Comments on: Do the Wealthy Really Earn What They Produce? http://www.automaticfinances.com/rich-people/ Money management for the 21st century Tue, 07 Feb 2012 06:31:05 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Jason Schoenbrun http://www.automaticfinances.com/rich-people/comment-page-1/#comment-7634 Jason Schoenbrun Sun, 07 Mar 2010 06:21:44 +0000 http://www.automaticfinances.com/?p=1612#comment-7634 (I must be missing something, because I'm not sure how the shoemaker example demonstrates value cannot be measured to show that wages reflect individual productive value, as you seem to set out to do.) You may have set out disclaiming fairness from your perspective (which I wholeheartedly disagree with, but that's in my comments in your other article) , but your ill feelings for market-determined value is all too evident and represents another serious issue. At the end of the day, we live in a capitalistic free market. Value is determined by the market. The fair value of a person like your example may fluctuate, and is just like the market capitalization of Apple. As the market determines their price to be valued at $X or $Y per share, so does their actual worth. There is no purer way for worth to be fair. For contrast, the opposite would be true if the government or some other entity steeped in and declared: "The value of Apple shall be $Z." To apply this principle to both of your columns, it seems to me that you do not respect free markets. You are offended that the market dictates Conan O'Brien to be worth so much money, so much so that you intimate how wonderful it would be if he bought you a cell phone instead of being such a greedy jerk. If you don't want an iPhone, don't buy one. If you like a competitor's product more, buy it. By doing so, you are validating that the rich (companies or people, whichever) are earning with they produce because as the consumer, you are saying so by putting your money in the product you believe will be a maximum cost-benefit gain for you. At the end of your purchase, you have in a small but real way affected Apple's market capitalization, or in terms we're discussing here, determined that Steve Jobs has earned what he produced (or perhaps that the competitor has). The shoemaker will command what the market determines he commands. What is the market? A murky but inherently true conglomeration of such factors as shoe demand, demand for his skill in a shoe, number of people with his skill and what each of them command, and actual value added to a particular company for hiring the guy, as in your example. Why you think this example demonstrates that the wealthy don't earn what they produce is not clear to me. I also just don't get how you seem to think taxing the rich a higher proportion/percentage simply because they're rich is not an encumbrance on the free market capitalism that has surged innovation and technological advancement in this great country more than any other throughout history. When you encumber such an incredibly, incredible powerful force, you may be nobly using the rich's money to bring up the middle class from the lower decks of the ship, but you end up bringing down the entire ship even more. Meritocracy and the you-earn-it-you-keep-it mentality is the single most powerful way to bring up the entire ship. (I must be missing something, because I'm not sure how the shoemaker example demonstrates value cannot be measured to show that wages reflect individual productive value, as you seem to set out to do.)

You may have set out disclaiming fairness from your perspective (which I wholeheartedly disagree with, but that's in my comments in your other article) , but your ill feelings for market-determined value is all too evident and represents another serious issue.

At the end of the day, we live in a capitalistic free market. Value is determined by the market. The fair value of a person like your example may fluctuate, and is just like the market capitalization of Apple. As the market determines their price to be valued at $X or $Y per share, so does their actual worth. There is no purer way for worth to be fair. For contrast, the opposite would be true if the government or some other entity steeped in and declared: "The value of Apple shall be $Z."

To apply this principle to both of your columns, it seems to me that you do not respect free markets. You are offended that the market dictates Conan O'Brien to be worth so much money, so much so that you intimate how wonderful it would be if he bought you a cell phone instead of being such a greedy jerk.

If you don't want an iPhone, don't buy one. If you like a competitor's product more, buy it. By doing so, you are validating that the rich (companies or people, whichever) are earning with they produce because as the consumer, you are saying so by putting your money in the product you believe will be a maximum cost-benefit gain for you. At the end of your purchase, you have in a small but real way affected Apple's market capitalization, or in terms we're discussing here, determined that Steve Jobs has earned what he produced (or perhaps that the competitor has).

The shoemaker will command what the market determines he commands. What is the market? A murky but inherently true conglomeration of such factors as shoe demand, demand for his skill in a shoe, number of people with his skill and what each of them command, and actual value added to a particular company for hiring the guy, as in your example. Why you think this example demonstrates that the wealthy don't earn what they produce is not clear to me.

I also just don't get how you seem to think taxing the rich a higher proportion/percentage simply because they're rich is not an encumbrance on the free market capitalism that has surged innovation and technological advancement in this great country more than any other throughout history. When you encumber such an incredibly, incredible powerful force, you may be nobly using the rich's money to bring up the middle class from the lower decks of the ship, but you end up bringing down the entire ship even more. Meritocracy and the you-earn-it-you-keep-it mentality is the single most powerful way to bring up the entire ship.

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