Summations Only

But this advantage has no economic value, because ... ?

Your definition of 'productivity' is useless.Once again you've equated another word that is unrelated to money with money. First value = price. Now productivity = profit.What's next? Eating = income?Edited by Jon, : No reason given.

And yet companies are capable of setting at least an approximate price on "favorable legislation", because they are willing to pay Congressmen actual money to get it.When a company spends so many million dollars per year to lobby Congress, this does appear on their balance sheet.

You cannot ignore the effect something has on productivity when assessing it's economic worth. You certainly cannot justify doing this simply because it doesn't fit well with your simplistic bookkeepers definition of "worth".If, for example, a new road costs the same as a new monument but the new road increases productivity such that it effectively pays for itself several times over then the new road has more economic worth than the monument (that isn't to say there aren't other reasons we might choose to build monuments). To insist that they both have equal economic value because they cost the same to build is just silly.So - Firstly - You cannot ignore effects on productivity when assessing the economic worth of something.Secondly - Once you accept that effect on productivity is a key part of assessing economic worth - It is also necessary to accept that assessing the worth of something becomes considerably more difficult than simply totting up it's cost. Which is exactly why that method of assessing worth is inadequate. Exactly. All hail the balance sheet. Simply ignoring all pertinent factors and attributing all wealth creation (and all proceeds of increased productivity) to share holders regardless of whether they actually have much to do with any increases in productivity at all simply plays into the hands of those who idolise the super rich (i.e. the largest share holders) as some sort of breed apart who create all the wealth. As Will Hutton put it:

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The great delusion of the age is that society must be endlessly grateful to the wealthy. They owe nothing to society. Rather, society owes everything to them as "wealth generators" because society contributes nothing to their success. The mores and values that inform the rest of human interaction — reciprocity, proportional distribution of pain and reward, trust and social obligation — must be suspended for them. If we want to enjoy the benefits of a dynamic capitalism we must recognise that the rich are different — and not self-defeatingly tax them. American neo-conservatives and their Republican outriders have worked tirelessly for 50 years to promote this hocus pocus, which offends not only the first principles of humanity, but of what we know about capitalism.

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Successful capitalism is an incredibly difficult phenomenon to create and sustain. It depends on entrepreneurial flair, yes, but also on ideas, institutions and processes ranging from great universities to innovative financial organisations that do not always appear spontaneously by the operation of free markets. They sometimes have to be designed by public action. Great businesses and wealth flower in strong societies that equip their entrepreneurs to prosper. The framework which supports this costs money, and it is proper that the rich should contribute proportionally.

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In your 'balance sheet economics' where do almost all the proceeds of increased productivity end up? What does the data say?

Hi Straggler,Measures of productivity like those that appeared in that graph represent summations across the balance sheets of all business and industry of the country. You can't use these productivity values in your arguments while ignoring the accounting means used to obtain those values. You don't have to use math in your arguments, qualitative arguments are fine, but if they run contrary to the math then they're wrong. You're confusing worth with return on investment. The benefits of productivity gains belong to the shareholders because they're the owners of the company whose capital is at risk.To the extent that shareholders disproportionately distribute these gains to upper management (through their proxies on the boards of directors), this is what you should be upset about. To the extent that governments insufficiently tax those with high incomes, this is what you should be upset about.You and several others here may be mistaking me for an advocate of policies favoring the rich. I'm not. I'm an advocate for simple accuracy. Productivity gains and losses belong to the shareholders. Economic reports of productivity gains/losses and even capitalism itself rely upon this.--Percy

You have previously said: So who of the following do you think most qualifies as a "wealth creator"...?A) A publicly funded scientist making significant headway in researching technologies that improve productivityB) Someone who spends most of their time playing golf but who happens to own a considerable number of shares in McDonaldsWho here is the "wealth creator" in your view? I'm not ignoring the accounting means. I'm simply requesting that you stop conflating share ownership with wealth creation. As has been amply demonstrated by recent economic events we all share the burden of risk for the economic failure of large scale private businesses. And if they end up bankrupt who provides the economic safety net that stops them ending up completely destitute? Certainly in the balance sheet terms you are applying this is true. But unless steps are taken to redistribute wealth in some way that reflects the genuine (rather than balance sheet) nature of wealth creation surely you can see that the inevitable result of this is ever increasing concentration of wealth at the top regardless of who actually creates wealth.Exactly as the data indisputably shows.So how would you address that ?Edited by Straggler, : No reason given.Edited by Straggler, : No reason given.

In monetary terms you haven't provided enough information for an answer. How would you answer your own question? I'm sorry, but you're going to have to face facts. In capitalism, risking capital is how one creates wealth. This is true whether you mortgaged your house to start your own company, or if you dipped into one of the trusts daddy left you to buy stock in an existing company.The problem with your approach is that it's all caught up in value judgments with no way to make objective comparisons or even any connection to objective data. Are you arguing that profits (and losses) shouldn't belong to the owners of a business? That's the basis of capitalism, you know.Look, if I'm arguing with a communist just let me know so I can stop wasting my time. But if you accept capitalism as the foundation of western-style economies then please start acting like you know something about it.--Percy

Actually, he's asking you to answer the question.Let us stipulate that the share-holder has a higher income than the scientist. Which of them is creating more wealth?

It increasingly seems that you are not only overstating the role of ownership in wealth creation, you are actually putting it forward to the exclusion of all else. But let's find out whether this is the case or not.... No, you are not arguing with a communist. You are arguing with someone who understands that innovation and increased productivity are the key components of wealth creation and that capital (amongst other things) is what facilitates it. In this example the McDonalds share owner has an income and assets that have a monetary value several times that of our research scientist.So - I ask again - Who here is the "wealth creator" in your view?If you still won't answer this question I put it to you that this is because even you aren't comfortable with the 'ownership = wealth creation' corner you have painted yourself into. I'm saying that your idealised model of risk and reward doesn't match reality.

Well, then stop acting like a communist. Every time it is pointed out to you that the productivity gains/losses do not belong to the workers but to the owners of the business you respond as if you believed that the means of production and their benefits belong to the workers, which is pure communism.Independent of all the problems associated with getting capitalism and free markets to work, owners of business and industry still own the profits from productivity gains. It doesn't matter what Paris Hilton does or what Donald Trump does, it doesn't matter how much malfeasance was committed by the financial industry back in the mortgage security debacle, the profits from business and industry still belong to the owners, the people who put their capital at risk. That's capitalism.If you want to argue that incremental profits deriving from productivity gains actually belong to the workers then that's communism.If you want to argue that wealth is unevenly and unfairly distributed, that the wealthy don't contribute their fair share, and that something should be done about it then I agree with you.But that doesn't change the way capitalism works. The points you're making about the wealthy are still valid and can still be made without the misstatements about capitalism and who productivity gains belong to.--PercyEdited by Percy, : Grammar.Edited by Percy, : Grammar.

Why won't you answer questions about the nature of wealth creation?Do you think that simply owning an asset that has increased in monetary value qualifies as an act of 'wealth creation'?Or do you think the activities and innovations which caused that asset to increase in monetary value can be more accurately described as 'wealth creation'?Do you at least understand the difference between the two things? No. I have simply said that if the wealthiest are receiving more wealth than they are creating wealth isn't trickling down. It is trickling up. I haven't said that. I have talked about increased productivity, innovation, the things that facilitate wealth creation and who it is that can meaningfully claim to be responsible for creating wealth. I have barely even mentioned "workers" at all. A number of UK banks (I understand the situation is similar in the US) are currently making big profits. Their shareholders are doing very well. A large part of the reason that these banks are currently so profitable is that they can borrow money at rates which reflect the fact that they are effectively underwritten by the UK government. So here we have a very real and direct example of shareholders profiting exactly because the rest of us are shouldering the risk. Privatised reward. Socialised risk. Completely contradicting what you are saying here about risk and reward in a capitalist system.You notions of how things work in terms of risk and reward are idealised, simplistic and in some cases just blatantly contradict reality.

We're on the same side of this issue. I'm not familiar with the UK banking situation, but this sounds like the issue of those businesses that fall into the "too big or too important to let fail" category. Bank deposits here in the United States are guaranteed up to $250,000 by the Federal Deposit Insurance Corporation (a government agency). In return for these guarantees banks submit to regulation and supervisory oversight that has become increasingly lax. General Motors received a bailout straight out because it was deemed "too big to let fail."These "too big or too important to let fail" businesses represent a serious problem on both sides of the Atlantic, and given how legislation is going here in the US it will only get worse. But each time I remind you that in a capitalist economy the profits belong to the owners of businesses who risk their capital, you bring up special cases like these as if it proves business owners don't risk their capital.If we were to start a company where you do the work and I provide the capital (or reverse the roles if you like) for a 50/50 split of ownership, to whom do the profits belong? To us, right? It doesn't matter how much free software we used or how many miles our trucks traveled on the publicly funded roads or how many air miles we flew taking advantage of the publicly funded air traffic control system, the profits belong to us. And it also doesn't matter that somewhere out there there are "too big to let fail" businesses. In a capitalist system the profits belong to those who risk their capital, in this case, us.About your question, in monetary terms you didn't provide enough data, and I told you that. That's why I asked you how you would answer the question, because in making the attempt you would see for yourself there is insufficient data. You'd make your best guestimates, but that's precisely the same thing investors do before risking their capital. Only one out of ten start ups ever make it, and each one was invested in by people who made guestimates of how much the company might eventually be worth, and nine out of ten times they were wrong.By the way, having people like yourself decide the value of things instead of the market? That's communism.--Percy

Well, if all you're trying to say is that shareholders get the money they get, then this is not, I think, a point that anyone has disputed.

So?

It is ridiculous for you to try and brand me as a communist for suggesting that average incomes should rise in line with productivity. The US was not a communist state prior to the late 1970s. The aim of my question is to try and get you to explicitly confront the 'ownership = the sole factor in wealth creation' position that you are increasingly cornering yourself into. When you say things like "If the worker wants to participate in his company's contribution to wealth creation then he should buy stock" - You seem to be glorifying ownership to the extent of denying that anything except ownership can qualify as wealth creation. You do not need monetary details to address this point. You simply need to answer the following:

Do you think that simply owning an asset that has increased in monetary value qualifies as an act of 'wealth creation'?

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Or do you think the activities and innovations which caused that asset to increase in monetary value can be more accurately described as 'wealth creation'?

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In the example of the publicly funded, productivity transforming research scientist Vs McDonalds share owner is it even possible, in your view, for the lower income, non-share owning, non-property-owning research scientist to be considered a 'wealth creator'? Or is wealth creation the exclusive preserve of those who own appreciating assets?

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It is your view on this that I am trying to definitively ascertain here.

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Percy writes:

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But each time I remind you that in a capitalist economy the profits belong to the owners of businesses who risk their capital, you bring up special cases like these....

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You call them special cases. But they are increasingly prevalent, hold entire nations/continents to ransom and completely contradict everything you are claiming about the way risk and reward works in a capitalist economy. Because your notions are simplistic and idealised and in many cases blatantly untrue.

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Percy writes:

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.... as if it proves business owners don't risk their capital.

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I have never once said that business owners don't risk capital. My point is simply that wealth creation is a collective endeavour that relies on a number of interdependent factors of which capital is one major facilitating factor. This means that there is no justification for apportioning the fruits of increased productivity almost entirely to those who own the most simply because they own the most. Shrugging and saying "That's capitalism" is to conflate capitalism with a certain sort of latter day freemarket fundamentalism. A conflation which is based on a number of misapprehensions. Two of which are:

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1) The wealthy are the wealth creators in society and the rest of us are best served by resourcing them such that they can apply their unique talents to create wealth that will then trickle down to everybody else.

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2) Market forces are so infallible that price and worth can be considered one and the same thing to the extent that the research scientist in our example is of less worth than the McDonalds share holder because he is paid less and owns less assets.

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You say you are not defending the wealthy. And I believe that is not your intention. But you are applying the same flawed thinking that underpins the increasing plutocratic tendencies of much right-wing politics.