Wednesday, March 9, 2016

You Are Not Your Marginal Product

People are on social media mocking socialism as if the market price for your labor is something you earned and not a fraction of the value you created.

OK. So not a huge fan of the state as is, but it is how we order society.

The idea that socialism is just redistribution of what you already have is overly reductive.

In addition, the idea is that what we have "earned" is often a conscious decision of our employers on what a job is worth or what you are worth. In many instances, it is less than the value you create.

That's the basic Marxist framework - the employer (capitalist) takes your surplus value.

One of the problems with capitalism post about 1980 is that the tradition share of value created has gone more towards the owners of capital as more value has been created.

This means that in spite of more women in the labor force, etc, the median household wage has stagnated.

Making people defensive about holding onto what they still do have, seeing growth at the upper bounds accelerate while there is little growth in the middle of the wage distribution that most people
We all do work hard, but it seems that people think the state is the culprit (and they are in a sense of being bought and controlled by big money politics) but ultimately it is the owners of capital that have taken the excess for what we work for, not the state.

The thing is that capitalism in the US has been better and it could be better for the people. There was much greater distribution amongst the classes when the USSR was on some levels a viable option. The end of history has aided the global rich more than the people who create value.
The title is a reference to your marginal product, or what you produce when you are added to a company in econ 101 terms. The idea in the intro textbooks is that you are paid what you are worth, but there is much empirical evidence and other discussion around the minimum wage that shows it is false.

And it's this chart, which show the disconnect of productivity (how much stuff is made) versus wages (how much people are paid), and how it has grown, which speaks to so much dissatisfaction in our contemporary climate from both sides, Capitalism has long been broken, but the current version is brokener.