Democrat and former Hillary supporter, Lady Lynn Forester de Rothschild, rejected Barack Obama, the class warfare elitist, to offer sincere support for John McCain. Her intelligent and well explained decision turned heads.
One of those heads belonged to none less than CNN's Campbell Brown. Brown determined to take Rothschild to task. In an exercize of utter futility, Brown used her "unbiased" news reporter platform in attempt to confound Rothschild's impeccable logic.
Watch how Campbell herself can only resort to ad hominem attacks, using the labels like "bitter" in effort to support her obvious disdain for Lady Rothschild's conclusions that Barack Obama, and current democrat political posers, attempt to foster class warfare in America. This is their only hope to remain electable.
The piece is titled, "Lady Lynn Forester de Rothschild gets schooled on CNN" but this title is just another example of pure political posturing. Watch this piece yourself and you'll see that it was actually Brown who "got schooled."
As I have written, and Lady Rothschild has supported in this interview, there can be no benefit to the American Ideal or prosperity to be gained dividing social and economic classes.
In my post from Sunday October 5, 2008, Capitalism's Potential for Income Inequality: Scourge or Benefit, I wrote about the problem Obama and Campbell believe Democrat policies will improve, that is the problem of increasing income inequality.
You can see that elitism and class warfare as practiced by Obama and Democrats are actually the forces that feed the very problem they "claim" they want to address. This is pure myth because they have no intention of producing a solution. By improving the incomes of their "so called" lower class effectively, they would erode the very voting block they depend on to hold on to the power they really want.
Recognizing individual productivity and the delivery of value as the key to improved income will eliminate the "need" for government programs to protect underproductive and potentially unnecessary workers. It would foster a productivity revolution which would undermine the income redistribution principles upon which Democrat platforms are founded.
Democrats themselves would be forced to resort to productive ideas and policies. Their productive constituency would require it.
Sounds like a timely idea.
CJ Coolidge is a regular contributor to HRTools.com.
Get your own copy of his groundbreaking book, The Squaredime Letters.
Visit CJ online at www.cjcoolidge.com.
Showing posts with label income inequality. Show all posts
Showing posts with label income inequality. Show all posts
Tuesday, October 14, 2008
Monday, October 6, 2008
Income Inequality: Corrected Through Understanding the Concept of Value
(This is the 4th installment in a series of articles about the problems associated with government's attempts to ignore free market principles in a free market world ecomony.)
Misunderstanding the Concept of Value.
What is the real force behind the problem we associate with the inequality of riches? It is, simply, the lack of universal understanding of value. We don't understand what it is, and we don't understand how to create it.
Value is simply, and only, the realization of a greater benefit than the resource expended to secure it. It is the enhanced well being of one realized from the contribution of another.
Value, in economic terms, has the mystical ability to be realized on both sides of a transaction. In fact, in an appropriately negotiated transaction, both parties will gain value, both will be benefitted. A transaction with only one beneficiary is simply theft. To be willing to buy the services of another for a price, I will realize that the benefit I gain is worth more to me than the money I give to secure the service. The service provider will realize that the money he receives is worth more than the time, effort, or material he expends to deliver. Such transactions are accomplished in the free market every day. Give and take. Value given, value realized, value returned.
The Higher the Value Realized, the Higher the Value Given - The More it's Worth, the More you Pay.
Why does Lebron James receive $19MM in endorsements before his 20th birthday? Because the companies making the offer will receive more than $19MM in benefit for what Lebron provides. Does he deserve it? Yes, once you understand the principle of value. If a major league baseball team can earn $50MM in enhanced profitability by obtaining the services of a gifted athlete, why wouldn't it be willing to invest $20MM to get him? Without making that investment, they miss the $30MM differential. To make the decision to not buy the players services would cost the franchise, and be a poor decision. Is the athlete overpaid? Not unless you don't understand value.
The same holds true, even for a commodity. Oil is a commodity. OPEC may control the price of oil, but their controls are only as strong as the value that oil has in the market to which they sell it. Their prices will only stand if someone else is willing to pay what they ask. And, in the case of oil, until the price of the resource exceeds the value produced by using it, the price can rise. It's as simple as that.
Value Has Nothing to do With the Product, the Service, or the Time Itself.
Some would argue that professional athletes are "overpaid." Here's the reason that the issue is an issue at all. We have erroneously determined to quantify the appropriate wage based on the actual task being done, not on the value of the impact of that task upon a particular company in a particular market. We have assessed a wage based on some assigned value of time, not on real value delivered.
After learning that Roger Clemens would be paid $18MM for pitching 1/2 a season, we make activity based value assessments. He might pitch in 20 games. He might throw 100 pitches per outing. That's only 2000 pitches. In activity terms, we might say Roger Clemens would be paid more than $9,000 per pitch.
If this bothers you, you must realize that you don't understand value at all.
Roger Clemens may have pitched, but he isn't paid just to pitch. He is paid to improve the conditions for the franchise willing to pay him. He is paid to be Roger, and to give the team whatever things come from his participation. Roger Clemens fills seats. People come to see Roger pitch. That accounts for something. Roger Clemens helps the team win. He helps less experienced pitchers. He brings a championship mentality to the team culture. These help the team win games. This fills seats, sells beer and hotdogs, advertizing, and on and on. Roger's employment is a value creator for a sports franchise.
It's the same for all professional athletes, for actors, for musicians, for lawyers, for producers, for business builders. Each of these gains substantial financial rewards which are always less than the value they contribute to their employer or the direct customers they serve.
This bears repeating: The financial reward realized, a workers compensation must always be less than the value they contribute to their employer or the direct customers they serve. Always.
Why is Your Compensation so Small? Why is Anyone's?
So what about all the other, little people? What about the "increasing" gap between the "haves" and the "have-nots"? Shouldn't this be adjusted? I won't argue the point. It would be a tremendous benefit to all of us to bring up the individual standard of living for all of us. And, I believe, it can be done. . . but not as long as we continue to misunderstand and misrepresent the concept of value.
We are our own enemy in this effort. We continue to create and maintain the very vehicle which proliferates the problem.
CJ Coolidge is a regular contributor to HRTools.com.
You can now get your own copy of his groundbreaking book, The Squaredime Letters.
You can vist CJ online at www.cjcoolidge.com.
Misunderstanding the Concept of Value.
What is the real force behind the problem we associate with the inequality of riches? It is, simply, the lack of universal understanding of value. We don't understand what it is, and we don't understand how to create it.
Value is simply, and only, the realization of a greater benefit than the resource expended to secure it. It is the enhanced well being of one realized from the contribution of another.
Value, in economic terms, has the mystical ability to be realized on both sides of a transaction. In fact, in an appropriately negotiated transaction, both parties will gain value, both will be benefitted. A transaction with only one beneficiary is simply theft. To be willing to buy the services of another for a price, I will realize that the benefit I gain is worth more to me than the money I give to secure the service. The service provider will realize that the money he receives is worth more than the time, effort, or material he expends to deliver. Such transactions are accomplished in the free market every day. Give and take. Value given, value realized, value returned.
The Higher the Value Realized, the Higher the Value Given - The More it's Worth, the More you Pay.
Why does Lebron James receive $19MM in endorsements before his 20th birthday? Because the companies making the offer will receive more than $19MM in benefit for what Lebron provides. Does he deserve it? Yes, once you understand the principle of value. If a major league baseball team can earn $50MM in enhanced profitability by obtaining the services of a gifted athlete, why wouldn't it be willing to invest $20MM to get him? Without making that investment, they miss the $30MM differential. To make the decision to not buy the players services would cost the franchise, and be a poor decision. Is the athlete overpaid? Not unless you don't understand value.
The same holds true, even for a commodity. Oil is a commodity. OPEC may control the price of oil, but their controls are only as strong as the value that oil has in the market to which they sell it. Their prices will only stand if someone else is willing to pay what they ask. And, in the case of oil, until the price of the resource exceeds the value produced by using it, the price can rise. It's as simple as that.
Value Has Nothing to do With the Product, the Service, or the Time Itself.
Some would argue that professional athletes are "overpaid." Here's the reason that the issue is an issue at all. We have erroneously determined to quantify the appropriate wage based on the actual task being done, not on the value of the impact of that task upon a particular company in a particular market. We have assessed a wage based on some assigned value of time, not on real value delivered.
After learning that Roger Clemens would be paid $18MM for pitching 1/2 a season, we make activity based value assessments. He might pitch in 20 games. He might throw 100 pitches per outing. That's only 2000 pitches. In activity terms, we might say Roger Clemens would be paid more than $9,000 per pitch.
If this bothers you, you must realize that you don't understand value at all.
Roger Clemens may have pitched, but he isn't paid just to pitch. He is paid to improve the conditions for the franchise willing to pay him. He is paid to be Roger, and to give the team whatever things come from his participation. Roger Clemens fills seats. People come to see Roger pitch. That accounts for something. Roger Clemens helps the team win. He helps less experienced pitchers. He brings a championship mentality to the team culture. These help the team win games. This fills seats, sells beer and hotdogs, advertizing, and on and on. Roger's employment is a value creator for a sports franchise.
It's the same for all professional athletes, for actors, for musicians, for lawyers, for producers, for business builders. Each of these gains substantial financial rewards which are always less than the value they contribute to their employer or the direct customers they serve.
This bears repeating: The financial reward realized, a workers compensation must always be less than the value they contribute to their employer or the direct customers they serve. Always.
Why is Your Compensation so Small? Why is Anyone's?
So what about all the other, little people? What about the "increasing" gap between the "haves" and the "have-nots"? Shouldn't this be adjusted? I won't argue the point. It would be a tremendous benefit to all of us to bring up the individual standard of living for all of us. And, I believe, it can be done. . . but not as long as we continue to misunderstand and misrepresent the concept of value.
We are our own enemy in this effort. We continue to create and maintain the very vehicle which proliferates the problem.
CJ Coolidge is a regular contributor to HRTools.com.
You can now get your own copy of his groundbreaking book, The Squaredime Letters.
You can vist CJ online at www.cjcoolidge.com.
Sunday, October 5, 2008
Capitalism's Potential for Income Inequality: Scourge or Benefit
(This is the 3nd installment in a series of articles about the problems associated with government's attempts to ignore free market principles in a free market world ecomony.)
There is Nothing Wrong with Capitalism.
The American Heritage dictionary defines capitalism as an economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market.
This is not a hard concept to understand. In a capitalist system, private citizens are permitted to own the means of production, the capital, and can freely invest in that capital out of the increased production, or the profits returned. The more they invest, the more the capital can produce, the higher the profit, the higher the standard of living. Good picture.
Income Inequality: Scourge or Benefit?
I do not defend the companies whose poor compensation strategies allow their executives to be paid untold millions even as their enterprises fail. There is no excuse for this. It is an abomination and an aberration to appropriate capitalism.
The knock, particularly on American capitalism is the apparent inequality it seems to produce. There are a relatively small, but ever growing number of executives and entrepreneurs earning millions while millions of others are earning a relatively small amount.
Remember basic economics. For economic stability, all participants in the economy must provide some contribution to the economy in proportion to the resources they consume.
However, because of age, or infirmity, or whatever, some percentage of every population will not be able to contribute in proportion to their consumption. By the same token, some percentage will be capable of producing more than they need. The balance is struck when the production of the more capable can be allocated to serve the needs of the incapable. This is what happens when a father produces enough to feed his children, as of yet too young to produce for themselves.
This is exactly the condition that has occurred in our well developed capitalist system.
There are the relative few who, through investing in the capital they have purchased and improved, produce substantially more than they need. It is because of this group that our standard of living is ever increasing. There are more who, not wishing to shoulder the risk and responsibility of capital acquisition and improvement, make other, smaller contributions, roughly equivalent to the resources they use, and consume. And there is a yet smaller group who cannot, or will not produce as much as they use or consume. All benefit from the high standard of living available in this country, perhaps the highest in the world.
The Real Conditions Behind Income Imbalance
As I have said, there is an income imbalance. It may even be growing, and may even be a problem, worthy of correction. But the current approaches deny the realities at work, some going so far as to destroy the conditions which encourage the improvements of the quality of life which we all enjoy.
Capitalist Income Imbalance is Essential, Even Good.
The cause of any economic imbalance and its potential remedies are being erroneously identified. Greed and injustice are blamed. Those few who "overproduce" are being accused of performing some injustice. Their "over-production" is viewed, not as the positive contribution that it is, but as some ill-mannered, inappropriately realized gain.
This thinking ignores this important reality: Their production is voluntary. These "over producers" could, just as easily, choose to produce only what resources they use, or consume. They could choose not to invest, and, therefore, not contribute to increase the standard of living for us all.
Legislation and Regulation: A Dangerous Way to Correct the Situation.
With this perspective, increasing law and regulation become the tools used in effort to correct the situation. Investment is penalized. Earning is discouraged. Progress is thwarted.
This approach can only destroy an economy. Eliminating high producers will reduce the resources available, and the improvement of the capital, the means of production, which will lead to a decrease in the standard of living for a growing population. Law and regulation can be used to minimize the imbalance, however. The playing field could certainly be leveled. But, doing so will reduce the productive capacity as the population grows. It will put the economy in decline.
I don't care how socialist or utopian you may be, you don't want the USA to become a 3rd world, simply balanced, economy.
The next installment will offer real practical considerations to the perceived problem of Income Inequality. It has to do with connecting compensation to productivity.
CJ Coolidge is a regular contributor to HRTools.coms.
You can now get your own copy of his groundbreaking book, The Squaredime Letters.
You can vist CJ online at www.cjcoolidge.com.
There is Nothing Wrong with Capitalism.
The American Heritage dictionary defines capitalism as an economic system in which the means of production and distribution are privately or corporately owned and development is proportionate to the accumulation and reinvestment of profits gained in a free market.
This is not a hard concept to understand. In a capitalist system, private citizens are permitted to own the means of production, the capital, and can freely invest in that capital out of the increased production, or the profits returned. The more they invest, the more the capital can produce, the higher the profit, the higher the standard of living. Good picture.
Income Inequality: Scourge or Benefit?
I do not defend the companies whose poor compensation strategies allow their executives to be paid untold millions even as their enterprises fail. There is no excuse for this. It is an abomination and an aberration to appropriate capitalism.
The knock, particularly on American capitalism is the apparent inequality it seems to produce. There are a relatively small, but ever growing number of executives and entrepreneurs earning millions while millions of others are earning a relatively small amount.
Remember basic economics. For economic stability, all participants in the economy must provide some contribution to the economy in proportion to the resources they consume.
However, because of age, or infirmity, or whatever, some percentage of every population will not be able to contribute in proportion to their consumption. By the same token, some percentage will be capable of producing more than they need. The balance is struck when the production of the more capable can be allocated to serve the needs of the incapable. This is what happens when a father produces enough to feed his children, as of yet too young to produce for themselves.
This is exactly the condition that has occurred in our well developed capitalist system.
There are the relative few who, through investing in the capital they have purchased and improved, produce substantially more than they need. It is because of this group that our standard of living is ever increasing. There are more who, not wishing to shoulder the risk and responsibility of capital acquisition and improvement, make other, smaller contributions, roughly equivalent to the resources they use, and consume. And there is a yet smaller group who cannot, or will not produce as much as they use or consume. All benefit from the high standard of living available in this country, perhaps the highest in the world.
The Real Conditions Behind Income Imbalance
As I have said, there is an income imbalance. It may even be growing, and may even be a problem, worthy of correction. But the current approaches deny the realities at work, some going so far as to destroy the conditions which encourage the improvements of the quality of life which we all enjoy.
Capitalist Income Imbalance is Essential, Even Good.
The cause of any economic imbalance and its potential remedies are being erroneously identified. Greed and injustice are blamed. Those few who "overproduce" are being accused of performing some injustice. Their "over-production" is viewed, not as the positive contribution that it is, but as some ill-mannered, inappropriately realized gain.
This thinking ignores this important reality: Their production is voluntary. These "over producers" could, just as easily, choose to produce only what resources they use, or consume. They could choose not to invest, and, therefore, not contribute to increase the standard of living for us all.
Legislation and Regulation: A Dangerous Way to Correct the Situation.
With this perspective, increasing law and regulation become the tools used in effort to correct the situation. Investment is penalized. Earning is discouraged. Progress is thwarted.
This approach can only destroy an economy. Eliminating high producers will reduce the resources available, and the improvement of the capital, the means of production, which will lead to a decrease in the standard of living for a growing population. Law and regulation can be used to minimize the imbalance, however. The playing field could certainly be leveled. But, doing so will reduce the productive capacity as the population grows. It will put the economy in decline.
I don't care how socialist or utopian you may be, you don't want the USA to become a 3rd world, simply balanced, economy.
The next installment will offer real practical considerations to the perceived problem of Income Inequality. It has to do with connecting compensation to productivity.
CJ Coolidge is a regular contributor to HRTools.coms.
You can now get your own copy of his groundbreaking book, The Squaredime Letters.
You can vist CJ online at www.cjcoolidge.com.
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