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Monday, September 04, 2006
Paul Greenberg :: Townhall.com Columnist
The labor theory of value
by Paul Greenberg
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Are Barack Obama's friends -- like Bill Ayers -- legitimate political issues?

The old man had long ago given up fixing shoes and gone into another line of work, buying and selling and making a nice living. But he never found any other work that gave him as much satisfaction as putting new leather soles on a pair of uppers. Or putting a pair of Cat's Paw heels on shoes that still had a lot of wear left, and doing it neatly, surely, carefully - to last.

He loved the feel and aroma of new leather, the grain in the old. He was seldom as happy as when he could hold a pair of weathered shoes in his hands, turn them over and over, feel the tread, admire the workmanship, and sometimes even name the local shoemaker who'd done it.

He might not have used an elevated, latinate word like Labor for his work, but he knew it required patience, craft, concentration and something else. An ineffable quality. Call it self-respect, and a respect for the work.

His boys could remember those rare occasions when the old man lost his temper. Once he threw a poorly repaired pair of shoes against a wall in his fury. What a sloppy waste of good leather! What a waste of time and the customer's money!

In his old age, he was unable to contain his contempt when he would drive by one of those glittery new shoe stores that sold cheap, shiny imports - the cardboard kind sure to come apart in the first rain.

The old man took poor workmanship as a personal affront. Labor wasn't a factor of production to him, it was a calling - and a refuge.

The old man wasn't much on theory, but he understood value received, good will, repeat business, and, above all, the importance of trust between people - customer and merchant, worker and boss, lender and borrower. To him, commerce was friendship, trust, something that wore as well as the shoes he fixed.

All the talk he heard about labor and capital, first from agitators in the old country, and then as the standard fare of politics in this one, seemed textbookish to him - not really useful, like a good solid pair of shoes.

He had a more personal concept of how economics worked. He thought of the economy as a web of personal relationships: with his customers; with the workers he hired and trained and sometimes had to let go; with the banker he depended on to get him started in various new ventures; with the landlord who collected the rent from him; and with his own tenants after he began buying a piece of property here and there, and building some rent houses.

He liked his houses kept up, the lawns mowed, so they would look like something. Like a good pair of shoes. Continued...

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Subject: Questioning alwaysQuestion's logic
> I see no economic value in seeing a dope dribble a ball up and down a court. Oops, I guess there goes the labor theory of value, it's not how much work or sweat goes into producing a product or service that determines it's price, it's supply and demand at the time of the voluntary exchange that determines value and price to the exchangers. <

You missed the core of the article -- quality and value. MJ was a great bb player, considered by many to be the best of all time (it's actually Wilt Chamberlain, but that's another discussion). Because of that, increased ticket sales more than paid his salary. Thus, he was a net plus to the finances of the team and its owner, identical to the $400M bonus paid mentioned above.

Choctaw writes:
Choctaw writes: Tuesday, September, 05, 2006 5:34 PM
American business
Businesses will shed or close a segment that may be making a profit and employing people just because it is not making "enough" profit so that their overall apparent profit margin will rise and elevate their stock value. Manipulation of stock value has become the "business" of business.
======================
True in many unethically run business. However, remember that a recent $400 million retirement package only cost the shareholders 6 cents for a $60 share of stock. Those shareholders saw their dividends go up more than that and so a one-time cost may not mean diddly to them. Those shareholders are retirees, teachers, factory workers etc. that have IRA's and 401K's, with mutual funds. One mutual fund alone had shares of that stock (Exxon) in several of its funds and total of over a billion of the 6.4 billion shares. I think they have sold off some since then and it still several hundred thousand shares owned by people like you and me.

However, we continue to drive manufacturing out of the U.S. with our tax policies, compliance costs, litigation, etc. Look at Ireland that pays workers more than here and Pharmaceuticals.

quote:
Ireland is a key global location for the pharmaceutical industry. Foreign Direct Investment for the Pharmaceutical sector in Ireland is 40 years old with Squibb (now Bristol-Myers Squibb) being the first pharmaceutical company to locate in Ireland in 1964. Currently thirteen (13) of the top fifteen (15) companies in the world have substantial operations in Ireland. In total there are eighty-three (83) facilities employing more than 17,000 people in Ireland.

Ireland is now one of the world’s largest exporters of Pharmaceuticals with €34 billion of intermediates and finished pharmaceuticals exported in 2002. 6 out of 10 and 12 out of 25 of the world’s top selling drugs are produced in Ireland including Lipitor and Zocor. Products are manufactured for global markets.
======================================

Business isn't leaving to just go pay workers less, it is leaving because we can't compete with nations like Ireland or Asia. In virtually every place they are going, they are also raising workers wages because they are creating labor shortages. Even in China with 1 billion people still in poverty, they have labor shortages because the people won't move to where the jobs are just like here. We have some states that are under 4% unemployment and need help
1 LOUISIANA----2.9
2 HAWAII-------3.0
2 WYOMING------3.0
4 NEBRASKA-----3.2
4 SOUTH DAKOTA--3.2
4 VIRGINIA------3.2
7 FLORIDA-------3.3
8 NORTH DAKOTA--3.4
8 UTAH----------3.4
10 VERMONT------3.5
11 IDAHO---------3.6
====================
yet in other states the people refuse to leave

43 INDIANA----------5.7
45 OHIO-------------5.8
46 TENNESSEE--------5.9
47 SOUTH CAROLINA---6.2
48 KENTUCKY---------6.3
49 ALASKA-----------7.0
49 MICHIGAN---------7.0
51 MISSISSIPPI------8.0
===================================

People are not that much different around the world. We don't want to be inconvenienced and so they try to have business pay the cost of social programs or the wealthy, and they won't move to where jobs are, and they want more and more social programs so they don't have to "choose" which insurance to buy or pay for it directly from their pay check.

But, many countries aren't doing that and business, which has to include those costs in their prices can't compete even if they make a profit in some cases, because the mutual fund managers we own the stock through (most workers that have stocks have them in funds) feel they must give us a good return so they start selling the stock and buying the stocks of other nation's businesses that are making better profits.

Then add this for public companies.

Quote:
According to a 2001 U.S. government report entitled "The Impact of Regulatory Costs on Small Firms," companies spent roughly $800 billion annually on federal compliance issues before Sarbanes-Oxley was even drafted.
http://www.cioinsight.com/article2/0,1540,1846782,00.asp
================================

That is $10,000 for a family of 4 we have included in the prices we pay for American goods and services. That is one reason even a person who pays no income tax is in the 50% tax bracket, he just doesn't see it but does wonder why each year, his paycheck buys less and less.
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