Rich people benefit from the poor being poor?

Political Philosophy
1

Does this claim have any validity?

This is a Marxist theory, a theory that the top wealth in any system benefit from the poor being poor.

Examples of this theory include:

  • Rich people benefit from the poor being ignorant

  • Rich people benefit from the poor being desperate

This may hold some water in a system where wealth or status is literally set in stone by the government. In a more capitalist society, a business who would exploit the poor in such a manner would be trampled by the businesses that don’t try to preserve such a status quo.

A business donates money to a charity, competitors will have to donate to charity to keep the business alive

A business gives educational benefits to their workers, possibly in hopes that the workers will still work for the company, competitors will have to do likewise to stay in business.

Rich people don’t benefit from people being dumb, because dumb people can’t find ways to avoid paying taxes. Dumb people can’t find ways to make their business more profitable. Dumb people can’t come up with new technologies to perhaps make their business more efficient.

Rich people don’t benefit from people being desperate. Perhaps there is a slight need for a feeling that their product is NEEDED, but not desperate to the point at which they’d throw more money at them. It does not do business owners any favors to have idiots jacking up the price for their capitol.

2

Rich people have nothing via their wealth unless there is something being made by someone else that can be traded for their money. Poor people are likely to have less to trade, by evidence of their inferior wealth. So, a rich person does not benefit in that respect from the poor.

A rich businessman may benefit “from” a poor businessman if he is able to spot the same business opportunity but can act on it first because of his saved wealth.

…Or, generally speaking, more wealth is of benefit to all who trade in a society, because everyone has more to trade with everyone else.

As you may see, many contexts could arise under your original claim, and you would first need to specify which context you mean before it could be refuted or supported.

3

Consider a simplified illustration of a rights-respecting, division-of-labor society. Start by assuming there are a few people who are all equally productive. Now, one person figures out a way to triple his productivity. He has more “stuff”, but since it is a division of labor society, he really does not want to consume all the extra production himself. He wants to trade it for goods produced by others. The only way he can do so is by offering a trade that others find to be in their mutual benefit as well. So, while he gets a benefit from his improved productivity, others do so as well. The less productive benefit from the existence of the more productive people rather than vice versa. The latter grow richer. So, in that sense, the poor benefit from the rich rather than the other way around.

4

I agree. The rich need employees, lieutenants, trusted advisors, professionals, customers, suppliers, and all sorts of other things from their fellow men. The wealthy generally didn’t get wealthy alone or just by thinking it so, and the few that simply inherited still provide tremendous benefits to less affluent people passively.

5

If we ignore scammers and con artists, then no one in a free economy would benefit from general stupidity or incompetence, never mind poverty. In fact, there are markets that cater to poor people. Look up micro-loans and such.

Welfare states, on the other hand, benefit greatly from the continued existence of poverty. The more desperate the better, since they will have to turn to the government for help and handouts. That’s how Mexico works for the most part. The sysytem is rigged to place barriers to productive investments, which means fewere well-paying jobs are created. Such jobs are saddled with "benefits,"mandates and laws that limit compensation in many ways. One way is imposing onerous terms for firing an employee. So the less you manage to pay him, the less it will cost you to terminate him later on (should the need arise). Mandatory bonuses, vacations and such also impose extra costs on employment. There’s also a 2% payroll tax employers pay (a tax for the privilege of employing people?), which also gives you an incentive to keep your payroll low.

There’s a lot more, like high utility prices (all government owned), lousy acces to financial services (government regulated) to health insurance (government regulated), taxes on new cars, property taxes on all cars, property taxes on land and houses, a 15% value added tax (VAT), special taxes on certain products, gas taxes, etc etc.

So poor people, whether they work or not, are told they will always remain poor and need government programs like healthcare, pensions, handouts, government schools, etc just to stay alive. And of course they keep voting in the parties that promies most handouts and programs.

If you can get out of that trap, and a surprising amount of people do, you get stuck paying even more taxes to finance the government and all its corrupt enterprises. There is a second group of government-dependents whoa ren’t poor: unionized workers of government-owned companies, agencies, etc. But that’s another story.

6

I would say that for Marxists it is true that “the wealthy” benefit from the poor being poor.

But in Marxism, socialism and the like the wealthy are not wealthy due to productivity but are wealthy due to political pull, politics and force.

Many of the Democrats pushing a modern day form of Marxism in our country today are quite wealthy and they do indeed benefit from the poor being poor. Who was it that said "if you steal from Peter to pay Paul you will always have Paul’s support)?

They thrive on the poor because the poor are willing to give them more and more power in return for redistribution of other people’s wealth.

Looking into Marxist political strategy it is not hard to see why they always attempt to destroy the “petite bourgeoisie” first instead of the bourgeoisie.

In free markets the wealthy do not benefit from the poor being poor but in highly regulated economies they can. The evil brilliance of the Obama administration and the Democrats that paved the way for him has been that they have been able to completely hide the elephant in the room.

7

Heh, whoever said you’ll always have Paul’s support in robbing Peter for Paul’s benefit never met an Objectivist.

There are a lot of reasons why leftists would be at the extremes of incomes. The very wealthy might feel very guilty and want to dispose of their “ill gotten” wealth, and have no qualms about having the government do the legwork. By extension other “rich people” would have to pony up as well. But a lot of wealthy leftists may also have obtained their wealth immorally, even by objective standards. I can imagine the less scrupulous trial lawyers & environmentalists obtaining massive fortunes from destruction of good products and effort of others - after all, we did have certain Presidential/VP candidates in 2000 and 2004.

And let’s face it, most people operate under the premise that true capitalism has never been tried, therefore never can/should/will be tried, and therefore is inherently a rigged system favoring “the rich”. With such an (anti-) intellectual climate it can be hard to escape that view, especially with educators (nearly all subsidized by the government, of course) propagating these “truths”.

8

A rich person can only benefit from the poor being poor by using force. But it doesn’t matter if you say that to a Marxist, since if they are ACTUALLY a Marxist, they’re bound to say that becoming rich requires force in the first place. The claim would only be valid if the labor theory of value is valid, which it isn’t.

9

For the sake of argument, isn’t it possible that workers could be broadly exploited by businesses working in collusion to keep wages low? Marxists believe that profits by a business entity are derived by undervaluing the worker contribution. In reality, don’t workers have very little leverage in salary negotiations for most low to mid wage jobs? And without leverage, how can workers negotiate for the true value of their labor, and thus avoid exploitation?

10

For the sake of argument, isn’t it possible that workers could be broadly exploited by businesses working in collusion to keep wages low? Marxists believe that profits by a business entity are derived by undervaluing the worker contribution. In reality, don’t workers have very little leverage in salary negotiations for most low to mid wage jobs? And without leverage, how can workers negotiate for the true value of their labor, and thus avoid exploitation?

If they are exploited, why don’t they move on to some other job?

Why would they accept less than the “value” of their contribution?

Think about what you are saying. Workers provide their time to a productive job, but not the total productive value of that job. If the employer provides the tools and raw materials and training to a worker, then the productive contribution of that worker is more than just his time, but also includes the value added by virtue of him using the employer’s tools and access to raw materials.

As with any voluntary exchange of value, both the employer and the employee profit from the exchange of the worker’s time for a paycheck. Which means the employer gets more from the worker’s time than what he pays the worker, and the worker gets more in pay for his time than he could in any other effort. Therefore, by definition, the employer is “undervaluing” the worker contribution, and the worker is “undervaluing” the pay he receives from the employer. Who is exploiting whom?

As long as the exchange of time for money is voluntary on the part of both parties, neither is exploiting the other, both are receiving more value (to them) than what they are giving, and both are profiting from it.

Is a grocer “exploiting” you when he sells you a product for more than it cost him to buy and stock, or are you “exploiting” the grocer when you purchase that product for less than what you would be willing to pay?

11

In reality, don’t workers have very little leverage in salary negotiations for most low to mid wage jobs? And without leverage, how can workers negotiate for the true value of their labor, and thus avoid exploitation?

Leverage implies a certain degree of control. Why would it be good for anyone except the owner/manager to have leverage/control over any aspect of a business?

The only thing that’s necessary for an individual to avoid exploitation, is freedom. If he is free to decide whether he wants to accept the wage being offered, then he is free to avoid exploitation. Any control over another individual’s property would be the exploitation of that other individual, who suddeny isn’t free to refuse a contract, and is being therefor used, exploited, abused, whatever you wanna call it.

12

For the sake of argument, isn’t it possible that workers could be broadly exploited by businesses working in collusion to keep wages low?

This would work if there were only a small handful of employers. Otherwise some would offer higher wages in order to get more productive employees, which would drive up their profits more than keeping wages down ever could.

Speaking of which, think about the minimum wage.

In reality, don’t workers have very little leverage in salary negotiations for most low to mid wage jobs? And without leverage, how can workers negotiate for the true value of their labor, and thus avoid exploitation?

It depends on the kind of work and on market conditions. A janitor, for instance, won’t ever earn much more than subsistence wages. The job’s too simple and even in low unemployment markets you’ll find takers. A skilled worker, for example a butcher or a seamstress, is very likely to find a better job when unemployment is low. he doesn’t have to negotiate with his current employer, he just has to go elsewhere.

13

I would think there would be many reasons why people would feel compelled to take a job where they were underpaid. What if there is a surplus of job seekers and too few jobs? What if a person’s family/friends/interests were within a certain geographic area and it would not be easy to relocate (losing support system)? There are reasons other than monetary compensation that are important.

I think of the Gilded Age and the rise of labor unions when I think of this subject. At this time industrialists had come up with many production methods where the use of unskilled labor was relied on more and more. Unskilled labor has less bargaining power than skilled labor, so you saw many workers who essentially had no choice but to accept any employment they could get. Why didn’t workers simply walk away instead of instigating the Great Railroad Strike of 1877 or the Pullman Strike of 1894?

14

I would think there would be many reasons why people would feel compelled to take a job where they were underpaid.

Yes, there are. However, people sholuld not act on those feelings, they should instead make rational judgements. It is not the job, or the right, of the government to do that for them.

What if there is a surplus of job seekers and too few jobs?

In a free society that is impossible. Human need for goods is limitless, so demand for producive people is also limitless. The only reason why there would be a shortage of productive jobs would be an artificial limit on some jobs, through force. As there is, today.

What if a person’s family/friends/interests were within a certain geographic area and it would not be easy to relocate (losing support system)? There are reasons other than monetary compensation that are important.

In that case, the person is not under-payed. Someone who could make 100.000 in Seattle, but refuses to leave New Delhi where he’s making 5.000, is not under-payed. Someone who is willing to move, but is not allowed, is under-payed, and the entity preventing him from moving (US gov.), is robbing him.

I think of the Gilded Age and the rise of labor unions when I think of this subject. At this time industrialists had come up with many production methods where the use of unskilled labor was relied on more and more. Unskilled labor has less bargaining power than skilled labor, so you saw many workers who essentially had no choice but to accept any employment they could get. Why didn’t workers simply walk away instead of instigating the Great Railroad Strike of 1877 or the Pullman Strike of 1894?

Maybe it was because they felt they were entitled to exert control over someone else’s property. (I’m positive that was the cause of the second strike, actually, I’m not that familiar with the other one) The same reason why taxation is close to 50% in the US.

If I were to speculate about the first one, maybe it had something to do with the governement’s involvement in the railroad industry, and the subsequent monopolies that were created, in that period. I don’t really know, I’m sure someone who does will give a better answer.

15

I would think there would be many reasons why people would feel compelled to take a job where they were underpaid. What if there is a surplus of job seekers and too few jobs?

Sure, that’s what I meant by market conditions. When unemployment is high, employees have little or no options. When it’s low, they have lots of options. But unemployment doesn’t stay high for long, unless government gets involved and makes things worse (like FDR did in the 30s).

What if a person’s family/friends/interests were within a certain geographic area and it would not be easy to relocate (losing support system)? There are reasons other than monetary compensation that are important.

Absolutely. But those are choices each person has to make. I wouldn’t expect any employer to pay me more just ebacuse I like it here and don’t want to move to where I can find higher wages or better conditions.

I think of the Gilded Age and the rise of labor unions when I think of this subject. At this time industrialists had come up with many production methods where the use of unskilled labor was relied on more and more. Unskilled labor has less bargaining power than skilled labor, so you saw many workers who essentially had no choice but to accept any employment they could get.

I don’t know of any factory jobs on the shop floor or the line that are unskilled, not now or ever.

Why didn’t workers simply walk away instead of instigating the Great Railroad Strike of 1877 or the Pullman Strike of 1894?

Read up on how government meddled during the development of railroads.

16

I would think there would be many reasons why people would feel compelled to take a job where they were underpaid. What if there is a surplus of job seekers and too few jobs? What if a person’s family/friends/interests were within a certain geographic area and it would not be easy to relocate (losing support system)? There are reasons other than monetary compensation that are important.

I think of the Gilded Age and the rise of labor unions when I think of this subject. At this time industrialists had come up with many production methods where the use of unskilled labor was relied on more and more. Unskilled labor has less bargaining power than skilled labor, so you saw many workers who essentially had no choice but to accept any employment they could get. Why didn’t workers simply walk away instead of instigating the Great Railroad Strike of 1877 or the Pullman Strike of 1894?

If there is a surplus of your job, then the value of your work is low. Your skills can be found anywhere, thus, you don’t have much intrinsic value.

In contrast, if there is a shortage of your qualifications, the value of your work is high.

17

Yes, there are. However, people sholuld not act on those feelings, they should instead make rational judgements. It is not the job, or the right, of the government to do that for them.

I’m not talking about feelings really. There are rational reasons why people stay near family and friends, people who they know and can count on. Leaving all that for a job that doesn’t pay substantially better may be counterproductive. Not to mention a mortgage on a house and the consideration of the lives of one’s other family members. Don’t employers know the difficulty and oft times impossibility of just picking up and leaving a job, and isn’t this a factor that works in their favor in wage negotiations?

In a free society that is impossible. Human need for goods is limitless, so demand for producive people is also limitless. The only reason why there would be a shortage of productive jobs would be an artificial limit on some jobs, through force. As there is, today.

I would check your assumption there. Wouldn’t you agree that human beings are not perfect machines and a society consisting of imperfect people in itself can produce inefficiencies, such as unemployment?

Maybe it was because they felt they were entitled to exert control over someone else’s property. (I’m positive that was the cause of the second strike, actually, I’m not that familiar with the other one) The same reason why taxation is close to 50% in the US.

A recession gripped the nation’s economy beginning in 1893. Orders for Pullman cars fell off and management began a program of lay-offs and wage cuts. The cuts, applied not to managerial employees but only to the hourly workers, averaged 25 percent. Since Pullman wages were already close to the subsistence level, it was a recipe for disaster for the workers. So isn’t it their right to organize to achieve some bargaining leverage against their employer in order to earn a wage commensurate with the value of their work?

18

Don’t employers know the difficulty and oft times impossibility of just picking up and leaving a job, and isn’t this a factor that works in their favor in wage negotiations?

What’s your point? It’s a voluntary relationship between both.

To put it in a different context: Doesn’t an employee know the difficulty and oft times possibility of a business shutting down and employing no one, and isn’t this a factor that works in their favor in wage negotiations?

Works both ways…

Wouldn’t you agree that human beings are not perfect machines and a society consisting of imperfect people in itself can produce inefficiencies, such as unemployment?

Are you claiming that is wrong?

A recession gripped the nation’s economy beginning in 1893. Orders for Pullman cars fell off and management began a program of lay-offs and wage cuts. The cuts, applied not to managerial employees but only to the hourly workers, averaged 25 percent. Since Pullman wages were already close to the subsistence level, it was a recipe for disaster for the workers. So isn’t it their right to organize to achieve some bargaining leverage against their employer in order to earn a wage commensurate with the value of their work?

What is the value of their work? If their work isn’t valued at Pullman for what the employees believe that it is, then they should go to other companies that have established a higher value for the work. Or they could produce a business plan, attract investors, produce, and pay themselves the value that they say they should receive.

19

I would check your assumption there. Wouldn’t you agree that human beings are not perfect machines and a society consisting of imperfect people in itself can produce inefficiencies, such as unemployment?

I am not talking about a machinery that consists of building blocks, I am talking about interactions among free individuals. Free individuals will always want more than what they have, and that means that there will always be an unlimited demand for productive individuals who are willing to work. Unemployment is strictly a consequence of a government ban on some types of employment, such as employment that involves less than minimum wage pay, or discriminates against one group or another etc.

A recession gripped the nation’s economy beginning in 1893. Orders for Pullman cars fell off and management began a program of lay-offs and wage cuts. The cuts, applied not to managerial employees but only to the hourly workers, averaged 25 percent. Since Pullman wages were already close to the subsistence level, it was a recipe for disaster for the workers. So isn’t it their right to organize to achieve some bargaining leverage against their employer in order to earn a wage commensurate with the value of their work?

Individual rights are a concept that applies to everyone equally. Yes, they have a right to do whatever they want, as long as it does not involve taking or threatening anyone else’s property or business. What bargaining leverage were they trying to obtain, that the Police needed to step in? If they all walked off the job and simply refused to go back, I doubt the President sent the cops to round them up and escort them back to work.

If that leverag involved threats against someone’s property, then they do not have a right to make such threats.

As for the value of their work, what are you basing your determination, that they weren’t getting the value of their work, on?

20

What’s your point? It’s a voluntary relationship between both.

It’s only voluntary in that the alternative can mean that by quitting you end up 1) losing your house and becoming homeless, 2) not being able to feed your family, 3) starting over at another company at a lower wage with less security, 4) losing your pension, 5) not being able to afford the insurance and you have a medical condition, or your family member does, etc. etc. etc.

I’m not saying you should never quit, but just really sometimes that it can come at a real price. This is why coming together as a bargaining unit with your fellow workers makes real economic sense.

To put it in a different context: Doesn’t an employee know the difficulty and oft times possibility of a business shutting down and employing no one, and isn’t this a factor that works in their favor in wage negotiations?

Works both ways…

Not really the same thing I don’t think. How does a worker use this to leverage a better wage or working condition?

Are you claiming that is wrong?

I just don’t understand why Objectivism has to be about perfect market efficiency. I mean, capitalism can be brutal, and I for one have made my peace with that. But there are so many Objectivists who, perhaps to assuage their guilt at the realities of capitalism, make the case that a Utopian society will emerge if government involvement in the economy ends.

What is the value of their work? If their work isn’t valued at Pullman for what the employees believe that it is, then they should go to other companies that have established a higher value for the work. Or they could produce a business plan, attract investors, produce, and pay themselves the value that they say they should receive.

Pullman was a company town. Virtually the whole town was owned or controlled by the company. There was nowhere else to go without everyone leaving town en masse. When two business negotiate a business agreement, the business with the most leverage usually gets the better end of the deal. What is wrong with unskilled workers banding together to establish the leverage needed for negotiations with the employer? That’s just capitalism in action.