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Email this2:22 pm
November 8, 2018
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Bill said
Employees are "critical" again off point of who creates wealth, i.e. only after the entrepreneur has set up the whole thing do employees get to play their role.
What about nationalized industries? There, an entrepreneur is removed from the picture, but employees are not.
Tells you who is the crucial part.
Employees are the real wealth generator, entrepreneur is the (often) parasitic element who comes with capital, often borrowed, and expects reward in excess of his/her contribution.
You tell me if Mark Zuckerberg, an entrepreneur, deserves to have net worth equivalent to that of 10,000,000 average Americans combined - does he generate as much real wealth as they do?
Even if he puts 70 hours of labor weekly, which I doubt, it is against 400,000,000 weekly work hours of those Americans.
Look at what is happening nowadays in USA, with employees getting stimulus cash, which artificially removed sizeable chunk of workforce from the labor market.
Entrepreneurs are all still there, how are they doing in creating wealth, without their employees? Not so well.
6:55 pm
October 21, 2013
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In some cases, when companies have shut down, employees have banded together and kept them open. I'm sorry I can't remember which ones at the moment; perhaps someone else can. Without the burden of satisfying shareholders with dividends and paying C-suite packages, they have kept in business and kept their jobs. Between them, they know everything about how the enterprise works.
Not long ago, a friend sent me an obituary for a well-known Canadian business owner. It included a long and impressive list of all the clubs he belonged to, all the charities he was involved with, all the (many and varied) boards and committees he'd sat on, and directorships held. My friend asked a single question: when did he ever have time to run a business? When, indeed?
8:01 pm
April 6, 2013
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Alexandre said
What about nationalized industries? There, an entrepreneur is removed from the picture, but employees are not.
Tells you who is the crucial part.
As Bill said, who created the industry before it was nationalized? It wasn't the employees. It wasn't the government.
Employees are the real wealth generator, entrepreneur is the (often) parasitic element who comes with capital, often borrowed, and expects reward in excess of his/her contribution.
You tell me if Mark Zuckerberg, an entrepreneur, deserves to have net worth equivalent to that of 10,000,000 average Americans combined - does he generate as much real wealth as they do?
Even if he puts 70 hours of labor weekly, which I doubt, it is against 400,000,000 weekly work hours of those Americans.
Hours spent is irrelevant. One is rewarded on results, not effort.
Yes, he does. He worked as hard as two average Americans but smarter than 10 million of them combined. 10 million people, working aimlessly about, doesn't amount to much. Just like a chicken with its head cut off.
Look at what is happening nowadays in USA, with employees getting stimulus cash, which artificially removed sizeable chunk of workforce from the labor market.
Entrepreneurs are all still there, how are they doing in creating wealth, without their employees? Not so well.
Using your same flawed logic, they are doing just fine. Lumber prices 4X what they were, the lumber companies can have the same profit as before with as little as 1/4 of the employees.
Most of the value was deciding to invest in the lumber business and building the lumber mill.
8:14 pm
April 6, 2013
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Loonie said
In some cases, when companies have shut down, employees have banded together and kept them open. I'm sorry I can't remember which ones at the moment; perhaps someone else can. Without the burden of satisfying shareholders with dividends and paying C-suite packages, they have kept in business and kept their jobs. Between them, they know everything about how the enterprise works.…
There is more to employee buyouts than that.
Employees band together to buy their employer. Hopefully, the jobs will last long enough for the reduced salaries to cover each worker's share of the purchase price.
10:13 pm
April 6, 2013
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Loonie said
Let's not glamorize the role of entrepreneurs. Statistically, a very large proportion of small businesses fail, even without pandemics, for a variety of reasons …. Many of them have ideas that would never work, don't know their markets, and, frankly, aren't very bright. …
Some are nutty, like in Dragon's Den: Aurora Castle…. 
Still, I think the world is ahead, in spite of the nutty ones, because of the successes from the less-laughable ones. 
7:03 am
March 30, 2017
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Alexandre said
Bill said
Employees are "critical" again off point of who creates wealth, i.e. only after the entrepreneur has set up the whole thing do employees get to play their role.You tell me if Mark Zuckerberg, an entrepreneur, deserves to have net worth equivalent to that of 10,000,000 average Americans combined - does he generate as much real wealth as they do?
Even if he puts 70 hours of labor weekly, which I doubt, it is against 400,000,000 weekly work hours of those Americans.
Its never about how many hrs one work. 400MM wkly work hours by a bunch of order followers is still worse than a 70 wkly hour of a visonary leader. Its the intellectual not the physical that counts.
Also if no one uses facebook, he wont be worth that much either. He created something that people wants.
8:39 am
November 8, 2018
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Loonie said
Not long ago, a friend sent me an obituary for a well-known Canadian business owner. It included a long and impressive list of all the clubs he belonged to, all the charities he was involved with, all the (many and varied) boards and committees he'd sat on, and directorships held. My friend asked a single question: when did he ever have time to run a business? When, indeed?
This is an exceptionally good point.
Also, to be fair to entrepreneurs, some do start with an idea and 70-80-90 hours of work every week, to implement that idea. Yet, there comes a point when they get reward in excess of their contribution, and when it happens eventually they become parasitic element.
Not wishing any ills to Mark Zuckerberg, but because I used him as an example, I will use it again. If Mark died before he delivered Facebook to masses, we might not have had Facebook. If Mark dies today, not much will change within his empire, that is ran by seasoned salaried executives on the top and IT proletariat at the bottom.
Which means, Mark Zuckerberg, as an entrepreneur, outlived his usefulness.
I am not saying he must be liberated from his riches, it is capitalism after all and capitalism is not a fair society. I can live with that.
Yet, there is no point of omitting the fact that 10,000,000 Americans will generate more real wealth working 40 hours/week than Mark working how many hours/week he does.
savemoresaveoften said
Its never about how many hours one work. Its the intellectual not the physical that counts.
Next time you hire someone replace roof of your house, call plumber to fix the leak, have cashier at grocery store pack your bags, tell them: "it's the intellectual not the physical that counts."
One day, you might need a nurse to change your diapers, perhaps then you'll understand how your statement is off. Mark Z. and all world intellectual elite won't come to care for you at the hospital, but one of many Canadian nurses you so casually berate for their non-intellectual work will.
8:48 am
November 8, 2018
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Norman1 said
Lumber prices 4X what they were, the lumber companies can have the same profit as before with as little as 1/4 of the employees.
I think your definition of wealth is "an abundance of money." My definition of wealth is "material prosperity."
There is an important difference between these two, and it comes to light when inflation rises. If we only define wealth as "an abundance of money," Zimbabweans would be considered the wealthiest nation in the world when their country suffered from extreme inflation.
9:24 am
September 11, 2013
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Alexandre, you seem not to get the point that even though the employees end up doing pretty well all the productive work it is the original creation of the business as a viable entity that is the prerequisite for it all. Can't apply for employment until someone else sets up as an employer. And many people worship a creator of the universe, even though Her creation work ended long ago, because without that there'd be nothing else.
Zuckerberg's creation provides untold amounts of wages, wealth, business, entertainment, convenience, human connection, etc for people every minute of the day, for years now, so what he does in an hours work today is not the relevant measuring stick to determine his daily contribution today.
The example of the business owner in lots of clubs, etc is meaningless. It's very normal to turn over daily operation to subordinates as one gets older as a business grows, lots of owners begin to devote time to charities, foundations, directorships, a myriad of forms of other service in society aside from continuing to be hands-on in business.
No private sector wealth creation and the resultant tax revenues equals no public sector nurse to change your diapers. Check out countries where no healthy private sector business creation, you're living in dirt.
11:52 am
April 6, 2013
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Bill said
…
Zuckerberg's creation provides untold amounts of wages, wealth, business, entertainment, convenience, human connection, etc for people every minute of the day, for years now, so what he does in an hours work today is not the relevant measuring stick to determine his daily contribution today.
Lots of web sites around these days. A few thousand to a few hundred thousand dollars to create one. However, there aren't that many that generated $18+ billion of profit for its owners.
Creating and maintaining a web site is not that valuable in itself.
The example of the business owner in lots of clubs, etc is meaningless. It's very normal to turn over daily operation to subordinates as one gets older as a business grows, lots of owners begin to devote time to charities, foundations, directorships, a myriad of forms of other service in society aside from continuing to be hands-on in business.
One can make that same snide comment about Bill Gates. With all the money and time he has been spending on healthcare and poverty issues, how much time could he have been spending on running Microsoft?
The answer is lots of time, while it was needed. Eventually, he grew Microsoft to the point where profits could pay employees to do the day-to-day things he did. That freed up his time to focus more on ensuring the company was creating products that people want to pay for and making sure it was resilient enough to survive duds, like Microsoft Bob.
12:12 pm
April 6, 2013
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Norman1 said
Lumber prices 4X what they were, the lumber companies can have the same profit as before with as little as 1/4 of the employees.
Alexandre said
I think your definition of wealth is "an abundance of money." My definition of wealth is "material prosperity."
There is an important difference between these two, and it comes to light when inflation rises. If we only define wealth as "an abundance of money," Zimbabweans would be considered the wealthiest nation in the world when their country suffered from extreme inflation.
Wealth is purchasing power. There hasn't been a significant change in overall purchasing power the past year. Chicken is not up 4X as the price of lumber. Gasoline is not up 4X.
You're just reading the equation backwards. It is inflation that causes increases in money supply and not the other way around.
1:22 pm
December 15, 2016
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Bill said
Alexandre, you seem not to get the point that even though the employees end up doing pretty well all the productive work it is the original creation of the business as a viable entity that is the prerequisite for it all. Can't apply for employment until someone else sets up as an employer. And many people worship a creator of the universe, even though Her creation work ended long ago, because without that there'd be nothing else.Zuckerberg's creation provides untold amounts of wages, wealth, business, entertainment, convenience, human connection, etc for people every minute of the day, for years now, so what he does in an hours work today is not the relevant measuring stick to determine his daily contribution today.
The example of the business owner in lots of clubs, etc is meaningless. It's very normal to turn over daily operation to subordinates as one gets older as a business grows, lots of owners begin to devote time to charities, foundations, directorships, a myriad of forms of other service in society aside from continuing to be hands-on in business.
No private sector wealth creation and the resultant tax revenues equals no public sector nurse to change your diapers. Check out countries where no healthy private sector business creation, you're living in dirt.
This is a bit O/T but I don't think that Zuckerberg really created anything original but he was wise enough to expand on an earlier concept.
Does anyone remember a site called Classmates ? It evolved about 5 or so years before Facebook and was very similar. You signed up to join, gave the name of your school and city and could leave a message for an old classmate. Only problem was that you had to pay a fee in order to get a response. I remember getting emails that so and so remembered me and left a message.
Zuckerberg was wise enough to see the potential in such a site, I believe. Anyway after Facebook became popular, Classmates went the way of the dodo bird.
1:59 pm
April 6, 2013
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One doesn't have to have an original idea to create lots of value.
Grocery retailing is an old business. Buy stuff by the pallet. Move it around to where people live. Unpack them into smaller family-size quantities. Put them on the shelf. Provide grocery carts or baskets. Have cashiers to collect payment.
Google wasn't the first search engine. But, Lycos and Alta Vista are gone too.
Ideas aren't worth much either.
An information highway to the home is not a new idea either. Telidon was supposed to be that but flopped because of the lack of compelling content.
Internet is quite old. Lots of money is being made bringing to everyone's home.
4:47 pm
October 21, 2013
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I would have thought it was obvious that a successful business needs both a viable idea AND employees to make it happen. Both are needed for wealth creation.
And, by the way, God is not retired. She's just moved on, trying to create new hearts and minds to see things her way. As it says in the Anglican prayer book at least, "thanks be to God, whose power, working in us, can do infinitely more than we can ask or imagine." Creation was not a one-off seven-day programme with no updates.
10:20 pm
April 6, 2013
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Both are needed but both are not equally valuable.
Just like the saffron, eggs, and water that may be needed for a recipe.
10:55 pm
October 21, 2013
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A discussion of the relative value of the various participants in an enterprise would be complicated and everyone has their own opinions and rationales. I think we'd do best to stay away from it here. But I hope we have at least established that wealth creation is a shared undertaking.
6:07 am
September 11, 2013
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We've all had money-making ideas, lots of 'em, means zero. There's a heck of a lot of work between between the "viable idea" and when emplyees are hired, that's the prerequisite slogging and risk, sometimes for years, that the business owners do to set it all up to the point of hiring employees who then roll in to put in their required daily commitment.
It's obvious that employees usually end up doing most or even almost all of the work, of course it's a pointless discussion there. And we all, directly or indirectly, own shares, are owners in and thus are entitled to our share of profits (or losses, as our shares can go to zero), businesses we've never done a lick of work for.
10:24 am
November 18, 2017
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On the issue of multiple taxation on dividend income:
Just about everything a business entity spends is for the purpose of business. (I think that criminal and civil penalties are exempted.) That's all tax-deductible at a designated rate, and the corporate marginal tax rate is much less than most individuals pay. The small business rate is even lower.
The bulk of what most individuals spend is for personal consumption. That's not deductible. That should be taxable, because it had special status while it was in the business entity.
Salaries, wages and bonuses paid to employees and owners are considered deductible business expenses. Thus, they are eligible for taxation at the receiving end - employees and owners pay tax on their payouts.
Hugely successful low-effort businesses, however smart or lucky their owners are, don't need special tax status. They are already hugely successful.
As former US president Obama noted in one controversial speech, those who benefit hugely from the way an economy works deserve to pay for it in significant part.
On the issue of OAS clawbacks:
I agree there should be a cap on payments. OAS is NOT funded by contributions, but by general taxation and its own managed endowment. On the other hand, I don't think that the current thresholds are too high - elderly folk in care or assisted/independent living can easily have annual living and medical expenses over $50k, and little opportunity to earn more.
RetirEd
RetirEd
10:49 am
February 20, 2018
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Why is there no gross dividend tax credit in the U.S. and other countries? Don't they have double taxation to.
10:51 am
April 6, 2013
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RetirEd said
On the issue of multiple taxation on dividend income:
Just about everything a business entity spends is for the purpose of business. (I think that criminal and civil penalties are exempted.) …
Dividends paid by a corporation are not tax deductible expense for the corporation.
As I wrote previously, the dividends are grossed up back to the income that the corporation had originally reported as taxable income. That is grossed up amount is added to the shareholder's taxable income.
The corporate taxes that the corporation had already paid is then credited to the shareholder's taxes owing as the dividend tax credits, federal and provincial.
Shareholder ends up paying the difference between his/her personal tax rate and the corporation's tax rate. Should the personal tax rate be lower than the corporation's tax rate, his/her personal taxes otherwise owing is reduced.
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