There is no such thing as unearned income

[Kulindahr]

Proposition: any time wealth is created, it was created by someone's effort; wealth cannot come into existence without such effort.


We speak of unearned income: Medicaid, food stamps, welfare both personal and corporate. But someone had to earn that income, or it wouldn't exist for it to be transferred.

That word "transferred" is a bit of a giveaway -- it's a misnomer, a way of saying "we took it from those who earned it and gave it to someone else". Of course there's no way to have government without doing some of that, but we make accusations of people being "undeserving" of the income bestowed on them -- and those we complain about are always the needy ones, those who have minimal means to support themselves.

But the greatest unearned income in the world is that of money sucking in -- they call it "earning" -- other money, merely by being there. All sorts of excuses are made, such as that people buying stock are enabling production (a lie), but in the end it's just money being handed to some people for no other reason than that those people already have a lot.

When the money handed over is a government check, today's "conservatives" like to call it theft. In essence, it is, but if that is theft, then so is the unearned income sucked up by the wealthy without them doing any work at all.

The question, then, is who actually earned that money -- who did the work for it to happen. And the next question is how to set that theft right.



Discuss.

 

[LuvFindsAndyHardy]

We speak of unearned income: Medicaid, food stamps, welfare both personal and corporate. But someone had to earn that income, or it wouldn't exist for it to be transferred.

I always thought the term "unearned income" referred to interest.

 

[Benvolio]

Your communist ideal has been tried Kulindahr and it doesn't work. Capitalism does work and is responsible for most of the standard of living that we enjoy today. 200 years ago the vast majority of humanity lived in one room hovels, one set of clothing, little food, no medicine, no chance of improvement. What we enjoy today is not the result of charity and give aways, but of people working to better themselves and enjoying some unearned income, and pass it on to their children. You hope to destroy that incentive is a plan for stagnation and poverty.
The last hundred and fifty years or so have witnessed hundreds of millions of deaths and untold misery from a few people fantasizing that they can make a ideal world by forcing people into molds of their imagining.

 

[opinterph]

… the greatest unearned income in the world is that of money sucking in -- they call it "earning" -- other money, merely by being there. All sorts of excuses are made, such as that people buying stock are enabling production (a lie), but in the end it's just money being handed to some people for no other reason than that those people already have a lot.

In some cases, wealth can be transferred through an arrangement where the recipient promises to introduce goods and services in the future to offset the value of wealth they receive in the present. The transaction involves some entity that is willing to provide the wealth and offer an assurance that it has value.

The entity transferring the wealth does not necessarily own sufficient resources to guarantee the full value of the transfer, should that entity be required to liquidate the entirety of its holdings at a given point in time. In most cases, the entity transferring the wealth imposes a fee on the recipient as a compensation for allowing the recipient to use the wealth and its guarantee that the wealth being transferred has real value.

The recipient does not hold legal title to the wealth it receives and is obligated to return the value of that wealth back to its original guarantor over some period of time. The entity transferring the wealth may or may not own the wealth, but either has possession and control over it or uses its credibility to guarantee that the wealth has value.

Whatever fee the entity transferring the wealth receives is income. That income is compensation for the hassle of facilitating the transfer and maintaining books of account and other documentation. It is also compensation for the risk it endures that the recipient may fail to provide the promised future goods and services.

If we assume that the recipient of the transferred wealth eventually provides sufficient goods and services to return the value of the transfer, along with an additional amount of compensation, to the entity that initially transferred the wealth – is the income resulting from the activity of temporarily transferring that wealth earned?

 

[Benvolio]

When debating, express your opinion about a person's ideas, not about them personally. [Link]

Pointing out the inconsistencies or changes in another's ides would not seem to be a violation of that rule.

 

[bankside]

Proposition: any time wealth is created, it was created by someone's effort; wealth cannot come into existence without such effort.


We speak of unearned income: Medicaid, food stamps, welfare both personal and corporate. But someone had to earn that income, or it wouldn't exist for it to be transferred.

That word "transferred" is a bit of a giveaway -- it's a misnomer, a way of saying "we took it from those who earned it and gave it to someone else". Of course there's no way to have government without doing some of that, but we make accusations of people being "undeserving" of the income bestowed on them -- and those we complain about are always the needy ones, those who have minimal means to support themselves.

But the greatest unearned income in the world is that of money sucking in -- they call it "earning" -- other money, merely by being there. All sorts of excuses are made, such as that people buying stock are enabling production (a lie), but in the end it's just money being handed to some people for no other reason than that those people already have a lot.

When the money handed over is a government check, today's "conservatives" like to call it theft. In essence, it is, but if that is theft, then so is the unearned income sucked up by the wealthy without them doing any work at all.

The question, then, is who actually earned that money -- who did the work for it to happen. And the next question is how to set that theft right.



Discuss.

Wealth is created by someone's effort, but it may also be created by someone's non-effort. In other words, it may be created by the use of someone's capital by someone else. If you tend a garden and grow vegetables and package them for sale, you've made an effort that creates tradable wealth. If you can't get the vegetables to market, I own a wheelbarrow you can use, without which that wealth would be lost. Or diminished, based on the limit of what you can carry. I've done nothing except own the wheelbarrow, yet its existence makes the market function better so that wealth is conserved, distributed more equitably and thus more profitably. (Without it your immediate neighbours would tire of buying your vegetables, they'd pile up, and your distant neighbours would scrimp with a few old carrots.) Thus the wheel barrow is as much a real input to procure our wealth as is your labour in the garden.

This doesn't change your equation; someone's mental effort a long time ago to design the wheelbarrow, and their one-time effort in making it, has created a device that pays continuing dividends to the gardener. But it is necessary to point out that wealth can take the form of something other than labour, and it can be owned by someone other than the person doing the labour. And also to emphasize the concept of capital assets being contributors to wealth.

Beyond just labour and capital assets, markets are contributors to wealth, because they enable the efficient exchange of things you have but don't want for things you don't have but want.

A market is also the creation of someone's effort: primarily that of Adam Smith, and the other thinkers, philosophers, economists, and merchants of the Enlightenment. The idea of the open market continues to pay dividends and create, preserve and distribute wealth in a way which power our prosperity to this very day. Smith or his direct heirs see no special benefit from this brilliant idea; in polite company it was bequeathed to us all, or at least stolen by us all for our own benefit with no commission going to Smith.

Or was it? With just an idea, nothing would have happened and Smith would be forgotten. But with all of us bringing that idea to life, Smith's idea gained value. This it is our efforts that bring the idea of the open market to life, and from which we are justly entitled to a benefit.

Incidentally, people buying stock enable production. If I buy stock in a new company making harvesting equipment in a new factory, you would be well pleased by the toil saved and motivated to trade with me for the tools. If some speculative investor comes along and offers me double what I put into it, he also enables production. At first, to justify his purchase costs, he ups the cost of equipment and creates a hardship for your farm and forces you to charge more for your vegetables, which displeases you and your customers. But then I've doubled my money, and I invest in a supermarket and a paving company and soon your vegetables are selling so fast you're looking to plant more fields. By now the cost of equipment is in perspective again, and we're all making so much money that we can hire truly obscure pointless positions like "marketing researchers" and "lifestyle analysts" and "professors of agronomy."

Except they're able to tell us that artichokes grow just as well as onions and there is enough demand for me to convert half my shelf space from onions to artichokes, and their abstract and intangible efforts, and the investor's money, and Adam Smith have all given us more wealth.

But there is one other precondition for the open market to work: a stable society. We all inherit a share in that society by the act of being born. And to the extent that we contribute as members of society, we are justly entitled to a dividend from its wealth, just as surely as I am entitled to a return on my wheel barrow when you use it to take the onions to market. That is the basis for our just use of social amenities; public education, public health care, public lots of stuff: we own the wealth that arises from our being born into a stable society. It is our own wealth that pays for this stuff.

 

[opinterph]

Pointing out the inconsistencies or changes in another's ides would not seem to be a violation of that rule.

Members are not required to advocate the same position from thread to thread. Each discussion stands on its own. Attempting to argue the opposing viewpoint can also provide beneficial insight.

 

[xbuzzerx]

When a person who accrued frequent flyer miles has earned enough for a free round-trip ticket to Singapore, where did that 'unearned income' come from?

And when the person actually cashes in and uses that free flight, where has the value gone?

Likewise, what about unused values of gift cards? Could we not call that unearned income as well?

 

[bankside]

When a person who accrued frequent flyer miles has earned enough for a free round-trip ticket to Singapore, where did that 'unearned income' come from?

And when the person actually cashes in and uses that free flight, where has the value gone?

Likewise, what about unused values of gift cards? Could we not call that unearned income as well?

That's just a purchase with deferred delivery. Basically frequent flyer points are a layaway option for flight.

 

[xbuzzerx]

That's just a purchase with deferred delivery.

But a large number of gift cards are never used whatsoever.

 

[Benvolio]

Members are not required to advocate the same position from thread to thread. Each discussion stands on its own. Attempting to argue the opposing viewpoint can also provide beneficial insight.

But, is it violation to point out the change or inconsistency? Cannot that also provide a beneficial insight.

 

[Orlandude]

But a large number of gift cards are never used whatsoever.

An even larger number of gift cards are literally thrown away because they have only a few cents left on them.
Those few cents add up to millions of FREE dollars for the one issuing the gift card. They actually count on you not using every cent of that gift card. Millions of gift cards are trashed every year because they have only 25 cents or 50 cents left on them...that's FREE MONEY to the card issuer.

 

[Benvolio]

Anyone who saves money to start a business, employ others and make a profit is necessarily receiving money he did not earn, and yes, he is profiting from the work of others. But the alternative is government ownership, and then the bureaucrats live off the labor of others.

 

[bankside]

Anyone who saves money to start a business, employ others and make a profit is necessarily receiving money he did not earn, and yes, he is profiting from the work of others. But the alternative is government ownership, and then the bureaucrats live off the labor of others.

Well my point is, someone who labours without owning capital is profiting from the capital of others, so it's a fair trade.

But the alternative is government ownership, and then the bureaucrats live off the labor of others.

No, there is really no difference in a manager reporting to the shareholders through their appointed Board, or a bureaucrat reporting to the electorate through their appointed Government. Bureaucrats, like managers, contribute something of value in exchange for their paycheques.

 

[bankside]

But a large number of gift cards are never used whatsoever.

True, but I can buy something and then throw it away. Arguably this weakens the economy, but I can still do it. If I don't claim my points or freebies or whatever, arguably nothing is lost from the economy either. I just failed to follow through on an exchange I could rightfully claim.

 

[xbuzzerx]

True, but I can buy something and then throw it away. Arguably this weakens the economy, but I can still do it. If I don't claim my points or freebies or whatever, arguably nothing is lost from the economy either. I just failed to follow through on an exchange I could rightfully claim.

That's true, but at the same time, extra goods were not created "in case you came into the store with your gift card." If you do not redeem the gift card, it was simply a transfer of money to the corporation for which they did not need to part with any labor or goods.

 

[opinterph]

But, is it violation to point out the change or inconsistency? Cannot that also provide a beneficial insight.

Beneficial insight about what, exactly?

 

[opinterph]

employ others and make a profit is necessarily receiving money he did not earn,

Operating a business involves labor by the person(s) doing the operating, which by most definitions is a source of earned income.

 

[palbert]

Anyone who saves money to start a business, employ others and make a profit is necessarily receiving money he did not earn, and yes, he is profiting from the work of others. But the alternative is government ownership, and then the bureaucrats live off the labor of others.

Dagny Taggart disapproves this.

 

[Benvolio]

Beneficial insight about what, exactly?

Pointing out the inconsistency may assist the individual and others to clarify or alter one of the positions, arriving at a more valid and thoughtful position.