Ultimately, businesses offer poor compensation because they can get away with it and society has designed the economic model to support this. The economic model does not reward work, but rather ownership of assets, and this principle exists throughout every nation. It's a society modelled around protectionism of wealth, where the wealthy can hand wealth down to their children.
In the United Kingdom, a third of people claiming government assistance are in employment. Over 50% of those buying their first home get gifted money from their parents to do so. Starting from nothing means playing a rigged game. It's like playing Monopoly, where one player starts out with half of the cards and everyone else thinks they can win if they strategise well enough.
Many core economic theories that are taught about productivity and pay are wrong. Anyone living in the real world can see that marginal productivity and price theory are wrong. If the game was perfectly fair, these theories may have some weight, however there's a multitude of factors that skew the board. Poor compensation does have consequences, and they may be felt by individual businesses. However, by and large, these consequences are offloaded on to the rest of society.
One correction: if no more value can be produced organically, this doesn’t mean that society will stale and money is hoarded among a few families.
Rather, the powerful will turn on each other and start waging war eventually, and the expendable bodies used in that is everyone else.
Neither of you mention creativity. The article too gives the impression that the world is made out of work (like turning a treadmill), and assets (inherently unfair). The point of it all is apparently to live, like a sessile sponge in the ocean, hence "living wage".
> Now at some point, the humans involved in handing out currency decided that too many people were living too nicely.
The origins of currency are mysterious. There were certainly some number of kings and tribal chiefs who minted coins and handed them out, mostly I think to soldiers. There were also traders using whatever coins and other small valuable objects. But I don't think anybody decided anything, except when messing around with taxes. I suppose company scrip comes closest to this vision, where your lack of money is determined by the mastermind who also creates it and hands it out and decides everybody's roles. That or communism. Generally no, it's not a rigged game, it's a messy brawl.
The core foundation of society is built around work. We trade our time, skills and attention for a pay check that allows us to sustain ourselves, our families, and that we can use as a means to achieve our goals. The key problem is that society devalues this work year after year, as those with assets are rewarded simply for holding a legal deed. Creativity can get you far when you have nothing, but there is a limit as to what it can achieve.
I disagree with the commenter that your replied to directly, who seems to believe the world is a zero-sum game. However it's also naive to believe that the game is not rigged, and that those who complain simply lack creativity.
In a healthy society, choosing to work to serve others 40 hours a week, should afford you the ability to acquire enough capital to buy a small house and start a family after 10 years. Unfortunately, this is now unachievable in many parts of the world.
>In a healthy society, choosing to work to serve others 40 hours a week, should afford you the ability to acquire enough capital to buy a small house and start a family after 10 years. Unfortunately, this is now unachievable in many parts of the world
I'm not necessarily disagreeing with you, but you seem to leap from "it is hard to buy a house these days" to "this is the fault of people accruing capital".
I'm trying to understand this leap. I think you mean that generational wealth means some people start with all the cards, and their buying power decides what house prices are?
The core theories aren’t necessarily wrong, I would say they are misapplied and misused to justify political stances. The science of economics does attempt to take in account as many factors as possible but that’s not the versions of the theories you will see discussed outside of the academic world because that becomes really complexe quickly and doesn’t paint a clear picture when we are looking for simple decisions. Just, don’t throw the baby, yada yada
Find a review of Dan Davies' The Unaccountability Machine and see what you think. I think that short term shareholder value may not be a good control variable given the state of the systems we navigate.
I mean, sure, I do agree with that statement, shareholder value is a pretty terrible metric. Will check your recommendation when I have the time
The core theories of economics seem correct, and in fact predict the current situation if used correctly. The problem is that the game has been systemicaly rigged. Employers have maximimized their legal leverage, while crushing all employee and subcontractor leverage. The central banks favors (and often rigs) the metrics that favor the rich (GDP, U3, CPI, etc), and ignore alteratives that favor labour. The government designs tax policy to favor integenerational wealth, and capital accumulation over income.
The new deal in America roughly got things correct, and was followed by the greatest expansion of the middle class in history. What we're suffering from today is the systematic destruction of that social contract.
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