Suppose I have a gadget that I want to sell ...

[kentuck]

And I sell out all of them in one week and I need to make more because the demand is high. Everybody wants one!

But I can't make them fast enough to keep up with the demand. What should I do?

So I decide to hire a couple of people to help make some more of these wonderful gadgets. I pay them slightly above minimum wage.

Now I'm making some pretty good money. I decide to expand the small plant where the gadget is produced and hire more people. So I hire a couple of dozen people and the product goes nationwide! I am making more money than I've made in my entire life.

It turns into a multi-million dollar operation. How much money should I pay my workers now that I have more money than I will ever use? Should I make them partners in the operation? Or should I give them a small raise, just above prevailing wage? What would be the "fair" thing to do?

Since I could not have become wealthy without the labor of those that helped get the business off-ground and I could not sell my product if people did not want it, what is the driving force behind my new found wealth? Is it my original idea? Is it the labor of others? Or is it the demand from all those folks that wanted one of my gadgets?

Please tell me how supply-side theory fits into my thriving new business??

[Dreamer Tatum]

1. And if your product DIDN'T take off, how much risk were your hourly employees exposed to?

Not much. You, on the other hand...

Benefits accrue to those who assume risk.

[kentuck]

4. Well, they had to work around some machinery...

They could have been injured. Some of them had children. If they did not have the job, the kids might have gone hungry? One needed the job so he could pay his mortgage. I feel like I put some money into the operation but my workers were not without risk. In fact, they probably risked more than I did if I looked at it realistically. I was mostly investing the profit made from their labor when I expanded. Now they all have good insurance and a pension plan. If and when the business goes under, they will not be broke within a week or two.

[Dreamer Tatum]

7. So you really propose to pay MUCH higher than the minimum wage.

to which I say, good on you.

[sandnsea]

5. Gaa, think man

The business owner is exposed to NO risk because they incorporated and there is no personal loss if they go belly-up. And just about any business that hires people is incorporated in some way.

The worker, on the other hand, has everything at risk and is completely dependent on that job. If that business goes belly-up, the worker is the one who loses everything and has their credit destroyed in the process.

Now that's not to say each worker deserves the same amount as the owner. The owner has knowledge, skills, massive hours of time invested, there's no comparison to a line worker for instance.

But the argument that the owner deserves more because of risk has always been assinine. They're the ones who say you should never use your own money when starting a business, so I don't know how they get away with also saying they have their money at risk. They Don't.

[Dreamer Tatum]

9. Um, what?

If I lose my seed money, I don't have any seed money.

You call that no risk?

[kentuck]

10. If you lose your life while working...

is that less important than your "seed money". The gadget was my idea. Is it OK if I make 400 times more than my average employee?

[Dreamer Tatum]

12. What are you making where people are getting killed right and left?

What kind of dangerous pieces of shit are you selling, anyway?

You should be regulated and shut down.

[sandnsea]

18. I'm running a mine

A copper mine which you need for electricity.

:shrug:

[kentuck]

19. One was almost killed just driving to work...

Life's a gamble. Who knows how dangerous it is to sit in front of his computer for long periods of time? Sometimes all risks are not visible.

[sandnsea]

11. Did you read what I wrote?

Other People's Money.

Further, if these folks are at the point of making millions and hiring people, they made back any seed money they *may* have put in, several times over.

It's a bullshit excuse to fuck over workers. Republicans have been pulling them out of their ass and saying their tulips since Reagan.

[kentuck]

14. I read it and I agree with you.

Sorry.

[Kurt_and_Hunter]

13. That's not right

Incorporation doesn't mean that it's a no lose proposition if your corporation goes under.

The reduction in risk you refer to is things like whether an unpaid business supplier can go after your house or your husband's salary or whatever.

Total lose of costs and effort are not trivial loses.

If an investor put $10,000 into your corporation and the return was $0 that's a lose of $10,000 any way one can look at it.

[kentuck]

15. I lost more than that in the dot.com bubble...

:-)

Life's a gamble for everyone. Some people put their money on the line. Some people put their lives on the line. No one is without risk.

In this instance, after the initial investment, everything invested after that was from profits. It really wasn't much of a gamble on my part.

[sandnsea]

17. There it is.

Do we value the investor class or the working class.

Is it work or wealth.

Do we value the money and time a worker has spent learning a trade.

Right now, clearly easy wealth of the investor class is winning.

[sandnsea]

16. It's not your $10,000

The owner in question didn't lose anything. It's crap that owners of businesses deserve more because of the financial risk. They don't have any. They file bankruptcy and open under a new name 6 months later. You've seen it a thousand times. THINK.

[Kurt_and_Hunter]

22. We are agreeing on one point and disagreeing on another

If the owner starts up a corporation with other people's money then perhaps the other people should determine how much money he gets. They are the ones taking the risk... it's their call to make.

In the big picture, however, it is kind of irrelevant whether the owner put up 100% of the capital or other people put up the capital.

Whoever put it up is at risk.

Rewards and losses flow from that fact.

Everyone who owns a share of stock has put 100% of their investment at risk.

Some entity--perhaps even the workers themselves--puts money at risk. That entity gets the profits.

Are you conflating executive compensation and ownership? The highly paid executive isn't risking much, but the OP was about ownership.

The right answer (post #3) is that people share in society, not in whatever corporation they work for. Workers shouldn't be made winners and losers based on what the owners do.

Did anyone bottling Coca-Cola 40 hours a week decide "new coke" was a great idea? Should they suffer for that decision? Why? The crates of coke are just as heavy either way. Similarly, if new coke took off, why should coke workers benefit at the expense of pepsi workers?

Let corporations do their thing (within reasonable regulations for health, safety, fair practices, sound financial behavior) and then tax the proceeds at a sufficient rate to have a decent society.

[damntexdem]

24. Losing a job.

And why should all benefits accrue to those who risk their money, as opposed to those who invest their labor to produce products to make a business successful? Or for that matter, why should all benefits go to those who assume risk as opposed to those who come up with the brilliant ideas? That we should most-strongly reward those who risk capital is a cultural meme that is most-correctly questioned.

[valerief]

2. Next step is outsource to slave labor in another country. Don't you know anything about business?

:sarcasm:

[Kurt_and_Hunter]

3. hmmm...

There is no reason for a job to be a gambling proposition. Set-ups where workers benefit from the success of the company are great... if the company succeeds. A lot of folks who did a perfectly good job for ridiculous dot.coms in the 1990s ended up holding a lot of worthless stock options despite having done nothing poorly themselves.

Pay your employees whatever it takes to get the requisite quality of work to maximize the success of your business.

And then have that success taxed at a good rate to, for instance, help out people who worked for businesses with less clever owners or worse luck and are now out of work.

"A good rate" is whatever tax rate best evens out the rough spots in life for the citizenry while not unduly deincentivizing success.

[tridim]

8. Ahh, stock options. I have thousands.

All completely worthless from the moment they were issued. What a joke.

[Vickers]

6. Not sure how to say this, so I'm just going to say it:

You're going to have to murder all of your workers.

Sorry, man.

:(

[deaniac21]

20. You pay yourself minimum wage and give the profit to UNICEF.

[kentuck]

21. My name is kentuck not Gandhi...

:-)

[county worker]

23. You completely left out the fact that someone has to make the right decisions.

You could have great demand but screw up your cash flow and not able to fill the orders. Also you left out were the original money came from. If you had investors they would want their profits.

[kentuck]

25. My Daddy left me some money.

But I make the decisions.

[JoePhilly]

26. well ....

In the real world, your widget was a good idea.

And as you started to make it, via these "workers' ... some of them IMPROVED on it. It evolved.

Some of them found process improvements as they made them for you ...

In most industries, "your widget" is no longer just yours, it also reflects the insight and innovation of your employees.

So your scenario, in which the widget does not seem to change, is false. No industry, not even SERVICE industries matches that scenario.

Workers ultimately TRANSFORM that which they build, both the process, AND the outcome.

Only a parasitic leader does not know this.

And so when a leader see the workers as nothing more than "labor" they demonstrate themselves as such parasites.

[kentuck]

28. I would agree with that...

Every employee is not equal, as far as value of input.

[kentuck]

27. But my question was ?

"Please tell me how supply-side theory fits into my thriving new business?"

[Kurt_and_Hunter]

29. In theory...

because the government eliminated the estate tax your daddy (as mentioned above) was able to leave you money and you then started this cool widget plant and created gainful employment for all your happy workers.

And your first wave of profits (before the it "turns into a multi-million dollar operation") were taxed at a low enough rate that you had plenty of money on hand to build the operation up to a multi-million dollar operation... creating more gainful employment for all your happy workers.

That's the theory.

The reality is another thing, but since you're posting on DU I'd hope any answer to your question would not be framed as supply-side advocacy.

Unless the president said otherwise, of course.

[kentuck]

30. Supply side would say....

If I build 100,000 of these gadgets, the people will buy them. But if they were no longer in demand, I would have a huge investment, no matter how much I supplied the marketplace. The demand has to be there first before the gadget is produced not the cart before the horse... it seems to me?

[Kurt_and_Hunter]

32. Up to a point...

Advertising sometimes creates demand out of nowhere. I doubt anyone knew they "needed" some of this shit.

But yes, of course demand for your product must exist.

I don't think even the looniest supply-siders say that demand is not a consideration in consumer activity, though.

Do they?

My sense is that a supply-sider would argue that only a concentration of capital (your daddy's money) can organize resources so as to efficiently/profitably meet that existing demand and thus create employment... that the demand will not create jobs on its own.

Which is true. It's all a a matter of how much. The best sysem to meet the needs of the populce probably features some level of concentration of capital and profit-driven competition. The question is how much?

I am a mild Democratic Socialist type... let the market do its work and skim enough off the top to have a decent society rather than Dodge City for all.

Modern mixed-economy.

(I have to admit I haven't ever studied the supply-side/demand-side rift enough to responsibly state the other side's arguments.)

[kentuck]

33. All I know is that it is supposed to "trickle down"...

:-) Give as much as you can to the top, with less taxes, etc, and their wealth will trickle down to the rest of us. Doesn't sound like a rational theory to me?

[Bonhomme Richard]

31. You can go with profit sharing. That way every employee......

has a real stake in the company's success and can earn accordingly just as you do. What percentage..that's up to you but it certainly would be better than just small yearly increases and fair. A side benefit is that good employees will not tolerate bad ones.