Cause, on 17 July 2019 - 10:32 AM, said:
As for Jeff Bezos, I agree no one needs 80 billion dollars. The man lost more money in a divorce than some African countries make in a yeat. However he built amazon and it employs hundreds of thousands. I don't necessarily believe he has to be somehow punished for the workers in amazon to have a better life.
A few points here:
1. Bezos may have built Amazon. However, a
huge portion of Amazon's value just comes from monetizing a resource that they were given more-or-less freely. The internet is an innovation that far outstrips "hey, I can put a shop on that". Indeed, I would argue that the network effect inherent to the internet basically underlies most of the value of most big internet companies. Their value is largely that lots of people use them because they are the first mover and then own the 'marketplace' where lots of people meet. There is some value to having a shared meeting point, but monetizing the network effect is not actually adding value as such. In fact, it is economically inefficient to monetise the marketplace (since this raises transaction costs and thus friction).
2. Amazon employs thousands of people, but do you think it has created more jobs than it has killed? More pertinently, do you think it has created
better jobs than it has killed? Replacing independent bookseller jobs with warehouse jobs is bad for the overall quality of jobs in the economy, and indeed bad for the economy as a whole. The former spread the wealth amongst a larger number of local merchants, who move money around the economy more actively. The latter concentrate wealth up to the very top, where it tends to stagnate more.
3. He basically has to lose money for his workers to gain it within Amazon's basic business model. Certainly there are cases where companies can pay people at every level better - for example when they change to a higher-skill strategy and grow - but Amazon's basic model involves a lot of menial labour.
Looking at the wider economic sense, the global mega-rich have captured an increasing amount of economic growth over the last decades. You may have seen the so-called 'elephant curve'.
elephant.png (50.54K)
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The distribution of
wealth - the accumulation of this income inequality - is far worse of course. For a given amount of growth, distributing more to the poor requires giving less to the rich. Furthermore, letting the rich hold so much is economically inefficient and results in less growth overall.
Cause, on 17 July 2019 - 10:32 AM, said:
I'm also not an economist and don't have a good grasp of the theory Ill only mention I know it exists, the idea of wage push inflation. Higher wages, in the form of a minimum wage for the lowest employees, leads to higher inflation of goods as the system seeks to return to equilibrium.
I think it's useful to consider this idea beyond the more abstract 'system returning to equilibium' phrasing.
Why would wages push inflation? The basic idea is pretty intuitive.
Wages rise. This means that the cost of production for companies rise.
Companies want to maintain their profit margin.
To do so, they raise prices (which people can afford due to their wages being nominally higher).
So now we can see some pretty important caveats.
1. Raising wages for Amazon workers is not the same as raising wages across the whole economy. Raising Amazon's cost of labour might raise Amazon's prices but it doesn't mean prices will rise across the whole economy. Furthermore, if we hypothesise that Amazon exists within competitive constraints - meaning by raising prices they lose customers - it may not be simple for them to raise prices if their competitors do not also need to do so.
2. Companies want to maintain their profit margin, but they don't necessarily need to do so. It isn't a strict constraint unless they're operating in a perfectly competitive environment. Economists often make this assumption which can make the transmission of wages to prices seem like an immutable law (because in total competition - where prices are as low as possible - companies can't give up profits because they don't make any). In reality, companies make plenty of profit. This means there is space for companies to reduce profits instead of raising prices. Plenty of factors play into where companies can place their profit margin, including the bargaining power of the workers. If we improve wages
by improving bargaining power then the company may be pushed to to distribute more of the profits to the workers rather than passing on costs to consumers.
3. If you're assuming that prices and wages essentially 'balance out' at some given level anyway, then it doesn't matter that the wages are higher in the US than in SA - because the prices will balance them out. Clearly this isn't the case and some equilibrium positions are preferable to others.
(While I've engaged with the idea on face value it's also worth point out that the empirical literature on wage-push inflation is not conclusive. Although the idea is intuitive, there isn't a consensus that it's accurate. It's equally intuitive to suggest that companies seek profit, which pushes prices up, which pressures workers to push for higher wages... i.e, that the mechanism works the other way around entirely. This is also putting aside issues such as inflation expectations and monetary policy.)
Silencer, on 17 July 2019 - 01:05 PM, said:
It is the same problem as all automation. Every company wants to automate as much as possible, cut jobs, and therefore make profits.
Here's the problem though. Every company is doing this...so if they keep cutting employees, who is going to buy their products? Nobody. Because those people won't have any money to do so without a job.
This is why all companies are inherently damaging their own long term survivability once they focus on growing profits without growing employment and wages. They are reducing the size of their customers' disposable income! The tipping point is usually once a company is no longer able to grow their market share. This is why banks are among the first to do stupid things (you know, like cause the GFC) - banks are effectively always at 100% market share since everyone needs a bank account and there is only so much room for competitive pricing to steal your competitors customers. So at first you try to be more efficient, do things faster so you can do more. Then you run out of ways to increase speed. Then the only options left end up being to cut staff (an artificial profit bump as long term you either need to rehire due to volume management issues or staff burnout for those who remain, or even longer term you run into a collapsing economy as consumer spending decreases due to the factors mentioned previously) or start defrauding people.
For automation the point only fully hits once humans can't contribute useful labour to receive pay. Certain companies might rather that people have money just to buy products, but being a pure consumer isn't exactly economically productive either. The economic model may need an overhaul but I'm not sure that is the desirable direction.
Also banks compete on far more than bank account pricing and this doesn't account for the side where banks make their profits, where there is plenty of scope for competition. The considerable variety in how profitable banks are is explained by much more than just how many staff they've cut. Indeed, the ECB notes that digitalisation does not only present cost-saving opportunities.
From a systemic point of view, recent empirical evidence suggests that a higher reliance on digitalised forms of providing financial services may also result in more contestable retail banking markets, as it becomes easier for bank customers to shop around and compare bank products and prices. While this may have a positive impact on the sector’s overall efficiency and lead to enhanced product transparency for bank customers, it could also have a first-order negative effect on profitability via reduced margins.
Help
just remember that it's not about who has it worst, it's about whether there is a problem with the current situation, and how to fix it. You can, after all, have sympathy for more than the most wretched life on earth. 
