The Pursuit of Wealth

Tim Duy:

For A Sunday Morning, by Tim Duy: An unusually quiet Sunday morning – the kids are with their grandparents, leaving me with a chance to think of something beyond the immediate economic data. This morning that meant a stream of thoughts triggered by Paul Krugman’s most recent op-ed, particularly this:

Most of all, the vast riches being earned — or maybe that should be “earned” — in our bloated financial industry undermined our sense of reality and degraded our judgment.

Think of the way almost everyone important missed the warning signs of an impending crisis. How was that possible? How, for example, could Alan Greenspan have declared, just a few years ago, that “the financial system as a whole has become more resilient” — thanks to derivatives, no less? The answer, I believe, is that there’s an innate tendency on the part of even the elite to idolize men who are making a lot of money, and assume that they know what they’re doing.

In this paragraph, Krugman sounds less like an economist and more like a philosopher. But I am not complaining in the least; economists lost a sense of the essential humanity of their topic when they gravitated down a path of sanitized mathematical and statistical methodology. Indeed, I often think that economists share no small blame for our current economic challenges, as the profession provided the intellectual basis for free markets but often failed to place that ideology in a larger social perspective. It is as if the profession followed the path of The Wealth of Nations but forgot The Theory of Moral Sentiments. The latter is Adam Smith’s philosophical tome, and if you can only read one of these two, it is my recommendation. I suspect that Krugman had TMS in mind when he wrote the above paragraphs. An excerpt from Smith:

In equal degrees of merit there is scarce any man who does not respect more the rich and the great, than the poor and the humble. With most men the presumption and vanity of the former are much more admired, than the real and solid merit of the latter. It is scarce agreeable to good morals, or even to good language, perhaps, to say, that mere wealth and greatness, abstracted from merit and virtue, deserve our respect. We must acknowledge, however, that they almost constantly obtain it; and that they may, therefore, be considered as, in some respects, the natural objects of it. Those exalted stations may, no doubt, be completely degraded by vice and folly. But the vice and folly must be very great, before they can operate this complete degradation. The profligacy of a man of fashion is looked upon with much less contempt and aversion, than that of a man of meaner condition. In the latter, a single transgression of the rules of temperance and propriety, is commonly more resented, than the constant and avowed contempt of them ever is in the former.

According to Smith, it is human nature to admire the rich, even when we shouldn’t, a mistake that Krugman argues led us to where we are today. Smith offers much more detail; an online version can be found here. For those with a busy schedule, a good place to start is Robert Heilbroner’s The Essential Adam Smith; it is one of the books I assign when I teach history of economic thought.

Krugman also laments the lost opportunities attributable to the pursuit of wealth:

Meanwhile, how much has our nation’s future been damaged by the magnetic pull of quick personal wealth, which for years has drawn many of our best and brightest young people into investment banking, at the expense of science, public service and just about everything else?

Which makes me think of another in the canon of Western culture, the 1987 movie Wall Street. A memorable line from the final scene:

Carl Fox: Stop going for the easy buck and start producing something with your life. Create, instead of living off the buying and selling of others.

For an interesting recent take on the draw of Wall Street and easy money and how it has warped career choices, see Michael Lewis in Bloomberg:

What Wall Street did so well, for so long, was to give people jobs that they could pass off to themselves as well as others as callings. Such was their exalted social and financial status: Wall Street jobs made people feel special without actually having to be special. You never really had to explain why you were doing it -- even if you should have.

Readers’ responses to Lewis can be found here. One particularly troubling comment:

I know why I am in finance -- partly because I enjoy the action and the excitement of life on the trading desk and also because I know what I want.

I want private school for my kids, I want my kids to go to a better university than Michigan, I want the Porsche S-1 one day, I want the apartment in the city and the summer home and yes, I want to marry a beautiful woman who shares certain values.

None of the above happens if you are a broke high school math teacher or a mediocre screenwriter.

From Smith:

The poor man's son, whom heaven in its anger has visited with ambition, when he begins to look around him, admires the condition of the rich. He finds the cottage of his father too small for his accommodation, and fancies he should be lodged more at his ease in a palace. He is displeased with being obliged to walk a-foot, or to endure the fatigue of riding on horseback. He sees his superiors carried about in machines, and imagines that in one of these he could travel with less inconveniency. He feels himself naturally indolent, and willing to serve himself with his own hands as little as possible; and judges, that a numerous retinue of servants would save him from a great deal of trouble. He thinks if he had attained all these, he would sit still contentedly, and be quiet, enjoying himself in the thought of the happiness and tranquillity of his situation. He is enchanted with the distant idea of this felicity. It appears in his fancy like the life of some superior rank of beings, and, in order to arrive at it, he devotes himself for ever to the pursuit of wealth and greatness. To obtain the conveniences which these afford, he submits in the first year, nay in the first month of his application, to more fatigue of body and more uneasiness of mind than he could have suffered through the whole of his life from the want of them. He studies to distinguish himself in some laborious profession. With the most unrelenting industry he labours night and day to acquire talents superior to all his competitors. He endeavours next to bring those talents into public view, and with equal assiduity solicits every opportunity of employment. For this purpose he makes his court to all mankind; he serves those whom he hates, and is obsequious to those whom he despises. Through the whole of his life he pursues the idea of a certain artificial and elegant repose which he may never arrive at, for which he sacrifices a real tranquillity that is at all times in his power, and which, if in the extremity of old age he should at last attain to it, he will find to be in no respect preferable to that humble security and contentment which he had abandoned for it. It is then, in the last dregs of life, his body wasted with toil and diseases, his mind galled and ruffled by the memory of a thousand injuries and disappointments which he imagines he has met with from the injustice of his enemies, or from the perfidy and ingratitude of his friends, that he begins at last to find that wealth and greatness are mere trinkets of frivolous utility, no more adapted for procuring ease of body or tranquillity of mind than the tweezer-cases of the lover of toys; and like them too, more troublesome to the person who carries them about with him than all the advantages they can afford him are commodious. … But in the languor of disease and the weariness of old age, the pleasures of the vain and empty distinctions of greatness disappear. To one, in this situation, they are no longer capable of recommending those toilsome pursuits in which they had formerly engaged him. In his heart he curses ambition, and vainly regrets the ease and the indolence of youth, pleasures which are fled forever, and which he has foolishly sacrificed for what, when he has got it, can afford him no real satisfaction. In this miserable aspect does greatness appear to every man when reduced either by spleen or disease to observe with attention his own situation, and to consider what it is that is really wanting to his happiness. Power and riches appear then to be, what they are, enormous and operose machines contrived to produce a few trifling conveniencies to the body, consisting of springs the most nice and delicate, which must be kept in order with the most anxious attention, and which in spite of all our care are ready every moment to burst into pieces, and to crush in their ruins their unfortunate possessor. They are immense fabrics, which it requires the labour of a life to raise, which threaten every moment to overwhelm the person that dwells in them, and which while they stand, though they may save him from some smaller inconveniencies, can protect him from none of the severer inclemencies of the season. They keep off the summer shower, not the winter storm, but leave him always as much, and sometimes more exposed than before, to anxiety, to fear, and to sorrow; to diseases, to danger, and to death.

Smith, in my opinion, places too much weight on the sufferings of the rich (or the ease of tranquility of the poor – he appears to be justifying the extent of inequality existing in a market system). Still, his underlying point regarding the ultimate rewards of the pursuit of wealth may be less than imagined. And, as Krugman suggests, that pursuit can yield enormous costs not just for the individual, but for society as a whole.

Update: Gavin Kennedy comments on Tim's post.

Comments

[ken melvin]

Terrific! Thanks Prof. Duy

[MichaelG]

Sorry, I'm not impressed. Contrary to what Smith is describing, your ambitious commenter who wants wealth isn't hoping for an easy job. He's perfectly willing to work 80 hours a week to get what he wants. You may think his goals are shallow, but they are goals.

And what's your alternative? Rich people have status, and as social animals, we all want some kind of status in our communities. If we didn't chase economic success, we'd be chasing some other kind of status. Even if all our material wants disappeared, and there was no need for money, you'd have competition. People who were fashionable or artistic or just funny would have status, and those without would strive for recognition, or sit and sulk.

I also think that if there were no rewards to work, we'd all just sit around and amuse ourselves, and never accomplish anything. Social climbing, and lust for wealth, or competition in general may be unseemly or even destructive, but it is what keeps us moving forwards.

If you don't like it, buy a few acres of land and become a subsistence farmer, depending on no one. I think that would get old pretty quickly.

[Meh]

It's actually worse than Duy (or indeed Adam Smith) understood. This is because it's not just an issue of the individual level, but the corporate one too.

How is it that General Electric, once the industrial centre of the US economy became, in essence, a financial firm?

Fundamentally, the market pressures in business push companies in two directions. One, which I'll leave Bruce Wilder to talk about (as he's much better at it than I) is a search for defensible rents.

That doesn't explain much, per se, as with good lobbyists and a big pot of money you can defend rents in a lot of industries.

The other factor is key, the pressure of the market pushes companies to see low-transaction cost activities. And what could be more frictionless than finance? There is no warehouseing problem, less logistics, just a network and the flipping of a few bits. No actual physical product... it can change at the speed of thought. Isn't this the perfect business, devoid of all those boring difficulties the rest of us have to wrestle with?

[robertdfeinman]

Societies which don't focus on wealth accumulation are referred to as "undeveloped" and our task is to assist them in moving towards materialism.

The counter trend has been around for a long time, but has been disfavored in the west. Socrates and Jesus both ended up in a bad way for promoting a modest lifestyle.

The creation of capitalism as a byproduct of the industrial revolution made it possible to produce consumer goods in abundance and at low prices. In fact so much can be produced that it was necessary for capitalists to create demand. One can start with Veblen or any number of social critics who noticed this effort.

What is different now is that we are reaching the limits of production based upon the cheap availability of raw materials and places to dump our waste. Combine this with the huge rise in population and we are even running out of places to put the people.

Given this the promotion of materialism and excessive wealth is not only as unjust, superficial and immoral as the old philosophers noted, but is now an actual danger to the planet. This is why I keep demanding that social thinkers and economists devote themselves to thinking about alternatives and not just to re-inflating the economic bubble as quickly as possible.

My latest 2 cents on the topic:
On Being Old - People and Countries

[Andrew]

So we've come to the conclusion that the pursuit of wealth is unethical? That's not a new conclusion. We've been hearing that for thousands of years. No one can stop people wanting to be (relatively) wealthy. Some have tried, and the results usually don't end well.

The conclusion that such a "pursuit can yield enormous costs not just for the individual, but for society as a whole" is so generalised and vague that it is rendered meaningless. Not only that, but it assumes that the 'pursuit of wealth' is somehow a specific activity that can be easily defined. People have different purposes and methods for pursuing wealth, some good and some bad.

This article has been written before. Probably been written every year for the last 5000 years.

[calmo]

Well, what to say...where the hell is evagrius?
No, that wasn't it.

If you're so smart, why aren't you rich?
That would B strike 2...

Thank you Tim for everythin.

I need to get to base on that.

says...

Before the current crisis this applied to other professions. Lawyers faced with the prospect of spending their lives essentially writing book reports. Doctors who would have rather used their talents on something else, often creative or entrepreneurial. Accountants ashamed of spending their lives adding up numbers.

The last few years answered the question, "Is there more to life than making money" with "Sure, spending it."

[mrrunangun]

Some lawyers hurt people who don't deserve to be hurt while working in the service of their clients. Most try to avoid that and try to serve a useful function in society. Most are comfortable and a number become rich. Doctors are similar. Teachers seldom get rich from teaching, though some academics do grow rich on outside $$. Consider though that the supervisor of a productive investment bank trading desk at $10,000,000/year, a not unreasonalbe figure, makes as much money as300 young teachers, 200 public defenders or assistant district attorneys, or as much as 30 or 40 surgeons. This difference persists year after year. No wonder that many of our bright young people eschew socially useful occupations-even very remunerative law and medicine, preferring finance. And as it turns out finance was a fraud.

[realpc]

Smith is only considering two extremes -- rich vs. poor, so what he is saying here does not apply to the average modern American. We aren't striving for great wealth and power, but we are striving for a reasonable level of success. We don't want to be poor -- there is nothing romantic or peaceful about poverty any more, if there ever was. Poverty is stressful and complicated, and just plain not fun.

Smith is describing someone who is obsessed with money and status, and of course that kind of obsessiveness is unhealthy. But the opposite extreme -- irresponsible laziness -- leads to bad outcomes also. A lazy person tries to live off the work of others, and there is nothing moral about that.

Smith describes ambition as all bad -- but he probably had lofty ambitions and goals himself, or he would not have become a great philosopher. And he makes is sound like successful people spend their time laboring at hateful chores -- but actually many successful people love their work.

Obviously, the best approach is to be moderate and avoid going to ridiculous extremes in anything.

[realpc]

"Socrates and Jesus both ended up in a bad way for promoting a modest lifestyle."

You actually think they were persecuted for being anti-captaliists!!!!

[S Brennan]

For the record,

"Socrates and Jesus both ended up in a bad way"

For crossing swords with the radical right of their day. Think of the "Heritage Foundation". Both charges would have made Ronald Reagan proud.

The charges against Socrates: "refusing to acknowledge the gods recognized by the State and of introducing new and different gods" and "corrupting the youth."

Pharisees asked Jesus, "Why do Your disciples transgress the tradition of the elders?

[DW]

"It is as if the profession followed the path of The Wealth of Nations but forgot The Theory of Moral Sentiments. "

Geez, I've been saying that for YEARS now!

[Gavin Kennedy]

Tim Duy deserves to be congratulated for drawing wider attention to Adam Smith's writings in "The Theory of Moral Sentiments."

Some of the above commentators should turn to the chapter Tim quotes from (TMS IV.i.8: p 181). If they do so and turn over the page they will find on page 183 a typical Adam Smith admonition to counter the rather depressing parable of the 'poor man's son', which should answer some commentators who may have missed Smith's main point.

He wasn't downgrading the pursuit of wealth (the "annual output of the necessaries, conveniences, and amusements of life") at all. He was simply putting the individual motivations that drives such (few) people to get up in the morning. He was putting them in context:

"And it is well that nature imposes upon us in this manner. It is this deception which rouses and keeps in continual motion the industry of mankind. It is this which first prompted them to cultivate the ground, to build houses, to found cities and commonwealths, and to invent and improve all the sciences and arts, which ennoble and embellish human life; which have entirely changed the whole face of the globe, have turned the rude forests of nature into agreeable and fertile plains, and made the trackless and barren ocean a new fund of subsistence, and the great high road of communication to the different nations of the earth. The earth by these labours of mankind has been obliged to redouble her natural fertility, and to maintain a greater multitude of inhabitants." (TMS IV.1.10: p 183)

Isolated quotations from Adam Smith often smother his great subtlety of expression by missing his counter-points.

[calmo]

You B right Gavin, the literary style of the day is closer to Hemmingway than say, James and we have little patience for the extended descriptions, --the "subtleties of expression" as you put it. Nope. We demand the Executive Summary. And Power Pointed points.
And, can I say that we are fortunate to have some occasional visitors here who remind us of that more expansive tradition? --"stream of consciousness" he calls it, defending his practice of using periods as if they were his eye teeth, commas a plenty...thanks B to Jesus.
And we are fortunate to have Tim not only selecting those passages but generously giving us his time and resources...he must think we are worth it! Dang.

[Isabel]

"... I want the Porsche S-1 one day, I want the apartment in the city and the summer home and yes, I want to marry a beautiful woman who shares certain values.

None of the above happens if you are a broke high school math teacher or a mediocre screenwriter. "

This is obscene.
Where is Anne when we need her?

[a]

"Indeed, I often think that economists share no small blame for our current economic challenges, as the profession provided the intellectual basis for free markets but often failed to place that ideology in a larger social perspective."

Well, that's the beginning of an apology. If more economists were to say they're sorry, the rest of us might find it in our hearts to forgive them. (Or not.)

[a]

"I want to marry a beautiful woman who shares certain values."

What I find funny about this one is, I guess what he means is, "I want to marry a beautiful woman who wants a Porsche S-1, an apartment in the city and the summer home," because those are apparently his so-called values.

[reason]

There seems to me a lack of discussion about why "finance" is not really productive, but no one mentions the magic words, "leveraged speculation".

I know once Bruce Wilder came up with the great expression "they want to extract your consumer surplus" (this time with assets). Leveraged speculation, is one of the ways they do it. It is a very subtle type of swindle.

[Isabel]

Incidentally, this comment on Naked Capitalism made me chuckle (yes, where is Evagrius, too?):

Norman Ball said...
I had imagined a financial elite that, inordinately perhaps, enriches itself during periods of economic prosperity. This is a tax, if you will, on broad-scale prosperity, a necessary toll. As sure as taxes.

I had not considered an elite that turns to preserving its 'boom time' earnings during hard times by such unconscionable methods as nationalization and socialization of risk. The rich suddenly look unvarnished, almost ridiculously in love with their mansions. They are not capitalists, have no ideological purity --just vanity plates with 'laissez-faire' stamped on them. Suddenly there is absolutely nothing to recommend the rich. Too indolent even to mount an ideologically consistent position, they are craven, they are nakedly opportunisitc, they are greedy. Period.

December 20, 2008 3:10 PM

[Icarus]

It's not just the pursuit of status which occupies the goals of many of our professional elites...it is the acquisition of leisure time.

You save up $5-10 million dollars, and you're technically 'free' from 'work'. This is the goal of many. Is it a bad one? Is it morally repugnant to want 'free' time to spend with family, to travel, to eat great food, to observe and cherish the 'high culture' of humanity?

Are any of you really saying that this goal is somehow unworthy because we must calibrate ourselves by the reality of the lower middle class or peasantry?

After a certain amount of acquired wealth, every extra dollar is either a 'game', or a plan to enact something much larger than a single, individual life. It possibly requires a word beyond "work" or "leisure". Donald Trump doesn't build megalomaniacal skyscrapers because it is "work", or "leisure", but something beyond both. I think that holds true for Bill Gates, Warren Buffet, Carlos Slim, and a host of other filthy rich individuals.

If you want to create great chance, it sometimes leads to, or requires great wealth. Imagine developing a 3G tool which allows applications to seamlessly be used by PDA's all over the globe, setting standards, and creating a platform for countless creative ventures. If you succeed at that, you'll likely be a billionaire. Those billions are "earned", as you created the value in numerous people's lives. You may hate the player, and I suspect many of you hate the game...but, you probably love the technology provided. It is nothing more than hypocrisy.

I think many of you are stuck on a vulgar labor theory of value...that is, the 'workers' of a corporation are the creators of value, and the 'managers' or 'owners' confiscate that value in a process of surpluss extraction. This crude marxism misses the point. You can replace base labor pretty easily. What you can't replace is the ingenuity, leadership, and vision/risk of the 'owner', and the scarcity of the 'techno-managerial' elite. That may sound horrible, but it's true.

All of blue collar detroit can be replaced pretty easily...that's why their labor isn't worth the UAW rates, and could theoretically decend into base subsistance wages. The techno-managerial elite cannot be replaced as easily (knowledge workers), as of today, and hence command professional salaries. The owners are the most scarce...they truly are a needle in the proverbial haystack.

The one thing I do agree with most (here), is that we need a financial system which allows for firms to fail. We should not socialize risk/losses, and privatize profits.

[ken melvin]

If anyone knows of a circus looking for contortionists, do suggest that it to look amongst the above.

[morloc]

MichaelG's the poster boy for people who are still on the treadmill.

[Isabel]

"It's not just the pursuit of status which occupies the goals of many of our professional elites...it is the acquisition of leisure time.

You save up $5-10 million dollars, and you're technically 'free' from 'work'. This is the goal of many. Is it a bad one? Is it morally repugnant to want 'free' time to spend with family, to travel, to eat great food, to observe and cherish the 'high culture' of humanity?"

Long live the Unions and la semaine de 35 heures!

Never thought I would cheer a post by Icarus.

[JB]

Excellent post, Icarus, though I think you overemphasize the uniqueness of the managerial and ownership classes. I think it's probably less a personal trait and more a lucky accident of birth that gave them (us?) the education / connections / stability that allowed them to define themselves in that role.

[Icarus]

JB,

I would suggest that we shouldn't use the word 'accident'. Often, those born to the privileged, or successful, are a product of family planning. This planning is the root of the success of the following generation. It isn't "luck"...it is the foresight and preparation of the parents which are the foundation of generational success.

[Jrossi]

This tension between altruism and selfishness is a huge issue in American medicine right now, one that will affect all of us in a few years. Primary care is involuting as medical students are choosing higher-paying specialties with "controllable lifestyles." It is a profound cultural shift. Solutions focus on paying primary care more. There is no thought of appealing to students' sense of social obligation.

[realpc]

[For the record,

"Socrates and Jesus both ended up in a bad way"

For crossing swords with the radical right of their day. Think of the "Heritage Foundation". Both charges would have made Ronald Reagan proud.

The charges against Socrates: "refusing to acknowledge the gods recognized by the State and of introducing new and different gods" and "corrupting the youth."

Pharisees asked Jesus, "Why do Your disciples transgress the tradition of the elders?]

Oh nonsense. They were challenging the establishment, not the "radical right." Jesus was pretty radical, but it had nothing whatsoever to do with economics or capitalism. There was no capitalism then.

(And Reagan was hardly a radical capitalist.)

It is very odd, although not surprising, to see leftists identifying themselves with Socrates or Jesus, neither of whom had anything in common with contemporary leftism.

[Patricia Shannon]

RealPC, I agree

[Patricia Shannon]

realpc, my agreement was with your earlier post. I have to think about the one you just posted.

[Patricia Shannon]

Since all land is owned by somebody, one has to first make enough money to be able to buy land to live a subsistence lifestyle.

[Patricia Shannon]

We work for 30 years or more to make other people rich. We go to work when we're feeling bad. Many of us raise children and pay for their college. We don't have time for things we want to do. We are stressed out by mean-spirited supervisors and co-workers. We have paid social security and medicare taxes all the while, supporting those who came before us. Why in the world is it selfish to want to be have some time for ourselves?

[realpc]

Patricia,

There are positive aspects to working as well, and I think many Americans enjoy feeling they are contributing to a company, and to society. We are all free to go off and take risks and try to succeed on our own, but most prefer to have more security.

I do agree with you that wanting to retire and have lots of time is perfectly understandable and no one should be deprived of it. Maybe it is selfish, but what is wrong with that? I hope that eventually I can retire from having to work at the same job every day, and have time for some of the many things I am longing to do.

In a socialist system (if any exist), the state would decide if, when and how everyone can retire. In capitalism, individuals can decide how much they want to sacrifice now for later. (Of course they take so darned much out of our paychecks it really can be a challenge to save.)

So Smith was wrong for this reason also. The hard-working ambitious person might have the goal of retiring early to enjoy life or work on projects that don't pay well. Lots of people have artistic talents but don't want to be poor, so they postpone being a full time artist until after retirement. The same goes for philosophers and scientists who would like to go their own way and be more creative.

Is it greedy and selfish to work hard so you can be free later? I am not working so I can have expensive cars and giant TVs, but so I can have more time eventually. (In the mean time, I like to work so it's ok.)

In general, I find the entire Smith quotation to be unhelpful and unconnected with reality. At least from today's perspective.

[morloc]

I am agog at the sloganizing imbecility of the phrase 'work hard so you can be free later.' Working hard has nothing whatever to do with it. The necessary and sufficient condition to be free later is to save. And for most it's easy to save (if it's not easy to save, then it's impossible to save, because you were born into the wrong caste in America) - trivially easy, unless you're afflicted with the gnawing insecurity Adam Smith describes. An awful lot of people are afflicted, sadly, since our predatory commercial culture's built on it.

[Patricia Shannon]

morloc, if you think everybody who works hard is able to save, you are too ignorant for anybody to pay attention to. During this time of economic crisis, with people's pensions and retirement savings being lost thru no fault of their own, your statement is downright crazy.

There are people, on whom the rest of us depend for our lifestyles, who don't make enough to save.

There are people who have medical expenses for themselves or their children.

http://dr_saaron.blogspot.com/2005/02/bankruptcy-medical-costs.html

ABC News report
Thursday, February 03, 2005
Half of all U.S. bankruptcies are caused by soaring medical bills and most people sent into debt by illness are middle-class workers with health insurance, researchers said on Wednesday.
There are people like me, who worked and saved. I went on exactly two vacations in my life, other than visiting relatives. To the world's fair in Tennessee (with some friends) and the one in New Orleans (by myself). In both cases, we/I brought a tent and camped out while we were there. As the result of a combination of recessions and age discrimination, I ended up losing all my savings and having my house foreclosed, when I thought I would have it paid off before retirement. I give my own example knowing it is but one of many.

[Patricia Shannon]

I had a friend, a very nice person, who died of breast cancer. When she was being treated, and felt lousy from the chemotherapy, she had to continue working for a boss she disliked in order to maintain her medical insurance. A system like this stinks.

[realpc]

morloc is the imbecile. It is not easy to save, unless you make a lot more than you need to survive. You have to work hard, in some sense, in order to make a good income. And you might work hard and still be poor.

Anyway, that has nothing to do with the point I was making -- that Smith was wrong, and people work hard for reasons other than, or in addition to, achieving great wealth and status.

And I agree with Patricia that there is a lot of injustice in our current system, and a lot of things could use improvement, but it's very complicated. Until relatively recently, there were no expensive treatments for breast cancer and other serious diseases. People didn't go bankrupt because they got sick, they just died.

No one knows exactly what can be done about the ridiculous price of health care and health insurance. I think insurance has actually caused the price of medical care to inflate dramatically.

In addition, the medical industry takes advantage of the fact that people expect treatments for everything, even when the treatments are unnecessary or harmful.

We have a similar problem with education -- everyone has been convinced they need a college degree, so demand has gone wild and so has tuition. Making college affordable for all is not necessarily the best solution.

[morloc]

Neither one of you comprehended that comment. Your hard work is irrelevant at best, and more likely, in terms of the background rate, the classic sign of mediocrity, a tendency to substitute effort for results. Given aptitude, work is not hard, although for most people it is tedious - that is why they pay for it. Only saving matters, and saving has nothing to do with hard work. Two things only stop you from saving: 1.) your caste - those in the ever-increasing insecure caste cannot get ahead; or 2.) your social anxiety, which produces shame at the very thought of forgoing things you don't need, but by which you might be judged. Show me a person who works hard for the sake of anticipated leisure and I'll show you a person who will never manage to get off the treadmill.

[Patricia Shannon]

In my view, keeping at tedious or boring work and getting it done is hard hard work.

[Patricia Shannon]

In my view, keeping at a tedious or boring task until it's finished is hard mental work.

[Patricia Shannon]

Sorry for the double post. Something weird happened the first time I posted, and I didn't think it would post.

[morloc]

Hard or not, tedious or not, it will do you no good. The meaningless recognition you get will simply make you buy into the meritocratic propaganda and intensify your dependence.

[Patricia Shannon]

And where are we supposed to get the money we save? Print it? Sell fraudulent investments?

[anon/portly]

As usual an excellent post by Tim Duy, but I must quibble with a couple of points.

The long passage from ATOMS is followed by the comment that Smith "places too much weight on the sufferings of the rich (or the ease of tranquility of the poor – he appears to be justifying the extent of inequality existing in a market system)."

I disagree. I don't think there's any sense in which Smith is trying to say that a person is better off being poor than rich, or that the rich don't have it easy; his point is that the things that wealth gets you are not the most important things. "They keep off the summer shower, not the winter storm...." (Surely an Oregon resident can appreciate this metaphor just now).

And rather a claim about the "tranquility of the poor," I think that Smith's "real tranquillity that is at all times in his power" is not something he can attain by staying poor, but simply something he does not attain just by becoming rich.

I think Adam Smith's point in this passage is very similar to Ecclesiastes, chapter 2. (Chapter 3 is perhaps more familiar: "To everything there is a season...").

verse 4: "I made me great works; I builded me houses;I planted me vineyards."

verse 10: "And whatsover mine eyes desired I kept not from them, I withheld not my heart from any joy; for my heart rejoiced in all my labour; and this was my portion of all my labour."

verse 11: "Then I looked on all the works that my hands had wrought, and on the labor that I had labored to do: and behold, all was vanity and vexation of spirit, and there was no profit under the sun."

There may be other quotes from Ecclesiastes that even better mirror Smith's point, but note that both Ecclesiastes and Smith emphasize vanity and that "vexation of spirit" is perhaps close to what Smith means by "exposed ... to anxiety, to fear, and to sorrow...."

If Smith failed to make (at least here) the specific point made in verse 10 above - "I withheld my heart not from any joy," or as we might say nowadays, the rich have more fun - maybe that's because for him, it was too much of a "well, duh" point to include....

[Merry-will-go-round]

I think MichaelG's commentary reflects the overall impact of Prof Duy's sentimental analysis of Krugman's phiosophical musings on the capitalist mentality. MichaelG's commentary makes for quaint anecdotal evidence that the enormous costs of greed, with consequent spoiling of the commons, are not born by society as a whole, but by the powerless and the gullible. This fact is conveniently overlooked by Krugman and Duy...and most economists.

Most of the wealthy elite have done a great job in profiting from their (criminally) negligent investments and mismanagement of resources with their subtle and obvious plunderings of public treasuries and lands. I wish more would self-congratulate in public as MichaelG has. Then the less fortunate could admire them more. Unfortunately, given the shorter life span of the less fortunate, their fawning days are fewer.

[anon/portly]

Tim Duy: "Which makes me think of another in the canon of Western culture, the 1987 movie Wall Street."

It makes perfect sense that Krugman's "the magnetic pull of quick personal wealth" would make one think of Wall Street. A synopsis:

Michael Douglas is as corrupt as the day is long.

Martin Sheen is as noble as the day is long.

Should Charlie Sheen be like Michael or Martin? A difficult choice, to be sure....

Perhaps I mis-remember the film; or maybe WS belongs in the "canon of Western culture" for something other than its dramatic qualities.

And ISTM there are a whole bunch of films one might think of after reading the extract from Smith's ATOMS. Citizen Kane, for an obvious example, maybe.

[realpc]

"Your hard work is irrelevant at best, and more likely, in terms of the background rate, the classic sign of mediocrity, a tendency to substitute effort for results. Given aptitude, work is not hard"

morloc is just focusing brainlessly on the word "hard." By "working hard" I just meant getting out of bed every morning and going where you're supposed to, and using the skills you have acquired. Whether the work is considered difficult or not is completely relative. Usually after doing a job for a while it stops being difficult, whatever it is, but hopefully there is always some degree of challenge. A brain surgeon might become very skilled, but never find his work boring. I doubt Tiger Woods finds playing golf boring, even with his extreme level of skill. You can ALWAYS get better at your job, so you NEVER have to get bored.

Working "hard" is often rewarding in itself. I find little or nothing of value in Smith's statement. We work "hard" to feel useful, to feel we are continually improving our skills, to feel appreciated, to make the money we need to survive, and yes maybe to get ahead so our future life will be easier and include more free time.

Perfectly obvious to most, except maybe some academics and philosophers.

[Lafayette]

Not the right thread; but, what the hey, it is good news about Health Care so it should go somewhere.

From the NYT: They also agreed that health care was a right; that insurance should cover “everything,” not just some services; and that coverage should be readily available from the government, as well as from employers.

Health Care IS a human right, not a business, and SHOULD BE a Public Service. I could not believe my eyes when I read the above. I reread the article, thinking these were perhaps Americans living in France or the UK.

Perhaps there is hope that some, at least, are getting the message.

[morloc]

You want warm and fuzzy feelings, then knock yourself out. You want control over your life, then save. Free time and an easy prime of life is every bit as nice as you imagine but you don't get them by toiling for appreciation or usefully striving to get used. Other-directed needs like those you attribute to work are almost always associated with other-directed spending. Both are counterproductive. Do not seek approval if autonomy is really what you want.

[reason]

Hey everyone, read carefully what morloc says, most of you are misinterpreting him. It is just common sense. A bit away from the normal economic policy topics we have here though.

[robertdfeinman]

In case anyone is still following this thread:
1. Why would anyone take comments seriously from a person who calls himself "morloc".

2. As to "saving". There is now ample evidence that those in certain socio-economic classes are never going to be able to get out of poverty or near poverty. I won't cite the various statistical studies, but Barbara Ehrenerich's book "Nickel and Dimed" puts a human face on the statistics.

The Horatio Alger myth is less true now than it has ever been before (the great depression, a possible exception). Upward mobility is now very difficult and the percentage of people moving out of the bottom two sectors is very low. One can't work or save one's way out. People don't make enough money, don't have enough time and don't have the skills to do so. There are also various socio-economic factors like discrimination in the granting of loans for homeownership or starting businesses that work against people as well.

Those who want to claim that it is a lack of initiative or a moral failing that the poor don't get ahead are just part of the long line of Ayn Rand adherents who lack both compassion and understanding of the real world.

Much of the present dilemma has been caused by such people ending up in positions of power, like Greenspan and Milton Friedman. They will be remembered by history along with other madmen who destroyed their own societies because of blind adherence to faulty ideology.

[Icarus]

A key component of creating savings is to live a life one can afford. People have low paying jobs, and choose to start a family...and then, wonder why they never save, or move up the wage ladder. It's ridiculous.

Even if you begin at $8-10/hour, there is a path towards moving up the wage ladder, toward financial security, and developing savings. The key is to not live a life you can't afford.

Americans consume too much, eat too much, have children they can't afford, buy cars too frequently, and hence live in an obsesity inflicted debt economy...and then wonder why things aren't peachy. Sad.

[Patricia Shannon]

rdf, quite so.

[realpc]

"Free time and an easy prime of life is every bit as nice as you imagine but you don't get them by toiling for appreciation or usefully striving to get used. Other-directed needs like those you attribute to work are almost always associated with other-directed spending."

It isn't common sense, it's total baloney. Or else he has no idea what I was saying. If you want to make money, you must do something society wants, and hopefully something you like doing. You cannot save money if you don't make any. And LOTS of people who have successful careers save money. Probably most. You are living in some alternate universe.

Yes Americans do a lot of status spending. I don't, personally. But smart Americans also save for emergencies and/or retirement. Smith's wonderfully contented poor guy was in big trouble if he ever got sick.

And I have no idea what morloc's point is, other than to despise working Americans.

[Patricia Shannon]

Reading it again, I wonder if Morloc is making the correct point that those who are able to get rich are those who are totally focused on themselves and on making money. "Other-directed needs like those you attribute to work are almost always associated with other-directed spending." Other-directed spending, that's what you do when you spend money on your family and give to charity. The people who cause the current financial crisis didn't get rich by creating something of value, but by gimmicks or fraud. They got big bonuses while bankrupting their companies. Maybe Morloc is being sarcastic in a way that is too subtle for us to realize at first.

[realpc]

You don't have to be selfish and crooked to be successful, Patricia. Yes, lots of rich people are crooks, but lots of poor people are also. And lots of successful people are responsible and honest.

And that is not what morloc meant by "other directed spending." He mending buying luxuries to impress others.

I don't know what his point was, and I don't think it was anything subtle. He's just expressing the idea that all of us who work are a bunch of idiots, while he is a great genius. You can believe him, without evidence, or not.

[Patricia Shannon]

http://www.sciencedaily.com/releases/2008/12/081215121603.htm

ScienceDaily (Dec. 15, 2008) — New studies from Tel Aviv University suggest that waiting until a man can give his son “all the advantages” may have a disadvantage, too.

Tel Aviv University researchers found in several consecutive studies that older dads are more likely to have boys with autism and lower IQs. Most recently, they found that the older a father’s age, the greater the chance that his son will display poor social abilities as a teen.
...
“There is a growing body of data showing that an advanced age of parents puts their kids at risk for various illnesses,” says Dr. Weiser. “Some illnesses, such as schizophrenia, appear to be more common the older parents get.
...
He also suggests that older men shouldn’t change their minds about having children since the statistical risk is relatively minor. “The effects of a father’s age on the health of his son are quite small, and many of the most dramatic effects in this study are driven by dads in their 50s,” says Dr. Weiser. “The difference in risk between someone who is 35 or 45 is so small that it’s irrelevant.”

[Patricia Shannon]

Older paternal, not just older maternal, age is also associated with Down's syndrome in the offspring.
Kind of a Catch-22, that if you are a responsible person who puts off having children until you are more mature, you increase your chances of having a child with severe problems.

http://www.sciencedaily.com/releases/2008/09/080901205719.htm

ScienceDaily (Sep. 1, 2008) — Older age among fathers may be associated with an increased risk for bipolar disorder in their offspring, according to a new report.

Bipolar disorder is a common, severe mood disorder involving episodes of mania and depression, according to background information in the article. Other than a family history of psychotic disorders, few risk factors for the condition have been identified. Older paternal age has previously been associated with a higher risk of complex neurodevelopmental disorders, including schizophrenia and autism.

Emma M. Frans, M.Med.Sc., of the Karolinska Institutet, Stockholm, Sweden, and colleagues identified 13,428 patients in Swedish registers with a diagnosis of bipolar disorder. For each one, they randomly selected from the registers five controls who were the same sex and born the same year but did not have bipolar disorder.

When comparing the two groups, the older an individual's father, the more likely he or she was to have bipolar disorder. After adjusting for the age of the mother, participants with fathers older than 29 years had an increased risk. "After controlling for parity [number of children], maternal age, socioeconomic status and family history of psychotic disorders, the offspring of men 55 years and older were 1.37 times more likely to be diagnosed as having bipolar disorder than the offspring of men aged 20 to 24 years," the authors write.

The offspring of older mothers also had an increased risk, but it was less pronounced than the paternal effect, the authors note. For early-onset bipolar disorder (diagnosed before age 20), the effect of the father's age was much stronger and there was no association with the mother's age.

"Personality of older fathers has been suggested to explain the association between mental disorders and advancing paternal age," the authors write. "However, the mental disorders associated with increasing paternal age are under considerable genetic influence." Therefore, there may be a genetic link between advancing age of the father and bipolar and other disorders in offspring.

"As men age, successive germ cell replications occur, and de novo [new, not passed from parent to offspring] mutations accumulate monotonously as a result of DNA copy errors," the authors continue. "Women are born with their full supply of eggs that have gone through only 23 replications, a number that does not change as they age. Therefore, DNA copy errors should not increase in number with maternal age. Consistent with this notion, we found smaller effects of increased maternal age on the risk of bipolar disorder in the offspring."

[Merry-will-go-round]

robertdfeinman - Well put points, however, history will be rewritten to suit the victors.

[Icarus]

Patricia,

But, the article seems to say that the odds are statistically insignificant.

Let me ask you this...don't you think people should wait till they're financially secure, with some capacity to save, and an actual "career" instead of just a 'job'?

I say this because I just don't believe that any sequence of social programs, or government policies can make up for 'bad parents'...and by 'bad parents' I mean people who have children they can't discipline/love. If you're too busy working to raise your kids, can you then be surprised that they don't compete well? If you don't have money to pay for activities children need to grow, can you then be surprised they don't compete well?

[anon/portly]

Brad Delong, 12/19/08: "I hesitate to disagree with Alan Greenspan—by my count, I have been wrong seven out of the ten times that I have, in my mind, had significant disagreements with his policies over the past quarter century."

Robert Feinman, 12/23/08: "Greenspan ... will be remembered by history along with other madmen who destroyed their own societies because of blind adherence to faulty ideology."

[cm]

Icarus: A large portion of the ingenuity, leadership, and vision are contributed by the hired help (white as well as blue collar). That not everybody, or perhaps just a minority, is capable or inclined to provide them does not mean they must come from the upper echelons. And managers at any level have largely operational roles, their job is not to innovate, otherwise they wouldn't be called managers. That proprietors or upper management are the originators of vision or ingenuity is mostly true in startups, where those people are often the founders. It is not characteristic of most enterprises.

[Real Person from the Real World]

One problem I don't see, is who defines the word "RICH." You have people making $100k a year, who consider themselves plain ordinary middle class, never mind those struggling to exist on $23k or less per year. It's great to go finger wagging, when you don't think it is you that deserves the lecture. No doubt about it, some financial people loved the money and knew they were raking it in, but that was just the extreme end of the spectrum. And why is it that it is assumed, that money lured people away from work that would receive social approval? I've heard the same thing, that somehow, we are going to lure some future banker or bio-geneticist away from those careers into being teachers, by throwing money at them? And yet, how many HR and financial ads focus on working "your passion." Seems to me, if you are going for an ordinary job, you are expected to ignore money, and go for "passion" while if you are a rock-star tech or biz guy, the proof is that you are paid 100+ times better than anyone else on the planet. Stop moralizing, and let's just regulate things so that those of us on the bottom of the totem pole have enough to live, and if we work hard, we get rewarded, and meanwhile, keep an eye on regulation, to slow too fast too much accumulation by those at the top end.

[Icarus]

CM,

I work as a director in a consulting company, and often hire/fire the managerial caste we're speaking of. They don't come from the aristocracy. They are often lower middle class bred students/workers who have simply managed their professional track.

As long as you obtain a decent education, refrain from committing felonies, and learn to communicate effectively, you're the right material for such positions. Is that so much to ask?

They don't come from a uber-privilged background...I'm not sure why you'd argue they do.

[Icarus]

Real Person,

The reason 'ordinary jobs' have 'ordinary salaries' is because they require 'ordinary people', who usually can be easily replaced.

Those making 100x that salary do so after a process of intense competition. That doesn't happen with teachers. To be a Hedge Fund Manager, or an investment banker at a Goldman Sachs, you probably went to a top 10 university, a top 5 graduate program, and were a top performer in a world of sharks. It is this competitive landscape which leads to such immense salaries.

As far as I understand, to be a teacher, you need a relatively remedial education, a bit of patience, and a desire to work. Nothing more. I know we vault the "ordinary worker"...but, the reason they toil in lower middle class existence is due to their inability to offer the market a very scarce skill.

I know, I know...you're gonna rant about how your employer is screwing you, and how you're really worth a lot more than you're being paid, and how you have a master's degree. But, the bottom line is that you're not going out and attracting the wage you want. And, there's a reason. Either you're not the worker you imagine yourself as, or, you've just picked a skill set with little value. In either case, the impetus is on you to change. If you don't, you deserve the $23k that you're worth, and earning.

[cm]

Icarus: You're changing the topic. Let me summarize the key points of our debate, with only little paraphrase:

You - vulgar labor theory of value; ingenuity/vision/leadership come from ownership and techno-managerial elite

Me - ingenuity/vision/leadership come mostly from the hired help, not from the ownership or upper mgmt

You - Mgmt does not come from a privileged background. I have not been arguing this!

What I have argued is that your model of an upper crust passing down the designed wisdom plus a commodity fulfillment force is likewise far too crude. That many companies are organized like this because the upper echelons of management and technical functions would like to have it so is no proof. Often top-down managed organizations are dysfunctional, except when it's all about execution of the same already figured out principles, in which case I question the significance of "ingenuity" and "vision".

But you probably know that. After all, you are making a nice living out of those dysfunctions. And are you not contradicting yourself, with your statement that you hire/fire the managerial caste (maybe those that you hire/fire are not members of that elite you are talking about)?

[cm]

Icarus: On "ordinary" and "scarce" skills -- the reason that many cannot move ahead, aside from obviously lack of ability and willingness to step up to the plate (which always have been and always will be factors), is that the labor structure in most professions, and in the aggregate, is roughly pyramid-shaped.

There is not enough need for "higher skilled" workers to make use of everybody's prospective skills. There is not even enough paying demand for all those "base" jobs needed to execute the vision dispensed by "higher skilled" designers or managers.

In most industries we have been experiencing consolidation, and overall not much of the growth that creates demand for new or enhanced skill sets.

Unless you believe that everybody can win in Musical Chairs by making more effort or getting better skills, what you are recommending is a relatively overskilled workforce for job consolidation -- of several job function into fewer. I can imagine why you would do that.

[Icarus]

CM,

On one level, you're quite right. I'm not prescribing a path, or argument, in which everyone could be successful. Life is a pyramid, in many ways, and our only hope is to eleveate the lower layers into a humane living. Other than that, we should embrace the pyramid, and seek more elevated heights. Perhaps this is pure elitism.

What I am saying is that a B- student, who is a non-felon, can 'make it' in the US, without too much trouble. A dumb-ass can become an accountant or a lawyer. Most of our vaulted professions don't require brains...they just require a bit of day to day discipline, and a plan. Of course, the competition begins when you want that 6 figure income, and only a small % of any profession pays that. That's why we have elite schools, or risky entrepreneurial spirit.

This 'ease' is what makes many immigrant communities succeed, with a smile. This is especially true with Asian immigration into the US over the past 20 years. Some of our elite schools now have 50% asian populations. Why? Well, even with financial hardship, and structural discrimination, one can raise the next generation of leaders with discipline/love, and a plan. We see it happening all over.

Why haven't white/black americans done the same? I'm serious. The question may sound racist, but, we need to ask such difficult questions. Is it the breakdown of the family? Is it obesity and the culture of television? Is it the uber-consumption which prevents some of them from restraining from current utility for future gain?

[cm]

Icarus: Some previously-minority or previously-marginalized groups have a strong sense of community and internal networking that they brought from their places of origin, where they needed it too to survive or attain success. They can generally be described as diasporas of common ethnic, cultural, or religious background. The broader local population in any coutry typically lacks that. In my experience, this community formation and networking is not very strong among European immigrants who don't bring it from home.

As for Asians (not just people from the Far East) in US higher ed, many of those have been on grant money or are from better to do families who can afford to send their kids to the US -- it's mostly the counterpart to the better to do US families who can send their kids to first-rate colleges. They go to US institutions because of the renown that those institutions command, the value that a US education (and business "experience") confers on them outside the US, and of course the prospect of building a prime career and livelihood in the US. As for the "smile", I have never seen that, but I anyway take it metaphorically.

Where I live, "Asians" that I estimate to be first generation immigrants seem to be either in tech (recent young, college educated), retail and commodity/business services targeted at their own ethnic/language community and also the local public (immigrants prior to tech), and of course to an extent "everything else". With "Asians" of subsequent generations who grow up in the US, including those coming to the US as small kids and effectively growing up in the US culture too, this strong ethnic attachment seems to diminish, they effectively become "Americans" and pursue all kinds of careers including government functions and blue collar professions.

In tech (and I suspect other professions too), one thing that cannot escape anybody's notice is that the market for labor and business collaboration works largely on networking and referral. Tech companies or their divisions are often dominated by some "minority" group, as in any referral system people bring in their own associates (by definition). In cases this goes so far that people outside the dominant group who are not "culturally compatible" with their ways will have difficulty finding success and advancement, and/or will leave (perhaps preferring another group more closely matching their own background). I don't mean to suggest any specific impropriety, this is just how such a system will work anywhere.

On a broader note, the US has so far been able to attract the educated elite from everywhere with good prospects of "opportunity", a significant element being availability of easy funding for all kinds of projects in US business and academia. We'll see how this works going forward with the credit crunch and financial meltdown. I suspect that "moral hazard" of always being able to bring foreign talent "to the rescue" was a substantial ingredient in the lack of making quality science/tech education and vocational programs available to the broad public. Many can simply not afford the existing programs, neither with their income nor with the level of debt available to them.

[cm]

And BTW, I have heard from quite a few "Asian" families (typically first-generation immigrant parents, with US-born or schooled kids) who meet the same challenges as "lazy Americans" -- lacking academic achievement for junior, affordability of prime higher ed, no jobs for those graduating into a sluggish/crashing economy, and for junior and senior, job loss or having to take jobs below their credential level. It's already going on for a while.

[calmo]

Merry Xmas to you and yours, cm and thank you for the lengthy post on your and Icarus's (which I am trying to untangle) views of the hi-tech employment sector.
If there is one sector that has had the lion's share of business investment, it is hi tech, yes? Sorta...not obvious lately...ok, at one time, now past.
Industry leader MSFT started funneling profits back into share buy-backs more than a year ago...tellin not only savvy MSFT shareholders but the industry and economy, the real score: business had no confidence in plant expansion.
Anso I suspect this contraction of business investment to continue wrt foreign nationals on work visas, if left to industry and not government subsidized programs...and hope this does not impinge on you in any harmful way.
Last thing:We'll see how this works going forward with the credit crunch and financial meltdown. I suspect that "moral hazard" of always being able to bring foreign talent "to the rescue" was a substantial ingredient in the lack of making quality science/tech education and vocational programs available to the broad public. The moral hazard --the acquisition of talent from abroad...depleting those country's brains, and fostering a second-rate domestic population that learns it doesn't have to do the math or..anything too strenuous...(thereby executing the hazard: reinforcing the weakness --the need for offshore talent)...is a moral hazard for the public, domestic and foreign, yes? The companies that do the acquisitions profit and, though you might argue the consumer benefits from lower prices, these are short term benefits on an eroding consumer base, yes? The company on the other hand suffers no loss filing for bk in the worst scenario and transitions to the next moral hazard opportunity.
The things about "moral hazard" I miss...

[cm]

calmo: Merry Xmas to you too. I already have my GC (no longer a visa worker), but thanks for the concern.

As for moral hazard, I meant it is one for whoever is in need of "talent" -- why invest in building your own when foreign talent walks in your door? But even with the lure of "opportunity" possibly declining, opportunity is always relative -- when opportunities (of your liking) are few and far between where you live, that meager opportunity elsewhere may look quite good.

I don't know about that supposedly second-rate population, but if individuals are expected to pony up from their own pocket for every bit of their vocational training (in proportion to the supposed earnings potential of the credential), I wouldn't hold out much hope for everybody getting super credentials.

[Real Person from the Real World]

Somebody in one of these threads mentioned the book, NICKEL AND DIMED: A journalist goes undercover to look at life doing the lowest paid jobs in the US. Some of those who work at WalMart cannot afford to buy a shirt there. And how do people pay for food and lodging on some of these salaries? What about latinos? All you ever hear is ranting about how they take jobs or use emergency rooms. What jobs? Dangerous ones cutting meat? Drudge work mowing all these nice suburban lawns? Working as maids? It's time we started looking at insisting employers pay a livable wage, and do things to keep jobs here in the US. Those who make 5 to 10 times what these people earn need to give up more of their earnings, so government can provide a safety net, and fix the infrastructure. Less emphasis on PASSION for a job, and more emphasis on fair pay, for those of us not in the kinds of jobs where cronies approve stratospheric salaries and highway robbery of consumers and customers is biz as usual.

[evagrius]

Perhaps the prolem is in the very title of the article; The Pursuit of Wealth.

Somehow, somewhen, it was decided that wealth, in itself, was the primary goal of work or labor.

This is in direct contradiction to the former, "traditional", view of work/labor.

The purpose of work/ labor is the acquisition and exercise of the virtues. Through work, one learns patience, steadiness, charity, etc;etc; because that is the only way to actually perform the work/labor required.

Wealth is a side product but the main acquisition is virtue.

Which is why wealthy people are considered to be more virtous than the poor.

What's happened is that the acquisition of the virtues has been relegated to the side, a mere attachment, appendage, an appendix.

Which is why someone like Madoff, ( and many other characters on Wall Street and Main Street), was adulated. Somehow, his ability to create wealth was equated with moral virtue.

Hard work, in itself, is just hard work. But if it is linked to the exercise of the virtues, it does result in creating, not wealth, but a full human being. But it's not work to exhaustion, physical and psychological.

The need for contemplation, leisure, in which one refreshes the spirit in preparation for work, is drastically needed. Not leisure as entertainment, but leisure as contemplation.

The acquisition of wealth in itself leads to eventual impoverishment.

We're seeing this now.

[Julio]

Icarus, CM:

Thanks for your thoughts and a fine example of how discussion can be conducted despite differing values and assumptions.

[cm]

Real Person: I'm all for living wages, but that will not help with under the table employment and bottom feeders taking advantage of desperate illegals. Abusive job arrangements fall in roughly two categories -- employers being able to bend the rules because of workforce oversupply (where better rules and enforcement will help, at least those who have a job), and discretionary jobs that will only exist at a low price point (perhaps below legal wages), mostly private or business services that are easily substituted or reduced in volume (or domestic volume). For the latter category, the only thing that will help is a beefed up safety net or state employment programs. In places that have a good safety net the latter sector is often not very well developed, or is populated with illegal employment but at wages set by safety net benefits.

[Icarus]

Real Person/CM,

Fair Wage? What is this? This sounds like a world of central planners and socialist property relations.

What is fair? Can you determine a number? Let's say you do...$20/hour? What you're essentially saying is that 2 parties are not free to contract a job for $19/hour. Is this the type of world you'd want? You want to set a floor, which amounts to a 'livable" wage, and tell everyone they can't agree to work for less?

And, what exactly is a living wage? Do I owe someone a wage which supports a family? 4 people? 3 people? Or, do I owe someone a wage which only supports that person? Who gets to 'live' off the wage I offer as an employer? Do we set limits?

The idea of a living wage is too problematic to legislate...and, it really curbs the freedom of economic actors.

What is more important is that people earn their market wage, and pay market prices for the goods they wish to purchase. And, in that environment, it is their responsibility to live within their means. It may be that you don't earn enough to raise a family. While that's sad, it's fair. You don't have a 'right' to have a family. You simply have a right to not be obstructed.

[cm]

Icarus: I didn't use the word "fair" in my comment, but as you are asking, what is considered "fair" is always a matter of social convention. The question is what convention is established as the mainstream at a given time and by whom. Clearly, you are talking from a position where you are the price maker and others are price takers. You can consider that fair, but others can disagree.

[Real Person from the Real World]

I read you Robert, and I say AMEN to your remarks.

[Real Person from the Real World]

Robert - excellent post.

[Real Person from the Real World]

CM you make excellent points, all wasted on Icarus. My remarks on Robert Feldman were for another post. My problem is an old slow system, that is far too obsolete.

[Icarus]

Real Person...need you resort to such childish comments. I value CM's posts, and others who will engage in debate. There is a philosophical battle between variations of social democracy, and it's conceptual other, neo-liberal freedom. Both have salient arguments, and both have great strengths and weaknesses.
To work through them is an importannt part of civic discourse. Your comments spit on that spirit of banter and debate.

[Icarus]

CM...

Price Making and Price Taking have been ever complicated with the advent of true supply chain globalization, wouldn't you say?

Will locations compete, incessantly, for capital? How will they develop and market competitive advantage in production? How will legislation, topography, rule of law, educational infrastructure...all conspire to create a hospitable location for labor/capital?

Isn't this the coming battle for this century? With 7 billion players in this game, the stakes are truly fascinating. Will 'Middle Classes' rise and fall due to shifts in the location of labor/capital? Will 'diaspora' come to mean something much more nimble than the trappings of a nation state? How will we secure our future generation's welfare? Is the state the arbiter of this?

The motion of peoples, the replication of production, intellectual property, and a host of other global topics are horribly difficult to predict. But we know a few things...

- US Hegemony is likely on the decline.
- Income inequality will rise, as long as there is continued population increase.
- Nuclear detterence will change the face of politics in the coming decades. Soon, nations such as Iran, Palestine, and other 'rogue' states will achieve nuclear capabilities, and that will change the bargaining table.
- A cyber-erotic world will arise, perhaps destroying classical notions of class consciousness.
- The Cubs will win a world series
- We will fit an entire glacier in a museum, caus that's what humans do.
- We will move closer to a true concept of a world court.

[Phillip Huggan]

"Even if you begin at $8-10/hour, there is a path towards moving up the wage ladder, toward financial security, and developing savings. The key is to not live a life you can't afford."

Even a prisoner who works for 65 cents/hr has a torturous path to financial security. It's called a winning lottery ticket. A living wage should be enough to allow one to save for retraining in one's desired career path. Taxing finance and oil industry 6+ figure salaries and pooling the procedes to pay for living-wage earner's education is the most efficient outcome of this thread topic.
Icarus, you are taking observations of managerial (power is stress relieving) white collar workers netting $50000+/yr and misapplying them to service staff (powerlessness is stressful) and manual labourers (dangerous but no hazard pay) netting $5000-$15000/yr. The only people who should earn a 7 figure salary are those who create new industrial processes or those who discover medical breakthroughs. This is a very small subset of the set of wealthy people that is being defended here.

[Icarus]

Philip Huggan,

So, how much does someone like Steve Jobs deserve? The market clearly thinks his leadership is worth billions. What is fair compensation for someone who creates so much value?

[cm]

Icarus: Apparently some people here think that "the market" is not a suitable mechanism to determine "fair" compensation, as market prices are determined more by power leverage and negotiating position (including supply/demand and urgency to sell or buy) than by whatever "value" being attributed to the goods sold.

There are already many "distortions" from the "free" market principle, the fewest of which are in favor of those who actually create the wealth. Most are in favor of gatekeepers and those who can leverage others' work and collect some kind of rent.

Of course, you know all that.

[Lafayette]

Wrong question

Ic: how much does someone like Steve Jobs deserve? The market clearly thinks his leadership is worth billions. What is fair compensation for someone who creates so much value?

He deserves to earn all that he can. The question remains nonetheless "Of his earnings, what does he deserve to keep?"

I keep referring you to the Gini-index, Ic, but you refuse to debate the question of "income equity", which is related to income fairness. Obviously, because you believe the sky's the limit as regards corporate earnings.

First, no one needs all that money. So the social utility of having it is nill.

Second, they haven't the foggiest notion what to do with it all (so they give it away like Gates/Buffet).

Third, it is a anachronism that they are able to earn that much, because it is not the market that determines their earnings but the company Compensation Committee -- which consists of who? You betcha: Other corporate heads who are trying to maximize their own earnings. This is Crony Management (aka Corporate Cupidity).

Executive earnings have little to do with "merit" and a lot to do with manipulating a backward compensation system. Steve Jobs has made a number of very good decisions, but the wealth generated by Apple requires a great many other people as well. Worse, Wall Street investment bankers who are simply feeding at the trough because of an under-regulated capitalist system that allows them to do so.

Better that the superfluous amount be taxed away and spent on better purposes -- like a world-class health care or university education that does not cost and arm and a leg. More so, it is available to one and all, not just some individual who knows how to work the corporate mechanism. And, the Lord knows, there are plenty of 'em.

What's more - you know it ... but wont admit it.

[Would never tell]

Compliments for this issue being brought up.

I am not an economist, so I don’t know if this is ridiculous, but can people that have extra savings volunteer to offer it up as a new kind of investment? I will gladly invest 20% of my savings into a private venture capital project to get lending going again if it will save us from ruin.

Can there be a drive, marketing, and advertising for such a thing to happen? I want my kids to grow up in a safe and healthy society. The return is a qualitative incentive that goes beyond any material self interest. I don’t want my kids, grandkids and their grandkids to pay for all the debt that is being generated. I am scared seeing social disorder break out.

The best and the brightest could head it up. No government, no red tape, no greedy bankers, just people trying to save our nation and perhaps the world. Foolish..never work? What the hell do I know?

I’m just nauseated watching this crap happen to people.