens I am expected to pay them more for the trouble.

Me: You need only pay anyone enough to keep them leaving you to produce property for your competitor. 

If your workers better their skills to work with the latest machines and your competitor buys those machines (capital) because he is getting increasing returns on each machine he buys, your competitor will snatch away all appropriately skilled workers in the marketplace and from his increasing returns, he will pay them higher wages.

Any wage rate is a price. All prices adhere to the one, true and only law for all of commerce — the Law of Prices. The Law of Prices holds the winning bids of purchase and sale in the face of what is on offer sets the price. 

Specifically, wage rates get set in double auctions. Would be workers bid in Dutch auctions (down against each other) and would-be employers bid in English auctions (up against each other).

Old Deadwood: There are lots of factors driving our economy and without a doubt government intervention is a big one...

Me: Intervention by lawgivers never drives an economy. Intervention crashes an economy.

Never be confused by the supposed glorious victories of state capitalism (China). The Chinese communist party is a mafia who are protecting its own and enriching its own by selling mostly to foreigners and not to almost a billion Chinese who aren't protected and who have almost nothing.

Old Deadwood:  Society has absorbed the indoctrination of entitlement...

Me: Rightly, you should have written, Americans. Society isn't a synonym for a people, a nation, Americans, and the like.

Society means friendly association. Some Americans are in society but not all are. A society of strangers can only arise around one thing — the trade of property in pursuit of profit. Property means right of ownership and never what is owned, such as chattel, recorded works of the mind or future obligation under contract.

Old Deadwood: Entitlements, something for nothing, is the disease rotting us to our core, from the bottom feeder on welfare to the coupon clipping "investor" letting their money "work" for them.

Me: Entitlement comes into English from the Anglo-French legal word meaning to bestow rank, to give title to property in something, to give privilege. That is what entitlement means. That is the legal reality. 

All politicians can do is entitle, that is, assign property (rights of ownership) to others through force.

Entitlements are inert, not alive. Entitlements can't act. Entitlements can't swipe one man's property and give it to another man.

The culprits are Congress and the lawgivers of the various states. Only they can steal the property of one and give it to another under the persuasion-in-propaganda rubric of law.

And what is the source of power of Congress and other lawgivers? Voters are the source of that power. Enough voters vote into office Congress and states' lawgivers for the purpose of swiping property and redistributing it.

You ought to learn about Pogo and the enemy. 

All that said, after reading through your commentary and reflecting upon it, what strikes me is the likelihood of you having become complacent over the years, even more so during boom times. And if that is so, you haven't been a good steward to your employees who depend upon you because they are not as smart as you.

————

Until Americans start talking about property — which means right of ownership and not what is owned — and until Americans start talking about duties and rights, as well as the arena were politicians are content to leave alone anyone, which is liberty, people shall continue to be deceived by many rhetoricians.

Until Americans learn how commercial banking works under a fiduciary monetary system with irredeemable paper currency, they will be fooled by by politicians and the handmaidens of politicians.

If the many would stop their minds from rambling and then start to think, prices should fall every year, if ever so slightly, on almost every product made, all things being equal, such as steady preference for those products. 

Improvements are hard to come by, but men achieve improvements, however incremental. It is rare when improvements burst on the scene, e.g., the railroad, the telephone, the car and Macadam road, the Internet, container shipping, the barcoded inventory, and so forth. So even when improvements happen and the winning bids a seller can accept can be lower while still maintaining margins owing to those improvements, current dollar prices will seem to be <i>up</i> because the tally of dollars in circulation are more.

This idea of ever upward growth in the economy is an outright lie published by lawgivers, their agents as well as central bankers and their agents. Economies can grow only under ever better improvements. There must be enough of those relative to the population, especially a growing one as output must be apportioned to the head count.

Economies tend to trade in a range of up and down like every market does. 

Of late, many have claimed that automation / robots kills jobs. Is that so?

"A self service kiosk that enables diners to design their own gourmet beef burgers will create 50 new jobs at a Palmerston North McDonald's restaurant." McDonald's Create Your Taste self service kiosks also create new jobs

Capital is the source of wages. Higher capital is  the source of higher wages. Believe it.