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Welfare And Corporate Profits

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This is about foodstamps in the US- but the point he makes is just as relevant to the UK tax credits system.

In both cases low wage top up's are just another way that wealth is transferred to the 1%;

McDonald’s Math: You Can’t Survive Working for Us

This ridiculously condescending budget put out by McDonald’s in partnership with Visa has been making the rounds today. I’ll allow excerpts from the Gothamist article on it and their corresponding video do most of the explaining, but the key point I want to hammer into people is that food stamps are corporate welfare.

They actually are not welfare for the workers themselves, who undoubtably don’t have wonderful lives. What ends up happening is that because the government comes in and supplements egregiously low wages with benefits like food stamps, the companies don’t have to pay living wages. So in effect, your tax money is being used to support corporate margins.

Even better, many of these folks who get the food stamp benefits then turn around and spend them at the very companies which refuse to pay them decent wages. Who benefits? CEOs and shareholders. Who loses? Society.

http://www.zerohedge.com/news/2013-07-17/foodstamps-are-corporate-welfare

So not only do many of these corporates avoid tax, their staff wages are subsidised by the state. Yet the people who run these outfits claim to despise 'socialism' :lol:

But- they will claim- if we had to pay higher wages we would employ less people-

Really? So that means that you are currently employing more people than you need to- which is failure of management. So any CEO who trots out this argument is in fact calling attention to his own failure to optimise his workforce. :lol:

But Mcdonalds do have some sage advice for those who can't survive on what their job pays;

Just in case you weren’t already aware of how difficult it is to survive on minimum wage, allow McDonald’s to lay it all out for you. The fast food giant has partnered with Visa to release a just-shy-of-condescending “budget journal” to help their employees manage their finances. In a hilariously obtuse budget breakdown, the Big Mac purveyor’s first piece of advice to employees: get a second job. Yup, even McDonald’s knows that workers can’t survive on the pittance they make flipping patties and fighting off customers.

:lol:

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But- they will claim- if we had to pay higher wages we would employ less people-

Really? So that means that you are currently employing more people than you need to- which is failure of management. So any CEO who trots out this argument is in fact calling attention to his own failure to optimise his workforce. :lol:

:lol:

I thought you keep proposing that machines will takeover people job and yet ridicule the Mac's claim.

I can see that high enough wages will make a few more automations at a Mcdonalds profitable..

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I thought you keep proposing that machines will takeover people job and yet ridicule the Mac's claim.

I can see that high enough wages will make a few more automations at a Mcdonalds profitable..

Ok- here's a scenario for you.

You work out that given the profits generated by your business you can afford to pay a maximum wage bill of X. You then discover that your current wage bill is lower than X.

As a result of this discovery you immediately take on more workers- who you do not need- in order to reach your maximum wage bill of X.

I ridicule this logic because this logic is ridiculous.

A company employs the number of workers it needs to employ- it does not employ more than it needs just because they are cheap to employ- nor will an increase in wages automatically lead to less jobs- it could simply lead to lower CEO pay and shareholder dividends.

Of course wages impact on profitability - but a drop in profitability does not automatically translate into less jobs- there are other ways this drop in profits could be accommodated.

So this spurious equation that paying people a living wage will inevitably lead to less jobs is bullshite- and any company that cannot pay it's workers a living wage is just a Zombie company propped up by state handouts.

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Ok- here's a scenario for you.

You work out that given the profits generated by your business you can afford to pay a maximum wage bill of X. You then discover that your current wage bill is lower than X.

As a result of this discovery you immediately take on more workers- who you do not need- in order to reach your maximum wage bill of X.

I ridicule this logic because this logic is ridiculous.

A company employs the number of workers it needs to employ- it does not employ more than it needs just because they are cheap to employ- nor will an increase in wages automatically lead to less jobs- it could simply lead to lower CEO pay and shareholder dividends.

Of course wages impact on profitability - but a drop in profitability does not automatically translate into less jobs- there are other ways this drop in profits could be accommodated.

Yes, but in real world, things almost never operate at 100% efficiencies and people don't look at the inefficiencies that closely until something trigger it...such as higher wage bill. Could Tesco have put in those self service tills 10 years ago - the technology was obviously there, but the slow profit growth gave it the push.

So this spurious equation that paying people a living wage will inevitably lead to less jobs is bullshite- and any company that cannot pay it's workers a living wage is just a Zombie company propped up by state handouts.

It obviously is bs...just look at Foxconn... one of your favourite example where 20% plus wage demand eventually lead to a million robots.

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Yes, but in real world, things almost never operate at 100% efficiencies and people don't look at the inefficiencies that closely until something trigger it...such as higher wage bill. Could Tesco have put in those self service tills 10 years ago - the technology was obviously there, but the slow profit growth gave it the push.

It obviously is bs...just look at Foxconn... one of your favourite example where 20% plus wage demand eventually lead to a million robots.

The answer to this of course is to gradually lower the length of the working week. It's a win-win scenario.

At the end of it you have a more productive economy in terms of output per worker due to increased mechanization. The workers work less hours and have more free time. And they also have higher wages with which to purchase the extra goods that their more productive economy produces.

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The answer to this of course is to gradually lower the length of the working week. It's a win-win scenario.

At the end of it you have a more productive economy in terms of output per worker due to increased mechanization. The workers work less hours and have more free time. And they also have higher wages with which to purchase the extra goods that their more productive economy produces.

That is potentially a solution but we have a competing system where the individual/corporation/nation/nationblock try to out do each other in term of production of goods and services (whether necessary or not) and then bid against each other for houses (I add this since we are on HPC).

Indeed the purpose of human existence is to explore and enjoy rather than to toil, but the mindset of grab what you can was made up from leaner time where people experienced serious shortages rather than abundance.

Further, there is one tricky issue about the debt and the national debt...when GDP growths become flat, the debt piles blow up.

Edited by easy2012

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Yes, but in real world, things almost never operate at 100% efficiencies and people don't look at the inefficiencies that closely until something trigger it...such as higher wage bill. Could Tesco have put in those self service tills 10 years ago - the technology was obviously there, but the slow profit growth gave it the push.

Which does not negate my point that any CEO who claims that increased wages automatically translate into less jobs is simply calling attention to his own failure to optimise his staff levels- you don't employ people simply because they are cheap- you employ them because your business could not run without them- which means reducing staff numbers will damage your operation.

It obviously is bs...just look at Foxconn... one of your favourite example where 20% plus wage demand eventually lead to a million robots.

So suppose you had a company that was using robots but could not afford to maintain them and as a result received a subsidy from the state in order to do that maintenance to stay in business- would you regard that as a viable company?

Any company that cannot pay it's way for whatever reason is a dead company- keeping it alive by subsidising it's wage bills or any other costs is just creating a Zombie- or is just transferring taxpayer money into the Pockets of the CEO and the Shareholders.

If companies like McDonalds need their staff wages and living expenses to be subsidised by the state then they are paying too little and need to either pay more or close down- it's absurd that corporations paying huge salaries, bonus's and dividends should have their wage bills subsidised by 'in work' benefits paid by the state.

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Which does not negate my point that any CEO who claims that increased wages automatically translate into less jobs is simply calling attention to his own failure to optimise his staff levels- you don't employ people simply because they are cheap- you employ them because your business could not run without them- which means reducing staff numbers will damage your operation.

It is never truly optimised. One can obviously be made to work another hour or two etc or change the ordering procedure. CEO are not rewarded on optimising starving level though - he can do what he likes as long as profit (or something just revenue) are rising.

The best thing remain not to give them excuses to look at staffing level and speak to automation consultant if your sole concern is that of the welfare of the workers.

So suppose you had a company that was using robots but could not afford to maintain them and as a result received a subsidy from the state in order to do that maintenance to stay in business- would you regard that as a viable company?

Any company that cannot pay it's way for whatever reason is a dead company- keeping it alive by subsidising it's wage bills or any other costs is just creating a Zombie- or is just transferring taxpayer money into the Pockets of the CEO and the Shareholders.

If companies like McDonalds need their staff wages and living expenses to be subsidised by the state then they are paying too little and need to either pay more or close down- it's absurd that corporations paying huge salaries, bonus's and dividends should have their wage bills subsidised by 'in work' benefits paid by the state.

Of course, non of the corporation should be subsidised through tax credits - it should be abolished but Gordon Brown make this a uphill task due to the number of affected people. However, it is also worth noting that tax credits ultimately subsidised the monopoly land providers...

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This is about foodstamps in the US- but the point he makes is just as relevant to the UK tax credits system.

In both cases low wage top up's are just another way that wealth is transferred to the 1%;

I keep saying on here that welfare and minimum wage are just means to make corporate profits higher but people keep telling me I'm wrong.

What welfare and minimum wage do is create a new higher price that people can pay for everything. So corporations can charge more . Minimum wage doesn't work at all because the people who get it are no better off with prices rising, all it does is devalue the earnings of people above it because they also have to pay the new higher price.

Executive pay is off the top of the scale since Labour introduced a minimum wage and if it did work they wouldn't now need to talk about the next corporate buffet that they call "living wage"

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Give Tesco, Amazon, et al permission to build on the basis that they also build affordable housing for their staff.

That means affordable on their wages, with no recourse to HB.

They will actually fairly happy to do that and bus them in, if it wasn't because of the S106 CIL.. A good chunk of the gains are immediately taken off as CIL/S106.

Tesco could have a 3rd floor for staffs like the takeaways - if it wasn't the council stopping them from doing that. Imagine what would happen to the house prices if some many accommodation spaces are created...

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I keep saying on here that welfare and minimum wage are just means to make corporate profits higher but people keep telling me I'm wrong.

What welfare and minimum wage do is create a new higher price that people can pay for everything. So corporations can charge more . Minimum wage doesn't work at all because the people who get it are no better off with prices rising, all it does is devalue the earnings of people above it because they also have to pay the new higher price.

Executive pay is off the top of the scale since Labour introduced a minimum wage and if it did work they wouldn't now need to talk about the next corporate buffet that they call "living wage"

That's because you are wrong.

Welfare and the NMW do not normally cause more goods or services to be produced (ironically now is an exception to this rule due to a world-wide surfeit of demand), but do alter who gets those goods and services. Thus imagine our yearly economic production as a pie, if the bottom 10% of society took home 2% of our nations income, then they would end up purchasing and consuming 2% of that pie. If welfare and the NMW increased their income share to 4% then their share of the economy-pie would increase to 4% .

As to corporate profits and executive compensation - knowing the above it should now be no surprise at all to know that the incomes of the executive class and corporate profits only skyrocketed after the private sector unions were neutered and decimated. Union power enabled the average to low-end worker to capture a share of the proceeds of economic growth via wages. Without that union power the average to low-end worker has captured very little of it so that their share of the economic pie has shrunk (16% of GDP in the 1970s to 12% in 2008 and it will certainly be less than that now ), with it instead being redirected by capital and their agents to themselves.

Edited by alexw

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Which does not negate my point that any CEO who claims that increased wages automatically translate into less jobs is simply calling attention to his own failure to optimise his staff levels- you don't employ people simply because they are cheap- you employ them because your business could not run without them- which means reducing staff numbers will damage your operation.

I think you're just a silly man talking crap again.

If I employ people to make widgets and sell the widgets for a price the market will bear and in so doing make a profit that is acceptable to me, in other words makes it worth my while, what happens if the cost of employing people has to go up? Potentially the profit I can then make selling widgets either becomes too low to make it worth my while or it might even make the whole operation unsustainable. So what do I do? I stop making widgets and sack the widget makers. Higher employment costs means less jobs.

Once more you over simplify and your arguments bear no relation to the real world. Once again. Why do you keep doing it? Is there something wrong with you?

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I think you're just a silly man talking crap again.

If I employ people to make widgets and sell the widgets for a price the market will bear and in so doing make a profit that is acceptable to me heaps of money that I'm very happy about, in other words makes it very worth my while, what happens if the cost of employing people has to go up? Potentially The profit I can then make selling widgets either becomes too low to make it worth my while or it might even make the whole operation unsustainable goes down a bit, I get to earn a slightly smaller heap of money and my workers get a living wage and can afford to buy the products they're producing. So what do I do? I stop making widgets and sack the widget makers. I keep making widgets because I'm still on a nice little earner and know which side my bread's buttered thank you very much. Higher employment costs don't necessarily means less fewer jobs.

Once more you over simplify and your arguments bear no relation to the real world. Once again. Why do you keep doing it? Is there something wrong with you?

Fixed it for you. :P

Seriously, I think you're either being deliberately obtuse or you're the silly man talking crap.

Edited by SLL

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Fixed it for you. :P

Seriously, I think you're either being deliberately obtuse or you're the silly man talking crap.

It sounds like you confused manufacturing (on low margin) with banking/consultancies/PFI with high margin.

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It sounds like you confused manufacturing (on low margin) with banking/consultancies/PFI with high margin.

No just another moron with no experience of the real world with a che guevara poster on their wall.

If the costs increase they can increase to a level that makes the enterprise no longer worth the owners time. And sure maybe they could keep it going and make less, but they have other things to do and if that operation no longer stacks up favourably against their alternatives its bye bye operation and bye bye jobs.

Its not their role to provide jobs, its their decision to make money that way and some jobs are produced as a consequence. You mess with that balance and its perfectly sensible for them to ditch the whole thing.

This 'workers' versus business owners is rather tedious and something you should have left behind at college.

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The answer to this of course is to gradually lower the length of the working week. It's a win-win scenario.

You are quoting the lump of labour fallacy again. Last time you did so, you backed your assertion by inadvertantly, and rather bizarrely, describing the concept of declining marginal utility.

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No just another moron with no experience of the real world with a che guevara poster on their wall.

If the costs increase they can increase to a level that makes the enterprise no longer worth the owners time. And sure maybe they could keep it going and make less, but they have other things to do and if that operation no longer stacks up favourably against their alternatives its bye bye operation and bye bye jobs.

Its not their role to provide jobs, its their decision to make money that way and some jobs are produced as a consequence. You mess with that balance and its perfectly sensible for them to ditch the whole thing.

This 'workers' versus business owners is rather tedious and something you should have left behind at college.

Absolute ********.

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I think you're just a silly man talking crap again.

If I employ people to make widgets and sell the widgets for a price the market will bear and in so doing make a profit that is acceptable to me, in other words makes it worth my while, what happens if the cost of employing people has to go up? Potentially the profit I can then make selling widgets either becomes too low to make it worth my while or it might even make the whole operation unsustainable. So what do I do? I stop making widgets and sack the widget makers. Higher employment costs means less jobs.

Once more you over simplify and your arguments bear no relation to the real world. Once again. Why do you keep doing it? Is there something wrong with you?

Ok- lets suppose you run a business and are very good at it- so good in fact that you have optimised the entire operation to maximise your profits.

And as part of that optimisation you have only employed the exact number of staff you need to make that business run- slap yourself on the back here- you are one hell of a CEO.

Then a new law comes in that will force you to pay those workers a small amount more than you are currently paying them.

Now you are doomed right- because if you increase their pay you will be forced against your will to lay some of them off- but because you have done such a good job of optimising your operation there is very little fat to cut- if you lay people off your business will no longer be operational- you are a victim of your own efficiency.

So that's it- game over.Right?

Or- perhaps you could take a little less profit and pay that money out as slightly higher wages? See how that works?

Reality is not as binary as you seem to imagine. I'm not saying that wage demands could never reach a level where they destroy a business- but this idea that a wage increase always and everywhere = a loss of jobs is nonsense. There is no automatic law of nature that states an increase in wages leads to a loss of jobs- it might just lead to lower shareholder returns or even-gasp!- less generous payouts for the CEO and his team.

For a well run, well optimised business a loss of employees represents a real threat to the viability of the company because-if it is well run- it will not be carrying employees who are not vital to it's operation.

So any CEO whose first and only solution to a wage hike is to threaten to lay people off is really just advertising his own incompetence- if he had been doing his job correctly there would be no way that laying people off would be his first choice- it would be his last.

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But- they will claim- if we had to pay higher wages we would employ less people-

If this was not so, why, for example, bother to deliberate over a minimum wage, why not make it £100 per hour, or £1000 per hour?

We seem to be working in ever decreasing circles in this regard, in that the more the state intereferes (in favour of either corporations or employees), the less affordable life becomes, requiring further legislation, and so on.

The problem is that governments do not create additional surplus, they can only take what exists from one party and give it to another.

It's rather like the government decreeing that, in spite of the existence of, for example, only 1,000 apples, and a population of 500, everyone should have 10 apples, clearly there are not enough apples produced for this to be possible, nor does such a decree lead to extra production of apples. This then leads to a situation where those who are best able to lobby the government end up with the lions share of apples (be it organised labour or corporate CEOs). Worse still apple producers become effectively subsidised by the state. Creating a situation whereby the interests of favoured apple consumers, apple producers, and the state, become one and the same the thing, such that anyone trying to produce more apples is stopped or rendered uncompetitive by the conflicting interests of the state and lobbyists.

Our economy is sadly rife with problems that match this allegory, for example, housing, banking, etc., all of it making life increasingly difficult for those who lie outside the circles of such favour.

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No just another moron with no experience of the real world with a che guevara poster on their wall.

If the costs increase they can increase to a level that makes the enterprise no longer worth the owners time. And sure maybe they could keep it going and make less, but they have other things to do and if that operation no longer stacks up favourably against their alternatives its bye bye operation and bye bye jobs.

Its not their role to provide jobs, its their decision to make money that way and some jobs are produced as a consequence. You mess with that balance and its perfectly sensible for them to ditch the whole thing.

This 'workers' versus business owners is rather tedious and something you should have left behind at college.

Businesses also need capital for developing new products and services. Without this, a company will eventually lose their share of the market to competitiors (in an economy where the government has destroyed competitiveness and competition, market share will be taken by foreign competitors).

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  • 292 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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