to not understand capitalism

[IceBeing]

Some people work hard (say 60 hours a week all year) and get paid about £20000 a year...and some people work hard and get paid 10 or even 100 times as much a year.

How can 60 hours a week of work from 1 person be worth 100 times as much as 60 hours a week of work from another person?

maybe designing a more attractive packaging for mobile phone sanitising products

Erm, yes. However did you guess?

well it is embarrassing but I actually know my IQ (part of recruitment process)...so I can say with some certainty that you are wrong about that.

I'm so, so baffled by this thread.
It started off as an honest enough 'I don't understand something, can you a) explain and b) justify why things are the way they are'
It has now turned into personal attacks and magic microwaves and not once has the OP conceded that anyone has made a valid point. Even the ones that are vaguely in support of her crackpot theories on the world

Well, congratulations for having a job you are in no-way deserving of, and for having a few IQ points to spare.

This has rapidly turned from what started off as a (semi)logical conversation about the pros and cons of Capitalism, and has instead turned into a weird IQ competition, so I'll leave you to it.

Best of luck ICE. The good thing about a capitalist society is that it is designed so that no one can coast through life taking advantage of other people forever, so, while flawed, I still have faith that you won't be able to dupe your boss forever, and that your laziness and ignorance will not be rewarded. Until then, enjoy.

I think there is some confusion between capitalism and a meritocracy- a meritocracy would reward skills/ability and hard work- although I struggle conceptually as it awards ability above effort - eg if I work hard but aren't skilled/bright and would advance less than someone brighter who works as a hard. On the other hand how do you motivate someone who is bright to work hard if they don't get anything back- i get that you may have increased job satisfaction and stimulation as well but reward helps.
On banking I am not clear banks are a great example of supply and demand. Jobs in banking are in high demand and massively oversubscribed but salaries remain high even at entry - you may consider that salaries should come down to a level that means supply=demand which doesn't happen. Part of that is because the banks want to be able to skim the supply.
I do think people are unduly focused on the salaries - ignoring the bail outs - banks generally make big profits and this profit has to be distributed somewhere- its ultimately going to go to either employees or shareholders- yes tax could increase but this at some stage would probably just mean the banks would move .

So i think the analysis needs to focus on why banks make money- what do they do that others are willing to pay so much for. You need to look at what do banks clients pay for- could anyone else perform this service? why is the client willing to pay so much? is it a closed market and why? skills?capital?regulation?- and then on the flip side if the bank is taking on money because its ramping up its own risk - thats fine in a sense that its the employees/investors taking that risk but they need to be taking the upside and downside

IceBeing, so how much more tax should the mega rich pay? Who are you including in that - what level of income?

Unnaturalchild, in at least some roles it's impossible not to reward ability over effort as there are numerous jobs which not everyone is capable of doing no matter how hard they try. You're paying for effort, capability and experience.

Meritocracy assumes that the answer to inequality is for people to try harder so that they do better in life. But we can't all be doctors and lawyers. We still need people to clean the streets, stock the supermarket shelves, work in elderly people's home's etc. I think we significantly undervalue this type of work. Often pay is determined by the level of qualifications/scarcity of skills required to do a particular job. However, I'm not convinced that this always equates to a job being of more social or economic value or says anything about how hard someone is working. I know people who work in adult care and it is extremely emotionally and physically challenging work but very low paid.

It's tricky - if someone has the skills to do a grade A ( assuming A is the hardest job) but chooses to do a less difficult job (C) - do you pay them the same as you would pay someone for whom C was the most difficult job they could do - or pay them commensurate with their effort. Capitalism says the former : you couldn't distinguish enough to see who was the bright slacker vs hard working less bright person. I don't think a meritocracy assumes that trying harder is the answer - it's really based on output - what you achieve not what you put in.
Re undervalued jobs - I think we value jobs considering whether we could do them rather than whether we would do them

I think there is also an element of wanting to pay for the bright shiny things and not wanting to pay for the things that are good for us.

E.g. ensuring that we have well paid highly skilled teachers and nurses is good for society in general, but if we don't currently have children in school and are perfectly healthy, it is more difficult to place a high value on these things.

That is why these things can't be left to the market.

Disappointed to jump back onto this thread and see that it has devolved into two posters barraging and bullying the OP.

My sister works really really hard and earns just above the minimum wage....i honestly dont work as hard, regularly divert to mumsnet/fb as I have that freedoom....and have just worked out that i get paid over £65/hr - Not really fair but.....

"I don't think a meritocracy assumes that trying harder is the answer - it's really based on output - what you achieve not what you put in."

But how do we measure output - there is a really interesting report by the New Economics Foundation that looked at the value of 6 different jobs - some low pay, some high paid. Some of their conclusions:

While collecting salaries of between £500,000 and £10 million, City bankers destroy £7 of social value for every pound in value they generate.

For every £1 they are paid, childcare workers generate between £7 and £9.50 worth of benefits to society.

For a salary of between £50,000 and £12 million, top advertising executives destroy £11 of value for every pound in value they generate.

For every £1 of value spent on wages of waste recyling workers, £12 of value will be generated.

www.neweconomics.org/publications/entry/a-bit-rich

So if capitalism is about valuing most those things that create the most value, are we doing this?

Thanks for that very honest post blahblah.

I think a lot of us would find it hard to admit that we really don't work as hard as many other people (though we may be paid much more) and even harder to admit that the skills required for our jobs, though specialised, are really not that hard to gain if you have the right training and networks.

It's not simply the case that the harder the job is, the greater the reward. Perhaps it should be, but it isn't.

For a salary of between £50,000 and £12 million, top advertising executives destroy £11 of value for every pound in value they generate.

Did they show their workings?

Did they show their workings?
Yes they did in quite some details - see appendix 2 of the report - cut and paste the link in my post above to see the report. I'm sure there any many who would argue with some of the workings, however, I'm also sure that it's no more or less robust than other ways people might have of trying to value the worth of different jobs.

I do. I negotiated my salary based on several key deliverables that will be easy to define and measure. My job is to do those tasks. If I don't, my position at the company will be in jeopardy. Should I go above these projected goals, then I get a bonus that is directly tied to how much extra I do.

I think it is quite easy to rationalise whether or not you are worth your pay to the company/clients that employ you.

But it is much more difficult to determine whether or not you are worth more or less, to society at large, than someone who operates in a vastly different sector.

I am confident that I am (easily) worth my salary to my employer, but I am not confident that I am worth more than a nurse in the grand scheme of things despite the fact that I could outearn a nurse.

IMO, the answer is in human behaviour as mentioned up thread - people generally want more for themselves and their own. Many on the left have said we should reduce foreign aid to support those in the UK - no different from supporting my family instead of yours.
If you remove the artificiality (sp?) of countries, then nearly all of us want more.
In terms of levels of pay, who should get the money. If a person/company creates wealth then this is shared between the employees and the owners. Taxation is just giving it to unrelated parties. If I have money, I can choose to keep it in a safe or lend/invest to a company. If the company fails, then I lose my money (hence higher interest rates on payday loans because a lot do not repay the loan let alone the interest). If you tax my profitable company, then I will leave it in a safe, there is no investment so no company so no jobs.

kim - as I mentioned up the thread I used to be a commodity trader.

Commodity traders do not make commodities more expensive, they really don't. They buy and sell. They have no net effect. Cornering commodity markets to drive up prices is generally illegal anyway.

My commodity was oil but the firm I worked for traded every commodity there was.

We didn't speculate. Very few commodity traders do. What we did was buy commodities in one place and move them around the planet to where they were in demand and hence more expensive. Sometimes we bought a commodity and transformed it into a more valuable one (e.g crude oil to be turned into petrol). Other times we bought a commodity this month, stored it and sold it next month when demand is higher.

Commodity traders like bankers have a legitimate role in the world. Most importantly if we got it wrong we knew we were out of business. No one would bail us out. That's capitalism.

Its the bailouts of big banks and cronyism between Govt and big business that manipulates capitalism into something else - its called facism. It aims to utilise business to serve the ends of Govt. The class structure under Facism is controlled and cemented. The poor stay poor, the rich stay rich. Everything is controlled. That is where we are increasingly heading - nationalism follows.

"Other times we bought a commodity this month, stored it and sold it next month when demand is higher."

And you don't think that storing a commodity, thus removing it from the market increases demand and makes the commodity more expensive?

Of course creating scarcity has an effect on price.

And why say that "very few" commodity traders 'speculate'? What do you call futures trading?