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Source: (consider it) Thread: The social-progressive mindset
Russ
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# 120

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quote:
Originally posted by chris stiles:
quote:
Originally posted by Russ:

Even though it's a different set of children at today's party.

You are making the assumption that there is no connection between the two sets of children.

No, I'm not assuming no connection between sets. I'm assuming no identity between sets.

In other words that a child has a self, an identity, a personhood, that is more than membership of some class which has a collective past experience.

--------------------
Wish everyone well; the enemy is not people, the enemy is wrong ideas

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lilBuddha
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The entrepreneur, as described in many economic models, is a semi-mythical creature. It is mainly used to drive interest in the model. Not unlike the fantastical creatures described in the early days of exploration. The reality is typically different and often much more mundane.

--------------------
So goodnight moon, I want the sun
If it's not here soon, I might be done
No it won't be too soon 'til I say goodnight moon

- A. N. Parsley, D. Mcvinni

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Sioni Sais
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# 5713

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quote:
Originally posted by Russ:
quote:
Originally posted by chris stiles:
quote:
Originally posted by Russ:

Even though it's a different set of children at today's party.

You are making the assumption that there is no connection between the two sets of children.

No, I'm not assuming no connection between sets. I'm assuming no identity between sets.

In other words that a child has a self, an identity, a personhood, that is more than membership of some class which has a collective past experience.

WTF has that to do with Chris Stiles's response? A while back you denigrated class as an abstract construct and now you are being as abstract as it is possible to be.

--------------------
"He isn't Doctor Who, he's The Doctor"

(Paul Sinha, BBC)

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chris stiles
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quote:
Originally posted by Russ:

In other words that a child has a self, an identity, a personhood, that is more than membership of some class which has a collective past experience.

Nevertheless, the child will be affected by the society in which it exists - which will include all the repercussions of the collective past experiences of that group - including other groups adaptive cultural responses to those experiences.

They don't exist in a kind of ex nihilo blank slate culture.

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Soror Magna
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quote:
Originally posted by Russ:
.. In other words that a child has a self, an identity, a personhood, that is more than membership of some class which has a collective past experience.

This is, of course, a uniquely modern, western viewpoint of individuality. Most people around the world, past and present, do define themselves in terms of family, community, clan, etc. Most people around the world who aren't Russ consider their "membership in some class" an integral part of their "self, identity, personhood". Furthermore, those of us who aren't Russ' default white male cannot escape the reality that no matter how uniquely individual we are, our "membership in some class" does determine how many people treat us. I read resumes from all over the world and many of them list parents' names, home villages, ethnicity and religion. Here's an example of how people who aren't Russ introduce themselves:

quote:
Elder Larry Grant is of Musqueam and Chinese ancestry. His hən̓q̓əmin̓əm̓ name is sʔəyəɬəq, and his Cantonese name is Hong Lai Hing. Born on a hop field as a premature baby in Agassiz, B.C., Elder Grant was raised in Musqueam territory. He is the descendant of qiyəplenəxʷ (Capilano) and xʷəlciməltxʷ, Musqueam warriors who welcomed the first English and Spanish explorers to Musqueam territory. He is also the son of Hong Tim Hing, one of many Chinese market gardeners who farmed within the Musqueam community during the early 20th century.
Elder Larry Grant (pdf)

--------------------
"You come with me to room 1013 over at the hospital, I'll show you America. Terminal, crazy and mean." -- Tony Kushner, "Angels in America"

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Jane R
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chris stiles said:
quote:
Nevertheless, the child will be affected by the society in which it exists - which will include all the repercussions of the collective past experiences of that group - including other groups adaptive cultural responses to those experiences.
Or as Tolkien more succinctly put it: "Who are you, alone and nameless?"
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mr cheesy
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No man is an island.

The entrepreneur who thinks he can operate independent of and outside of his own cultural and social setting is an idiot.

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arse

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no prophet's flag is set so...

Proceed to see sea
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quote:
Originally posted by mr cheesy:
No man is an island.

The entrepreneur who thinks he can operate independent of and outside of his own cultural and social setting is an idiot.

What an idiot-filled world we live in. Everywhere multinational corporations constantly intrude into other cultures and social settings, and operate. Though it is much more than idiocy, it is a form of neo-colonialism, entrepreneurial exploitation, forcing of values, extinguishing of individuality. I particularly hold out consumer product companies, retailers who can force indigenous businesses out of business, export of cultural products like films and other media, oil companies. We also have idiocy like technological companies who fund their business via lucrative military contracts which provides for unfair advantage and selling things below cost.

Additionally, we can look at the idiots who successfully buy government support, particularly the fossil fuel companies, which are incredibly subsidized and actually noncompetitive without, probably because they pay so much into politician campaigns. Fossile fuel companies get billions in corporate welfare, 13x more than renewables.

Which all makes me ask, if any large business is really capitalist, into competition, or just into avarice via whatever legalised immoral and illegitimate means possible. (Then there are banks which should have gone out of business and their execs jailed, but instead got welfare and bonuses after destroying the economy over bingo-with-housing.)

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Soror Magna
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And the above shows how far the real world is from Russ' simplistic Entrepeneurs 101 view of economics.

One thing is true: a lot of job growth comes from small businesses - during some periods, more than from big corporations. This happens despite the fact that everything is stacked against them, with government policies overwhelmingly favouring larger businesses. And no, "cutting red tape" doesn't solve the problem because the cuts also always favour big business.

Politically, the entrepreneur is used and exploited over and over by trickle-downers to cover up what are actually goodies for non-entrepeneurs.

--------------------
"You come with me to room 1013 over at the hospital, I'll show you America. Terminal, crazy and mean." -- Tony Kushner, "Angels in America"

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lilBuddha
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quote:
Originally posted by Soror Magna:
quote:
Originally posted by Russ:
.. In other words that a child has a self, an identity, a personhood, that is more than membership of some class which has a collective past experience.

This is, of course, a uniquely modern, western viewpoint of individuality.
This is the presented view of the west, perhaps. But it is not the real viewpoint in the UK or the US. In the UK, one is surrounded by the expressions of class, it is the essence of comedic expression and behavioural expectations. In the US, it is not as tied to birth, but it still exists.

--------------------
So goodnight moon, I want the sun
If it's not here soon, I might be done
No it won't be too soon 'til I say goodnight moon

- A. N. Parsley, D. Mcvinni

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Russ
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# 120

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quote:
Originally posted by Dafyd:
[QUOTE]Originally posted by Russ:
[qb] if you confuse the two you start inventing magical entrepreneur powers that give the possessor special rights and privileges.

No magic in it. But I'm sure you recognise that the skills and aptitudes needed to run a successful bakery business or widget-making business are different from the skills needed to be a competent baker or widget-maker. And those inputs should also earn their fair reward.

No special rights.

quote:
Probably it is less than the sum risked unless the entrepreneur was gambling on a business more likely than not to fail.
I thought all businesses were more likely than not to fail. Failure rate for start-ups is about 80% over a five-year period.

quote:
But there's no suggestion even in Schumpeter that the reward for ideas is an ongoing reward. Any benefit to the new enterprise from innovation lasts only until other enterprises can copy the idea.
Don't see how that's necessarily so. Maybe businesses gain market share over the period when they have a temporary advantage and lose market share when competitors have an advantage.

More generally, I'm not quite sure where you're coming from on this.

You reminded me upthread that in conventional economic theory, there is no excess profit in a competitive market. At equilibrium, the operating profit is just sufficient to cover the overhead costs. The business makes just enough to pay the going rate for labour, capital, and land inputs (and tax/rates to government and the risk-related going rate of return to the entrepreneur).

And that this competitive equilibrium is more beneficial to society than the situation where any of these inputs is over-compensated due to monopoly power.

Is that not the standard model ?

Are you saying that this model is wrong ? Or that markets aren't competitive enough ?

--------------------
Wish everyone well; the enemy is not people, the enemy is wrong ideas

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Crœsos
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quote:
Originally posted by Russ:
quote:
Originally posted by Dafyd:
if you confuse the two you start inventing magical entrepreneur powers that give the possessor special rights and privileges.

No magic in it. But I'm sure you recognise that the skills and aptitudes needed to run a successful bakery business or widget-making business are different from the skills needed to be a competent baker or widget-maker. And those inputs should also earn their fair reward.

No special rights.

Given that you're advocating preferential treatment by the state of bakery owners relative to bakery workers, I think the words "fair" and "special" are doing a lot of unpaid overtime in your post there.

Your premise is that, to use Dafyd's example from a few days back, those who profit from their labor (the bakers in the example) should rightly be taxed by the state at a higher rate than those who profit through ownership of property (oven owner Five). Despite the fact that all income in the example comes from the same source, you posit that it would be unfair, unjust, or otherwise bad for the state to tax the earnings of oven owner Five at the same level as it taxes the earnings of his baking compatriots, apparently because Five has the option of just stashing his oven under his mattress and turning a profit that way. [Confused]

It also seems somewhat disingenuous to lump together such disparate activities as "run[ning] a . . . business" and holding several shares of Super Giant Amalgamated Corporation.

quote:
Originally posted by Russ:
You reminded me upthread that in conventional economic theory, there is no excess profit in a competitive market. At equilibrium, the operating profit is just sufficient to cover the overhead costs. The business makes just enough to pay the going rate for labour, capital, and land inputs (and tax/rates to government and the risk-related going rate of return to the entrepreneur).

And that this competitive equilibrium is more beneficial to society than the situation where any of these inputs is over-compensated due to monopoly power.

Is that not the standard model ?

Are you saying that this model is wrong ? Or that markets aren't competitive enough ?

That would seem to be the conclusion we could draw from the paper that was recently (and ineptly) "suppressed" by the U.S. Treasury Department. (The original story ran in the Wall Street Journal, but they've got a paywall so I can't provide a meaningful hyperlink.) If there were really no excess profit in the market we'd expect to see a lot more pass-through of changes in corporate taxation than we actually see. You can argue that it's because the model is wrong or that the market isn't truly "competitive", but that's what we see in reality, as opposed to theory. Which is probably why Mnuchin found the paper so offensive.

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Humani nil a me alienum puto

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mr cheesy
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quote:
Originally posted by Russ:
No magic in it. But I'm sure you recognise that the skills and aptitudes needed to run a successful bakery business or widget-making business are different from the skills needed to be a competent baker or widget-maker. And those inputs should also earn their fair reward.

No special rights.

There is "special rights" when the baking entrepreneur employs a skilled baker on low wages simply because he has access to capital when he himself has no baking skills and when the baker could easily run the business but never gets the chance to.

Distributism means giving every baker the tools so that they can succeed in making money for himself without the unnecessary capitalist standing behind him skimming off the profits.

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arse

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Russ
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# 120

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quote:
Originally posted by Crœsos:

It also seems somewhat disingenuous to lump together such disparate activities as "run[ning] a . . . business" and holding several shares of Super Giant Amalgamated Corporation.

Actually, I'm the one who's distinguishing the role of the entrepreneur as a separate factor of production from capital.

--------------------
Wish everyone well; the enemy is not people, the enemy is wrong ideas

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Dafyd
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quote:
Originally posted by Russ:
quote:
Originally posted by Dafyd:
if you confuse the two you start inventing magical entrepreneur powers that give the possessor special rights and privileges.

No magic in it. But I'm sure you recognise that the skills and aptitudes needed to run a successful bakery business or widget-making business are different from the skills needed to be a competent baker or widget-maker. And those inputs should also earn their fair reward.

No special rights.

Awarding all the profit to themselves rather than splitting it among all the employees must certainly count as a special right.

quote:
I thought all businesses were more likely than not to fail. Failure rate for start-ups is about 80% over a five-year period.
In that case the person (or persons) risking their capital is entitled to a return of five times their capital (but no more). Assuming of course that they don't get any pay out while the business is running.


quote:
The business makes just enough to pay the going rate for labour, capital, and land inputs (and tax/rates to government and the risk-related going rate of return to the entrepreneur).

Are you saying that this model is wrong ? Or that markets aren't competitive enough ?

Hang on, you say you want to distinguish between the input of the entrepreneur and the input of capital. Qua entrepreneur the entrepreneur doesn't risk anything. Only capital is being put at risk here. There's no risk related going rate of return to the entrepreneur if you distinguish the entrepreneur from capital.

Anyway, businesses do seem to make profit so presumably the market is not working according to the model.
The point was that you seemed to be suggesting that social-progressives by campaigning for things like health and safety legislation, pension rights, holiday and sick pay, rights not to be unfairly dismissed, etc, were giving workers more than a fair wage for fair work, and were therefore unfair to the employers. The point would be that a charge of unfairness against social-progressives is not consistent with a defence of profit that isn't shared among all employees.

[ 13. October 2017, 20:56: Message edited by: Dafyd ]

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we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

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Doc Tor
Deepest Red
# 9748

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quote:
Originally posted by Russ:
quote:
Originally posted by Crœsos:

It also seems somewhat disingenuous to lump together such disparate activities as "run[ning] a . . . business" and holding several shares of Super Giant Amalgamated Corporation.

Actually, I'm the one who's distinguishing the role of the entrepreneur as a separate factor of production from capital.
No, that's just wrong. If the bakers had the capital, they wouldn't need an 'entrepreneur'. They'd hire a business manager and make them their employee.

--------------------
Forward the New Republic

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Russ
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quote:
Originally posted by Dafyd:
Qua entrepreneur the entrepreneur doesn't risk anything. Only capital is being put at risk here. There's no risk related going rate of return to the entrepreneur if you distinguish the entrepreneur from capital.

Not true. The capital for a start-up business would normally come from some form of bank loan. The interest on the loan is the return to capital. The entrepreneur is the one who's put up the collateral on the loan - probably his house. He takes the risk.

Typically, the money he takes home at the end of each week isn't a fixed salary rate times the number of hours he's put in. And isn't a fixed royalty on the innovation - the better mousetrap that he set up the business to manufacture. What he takes home instead is the profit for that week. Which may be zero. His income stream, his return, carries all the risk.

Until the business is established enough when he can sell shares in it and pay off the bank loan, so as to spread the risk to capital.

--------------------
Wish everyone well; the enemy is not people, the enemy is wrong ideas

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mr cheesy
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# 3330

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quote:
Originally posted by Russ:
Not true. The capital for a start-up business would normally come from some form of bank loan. The interest on the loan is the return to capital. The entrepreneur is the one who's put up the collateral on the loan - probably his house. He takes the risk.

Oh cry me a fucking river - the entrepreneur stands to lose something he's staked against his gamble. His huge fucking house that he lives in whilst his workers struggle to find rental properties that don't have mould on the walls. His Jaguar whilst his workers can't afford cars. All bought off the labour of his workers.

Give me a break.

And this is all bollocks anyhow - you'd have to be a really stupid entrepreneur to be signing guarantees of business loans solely against your own property. What actually happens is that people use their property as collateral to leverage a portfolio of financing, including loans and grants (if at all available).

If/when a business collapses, those loan liabilities are almost never covered by the assets staked against it, largely because the guarantors go bankrupt and investors typically get pennies back in the pound after court costs.

And as every fool knows, every successful entrepreneur has a string of bankruptcies and business failures in their history (usually leaving a string of investors in their wake who just have to accept the loss). They might lose assets from on failure, they just learn the lesson and move on to another venture.

The idea that the entrepreneur alone is taking all the financial risk is bullshit.

quote:
Typically, the money he takes home at the end of each week isn't a fixed salary rate times the number of hours he's put in. And isn't a fixed royalty on the innovation - the better mousetrap that he set up the business to manufacture. What he takes home instead is the profit for that week. Which may be zero. His income stream, his return, carries all the risk.
No he doesn't. Utter crap.

Entrepreneurs gamble with other people's money as well as their own. Often far more of other people's money than their own.

quote:
Until the business is established enough when he can sell shares in it and pay off the bank loan, so as to spread the risk to capital.
Yeah, ok whatever.
[Roll Eyes]

--------------------
arse

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chris stiles
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quote:
Originally posted by Russ:

You reminded me upthread that in conventional economic theory, there is no excess profit in a competitive market. At equilibrium, the operating profit is just sufficient to cover the overhead costs.

Equilibrium may be a state that the market heads towards over the long run (modulo other things such as oligopolies developing). But when you get into a business you do so because the market is not at equilibrium - you don't start a business if all you can do is just about cover the cost of your capital.
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Dafyd
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quote:
Originally posted by chris stiles:
quote:
Originally posted by Russ:

You reminded me upthread that in conventional economic theory, there is no excess profit in a competitive market. At equilibrium, the operating profit is just sufficient to cover the overhead costs.

Equilibrium may be a state that the market heads towards over the long run (modulo other things such as oligopolies developing). But when you get into a business you do so because the market is not at equilibrium - you don't start a business if all you can do is just about cover the cost of your capital.
This may be the case in the real world. However, it is the case in the economic models that economists and the right/centre use to justify the real world. Where starting a business and not starting a business have an equal payoff according to the dominant model of economics the difference between people who start businesses and people who don't will be based solely on temperament.
You can tell someone is a mainstream economist if they think that in the case of a mismatch between the real world and the economic model the problem lies in government interference with the market.

--------------------
we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

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Dafyd
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# 5549

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quote:
Originally posted by Russ:
quote:
Originally posted by Dafyd:
There's no risk related going rate of return to the entrepreneur if you distinguish the entrepreneur from capital.

Not true. The capital for a start-up business would normally come from some form of bank loan. The interest on the loan is the return to capital. The entrepreneur is the one who's put up the collateral on the loan - probably his house. He takes the risk.
Property that can be used as security for a loan is capital. The entrepreneur's role in the little economic model that you were sketching was to produce the ideas.
We were I think talking about what factors are necessary for wealth to be created and who should be credited with creating that wealth. You were wanting to distinguish the role of the entrepreneur from the role of capital (put at risk) and the employees, as you were wanting to argue that the employees might fairly be credited with creating only the minimum market rate for their labour. I'm arguing that that is not fair by any intuitive or non-economic definition.

--------------------
we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

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Dave W.
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# 8765

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quote:
Originally posted by mr cheesy:
quote:
Originally posted by Russ:
Not true. The capital for a start-up business would normally come from some form of bank loan. The interest on the loan is the return to capital. The entrepreneur is the one who's put up the collateral on the loan - probably his house. He takes the risk.

Oh cry me a fucking river - the entrepreneur stands to lose something he's staked against his gamble. His huge fucking house that he lives in whilst his workers struggle to find rental properties that don't have mould on the walls. His Jaguar whilst his workers can't afford cars. All bought off the labour of his workers.
Jesus Christ, mr cheesy. "His huge fucking house" and "his Jaguar"? Tell me - is he wearing a top hat and a monocle, too?

According to the US Census Bureau the top sources of startup capital in 2012 were:
  • 57% - Personal savings
  • 8% - Personal credit card
  • 8% - Bank loan
  • 6% - Other personal assets
  • 3% - Home equity
  • 2% - Business credit card
  • 25% - No startup capital
(Numbers are percentages of respondent firms citing an item as a source of capital.)
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lilBuddha
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quote:
Originally posted by Dave W.:
quote:
Originally posted by mr cheesy:
quote:
Originally posted by Russ:
Not true. The capital for a start-up business would normally come from some form of bank loan. The interest on the loan is the return to capital. The entrepreneur is the one who's put up the collateral on the loan - probably his house. He takes the risk.

Oh cry me a fucking river - the entrepreneur stands to lose something he's staked against his gamble. His huge fucking house that he lives in whilst his workers struggle to find rental properties that don't have mould on the walls. His Jaguar whilst his workers can't afford cars. All bought off the labour of his workers.
Jesus Christ, mr cheesy. "His huge fucking house" and "his Jaguar"? Tell me - is he wearing a top hat and a monocle, too?

According to the US Census Bureau the top sources of startup capital in 2012 were:
  • 57% - Personal savings
  • 8% - Personal credit card
  • 8% - Bank loan
  • 6% - Other personal assets
  • 3% - Home equity
  • 2% - Business credit card
  • 25% - No startup capital
(Numbers are percentages of respondent firms citing an item as a source of capital.)

This includes
quote:
firms with paid employees and firms with no paid employees.
The statistics do not tell the complete story. No employees would include businesses such as gran selling her knitting on Etsy and loads of other, single-person businesses.
My guess would be that the larger enterprise, the lower the personal savings %.

--------------------
So goodnight moon, I want the sun
If it's not here soon, I might be done
No it won't be too soon 'til I say goodnight moon

- A. N. Parsley, D. Mcvinni

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Doc Tor
Deepest Red
# 9748

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quote:
Originally posted by Dave W.:
Jesus Christ, mr cheesy. "His huge fucking house" and "his Jaguar"? Tell me - is he wearing a top hat and a monocle, too?

According to the US Census Bureau the top sources of startup capital in 2012 were:
  • 57% - Personal savings
  • 8% - Personal credit card
  • 8% - Bank loan
  • 6% - Other personal assets
  • 3% - Home equity
  • 2% - Business credit card
  • 25% - No startup capital
(Numbers are percentages of respondent firms citing an item as a source of capital.)
What these figures show is that while someone (I'm not going to call them an 'entrepreneur') starts up a business selling services/widgets, almost no one whatsoever puts their house on the line.

Because they'd be fucking idiots to do so. That's why we have the notion of 'limited company', so that when it all goes tits-up, the business owner is only liable to debts up to the level of the assets of the business, not the coat off their back.

Yes, personal savings are sunk into businesses (because banks don't lend to risky ventures). Yes, rewarding successful start-ups is a public good. But in 99% of these cases, the start-up will be a sole trader, or a partnership. Theirs the risk, theirs the labour.

And again, fwiw, I get charged the same level of income tax as a self-employed sole trader as an employee would. The idea that I should be charged less would mean I would benefit, but fuck that shit. Capital just needs to be charged more.

(for clarity, I fell/fall into the last category).

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Jay-Emm
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quote:
Originally posted by lilBuddha:
The statistics do not tell the complete story. No employees would include businesses such as gran selling her knitting on Etsy and loads of other, single-person businesses.
My guess would be that the larger enterprise, the lower the personal savings %. [/QB]

It technically goes up as a % of firms for the first employed person, but that is because the no-capital needed drops faster (leaving it at 65%). Only 1/5 of the firms actually employed anyone.

However when weighted by any of the sizes (so a bigger company counts double), then it goes back to 50% (but with loans now making 20%).
Which is consistent with your hypothesis, and inconsistent with it's converse.

Moreover we haven't a clue how much that starting capital actually was. As we see many didn't need any capital at all it's not unreasonable to assume about as many needed trivial amounts of capital (I.E each workers risk as much if their paycheck doesn't come).

_________
Or to put it the other way using the actual numbers they give.
2.5m firms employing people were started (significantly) by personal capital.
0.3m employed people but needed no capital
0.8m employing people were started (significantly) by other capital.
2m needed labour and are missing (I don't know why that doesn't match up with not-reported)

7m firms used personal capital but no labour
2m firms used other capital but no labour
4m firms needed no capital or labour.
10m firms needed no labour and are missing

[citition, as requested by website based on Census bureau info in link]

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mr cheesy
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quote:
Originally posted by Doc Tor:
What these figures show is that while someone (I'm not going to call them an 'entrepreneur') starts up a business selling services/widgets, almost no one whatsoever puts their house on the line.

Because they'd be fucking idiots to do so. That's why we have the notion of 'limited company', so that when it all goes tits-up, the business owner is only liable to debts up to the level of the assets of the business, not the coat off their back.

These are two slightly different things. It is true that owners and directors of limited liability companies are protected against personal losses. Which means that those who find that they're unsecured creditors against the company that is insolvent (usually suppliers etc) might find it really hard to get anything back and usually have no way to push the liability on to the directors personally. In those situations they might find that they're a long way down the list of importance for those clearing up the affairs and get nothing at all even whilst the directors continue to live in their fancy houses.

But increasingly those lending money to businesses, particularly if they're startups, require there to be a personal guarantor against the loan, which is indeed often held against a building. That's often a director of the business.

So if the thing goes belly-up and the lender wants to get their money back, they'll try going after the house of the guarantor of the business loan.

It does happen quite regularly.

[ 15. October 2017, 16:36: Message edited by: mr cheesy ]

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arse

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Dave W.
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Note that the link I gave has responses to a survey of all firms in the US in 2012, not just the ones started in that year. Information about the sources of capital does refer to when they were started or acquired, but information about employees refers to the pay period including March 12, 2012, not the conditions at startup.
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Jay-Emm
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There is another table SCB14, that has the info also broken down by company size.

There personal capital [at the beginning] declines from 71% of firms with paid employees making less than £5000 (ironically those who are almost certainly losing the risk and of course they are not getting the tax break).
to 57.3% of firms making more than £1,000,000

NB We also see that 40million workers are accounted for of 100million total, with about 65% of firms reporting, suggesting that the bigger firms were worse at filling the forms in.
The average pay of most of the categories is also less than that of the national (bizarrely firms that needed no capital do hit the average).

[same citation, conclusions here to be taken with extreme caution]

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Russ
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quote:
Originally posted by Dafyd:
Property that can be used as security for a loan is capital.

Yes, but it's not recompensed by interest or dividends (the usual return to capital) it's recompensed from the entrepreneur's profit.

quote:
The entrepreneur's role in the little economic model that you were sketching was to produce the ideas.
More than that. If two blokes are chatting down the pub, and one of them comes up with a business idea (square wheels, coloured milk, whatever) and the other one goes ahead and starts up a business to produce the square wheels or the coloured milk or whatever, then he's contributed something more than an idea. "Initiative" is the best description I've found so far.

quote:
you were wanting to argue that the employees might fairly be credited with creating only the minimum market rate for their labour. I'm arguing that that is not fair by any intuitive or non-economic definition.
I think you're right that this is at the heart of the social-progressive belief on this topic.

Paying the "going rate" for labour (as well as for land and capital) seems in one sense fair. If you were selling to your neighbours surplus veg from your allotment, for example, I think the going rate would be your yardstick of what's a fair price to ask.

And economic theory - such as it is - suggests that in a competitive market, a business that pays less than the going rate for labour will not succeed in attracting the quality of staff it needs, while a business that pays more will lose out in price competition with rival firms.

The s-p view seems to be that the going rate for labour should be higher than it is. Without necessarily specifying whether it is the return to capital, land, or to the entrepreneur that should be correspondingly lower.

And without a clear notion as to what the right rate should be.

Because the notion of a "right rate" implies that more than this is too high. And saying that wages could conceivably be too high is non-pc, is off-message. Because the doctrine is that workers are the underdogs who deserve more.

I guess I'm trying to contrast someone who has a view as to what a fair price is (and can therefore impartially conclude that this price is too low and that price is too high). With someone who has only a sympathy, a partiality, a prejudice in favour of one particular group and therefore concludes that their return is always too low.

--------------------
Wish everyone well; the enemy is not people, the enemy is wrong ideas

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mr cheesy
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quote:
Originally posted by Russ:


Paying the "going rate" for labour (as well as for land and capital) seems in one sense fair. If you were selling to your neighbours surplus veg from your allotment, for example, I think the going rate would be your yardstick of what's a fair price to ask.

Very few people sell produce from their allotments. First because the lease agreement expressly prohibits it and secondly because there is a prevailing culture of giving away excess produce.

Even if one stops talking about an allotment and instead is talking about produce from a home vegetable garden this mental exercise doesn't work.

Almost nobody sells things that they've grown at the side of the road at the price they'd reach in a shop. Because that's stupid for obvious reasons.

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arse

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Crœsos
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quote:
Originally posted by Russ:
Typically, the money [an entrepreneur] takes home at the end of each week isn't a fixed salary rate times the number of hours he's put in. And isn't a fixed royalty on the innovation - the better mousetrap that he set up the business to manufacture. What he takes home instead is the profit for that week. Which may be zero. His income stream, his return, carries all the risk.

There still seems to be a huge, unstated leap between this and your assertion that any income derived this way deserves preferential tax treatment from the state. Why does a man running a bakery deserve a lower tax rate than his assistant who derives his income performing the same tasks? Yes, if the bakery fails the head baker loses his source of income, whereas the assistant baker will . . . also lose his source of income? [Confused] There seem to be several missing steps of reasoning here.

quote:
Originally posted by Russ:
I guess I'm trying to contrast someone who has a view as to what a fair price is (and can therefore impartially conclude that this price is too low and that price is too high). With someone who has only a sympathy, a partiality, a prejudice in favour of one particular group and therefore concludes that their return is always too low.

And who exactly would this economic equivalent of "the view from nowhere" be? Someone who is neither employer, nor employed, nor in any way a participant in the economy?

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Humani nil a me alienum puto

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mr cheesy
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quote:
Originally posted by Crœsos:
And who exactly would this economic equivalent of "the view from nowhere" be? Someone who is neither employer, nor employed, nor in any way a participant in the economy?

Sounds a bit like a Rawlian veil of ignorance whereby in an ideal world prices would be impartially assessed.

Back in the real world, this never happens. If there is someone with capital, they want a return. So the price of labour is the minimum that the entrepreneur can possibly get away with to ensure maximum possible profits.

The only scenario where it is any different is where the entrepreneur is selling his own labour, or where the enterprise is a co-op or worker-owned.

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arse

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Dafyd
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quote:
Originally posted by Russ:
quote:
Originally posted by Dafyd:
Property that can be used as security for a loan is capital.

Yes, but it's not recompensed by interest or dividends (the usual return to capital) it's recompensed from the entrepreneur's profit.
That may be how it is. But you were asking what is fair.
I believe I have already established that a fair recompense for risk to one participant's property should be a finite sum proportional to the probability of loss and the property risked. You certainly haven't challenged this point.

quote:
quote:
The entrepreneur's role in the little economic model that you were sketching was to produce the ideas.
More than that. If two blokes are chatting down the pub, and one of them comes up with a business idea (square wheels, coloured milk, whatever) and the other one goes ahead and starts up a business to produce the square wheels or the coloured milk or whatever, then he's contributed something more than an idea. "Initiative" is the best description I've found so far.
You have been rather casting around for what the other bloke contributes. You've said it's initiative, but then you said he should be compensated for the risk and the contribution of his ideas.

quote:
Paying the "going rate" for labour (as well as for land and capital) seems in one sense fair. If you were selling to your neighbours surplus veg from your allotment, for example, I think the going rate would be your yardstick of what's a fair price to ask.

And economic theory - such as it is - suggests that in a competitive market, a business that pays less than the going rate for labour will not succeed in attracting the quality of staff it needs, while a business that pays more will lose out in price competition with rival firms.

So you're looking at this from the viewpoint of the business owner who is doing the paying. Rather than looking at the matter impartially, you're operating out of a prejudice and partiality towards the business owner. Which is why you keep changing your mind about whether the business owner is being compensated for initiative, or risk, or ideas; they're all rationalisations for a pre-existing prejudice in the business owner's favour.

quote:
And without a clear notion as to what the right rate should be.
There's nothing so unclear to you as a notion that runs against your prejudices.

quote:
Because the notion of a "right rate" implies that more than this is too high. And saying that wages could conceivably be too high is non-pc, is off-message. Because the doctrine is that workers are the underdogs who deserve more.
Seems to me that the idea of a 'right rate' is made from the position of someone offering a rate. And therefore is made from a position of partiality. As you admit that you're contrasting a social progressive viewpoint that has a view about what would be fair, with your own viewpoint which comes out of sympathy, partiality and prejudice in favour of the business owner and therefore concludes that any finite share of the profits is too low.

--------------------
we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

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Crœsos
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quote:
Originally posted by Russ:
quote:
Originally posted by Dafyd:
Property that can be used as security for a loan is capital.

Yes, but it's not recompensed by interest or dividends (the usual return to capital) it's recompensed from the entrepreneur's profit.
Aren't dividends or interest also paid out of profits? I'm not seeing how you make a clear distinction here.

[ 17. October 2017, 15:43: Message edited by: Crœsos ]

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Humani nil a me alienum puto

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mr cheesy
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quote:
Originally posted by Crœsos:
Aren't dividends or interest also paid out of profits? I'm not seeing how you make a clear distinction here.

I am not an accountant, but I don't think there is a distinction here either - dividends are paid to business owners if the business makes a profit. If someone is being paid whether or not the business makes a profit, that's a salary not a dividend.

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arse

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mr cheesy
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In fact, I think the whole thing is even more screwy than that.

Unless the business is insolvent, it is trading with various assets and liabilities. The latter might include loans from banks and investments from owners.

If there is a formal loan, then each month that is paid (with or without interest) from the turnover that the business is generating. The business might have a big turnover, might satisfy some or all of the loans on a monthly basis, and still not make money.

As far as I can see, that's a pre-tax liability. It's a cost to the business, nothing to do with whether it actually makes money or not.

Again, I'm not an accountant so maybe I'm wrong in that.

[ 17. October 2017, 15:51: Message edited by: mr cheesy ]

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arse

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Russ
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quote:
Originally posted by Dafyd:
You have been rather casting around for what the other bloke contributes. You've said it's initiative, but then you said he should be compensated for the risk and the contribution of his ideas.

All of the above. The typical entrepreneur contributes so much...

If the collateral were provided by someone else, then they should receive some recompense for that. If the ideas are provided by someone else, then some royalty on intellectual property would be appropriate.

All the contributors deserve some recompense.

I'm suggesting to you that there is nothing inherently unjust in any of the contributors receiving a fixed return (wages, rent, interest respectively) at the going rate. Leaving the business owner with all the risk.

And equally, nothing wrong in anyone negotiating for a share of the profits instead. Or some mixture of the two.

But I see no justification for the bank, having agreed the terms of the loan, to assert a moral claim to an additional share of any profit. And if that's true for capital, why is not true for land and for labour ?

quote:
Seems to me that the idea of a 'right rate' is made from the position of someone offering a rate. And therefore is made from a position of partiality.
Rubbish. The going rate is observable by non-participants. And not a few statisticians spend their time collecting and analysing such data.

I can only repeat that your problem is that you want to assert that there is a "right rate" or "just rate" for labour that is higher than the going rate. But don't have any philosophical basis on which to do so.

--------------------
Wish everyone well; the enemy is not people, the enemy is wrong ideas

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Crœsos
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quote:
Originally posted by Russ:
No magic in it. But I'm sure you recognise that the skills and aptitudes needed to run a successful bakery business or widget-making business are different from the skills needed to be a competent baker or widget-maker. And those inputs should also earn their fair reward.

quote:
Originally posted by Russ:
quote:
Seems to me that the idea of a 'right rate' is made from the position of someone offering a rate. And therefore is made from a position of partiality.
Rubbish. The going rate is observable by non-participants. And not a few statisticians spend their time collecting and analysing such data.

I can only repeat that your problem is that you want to assert that there is a "right rate" or "just rate" for labour that is higher than the going rate. But don't have any philosophical basis on which to do so.

Or possibly even a "fair" rate. Seriously, do you not realize we can read your past posts? That one's not even on a different page yet! There doesn't really seem to be a "philosophical basis" to argue that investors deserve a "fair reward" but that labor should be compensated without any assessment of fairness.

And I'm still waiting for your explanation for why property owners should receive preferential tax treatment from the state relative to laborers.

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Humani nil a me alienum puto

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Dafyd
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quote:
Originally posted by Russ:
quote:
Originally posted by Dafyd:
You have been rather casting around for what the other bloke contributes. You've said it's initiative, but then you said he should be compensated for the risk and the contribution of his ideas.

All of the above. The typical entrepreneur contributes so much...
Including labour. But you didn't want to think that the typical entrepreneur contributed labour. You wanted to distinguish the entrepreneur's contribution from any contribution by labour, because you thought that 'muddled things'.
Yet you want to lump all the other potential contributions together even though that also muddles things.

quote:
If the collateral were provided by someone else, then they should receive some recompense for that. If the ideas are provided by someone else, then some royalty on intellectual property would be appropriate.

All the contributors deserve some recompense.

But you don't seem to have a philosophial basis for saying what the return on collateral or intellectual property should be.

quote:
But I see no justification for the bank, having agreed the terms of the loan, to assert a moral claim to an additional share of any profit. And if that's true for capital, why is not true for land and for labour ?
You asserted that there was such a thing a fair wage for a fair day's work. Now you're trying to say that there's no such thing.

Neither the capital nor the land are doing any work. (Nor is the entrepreneur on your account doing any work. You've decided to specify that they make no contribution by way of labour.) Also, of course, neither capital nor land can be forced into a bargain under duress. While typically labour does have to make ends meet and therefore is under duress.

quote:
quote:
Seems to me that the idea of a 'right rate' is made from the position of someone offering a rate. And therefore is made from a position of partiality.
Rubbish.
Not at all.

quote:
The going rate is observable by non-participants.
I don't see why you think non-participants can't be partial or prejudiced. You don't think progressives are impartial because they're non-participants.

quote:
I can only repeat that your problem is what you want to assert that there is a "right rate" or "just rate" for labour that is higher than the going rate. But don't have any philosophical basis on which to do so.
Quite the opposite actually. You wanted to assert that social-progressives wanted employees to earn more than was fair. But ever since I suggested that fairness might be an appropriate share of the proceeds, you're busy disavowing the notion of fairness. You're happy to invoke the concept of fairness when it suits the employer. But not to invoke it when it suits the employee.

I've repeatedly suggested philosophical bases for the appropriate returns for capital and labour, namely the money loaned multiplied by the risk, and a share of the proceeds. You just don't want to acknowledge that. For some reason.
Why, if not partiality, don't you want to acknowledge that?

--------------------
we remain, thanks to original sin, much in love with talking about, rather than with, one another. Rowan Williams

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Leaf
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quote:
Originally posted by Russ:
The going rate is observable by non-participants. And not a few statisticians spend their time collecting and analysing such data.

Watch the goal posts slide around faster than deck chairs on the Titanic.

Watch particularly the use of a rhetorical strategy which is a variant on Irregular Verbs. In this case, Russ is claiming the category of "observable" for his position while claiming that Dafyd's position is "philosophical."

Of course Russ has a philosophy too, he just doesn't state it as such. His philosophy is support for the status quo: "Whatever is, is right." Since you can observe the status quo, that makes it a fact; and if a fact, a natural law must have caused it to be so. And social laws are a subset of scientific laws. Hmm.

It is inconvenient that the status quo has changed over time, but this too can be solved by use of Irregular Adjectives. Those previous changes made to the status quo by social progressivism - such as the rule of law and enfranchisement of non-landowning men - were legitimate and inevitable evolutions. More recent, or proposed, changes to the status quo are gross violations of the natural order of things by well-meaning but misguided philosophers.

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