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  1. Vlad Motchoulski
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    Vlad Motchoulski Member

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    Against capitalism

    Discussion in 'Debate Room' started by Vlad Motchoulski, Aug 26, 2015.

    There are many statistics that show how much of a failure capitalism is for the lower class. The most obvious one to me is a thought experiment. How is it possible that one adult working full time cannot afford food, water, shelter, and healthcare in this current age of wealth abundance? Why should an adult be penalized for taking a less favorable job, when such job is required for society to function?

    People working these jobs shouldn't have to rely on welfare to survive. That makes absolutely no sense. They found work and most of them do it well. What else is expected of them? Is it realistic a fast food worker on welfare to "go to college and get a better job" when their bank account is in the double-digits before payday and their body is broken from the labor?

    Why does the employer continue to punish and shame them instead of empowering them and giving them a means to earn their way out of poverty with a living wage?

    There is absolutely no empathy from employers. All these people, who break their backs for wages such as $8.50 per hour, want is a means to survive. They upheld their end of the bargain by working the designated hours at an adequate performance level. Why can't they just be allowed to live?
     
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  2. BrianIff
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    BrianIff I'm so piano, a bad punctuator. Contributor

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    I agree with your premise but am pessimistic about a higher wage changing much, as companies will want to recoup their losses and their shareholders will only amplify that course. So the price of everything goes up and nothing changes in real terms. The economic crisis in Europe has only reinforced the notion that high taxes and deficits lead to instability. So long as the media tells the middle and even lower class that they will have to pay for any improvement one way or another, there is no hope.
     
  3. ManOrAstroMan
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    ManOrAstroMan Magical Space Detective Contributor

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    The thing is, no economic system is perfect. They all involve humans, who are flawed, imperfect beings. Capitalism, communism, whateverism, they will all fall victim to human greed and the little guy suffers.
    Granted, I'm no economic scholar, but as awful as it may be, capitalism does at least offer the best chance for someone to achieve financial security. Sure, it would involve a lot of luck, and probably the cooperation of others, but the chance still exists.
     
  4. ChickenFreak
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    ChickenFreak Contributing Member Contributor

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    That assumes that the cost of low-wage labor is a substantial, is in fact the dominant, part of the cost of most products. It also assumes that it MUST be the dominant part of the cost. And that's a huge and IMO invalid assumption.

    Yes, many businesses may currently be based on the assumption that what is essentially slave labor will be available indefinitely. That doesn't mean that we owe those businesses the continued availability of slave labor.

    A fast food restaurant sits on land that's probably worth millions of dollars. It was built for hundreds of thousands or millions of dollars, and built with what was likely union labor with decent union wages. It was decorated and stocked and equipped with materials that were designed by high-wage people and created in many cases by union-wage people. Heating, cooling, advertising--most of the costs involve services that use decently-paid labor.

    If the guy scooping fries makes an extra fifteen dollars an hour, and he is responsible for a hundred food items an hour, then that's fifteen cents per food item that have to be accounted for somehow. The higher-wage people involved in the enterprise get less, or the people buying the food pay more, or the restaurant makes a lower profit.

    Is that a bad thing?

    Is that whole infrastructure dependent on the assumption that labor is essentially free, and SHOULD it be? (Yes, I know it's not free, but it's so cheap that it may as well be.) The manufacturer of the fry machine, and the real estate developer, and the architect, MUST be supported by the guy who's working his second job scooping fries? And they all MUST be saved, by that same guy, from having to spend any money on their food?

    If that guy gets higher wages, he is going to be much better off, even if the cost of living goes up. His wages go up by one hundred or two hundred percent, cost of living goes up by twenty-five percent, how is he anything but a huge winner?

    It's those of us who already make enough money that are going to have a little less in our pockets when that guy, and all the minimum wage employees like him, start getting a living wage. The guy who works in the printing plant that makes the tray menus might need to be paid more, too. Maybe those tray menus will cost a few more pennies per thousand. Oh, dear.

    The poor are subsidizing MY low cost of living. That's not OK.
     
  5. BrianIff
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    BrianIff I'm so piano, a bad punctuator. Contributor

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    I can't tell if you're saying I'm making an assumption or if the company is. I wouldn't expect the companies to embrace change. Minimum wage doesn't even keep up with inflation. As for myself, I've worked construction cash jobs that are worse than fast food -- which I've also done at several places -- for less than min. wage after tax. My pessimism is well justified and will discuss it at length if you mean I'm making an assumption.

    As for the employees who are the backbone as you've described it, the labour market has unlimited resources there with unemployment as it is -- more people would take min. wage over welfare, I think.
     
  6. uncephalized
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    uncephalized Active Member

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    I am in favor of capitalism backed up by socialism.

    I want to tax more, with a highly progressive scheme that hits the top incomes at much higher rates, in order to pay for a universal welfare program (sometimes called citizen's dividend, guaranteed income, basic income) that would send every single person in the country a monthly deposit equaling or exceeding a poverty-level income, or around a thousand dollars a month, per person. No strings, no hoops, just a check for everyone. If you don't trust the banks you can go in to your local office and have it paid to you in cash.

    At the same time, eliminate the means-tested welfare and food assistance programs. Combine and expand Medicaid and Medicare to universal coverage. Make public university free for anyone who can meet entrance requirements; community and trade schools free for everyone. And eliminate all wage controls.

    Basically, make sure every single person can afford essential food, clothing, shelter, medical care and education, no matter what. Then let them work out the rest on their own. If someone wants to sell their labor for $1.50 an hour, or even give it away free because they want the experience, let them; they're not going to starve. If someone else prefers to live entirely off the guarantee and will only work a job if the pay is $100 an hour, fine. Artists get to spend 100% of their time on their work as long as they are willing to live simply until they make a name for themselves. Businesses are free to create as many jobs as they want, at whatever compensation serves their interests best; but workers don't have to take rotten jobs, because homelessness is not their only alternative--so employers with stingy practices will find themselves forced to compete with labor that is no longer desperate for any crumb the owner class tosses them.

    The universal benefit should extend to children, too--half entrusted to the parents to offset costs of care, the other half held in trust until adulthood (18, 21, 25?) to give young people seed money for entrepreneurship, additional training, home ownership, travel... whatever they think best. (At $12,000 per year, half saved, with an 18-year holding period, that accumulates to $108,000--assuming you don't even pay any interest on the held funds. More than enough for a down payment on a small home with a mortgage that can be covered by the guarantee--meaning home ownership is within reach of every person who wants it--with plenty left over to start a small business venture.)

    It would be revolutionary. It's one of my fondest hopes that I will live to see it happen.

    EDIT: by the way, I did some calculations and my proposal would require the redistribution of about 20% of the nation's total income, plus the costs of universal health care and education. Fairly expensive, but well worth it in my opinion--and it would mostly be borne by the top quintile of earners (and even more disproportionately by the small number of absurdly wealthy people, who make more than enough to lead luxurious lives even if you took 90% of their income right off the top).
     
    Last edited: Aug 26, 2015
  7. ChickenFreak
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    ChickenFreak Contributing Member Contributor

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    No, the companies won't embrace change--why would they volunteer to pay for a resource that they've been practically getting for free? Minimum wage needs to be drastically increased, by law.

    And people who are making a living wage and getting benefits can...buy things, things made by other people who are making a living wage. They can buy things, they can stop losing much of their money in payday loans and other predatory practices that take even more money from the poor, they can get medical care for themselves and their children and stop losing their hard-won savings for every medical incident. They can be productive, producing and consuming, parts of the economy.

    I simply don't accept that our economy depends on poverty and that reducing poverty will destroy our economy. I'm not saying that that's what you're saying--I'm not quite sure what you are saying--but I've seen claims that pretty much add up to a claim that economic health requires that we maintain practices that enforce poverty.

    A universal living minimum wage, and universal health care. That would be a start.
     
  8. BrianIff
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    BrianIff I'm so piano, a bad punctuator. Contributor

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    I'll be honest with you, I have no idea how much money blue-chip companies would lose if there was a significant jump in the minimum wage. I know that executives don't need it, and that none of them will starve. My view is that those companies that rely on min. wage labour have been spoiled and led to believe that they're entitled to the good ride they're accustomed to. Unfortunately, legislation, if it was even passed, to increase the minimum wage would be met with some other price increase by the companies because they won't except a huge jump even though min. wage doesn't even follow existing inflation.

    I'd say we're on the same page as far as our regard for the working class, but I don't think legislating a higher min. wage would effect change given the companies' sense of entitlement.
     
  9. ChickenFreak
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    ChickenFreak Contributing Member Contributor

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    But if those companies could get away with drastically higher prices, they'd raise them right now--it's not as if they keep them lower out of the goodness of their hearts. They can get away with only so much increase; beyond some point, people stop buying. I still believe that if we had a very large increase in the minimum wage, the increase in cost of living, for the poor, would be dwarfed by the increase in their wages. It's not as if the current incredibly lopsided wealth situation has always been true--there's nothing inherent about it.
     
  10. BrianIff
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    BrianIff I'm so piano, a bad punctuator. Contributor

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    I'm neither an economist nor mathematician but to take every job and elevate it to, say, a first-year carpenter, would push the union and trade to pay more for those who choose to pursue that trade -- as with any other trade. Then we get into very serious inflation, beyond what would occur from an overnight min. wage increase. To get a major political party to even read such a bill of that magnitude is unimaginable for other reasons, but if the media and right-wing party would take a timeout, how does the proposal stand on its own?
     
  11. ChickenFreak
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    ChickenFreak Contributing Member Contributor

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    I don't know that that's true. There was a time when far more jobs had a living wage. You're assuming that the barely-paid now would be increased to an artificially high wage. I'm arguing that they're currently being paid an artificially low wage.

    Doesn't that first-year carpenter have a path upward to higher wages? Would he really say, "That checkout clerk's salary isn't small enough compared to mine, so I'm not going to work as a carpenter."?
     
  12. BrianIff
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    BrianIff I'm so piano, a bad punctuator. Contributor

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    I have no commitment to the working class being paid considerably less, so we can agree that their wages are too low. However, people who buy tools and go to trade school are always going to demand more than menial labour. The current gap is something else that would have to be overcome. The individual, him/herself, may see the fairness in what you say, but I don't see any reason to believe that an increase in trades would not follow from a big jump in the minimum wage.

    Northern European states are the flattest societies as I have come to understand, with the smallest gaps in wages between workers and professionals, especially after tax. I just think North America is beyond any chance of such an evolution.
     
  13. ChickenFreak
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    ChickenFreak Contributing Member Contributor

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    But it doesn't sound like people in those Northern European states are flat-out refusing to go to school.

    Right now, a quick Google claims that carpenters, on average, earn $21 an hour. Minimum wage is $7/hour. (I'm rounding to the nearest dollar.) So the carpenters make three times minimum wage. The same site says that a carpenter's salary can reasonably go up to $35/hour, or five times minimum wage. (I'm tentatively assuming that carpenters also get overtime pay if they work overtime, while minimum wage workers don't.)

    Let's assume that minimum wage goes up to $15/hour, which is above the bare living wage in most areas. So minimum wage has gone up more than one hundred percent, or $8/hour. Are you assuming that carpenters are going to demand a one hundred percent increase, or $42/hour? Or demand the same $8 increase, or $29/hour? Is there any predicting?

    If minimum wage goes up to $15/hour and carpenters' wages don't even move, is a carpenter going to quit his job and take a roughly thirty percent pay cut to get a minimum wage job? Is someone who wanted to be a carpenter going to refuse to go to trade school and decide to work a minimum wage job all his life? Wouldn't he rather shoot for the eventual $35/hour?
     
  14. BrianIff
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    BrianIff I'm so piano, a bad punctuator. Contributor

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    I live in a transportation hub city just outside Toronto. It sprawls with warehouses. I know that many of them rely on agency labour often beyond the so-called 6 month "temp-to-hire" period. A lot of those spots hire a walkie or forklift operator for $14-17 (min. wage is $11 here, but Canadian dollars) with the prospect of only a very modest raise if any. Those operators have to pay for training and then re-licensing every three years or whatever it is. Those machines are also not something that can be learned overnight. So where's the incentive there? I believe it's plausible to say those wages would have to go up. This "class" of occupation, with the amount of investment and time necessary to be proficient, is necessary to be higher than minimum wage to retain workers who might change careers with all the possibilities available for the same wage.

    I admit that it is more speculative with the carpenter, but I would include a lot of building trades in the class that I've described. And after the inflation that would ensue, like how fuel prices raised everything else, I can see the unionized carpenter's wages increasing.
     
    Last edited: Aug 27, 2015
  15. Vlad Motchoulski
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    Vlad Motchoulski Member

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    I have experience working at the lowest tier of employment - Wendy's. I was technically full time but the manager only scheduled me for 32 hours per week. Three days the shift was 11 AM to 5 PM and two days the shift was 5 PM to 3:30 AM.

    As you can imagine, this took its toll on my health. But more than that, at a pay rate of $8.25 per hour, I was improperly compensated for the hell I was experiencing. It was crude, barbarous, and unethical.

    My monthly gross pay was around $1,050. After taxes it went down to $840. Now without any further information I will tell you one fact: rent for a one bedroom apartment starts at $850 per month in this area.

    So, how then, after toiling like a faithful little drone for each hour they give me, am I still short $10 on rent?

    I can't work a second job... my schedule was wildly inconsistent and a few no-shows would result in termination. Syncing the Wendy's job with another would have been a logistical impossibility. I can't go to college to improve myself because... I'm freaking homeless! I can't even the area's cheapest rent.



     
  16. PrincessSofia
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    PrincessSofia Active Member

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    This doesn't have much to do with your post, but I always wondered why people who have minimum wage job and who struggle financially, and live in a big city, or just a place where rent is very high for some reason, don't move to a city where rent is reasonable, because rent is often where most of the budget goes. I'm not from the USA, so that might be different, but to take my example, I come from a small city , therefore the cost of life is acceptable, and most people with a minimum wage job do very well, they buy houses, new cars etc.. whereas when I moved to a huge city, people who had these same kind of jobs told me they struggled to even find owners who would rent them their flats because they had minimum-wage jobs, and their life in general was not pleasant due to financial struggles. And I, as a student, don't see how other students who move from a small town to a big city and don't have well off parents can cope with the stress of life, and still be successful in their studies. I spent one year worrying about how I was going to do to eat or buy university books etc, and that was with my parents helping me. After one year I dropped out because I didn't see how I was going to pay for two more years in this city, and am now attending university in a smaller city closer to home where I can focus on my studies and not on how the hell I am going to pay for train tickets or things like that. Sorry for the rant lol, but my point is that people who work hard but still don't have the means necessary to live in a big city should move somewhere smaller, provided that they find jobs of course, and their quality of life would improve. It may not be fair, but that's the way things are.
     
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  17. ChickenFreak
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    ChickenFreak Contributing Member Contributor

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    So those wages will go up. And the pay of their direct supervisor might go up, and maybe then the next level, in a ripple effect, with the number of people affected by the ripple getting smaller as you go up. So the product or supplies that these workers move with their forklifts might go up in cost by a tiny, tiny fraction of a cent per pound.

    My point is that I very much doubt that the pricing and profit margin of most of these businesses is primarily dependent on the cost of their lower-tier workers. I remember reading that garment workers at some offshore location could have their wages doubled and the cost difference per item would be...nothing. Not even a penny. Their wages have that little to do with the cost of the item; doubling their wages, divided by the number of items, produced a number so small that it was in the rounding error.

    I'm sure that this is less true with United States workers, but I still very much doubt that there are many places where the wages of low-paid workers, including those a tier or two or three above the bottom, are that big a factor of the total costs. There may be a few--for example, I recall that groceries have razor-thin margins that could be affected by anything. So if we increase minimum wage, we might pay one, or even two or three, cents more for a food item. I can afford that, and the people whose wages have just been increased can afford it too, far more easily than they could afford the lower prices on their drastically lower wages.

    Let's imagine a large office building, built for hundreds of millions of dollars, probably taking in hundreds of thousands or millions of dollars in rent every month. Let's imagine that we DOUBLE the wages of the janitorial and cleaning and security staff, and increase the wages of their supervision by fifty percent, and the next level by twenty-five percent. Is that going to double the rent of an office suite? Even if the building is somehow making ZERO profit, precisely breaking even, so that every last penny of that wage increase has to be added to the rents, the rents are going to go up by a very small percentage.

    Our economy does not depend on poverty. If minimum wage is doubled, and that ripples upward, that ripple is going to stop well before the people who are making five or ten times minimum wage. It's going to take care of the poor and (did I mention this in this thread already?) it's going to save a lot of tax dollars in welfare payments and food stamps.

    I don't know exactly how efficient or inefficient tax dollars are, but I would bet that to pay for a dollar given away in food stamps, a whole lot more than a dollar had to be taken in taxes. I would be very surprised if wages aren't a lot more efficient than government benefits. The average tax-paying above-poverty-level citizen might well come out ahead, when you compare the slightly higher prices that he'd pay, compared to the taxes that he would have paid to pay for benefits for the poor.

    (Hmm. Now I'm curious. How many tax dollars does it cost to pay out a dollar in, say, food stamps? $1.10? $1.50? $2.00? $10.00? $50.00? This ought to be a number that the government could calculate, if I just knew the term to Google for.)
     
  18. BrianIff
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    BrianIff I'm so piano, a bad punctuator. Contributor

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    First, I'll clarify my position. I don't believe that companies' profits derive primarily from low-tier workers' wages. Neither do I believe that companies see this.

    Wal-Mart announced in 2013 that, of 1.3M associates, 475K workers earned more than $25K, but that leaves 825K that got less. According to the Bloomberg article, 525K workers are full-time of them. I won't speculate what they paid to part-time workers. The third site says Wal-Mart made 125B in profit, some payable to bond and share holders. Doubling 525K*22K is $23.1B, which would take 9.25% (before part-time and ripples) of the profit. I know there's rich people that don't need it, but it's still got to be shouldered by someone, and I can't see the company not raising prices.

    The price of everything wouldn't double in response, but I'm inclined to think that the gains by workers wouldn't be that significant. I'm not sure where the discussion can go from here.

    http://www.huffingtonpost.com/2013/10/23/walmart-salary_n_4151131.html

    http://www.bloomberg.com/bw/articles/2013-10-23/more-than-half-of-walmarts-hourly-workers-make-less-than-25-000

    http://www.wikinvest.com/stock/Wal-Mart_%28WMT%29/Data/Gross_Profit/2013
     
  19. 123456789
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    There is nothing wrong with true capitalism.

    When the government bails out banks, that's not capitalism. When the government subsidizes big companies like Wal Mart using billions of taxpayers money per year, that's not capitalism. When laws are formed that help certain companies maintain monopolies, that's not capitalism.
     
  20. ChickenFreak
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    ChickenFreak Contributing Member Contributor

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    Unless I misunderstand your calculation, they're already paying 12 billion, so if they double those wages, they're only increasing by 12 billion (rounded up) not 23 billion.

    And the number to compare that to is not profit, but gross revenue, which was about 400 billion. So the increase in wages would be around 12/400, or three percent of gross revenue. So if prices go up by three percent, that covers the salary increase.

    So we could assume that the employees' cost of living would go up by three percent, IF absolutely every expense in their lives is due to purchasing Wal-Mart products or other expenses that similarly increase due to the increased minimum wage. I don't think that's true--for example, housing is a huge expense, and you don't buy your house from WalMart.

    Because their income would only go up by 97%, instead of 100%? I'm still seeing 97% as pretty significant.

    (Edited to consider my math. 97%? 98.5? That's assuming that one hundred percent of the income is spent on living expenses, which for the poor is probably accurate. So if you earn and spend twenty thousand a year, and then next year you earn forty thousand but spend twenty thousand six hundred because cost of living went up by three percent, then you're ahead by nineteen thousand four hundred, divided by the original twenty thousand, or...yes, ninety-seven percent.)
     
  21. BrianIff
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    BrianIff I'm so piano, a bad punctuator. Contributor

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    Last edited: Aug 27, 2015
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  22. ChickenFreak
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    Walmart's labor cost increase in this scenario would be approximately three percent of revenue. Edited to add: Or perhaps five, if we ripple upward.

    Your theoretical business's labor cost increase would be approximately twenty-five percent of revenue.

    If minimum wage is increased, your theoretical business may go out of business, as may many businesses where the profit is so very small that the business is essentially dependent on almost-free labor. That is where the pain of a minimum wage increase is likely to be--not increased cost of living, but disruption as businesses that are dependent on a model of near-free labor go out of business, and their employees have to find other jobs. I believe that the increased amount of money in the economy from the people lifted out of poverty-WalMart certainly isn't going to go out of business, and their employees will be a lot of less-poor people--will result in more jobs being created, but there will certainly be a disruption.

    Those businesses using near-free labor were never self-supporting--we're all supporting them, with welfare and subsidized housing and child care subsidies and food stamps for their employees. If a business goes under when it's asked to pay the real cost of its labor, that business was never viable in the first place.
     
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  23. Aaron DC
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    I wonder if capitalism leads to this scenario in the first place, though? I don't know economics well enough to answer that.

    I do wonder what happens if we remain privatised across the board and remove the speculation effects of stock market activity, as well as share holder imperatives from business.
     
  24. BrianIff
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