Failed businesses: Theranos, WeWork and others

[Beorning]

I've been bored lately, so I ended up watching some YT videos on failed (or outright fraudulent) businesses and people behind them. Like Elizabeth Holmes and her Theranos start-up, or Adam Neumann and WeWork.

I have questions...

Regarding Elizabeth Holmes and Theranos: I admit I can't quite understand how did she manage to pull all of this off? She founded her company in 2003 and it was only in 2015 that concerns were raised whether anything about this business was legit. True, Holmes started giving interviews etc. only around 2013 or so... still, the company has been operating for over a decade at this point, secured investors and their money etc. How the heck did Holmes manage to do this? Did no investor actually look closely at this company and check whether there was a viable product to sell at all?

Also, I'm genuinely wondering what Holmes' endgame was supposed to be? Yes, she somehow managed to get rich on investors' money while stringing them along with a promise of revolutionary invention. But... this *had* to blow in her face at some point. At some point, people were going to demand the finished product. Which didn't exist. Did Holmes think that day wouldn't come? Or did she really believe she could achieve this kind of technological breakthrough?

As for Adam Neumann and WeWork - again, how did he manage to go so far with this company? WeWork wasn't necessarily fraudulent, but its business model was incredibly risky. And, as it turned out, the company wasn't generating any profits for 9 years - on the contrary, it kept losing money. And yet, Neumann kept getting money from investors and made himself rich. In fact, after he was removed from WeWork after the company's disastrous finances were revealed, he walked away with a big severance pay...

Seriously, is it actually legal? You can just come up with a flashy business idea, dazzle some investors, play at running a company without generating any actual profit - and then walk away with a thick paycheck? This is bizarre...

Thoughts?

[ReijiTabibito]

I can't speak for Neumann and WeWork, but I have read a couple of books (notably Carreyrou's Bad Blood) and seen a handful of videos on Holmes and Theranos.  I'm no expert, but from what I've learned, here's the breakdown.

Holmes was a psychopath (not in the ax-crazy sense, in the 'totally lacking what one could call conscience' sense) who expertly manipulated people least likely to spot contradictions or ask questions about her line of business.  Medical science is a field that requires years of study and research not only in order to make advances, but to have any idea what someone is talking about.  We can talk about Trek or Doctor Who technobabble, but that is literally a thing that people in scientific research fields do.  (Speaking from my year-plus collegiate experience working in science research labs.)  Holmes and her partner, Ramesh Balwani, were very careful to select investors that lacked a medical background, and in many cases no background in the sciences at all.  About the only name attached to Theranos that had any sort of medical background that I remember was Bill Frist, who was a cardiac surgeon and former US Senator.  They also picked high-profile names to encourage others to invest.  Guys like Henry Kissinger.

Theranos also made full use of things in the business world like nondisclosure agreements and noncompete clauses in order to cover up the fact that Theranos was having serious problems on the inside, but also to keep staff from jumping ship to another company when they inevitably realized (at least for the R&D teams that had to do the actual work and not just convince people to sign big checks) that they were hosed.

We say now, after all the fact, that the result was the inevitable conclusion.  Consider the following.

A: In...I think it was 2012, a member of the sales department discovered that Theranos' financial projections were based on faked data from tests.  He did what any person would do and raised the alarm, alerting the board about what had been going on.  The board learned of the activity, and called an emergency meeting expressly for the purpose of firing Holmes as CEO from Theranos.  She managed to convince them to back down, that she was trustworthy after all, over the course of about two hours...and then when the Damoclean sword was not forthcoming, fired not only the whistleblower, but anyone who had come forward to support their effort to alert the corporate board.  If the board had stuck to its guns and fired Holmes then and there, the deception would have been uncovered years before their exposure in late 2015.

B: One of the key figures in the downfall of Theranos was Richard Fuisz, a friend of the Holmes family and doctor.  Fuisz had wanted to get involved in Theranos, but Holmes had recognized that his medical expertise could jeopardize her plans, and so deliberately cut him out of any involvement with the company.  In retaliation, Fuisz patented a device similar to something that Theranos was working on, and ended up in court over it - part of the court case involved the deposition of Ian Gibbons, the head scientist at Theranos.  Gibbons knew that whatever he did - tell the truth or lie - would seriously endanger him, and as a result, Gibbons committed suicide the night before he was scheduled to speak to Fuisz' lawyers.  If Fuisz had been brought on rather than rejected as part of the team at Theranos, it would have screwed up Holmes' projected timelines, certainly, but it also would have removed what became one of the driving forces behind Theranos' downfall.

As for 'how did she think she could get away with it,' see A above, but also...psychopaths like Holmes tend to believe that they can talk their way out of any problem that comes up.  That it's just a matter of massaging egos and soothing emotions and then everything can go right back to normal.  It's part of the diagnosis that makes them what they are.

As for how she was able to continue raising money despite no actionable product, that's what the high-profile names were for, and in addition, she took advantage of everyone's desire to be the new hot thing on the block, the cutting edge, all of that.

If you want to know more, and haven't seen them already, check out ColdFusion and ReasonTV's videos on Theranos; each is about a half-hour.

[Oniya]

In relevant news, Holmes's trial has started.  The prosecution calls her a liar and a cheat - while the defense claims that she actually believed all the things she said, and intends to bring a 'domestic abuse defense', laying the blame on Ramesh 'Sunny' Balwani.  His trial is slated to begin in January.

[Beorning]

I'm honestly intrigued in what will the verdict be... And as I said, I'd really, really love to know whether it was all a cold-blooded scam, or if she somehow believed she could deliver the product in the long run.

Anyway, all of this made me think of whether it is possible to be both a successful businessperson and behave ethically. Can you achieve success in business without trampling over employees and / or swindling clients? Or is every successful CEO, by necessity, a soulless exploiter like Jeff Bezos?

[Oniya]

I'm honestly intrigued in what will the verdict be... And as I said, I'd really, really love to know whether it was all a cold-blooded scam, or if she somehow believed she could deliver the product in the long run.

Anyway, all of this made me think of whether it is possible to be both a successful businessperson and behave ethically. Can you achieve success in business without trampling over employees and / or swindling clients? Or is every successful CEO, by necessity, a soulless exploiter like Jeff Bezos?

The guy who runs Costco seems to be doing a good job.  His employees have actual benefits, and he capped his own pay to put money back into payroll/the company.

[Saria]

Anyway, all of this made me think of whether it is possible to be both a successful businessperson and behave ethically.

No.

Any definition of “successful” that would be recognized by any contemporary business journalist or professor requires exploitation on some level. It’s baked into the system, right down to the fundamentals. Merely having employees automatically makes you an exploiter. Anything else that maximizes profits just makes it worse from there.

Case in point:

The guy who runs Costco seems to be doing a good job.  His employees have actual benefits, and he capped his own pay to put money back into payroll/the company.

Treats his own employees better than most: good.

Still ends up using slave labour: not so good.

Generally, you should always assume that if you can’t see the evil a company is doing at their front-line locations, you just need to dig a bit into their supply chain. The worst evils are generally hidden outside of the view of shoppers in rich, Western countries.

And of course, there are endless animal cruelty allegations, particularly connected to their cheap chickens.

I’m not saying that Hamilton James is Hitler. But the man is no angel. Even outside of Costco, he’s been involved in some shady financial shenanigans (never charged, as far as I know, because settlements were made, as often happens with rich criminals), and he was a big supporter of Dubya.

Or is every successful CEO, by necessity, a soulless exploiter like Jeff Bezos?

It is a common misconception that taking part in an evil system requires you to be an evil person. While there are no shortage of genuine pieces of shit among mega-successful CEOs, there are no doubt many that are wonderful, sweet people, and they’re probably doing their damnedest to be good and decent in their business dealings.

But no matter how good you may try to be, so long as you are willingly taking part in an unethical system, you cannot claim to be ethical. You may be the nicest exploiter who ever did live… but you’d still be an exploiter.

[clonkertink]

Merely having employees automatically makes you an exploiter. Anything else that maximizes profits just makes it worse from there.

I would strongly dispute this statement. Compensating someone for their labor is not the same as exploitation. Only a failure to adequately compensate employees.

Suppose I run a auto-mechanic’s shop. I make my living repairing people’s cars. Sure, I can probably do all that myself, but as just one man there is a cap on how much work I can do. Now, if I employ a second mechanic, we can service more cars do more work and earn more money than I could on my own. Moreover, I have now enabled a second person to earn a living through their skills.

However, suppose I refuse to employ this mechanic, because I believe it is unethical to employ another person. Well, this second mechanic can either go work for someone else (and just be exploited to a greater or lesser degree) or they can go open their own shop. But now, of course, we’re in competition with each other. Rather than making money together, we end up driving each others’ prices down. If everyone with a mechanical skillset works for themselves, then they are all entirely reliant on whatever work comes through the doors on any given day, and it’s entirely sink or swim.

Now, there are ethical (not to mention legal) obligations to employing people: they need a living wage, they need time off to recharge, destress, and focus on themselves, they need benefits that can help them stay healthy and happy, they need assistance saving for retirement, and so on.

Of course, I’m not going to say that employing others is inherently virtuous, or that people earning subsistence wages should somehow be grateful for the pittance they’re given - there is a conflict of interest between the employer’s prosperity and an employee’s wages. I think business needs careful regulation to ensure that workers are fairly compensated for their time and effort.

But employing people is necessary. Not everyone has it in them to be a self-employed entrepreneur - I certainly don’t. I have a specialized skillset, and I’m quite happy to be able to ply those skills undisturbed, day-in, day-out for stable pay. The thought of having to constantly seek out people who will engage my services is exhausting to me

[Beorning]

I'd like to see that subject elaborated on, too. If I employ a person and pay them well, then what constitutes the exploitation here?

Also, if we assume that employing people is exploitative by definition, then - that's the alternative? You can't build a modern economy on self-employed specialists...

[Saria]

I would strongly dispute this statement. Compensating someone for their labor is not the same as exploitation.

You are disputing a statement I did not make. I did not say “compensating someone” is exploitation. That’s would be an absurd claim to make… which is why I didn’t make it.

I said: “Merely having employees automatically makes you an exploiter. Anything else that maximizes profits just makes it worse from there.”

See it now? It’s having employees that is exploitation… not compensating people for their work. Compensation for work is not synonymous with employment. When I pay off my sexy pool guy for services rendered, I am compensating him for his work… but he is not my employee.

Having an employee does not merely mean having someone you compensate for their work. It specifically means having someone whose work makes money for you. And that is the problem, right there… when one person’s work is being exploited for another person’s gain. The word is right in there: “exploited”. You may compensate an employee somewhat for their work… but as their employer, you are, by definition, scraping off some portion of their deserved compensation for yourself. That’s how employers make money off of employees; that’s why employers have employees.

(As an aside, I also said “maximizing profits” is exploitation. I would hope that’s plainly obvious. If you’re profiting off someone else’s work, that’s clearly exploitation. That’s like the dictionary definition of the word!)

Only a failure to adequately compensate employees.

“Adequately”. What an interesting choice of word. How do you define “adequate”? Because history’s greatest economic theorists have already had a swing at it, and it turns out, the only wage that is “adequate” is a fair wage, meaning a wage equal to the amount of work the person puts in to the job.

If you think “adequate” just means “the employee won’t starve to death, or run away to another employer (because your pay is lower than theirs)”, then you are looking at wages from entirely the wrong perspective. You are defining “adequate” as “what I can get away with paying”… not what is ethical, or non-exploitative.

Suppose I run a auto-mechanic’s shop. I make my living repairing people’s cars. Sure, I can probably do all that myself, but as just one man there is a cap on how much work I can do. Now, if I employ a second mechanic, we can service more cars do more work and earn more money than I could on my own. Moreover, I have now enabled a second person to earn a living through their skills.

Okay, you’ve missed the point completely. The part that is exploitation is not the mere fact of “getting another person to work with you”. The exploitation comes from the theft of the employee’s rightful earnings. So if you’ve created a whole story about an auto shop that hires a new employee but never once even mention wages or profits… you’re just wasting both of our time.

Let me fix your example.

So you’re an auto mechanic, and let’s say you do enough work to make $1,000 of net income a week. Cool. So you hire someone else, and now your shop’s total net income is $1,900 a week. Great!

Now, how much pay is “adequate” for your new employee?

If you answer anything less than $900 per week, you’re ripping your employee off. They are doing $900 worth of work. Paying them any less would be exploiting them.

But here’s the thing… if you paid that new employee $900—the amount they rightfully deserve—then at the end of the week, you’re still an auto mechanic making $1,000 a week. Your business may be growing on paper… but you are not getting any richer. You’re also not working any less hard. Sure, your business is bigger, and making more money in aggregate. But nothing, really, has changed for you.

This is not how things work in reality for the majority of businesses, certainly not for any business that has a billion-dollar CEO.

What happens in most businesses is that the owner would pay the new mechanic, say, $500, and then the owner would pocket the extra $400. That’s reality. That’s exploitation. Plain as day.

(Actually, a more realistic example would have the owner now doing half the work—so only producing $500 per week—so the shop in total makes $1,400 per week. They then pay the employee $400 per week, and the owner walks home with $1,000 same as before, but now for half the work. Then they’d add more employees and do less work, until they’re making much more than they were when working alone, while doing basically nothing. That’s the dream, right? Well, that whole dream is predicated on exploitation.)

(Also, you can jigger the numbers all you want, but the theory won’t break. For example, you could say that you hired another mechanic with the same skill as yourself, but now your shop is making $2,500, because even though you both could do $1,000 of work on your own, your combined efforts make certain tasks easier. So you both do $1,000 work of work individually, then you both obviously deserve $1,000 individually; that’s a no brainer. But… who gets the extra $500? You? Why? You’re not solely responsible for that $500 worth of added value. It’s a joint effort between you and the employee. Thus, you each deserve $250. Once again, there would be no exploitation if you actually paid your employee the same as you pay yourself… but no real-world boss (at least not of any large, profit-driven company) actually does that; they always take a little cut out of the employee’s wages for themselves. Clear and undeniable exploitation.)

This is where a classical economist would start to babble about “well, I’m giving the new employee the opportunity to work, so I deserve something for that!” No, fuck that noise. The employee is creating $900 of surplus value for the company. The employee is investing their blood, sweat, and tears into the company to create that surplus value. The company would have zero of that surplus without the employee. The employee deserves 100% of that value they added to the company.

If you want to make some silly “doing them a favour”, “job creator”, or other hand-wavey argument to justify scamming the employee who is doing $900 worth of effort, and pay them only $400, then I defy you to argue the employee wouldn’t then be within their rights to turn around and put in only $400 worth of effort. I can’t see how anyone could possibly argue it’s fair to demand $900 worth of work from someone, then pay them only $400. But that’s how the world works today. In order to make a profit, a company has to ask a worker to put in more effort than what they are paid for. That’s why employment is exploitation.

I'd like to see that subject elaborated on, too. If I employ a person and pay them well, then what constitutes the exploitation here?

🤨 What I said isn’t controversial. This is pretty fundamental, economics 101 stuff. It goes all the way back to Adam Smith, and probably before. If I recall, Smith actually defines “profit” in terms of taking away part of a worker’s rightful (“natural”, but I’m not a fan of that word) earnings; all profit is exploitation by taking some part of what a worker deserves for their labour. So if you own a company that makes profits, you are definitionally exploiting workers, even according to Adam freakin’ Smith, who’s about as far from a leftist pinko hippie as it’s possible to get.

Yes, all employment* is exploitation. That is impossible to debate; it’s just a fact. You could argue whether the exploitation is acceptable (like Smith†) or not (like Karl Marx)… but you can’t argue that it doesn’t happen. The exploitation is a mathematical fact. Employee does X value of work, employee gets Y pay… Y < X, because the company’s gotta make a profit, so… exploitation.

(* All employment in a capitalist framework is exploitation. If you consider a co-op to be “employment”, then that wouldn’t be exploitation… but frankly, what we think of when we talk about “businesses” and “employers” isn’t co-ops.)

(† Smith considered all profit to be exploitation, but he didn’t consider mere employment to be exploitation, and he created some wiggle room in his theory to account for that. In his eyes, you could run a business by paying most of the profits back to the workers, and only skimming a “reasonable” amount off the surface for yourself, and that wouldn’t be exploitation. However… the reason Smith didn’t think mere employment was exploitation was because Smith believed workers need “masters” to survive, and it’s perfectly fair and legit for the masters to suck up a “reasonable” amount of the workers’ rightful earnings in exchange for that. In other words, a more genteel and sophisticated form of feudalism. I would hope that we’ve moved beyond the kind of thinking that believes that peasants require nobles to civilize them and tend to them like shepherds tending to sheep… but I’m probably just setting myself up to be disappointed.)

If you want it actually illustrated, rather than just me pointing to the theorists, then okay, I’ll give it a shot. Just keep in mind I’m not an economist, so my terminology and framing of the theory may be wonky. And of course, I’ll be simplifying it down to ELI5-level, for myself as much as for anyone else.

Suppose Alice makes widgets. To do that, she has to acquire certain supplies and raw materials, use certain tools and equipment—which both cost to acquire, operate, and maintain—put in some amount of physical effort—which means she has costs in operating and maintaining her own body, including accounting for wear-and-tear—and take some amount of time out of her life. When she’s done, she then sells those widgets. The total amount of money she makes is the total amount she is able to sell her widgets for, minus total of all costs, possibly divided by the time depending on whether you want the rate or total.

Let’s say the costs per widget are:

• $10 for supplies and raw materials
• $20 for all costs to acquire, operate, and maintain tools and equipment
• $30 for all costs to maintain herself (food and stuff)

Then she sells a widget for $100. That’s $40 income she gets per widget.

Simple, right? That’s as basic as economic theory gets.

Okay, but now here’s the billion-dollar question: How much of the money from the sale of those widgets does Bob deserve for standing by and watching Alice work, without helping at all?

I cannot imagine any conceivable, sensible argument that the number is anything other than zero.

So now you might say: “Saria, you’re being unfair. Employers don’t just do nothing. They own the means of production!”

(By the way, “means of production” doesn’t just mean physical equipment like machines and tools. I’ve made the example that way for clarity. Means of production could also include things like the ability to make sales, or contracts with suppliers or clients, or anything else that makes the business function. The theory is the same in all cases. For example, if your razzle-dazzle, smooth-talkin’ skills as a wheeler-dealer leads to a deal that sells widgets for $110 rather than $100… then you deserve $10 per widget. If you manage to talk down suppliers to $7 rather than $10… then you deserve $3 per widget. In all cases, whatever value you add, that’s what should you get paid.)

Okay, so let’s assume that the tools and equipment that Alice has to use were actually acquired by Bob, and Bob pays for their maintenance. (You could also assume Bob pays for the raw materials and supplies; doesn’t really change anything in theory, though it does better approximate reality. I’ma hand-wave it for brevity.) This is closer to what a contemporary, real-world business might look like, with Bob as employer and Alice as employee.

In this situation, it would be perfectly fair for Bob to take the costs of buying and maintaining the equipment out of Alice’s income. In fact, anything else would be unfair.

But taking anything else above the costs of buying and maintaining the equipment would be unethical. This is basic, kindergarten-level logic: if you don’t do shit, you don’t get shit. The only fair income for what you put in to a job is the value you have added to it; anything else is either stealing or being robbed. If Bob is doing nothing else beyond supplying the equipment and maintaining it, he deserves nothing else beyond those costs, which is the total value he’s putting in to the widget-creation process.

In a zero-exploitation world, Alice would give Bob exactly what his contribution was worth: whatever it costs to acquire and maintain the equipment, including whatever time Bob puts in to actually doing that (which would be time Alice no longer has to spend doing that, so it balances out). In other words, Bob would get $20 per widget:

• $10 for supplies and raw materials
• $20 to Bob (for all costs to acquire, operate, and maintain tools and equipment)
• $30 for all costs to maintain herself (food and stuff)

A widget still sells for $100, so Alice still makes $40 per widget. Bob makes $20 per widget… he makes exactly what his contribution to the process is. Zero exploitation.

Of course, in reality, the fact that Bob owns the equipment—the means of production—means that he has some degree of power over Alice. Alice can’t make widgets without the equipment, and if she can’t make widgets, she makes zero income… which means she starves and dies. Bob will also starve and die without income, but if Bob can afford to buy machinery, he can hold out much longer than Alice. (Plus, there are probably a lot more Alices—workers—than there are Bobs—people who own the means of production—so Bob can fuck around with Alice a lot more than Alice can fuck around with Bob.) So Bob can basically blackmail Alice for more than the mere costs of acquiring and maintaining the equipment, and Alice will have little choice but to pay.

That is how employment actually works in the real, contemporary world. In fact, because the power imbalance is so extreme, in practice, Bob would demand just about every cent he could milk out of Alice. He wouldn’t just take an extra $5 or $10 per widget. He’d take as much as he can.

So, in the real world, this is what the situation might look like per widget:

• $10 for supplies and raw materials
• $20 to Bob (for all costs to acquire, operate, and maintain tools and equipment)
• $30 for all costs to maintain herself (food and stuff)
• $35 to Bob (exploitationprofit)

which leaves $5 per widget for Alice. Meanwhile, out of that $35, Bob will take a chunk for his own pocket, and post the rest as profit for his widget-making business.

That’s capitalism 101.

The tl;dr is this:

In order to make a profit, a company has to pay an employee less than what the employee deserves. If an employee puts in $100 worth of work, and gets paid a fair $100 for it, the company cannot make a profit. In order for the company and its owner (or shareholders, which are just owners) to get rich, they must steal some amount from the employee. So:

• Any company that makes a profit must be exploiting its workers.
• Any person in a company who is making more than their actual contribution—usually the owner, but often also other high-level people in the company—must also be exploiting the workers.

Q.E.D. ∎

Also, if we assume that employing people is exploitative by definition, then - that's the alternative? You can't build a modern economy on self-employed specialists...

😲? Co-ops! This is not some secret, new, or theoretical technology. They’ve existed for basically all of recorded history. Worker co-ops specifically in their modern form date back to the industrial revolution.

I’ve heard it said that most people can more easily imagine the end of the world than they can imagine the end of capitalism. Still, it’s shocking to actually see that in action.

You don’t need “employees” and “employers”. (And no, everyone being a master trades-person with their own private, artisanal workshop is not the only alternative.) You don’t need “bosses” and “underlings”. You don’t need an executive class and a worker class. You just need a team of people, each of whom can contribute to the company in their own way (for example, with a diverse set of skills, some of them in production, some in sales, etc.), and a way to determine the proportionality of each person’s contribution (for example, someone who contributes as a process engineer may be making a larger contribution per hour than someone who contributes as a janitor), and then… boom, you’re done! At the end of the day, you just tally up the total profits, then split them up by the contribution proportion.

Co-ops have been around forever, and have been massive successes in most places. They are far less likely to go belly-up, more productive and more efficient (and, particularly, environmentally efficient), have much happier workers (because they provide much better stability), and usually pay more. (The “usually” is because of an interesting quirk about co-ops: When the economy goes into a ditch, regular companies usually respond by laying people off. This is catastrophic for the victims, actually slows down any economic recovery, and makes it more difficult for the company to bounce back when the economy recovers. Meanwhile, co-ops usually respond by lowering wages. This sucks, but because no-one is being laid off, they don’t worsen the wide-scale economic situation much, and they recover much faster when the economy does.)

Assuming the proportioning formula is fair, then there will be no exploitation in a co-op, because everyone shares the profits (proportionally). It’s important to understand that this isn’t directly comparable to a traditional capitalist firm, because there employees are considered a cost. In a traditional company, you take all income, deduct the costs, deduct the payroll, then what’s left is profits, and that all goes to the owner (or shareholders). In a co-op, you take all income, deduct the costs, and what’s left is profits… and that all goes to the workers, fairly proportioned (assumedly). So when everyone shares the profits in a co-op, you’re talking about sharing a much bigger pool, because a co-op’s profits will be much higher than a regular company’s (because payroll is not deducted).

Anywho, there’s your answer. Exploitation is always happening whenever there is an owner and employees… but you don’t always need to have an owner or employees. If you don’t have employees, and everyone is a “worker-owner” compensated by a fair proportion formula (not just worker co-ops; there are plenty of other such structures, like communes, kibbutzes, and more), then you don’t have exploitation.

[Oniya]

You are disputing a statement I did not make. I did not say “compensating someone” is exploitation. That’s would be an absurd claim to make… which is why I didn’t make it.

I said: “Merely having employees automatically makes you an exploiter. Anything else that maximizes profits just makes it worse from there.”

See it now? It’s having employees that is exploitation… not compensating people for their work. Compensation for work is not synonymous with employment. When I pay off my sexy pool guy for services rendered, I am compensating him for his work… but he is not my employee.

Having an employee does not merely mean having someone you compensate for their work. It specifically means having someone whose work makes money for you. And that is the problem, right there… when one person’s work is being exploited for another person’s gain. The word is right in there: “exploited”. You may compensate an employee somewhat for their work… but as their employer, you are, by definition, scraping off some portion of their deserved compensation for yourself. That’s how employers make money off of employees; that’s why employers have employees.

(As an aside, I also said “maximizing profits” is exploitation. I would hope that’s plainly obvious. If you’re profiting off someone else’s work, that’s clearly exploitation. That’s like the dictionary definition of the word!)

“Adequately”. What an interesting choice of word. How do you define “adequate”? Because history’s greatest economic theorists have already had a swing at it, and it turns out, the only wage that is “adequate” is a fair wage, meaning a wage equal to the amount of work the person puts in to the job.

If you think “adequate” just means “the employee won’t starve to death, or run away to another employer (because your pay is lower than theirs)”, then you are looking at wages from entirely the wrong perspective. You are defining “adequate” as “what I can get away with paying”… not what is ethical, or non-exploitative.

Okay, you’ve missed the point completely. The part that is exploitation is not the mere fact of “getting another person to work with you”. The exploitation comes from the theft of the employee’s rightful earnings. So if you’ve created a whole story about an auto shop that hires a new employee but never once even mention wages or profits… you’re just wasting both of our time.

Let me fix your example.

So you’re an auto mechanic, and let’s say you do enough work to make $1,000 of net income a week. Cool. So you hire someone else, and now your shop’s total net income is $1,900 a week. Great!

Now, how much pay is “adequate” for your new employee?

If you answer anything less than $900 per week, you’re ripping your employee off. They are doing $900 worth of work. Paying them any less would be exploiting them.

But here’s the thing… if you paid that new employee $900—the amount they rightfully deserve—then at the end of the week, you’re still an auto mechanic making $1,000 a week. Your business may be growing on paper… but you are not getting any richer. You’re also not working any less hard. Sure, your business is bigger, and making more money in aggregate. But nothing, really, has changed for you.

This is not how things work in reality for the majority of businesses, certainly not for any business that has a billion-dollar CEO.

What happens in most businesses is that the owner would pay the new mechanic, say, $500, and then the owner would pocket the extra $400. That’s reality. That’s exploitation. Plain as day.

(Actually, a more realistic example would have the owner now doing half the work—so only producing $500 per week—so the shop in total makes $1,400 per week. They then pay the employee $400 per week, and the owner walks home with $1,000 same as before, but now for half the work. Then they’d add more employees and do less work, until they’re making much more than they were when working alone, while doing basically nothing. That’s the dream, right? Well, that whole dream is predicated on exploitation.)

(Also, you can jigger the numbers all you want, but the theory won’t break. For example, you could say that you hired another mechanic with the same skill as yourself, but now your shop is making $2,500, because even though you both could do $1,000 of work on your own, your combined efforts make certain tasks easier. So you both do $1,000 work of work individually, then you both obviously deserve $1,000 individually; that’s a no brainer. But… who gets the extra $500? You? Why? You’re not solely responsible for that $500 worth of added value. It’s a joint effort between you and the employee. Thus, you each deserve $250. Once again, there would be no exploitation if you actually paid your employee the same as you pay yourself… but no real-world boss (at least not of any large, profit-driven company) actually does that; they always take a little cut out of the employee’s wages for themselves. Clear and undeniable exploitation.)

This is where a classical economist would start to babble about “well, I’m giving the new employee the opportunity to work, so I deserve something for that!” No, fuck that noise. The employee is creating $900 of surplus value for the company. The employee is investing their blood, sweat, and tears into the company to create that surplus value. The company would have zero of that surplus without the employee. The employee deserves 100% of that value they added to the company.

If you want to make some silly “doing them a favour”, “job creator”, or other hand-wavey argument to justify scamming the employee who is doing $900 worth of effort, and pay them only $400, then I defy you to argue the employee wouldn’t then be within their rights to turn around and put in only $400 worth of effort. I can’t see how anyone could possibly argue it’s fair to demand $900 worth of work from someone, then pay them only $400. But that’s how the world works today. In order to make a profit, a company has to ask a worker to put in more effort than what they are paid for. That’s why employment is exploitation.

🤨 What I said isn’t controversial. This is pretty fundamental, economics 101 stuff. It goes all the way back to Adam Smith, and probably before. If I recall, Smith actually defines “profit” in terms of taking away part of a worker’s rightful (“natural”, but I’m not a fan of that word) earnings; all profit is exploitation by taking some part of what a worker deserves for their labour. So if you own a company that makes profits, you are definitionally exploiting workers, even according to Adam freakin’ Smith, who’s about as far from a leftist pinko hippie as it’s possible to get.

Yes, all employment* is exploitation. That is impossible to debate; it’s just a fact. You could argue whether the exploitation is acceptable (like Smith†) or not (like Karl Marx)… but you can’t argue that it doesn’t happen. The exploitation is a mathematical fact. Employee does X value of work, employee gets Y pay… Y < X, because the company’s gotta make a profit, so… exploitation.

(* All employment in a capitalist framework is exploitation. If you consider a co-op to be “employment”, then that wouldn’t be exploitation… but frankly, what we think of when we talk about “businesses” and “employers” isn’t co-ops.)

(† Smith considered all profit to be exploitation, but he didn’t consider mere employment to be exploitation, and he created some wiggle room in his theory to account for that. In his eyes, you could run a business by paying most of the profits back to the workers, and only skimming a “reasonable” amount off the surface for yourself, and that wouldn’t be exploitation. However… the reason Smith didn’t think mere employment was exploitation was because Smith believed workers need “masters” to survive, and it’s perfectly fair and legit for the masters to suck up a “reasonable” amount of the workers’ rightful earnings in exchange for that. In other words, a more genteel and sophisticated form of feudalism. I would hope that we’ve moved beyond the kind of thinking that believes that peasants require nobles to civilize them and tend to them like shepherds tending to sheep… but I’m probably just setting myself up to be disappointed.)

If you want it actually illustrated, rather than just me pointing to the theorists, then okay, I’ll give it a shot. Just keep in mind I’m not an economist, so my terminology and framing of the theory may be wonky. And of course, I’ll be simplifying it down to ELI5-level, for myself as much as for anyone else.

Suppose Alice makes widgets. To do that, she has to acquire certain supplies and raw materials, use certain tools and equipment—which both cost to acquire, operate, and maintain—put in some amount of physical effort—which means she has costs in operating and maintaining her own body, including accounting for wear-and-tear—and take some amount of time out of her life. When she’s done, she then sells those widgets. The total amount of money she makes is the total amount she is able to sell her widgets for, minus total of all costs, possibly divided by the time depending on whether you want the rate or total.

Let’s say the costs per widget are:

• $10 for supplies and raw materials
• $20 for all costs to acquire, operate, and maintain tools and equipment
• $30 for all costs to maintain herself (food and stuff)

Then she sells a widget for $100. That’s $40 income she gets per widget.

Simple, right? That’s as basic as economic theory gets.

Okay, but now here’s the billion-dollar question: How much of the money from the sale of those widgets does Bob deserve for standing by and watching Alice work, without helping at all?

I cannot imagine any conceivable, sensible argument that the number is anything other than zero.

So now you might say: “Saria, you’re being unfair. Employers don’t just do nothing. They own the means of production!”

(By the way, “means of production” doesn’t just mean physical equipment like machines and tools. I’ve made the example that way for clarity. Means of production could also include things like the ability to make sales, or contracts with suppliers or clients, or anything else that makes the business function. The theory is the same in all cases. For example, if your razzle-dazzle, smooth-talkin’ skills as a wheeler-dealer leads to a deal that sells widgets for $110 rather than $100… then you deserve $10 per widget. If you manage to talk down suppliers to $7 rather than $10… then you deserve $3 per widget. In all cases, whatever value you add, that’s what should you get paid.)

Okay, so let’s assume that the tools and equipment that Alice has to use were actually acquired by Bob, and Bob pays for their maintenance. (You could also assume Bob pays for the raw materials and supplies; doesn’t really change anything in theory, though it does better approximate reality. I’ma hand-wave it for brevity.) This is closer to what a contemporary, real-world business might look like, with Bob as employer and Alice as employee.

In this situation, it would be perfectly fair for Bob to take the costs of buying and maintaining the equipment out of Alice’s income. In fact, anything else would be unfair.

But taking anything else above the costs of buying and maintaining the equipment would be unethical. This is basic, kindergarten-level logic: if you don’t do shit, you don’t get shit. The only fair income for what you put in to a job is the value you have added to it; anything else is either stealing or being robbed. If Bob is doing nothing else beyond supplying the equipment and maintaining it, he deserves nothing else beyond those costs, which is the total value he’s putting in to the widget-creation process.

In a zero-exploitation world, Alice would give Bob exactly what his contribution was worth: whatever it costs to acquire and maintain the equipment, including whatever time Bob puts in to actually doing that (which would be time Alice no longer has to spend doing that, so it balances out). In other words, Bob would get $20 per widget:

• $10 for supplies and raw materials
• $20 to Bob (for all costs to acquire, operate, and maintain tools and equipment)
• $30 for all costs to maintain herself (food and stuff)

A widget still sells for $100, so Alice still makes $40 per widget. Bob makes $20 per widget… he makes exactly what his contribution to the process is. Zero exploitation.

Of course, in reality, the fact that Bob owns the equipment—the means of production—means that he has some degree of power over Alice. Alice can’t make widgets without the equipment, and if she can’t make widgets, she makes zero income… which means she starves and dies. Bob will also starve and die without income, but if Bob can afford to buy machinery, he can hold out much longer than Alice. (Plus, there are probably a lot more Alices—workers—than there are Bobs—people who own the means of production—so Bob can fuck around with Alice a lot more than Alice can fuck around with Bob.) So Bob can basically blackmail Alice for more than the mere costs of acquiring and maintaining the equipment, and Alice will have little choice but to pay.

That is how employment actually works in the real, contemporary world. In fact, because the power imbalance is so extreme, in practice, Bob would demand just about every cent he could milk out of Alice. He wouldn’t just take an extra $5 or $10 per widget. He’d take as much as he can.

So, in the real world, this is what the situation might look like per widget:

• $10 for supplies and raw materials
• $20 to Bob (for all costs to acquire, operate, and maintain tools and equipment)
• $30 for all costs to maintain herself (food and stuff)
• $35 to Bob (exploitationprofit)

which leaves $5 per widget for Alice. Meanwhile, out of that $35, Bob will take a chunk for his own pocket, and post the rest as profit for his widget-making business.

That’s capitalism 101.

The tl;dr is this:

In order to make a profit, a company has to pay an employee less than what the employee deserves. If an employee puts in $100 worth of work, and gets paid a fair $100 for it, the company cannot make a profit. In order for the company and its owner (or shareholders, which are just owners) to get rich, they must steal some amount from the employee. So:

• Any company that makes a profit must be exploiting its workers.
• Any person in a company who is making more than their actual contribution—usually the owner, but often also other high-level people in the company—must also be exploiting the workers.

Q.E.D. ∎

😲? Co-ops! This is not some secret, new, or theoretical technology. They’ve existed for basically all of recorded history. Worker co-ops specifically in their modern form date back to the industrial revolution.

I’ve heard it said that most people can more easily imagine the end of the world than they can imagine the end of capitalism. Still, it’s shocking to actually see that in action.

You don’t need “employees” and “employers”. (And no, everyone being a master trades-person with their own private, artisanal workshop is not the only alternative.) You don’t need “bosses” and “underlings”. You don’t need an executive class and a worker class. You just need a team of people, each of whom can contribute to the company in their own way (for example, with a diverse set of skills, some of them in production, some in sales, etc.), and a way to determine the proportionality of each person’s contribution (for example, someone who contributes as a process engineer may be making a larger contribution per hour than someone who contributes as a janitor), and then… boom, you’re done! At the end of the day, you just tally up the total profits, then split them up by the contribution proportion.

Co-ops have been around forever, and have been massive successes in most places. They are far less likely to go belly-up, more productive and more efficient (and, particularly, environmentally efficient), have much happier workers (because they provide much better stability), and usually pay more. (The “usually” is because of an interesting quirk about co-ops: When the economy goes into a ditch, regular companies usually respond by laying people off. This is catastrophic for the victims, actually slows down any economic recovery, and makes it more difficult for the company to bounce back when the economy recovers. Meanwhile, co-ops usually respond by lowering wages. This sucks, but because no-one is being laid off, they don’t worsen the wide-scale economic situation much, and they recover much faster when the economy does.)

Assuming the proportioning formula is fair, then there will be no exploitation in a co-op, because everyone shares the profits (proportionally). It’s important to understand that this isn’t directly comparable to a traditional capitalist firm, because there employees are considered a cost. In a traditional company, you take all income, deduct the costs, deduct the payroll, then what’s left is profits, and that all goes to the owner (or shareholders). In a co-op, you take all income, deduct the costs, and what’s left is profits… and that all goes to the workers, fairly proportioned (assumedly). So when everyone shares the profits in a co-op, you’re talking about sharing a much bigger pool, because a co-op’s profits will be much higher than a regular company’s (because payroll is not deducted).

Anywho, there’s your answer. Exploitation is always happening whenever there is an owner and employees… but you don’t always need to have an owner or employees. If you don’t have employees, and everyone is a “worker-owner” compensated by a fair proportion formula (not just worker co-ops; there are plenty of other such structures, like communes, kibbutzes, and more), then you don’t have exploitation.

You know what?  This is the sort of reaction that makes people just throw up their hands and say 'Fuck it.  I'm already driving an hour out of my way to get to business Y, because they're better than business X (and as a side, burning more energy and polluting the planet more), and now I'm getting told that no matter what business I choose, it's never going to be good enough.  I'm just going to go back to the place I was shopping at originally, because I can't fucking win.'

[Azy]

It takes a little creative thinking, but you can run a business and be like 95% ethical.  You don't tend to make those insanely high profits that the companies who do cut corners do though, which is why most employers don't, and the opinion that it can't be done exists.  That being said, I have noticed that employers who treat their employees like, you know, human beings actually tend to have a higher production rate.  People want to come in and work hard when they like their boss and they're being treated like something more than cogs in a machine which are expendable.   

[Saria]

You know what?  This is the sort of reaction that makes people just throw up their hands and say 'Fuck it.  I'm already driving an hour out of my way to get to business Y, because they're better than business X (and as a side, burning more energy and polluting the planet more), and now I'm getting told that no matter what business I choose, it's never going to be good enough.  I'm just going to go back to the place I was shopping at originally, because I can't fucking win.'

You’re right, you can’t win. Not if that’s the way you’re trying to play the game.

I realize this will be heretical to the American religion of individualism, and will contradict all the feel-good messaging you’ve been hearing your whole life about how “you can make a difference!” but there is literally nothing you can do that will make one iota of difference to the problem of labour exploitation. Or climate change for that matter. Shopping at business Y or X? Doesn’t matter. Driving less or driving an electric? Won’t make a lick of difference.

And no, it doesn’t even matter in aggregate. In other words, if you’re doing these things—shopping at one business or another, or driving less or electric—because you believe that while your one person’s contribution doesn’t matter, if everybody does it (or at least “enough people”), then that will make a difference… no. No, it won’t. Even if every single person in your city/state/country/whatever does all the right, “good” things, it might move the needle barely perceptibly, depending on how big your country is… but generally won’t make any meaningful difference whatsoever.

You have to understand the scales we’re talking about here. Let’s use an example that someone reminded me of just the other day: The fifteen biggest container ships cause more pollution than all the cars in the world.

There were no typos there. I didn’t say the fifteen biggest container shipping lines, or fleets. I said ships. That’s right, fifteen boats. Less ships than you can count on your fingers and toes. More pollution than all the cars in the world.

(Why is this so? Well, because container ships are out of sight and out of mind, they burn the dirtiest forms of heavy fuel and diesel that no jurisdiction would ever allow within their borders. It’s cheaper. But because of that they belch out sulphur and other pollutants on a scale that’s jaw-dropping.)

Against that scale of polluting, worrying about the extra carbon emissions from driving an hour out of your way seems a bit silly, doesn’t it? You could roll coal for a thousand years, and still not match what one of those ships pukes out annually.

And we were just talking about fifteen or so ships. From what I’ve heard, there are close to 10,000 active ships. Also, keep in mind that shipping isn’t even close to the worst polluting industry.

Are you getting a sense of the scale of the problem now?

Let’s use another example, this one about labour exploitation. One actually came up earlier, about how Costco was using slave labour in its seafood supply chain. Now, I don’t believe that Costco wanted slave labour in its supply chain. I even believe that Costco has measures in place to prevent that kind of thing, not least for the ethical problems, but because it inevitably leads to horrible publicity. Yet it happened. Think about what that means: even a company as large as Costco, with all of the power and resources that comes with that, can’t manage to run a business without relying on slave labour at some point in its supply chain. (And, for the record, Costco’s supply chain isn’t really that big: they order huge quantities, but only of a relatively small number of products. That makes it much easier for them to focus and demand quality (and low prices) than it is for, say, Walmart, which has like 50 times the number of products.)

If worker exploitation is so ubiquitous in the global supply chain that even a company like Costco—which is making it part of its brand that it is anti-exploitation—can’t avoid it… it’s pretty delusional to think that an individual shopper can by choosing to shop at business X versus Y.

The problems are just too big. They are systemic, and the scale is so far and away beyond individual power, that it is ridiculous to think you can really make any difference by individual actions, even when taken in aggregate. The idea that you can have any meaningful positive impact by “voting with your dollar” (or voting, period) is delusional. It doesn’t matter whether you shop at business Y or X; you will be supporting monstrous evils—at some level—either way. And even if by some miracle you aren’t, it won’t really matter to the big picture. So if I were you, I wouldn’t waste that hour driving.

Now at this point, I have to make a few things absolutely clear, because every time I point these realities out, I get accused or being negative, defeatist, or generally suggesting that the situation is hopeless and that you should do nothing. If that’s your takeaway from what I’ve said, the problem is not me, it’s you. If someone says “what you’re doing isn’t working”, and your takeaway is “then it’s hopeless!”, the problem is not the person pointing out the reality of things to you, it’s your lack of imagination. Because when someone tells me “what you’re doing isn’t working”, my takeaway is: okay, then let’s try another strategy. (Good grief, if I hear “nothing you do will fix the global problems”, that’s not negative to my ears! Because it means that fixing the global problems probably isn’t going to have to require much change in the way I live! That’s good news!)

So before I get accused of being a doomsayer, or fatalistic, or whatever (which is probably going to happen regardless), let me make these things absolutely clear:

I am not saying that you should not do things like shopping at more ethical stores, or driving less or electric, or other good things.

I am saying that doing those things is not going to make a difference to the global, systemic problems we have to fix.

But those things are still good things to do, even if you won’t save the world by doing them.

If your only motivation for doing something you know is good and right is the feeling of power you get from having an impact on the world as a whole… then I submit you’re not as good a person as you think you are. Doing the right thing should be its own reward. Even if it won’t impact the world as a whole, even if nobody at all even notices you doing it, doing the right thing is still the right thing to do.

And it may have an impact! No, not on the massive, global, systemic problems we need to fix, but there may be smaller, localized, impacts. For example, if business X is paying its workers poorly, working them too hard, busting unions, and so on, while business Y is paying its workers well, treating them well, and letting them unionize… then while boycotting X won’t make a lick of difference to the global, systemic issues… you might at least be making things better for the local workers at businesses X and Y. That won’t matter on a global scale, but it will matter to those workers. That’s not nothing.

I am not saying there is nothing you can do to fix these global, systemic problems.

I am saying that individualistic action, even when taken in aggregate, won’t make much of a difference.

But… and this may blow your mind… there are other options besides individualistic action.

There is far too much focus on individuals in this whole discussion. Elizabeth Holmes may have been either evil or delusional—I’m leaning toward evil—but there is no possible way Theranos could have gone on as long as it did if she were the only evil person in the story. The same goes for people like Jeff Bezos: Bezos is not personally at Amazon warehouses, turning them into sweatshops and making people piss in bottles. There’s a whole system in place making that evil possible.

The rot is systemic. It goes top to bottom, and out to all sides. And just as it is misguided to focus on individuals like Holmes or Bezos, or their actions, as the cause of the problem, it is also misguided to focus on individuals or their actions as the solution.

So if individualistic activism won’t make a difference, what will? You know what? I’ll let figuring that out be an exercise for the reader. Believe it or not, I don’t take pleasure in being controversial; I thought most of the stuff I’ve pointed out was already common knowledge, and if I knew I’d be challenging the tenets of the capitalist religion, I would have kept my mouth shut. It’s not fun being the Cassandra of late-stage capitalism.

I’ll just say that despite what I’ve been accused of (and, am very likely to be accused of again), I am not saying the situation is hopeless, or that there is nothing you can do to fix it. Quite the opposite, I am extremely optimistic about the future, and actively work with several organizations toward making it better. I believe we can solve the climate change crisis, and the problem of labour exploitation, and everything else. As with most things, it’s not about playing the game harder, it’s about playing the game smarter.

[Oniya]

I'm not saying that I can't win at capitalism.

I'm saying I can't win with YOU.  Because whatever I do, YOU - or one of the other 'Cassandras of late-stage capitalism' is going to say I'm not getting out there and gutting the whole damn system.

[clonkertink]

So if individualistic activism won’t make a difference, what will? You know what? I’ll let figuring that out be an exercise for the reader. Believe it or not, I don’t take pleasure in being controversial; I thought most of the stuff I’ve pointed out was already common knowledge, and if I knew I’d be challenging the tenets of the capitalist religion, I would have kept my mouth shut. It’s not fun being the Cassandra of late-stage capitalism.

I’ll just say that despite what I’ve been accused of (and, am very likely to be accused of again), I am not saying the situation is hopeless, or that there is nothing you can do to fix it. Quite the opposite, I am extremely optimistic about the future, and actively work with several organizations toward making it better. I believe we can solve the climate change crisis, and the problem of labour exploitation, and everything else. As with most things, it’s not about playing the game harder, it’s about playing the game smarter.

I don't think you realize how many people you've alienated in this thread who might actually be inclined to agree with some of your premises. I am sure there are many readers (myself included) who hate the inequality that stems from ruthless capitalist systems prioritizing profits over people. However, the stance you have taken is so extreme, that it seems to implicate every employer from Jeff Bezos down to the proprietor of the local mom and pop shop in the same great evil, regardless how employees are actually treated.

While you say you take no pleasure in being controversial, your three posts have devoted more words to this subject (and taken the thread far afield from its original topic) than everyone else combined, and with little effort to actually engage people who might disagree with the minutiae of your argument.

Most egregiously, however, when asked for solutions, you have opted to leave them as an exercise to the reader, while at the same time assuring everyone else that you are working on those solutions yourself. Yet in my experience, the advocates who have changed my mind and brought me around to their cause are the ones who openly discuss solutions.

However, this thread is probably far enough off-topic already. If you would like to discuss issues like economic inequality or climate change, those would both be excellent topics for a separate thread.

[Beorning]

I don't think you realize how many people you've alienated in this thread who might actually be inclined to agree with some of your premises. I am sure there are many readers (myself included) who hate the inequality that stems from ruthless capitalist systems prioritizing profits over people. However, the stance you have taken is so extreme, that it seems to implicate every employer from Jeff Bezos down to the proprietor of the local mom and pop shop in the same great evil, regardless how employees are actually treated.

Exactly.

Saria, your analysis of why some form exploitation is inherent in capitalism was thought-provoking (even though I keep thinking there must be some reasoning flaw in it...). But you basically seem to take the stance that because of said inherent exploitation, every business is similarly evil. And it's just not true. There's an obvious difference between a small business that treats its workers fair, pays them well etc. and something like Amazon, which seems to be some nightmare factory designed to push its workers to their physical limits...

Most egregiously, however, when asked for solutions, you have opted to leave them as an exercise to the reader, while at the same time assuring everyone else that you are working on those solutions yourself.

Another good point. Saria, I'd really like to hear how you'd change the problems you speak of...

[Saria]

Saria, your analysis of why some form exploitation is inherent in capitalism was thought-provoking (even though I keep thinking there must be some reasoning flaw in it...). But you basically seem to take the stance that because of said inherent exploitation, every business is similarly evil. And it's just not true. There's an obvious difference between a small business that treats its workers fair, pays them well etc. and something like Amazon, which seems to be some nightmare factory designed to push its workers to their physical limits...

Yes, the difference is obvious. So why would you think it’s not obvious to me, too?

I never said or implied anything even remotely close to “every business is similarly evil”. That’s an absolutely ridiculous claim to make. Obviously a business that gives their workers a good living wage, allows them considerable freedoms, and lets them have a say in how things are done is nowhere near as evil as Amazon, where workers are literally pissing in bottles and dropping dead on warehouse floors because the conditions are so horrible. And just as obviously, neither of those are as evil as a business that literally uses child slave labour in a sweatshop. Obviously, obviously.

I don’t even know how you could possibly get the idea that I think every business is similarly evil out of anything I’ve said:

• I said all employment is exploitation, sure. And it is; that’s been a staple of economics thinking going back to the beginning of economics thinking. (In fact, despite what’s been characterized in this topic, the idea that employment is exploitation is not even close to an “extreme” in economic thinking… another major position is that “employment is slavery”. Even that is not an extreme position, except maybe in the extreme rightward-skewed political landscape of the US; it’s a pretty standard part of socialist theory.)
  
  But obviously not all exploitation is equivalent. Why would anyone think all exploitation is equally bad? That’s completely ridiculous.
  
  
• I said there was systemic “rot” all through the economy, sure. The specific example I gave was that it is basically impossible for even an organization with considerable power and resources to avoid literal slave labour in their supply chain.
  
  But again, while rot may be pervasive in the system, that doesn’t mean everywhere is equally rotten. Again, that should be obvious. I even literally gave a counter-example! I pointed out that Costco was (most likely) trying not to have any evil in its supply chain, but ended up with it despite their efforts. Hell, you—whoever you are reading this—you have bought something that was produced with slave labour. Even if you tried your damnedest to shop ethically… I 110% absolutely guarantee you own or used something made by slaves. Probably child slaves, too. So does that mean you are just as evil as the slavers? NO! Of course the fuck not! I can’t fathom how anyone could think that.

Pardon me if I sound a little frustrated, but I have always tried to assume the best of people, and their arguments (even when I’ve occasionally mis-assumed, and had that thrown back in my face, as actually happened in this very topic). Meanwhile, I’m being accused by several people of being some wacko extremist, on the basis of imagined beliefs I supposedly have… that are not only literally contradicted by what I’ve written, but are absurdly ridiculous on their face. Seriously, how do we go from “employment is exploitation” to “Saria says giving people money is evil!”? I said “employment is exploitation”, and a couple people stepped up to defend employment… you don’t see me pointing a finger at them and saying “oh, so you like exploiting people”, do you? I mean, come on, people: if you’re going to attribute ideas to me, could you at least use ideas that aren’t obviously idiotic? If it sounds idiotic to you, why assume it’s what I believe? Why not give me even the tiniest amount of credit?

Another good point. Saria, I'd really like to hear how you'd change the problems you speak of...

I don’t think that would be a good idea.

Up to this point—despite what’s been said—I have tried to engage with every single person who has asked anything of me… I have literally done nothing but answer questions, unsolicited only in my first post, and then after that, I think I answered literally every single question that was asked of me (if I missed any, it was unintentional). When I was asked for a solution, I gave it… immediately, and directly. (Co-ops. They’re the solution to labour exploitation.) Again, that’s despite what’s being said about me not offering solutions. The one and only time I didn’t offer a solution was the one time I wasn’t asked for one, and, frankly, didn’t think anyone really wanted to hear it. (And, from the response I got, I’d say I was right.)

But I don’t know if you’ve realized it or not, this topic has taken a turn. Since my last post, prior to your post, not a single poster has even tried to discuss, question, challenge, or criticize even one of the points I’ve made. Instead, it’s all been criticism of me. I haven’t targeted anyone—I have always addressed the points/issues/claims made, not the personality of the person making them—but the topic seems to have changed to “what’s wrong with Saria”, wth lots of telling me I’m infuriating, or alienating, or crazy… pardon me, “extreme”. Oh, and also verbose, apparently. 🤷🏾‍♀️ That was a nice touch.

Like I said before, I don’t enjoy being controversial. It’s not fun for me to hear that people dislike me or the way I am so much they would rather see the planet burn… ironically stated while criticizing my tone. Not how I want to spend an evening, no. Plus I’m about a half-litre low, since I just donated, so I don’t have the energy for it. Unlike the previous solution, this one will require “devoting” a lot more words—it doesn’t have a simple, one-word answer like “co-ops”—and I can’t imagine the situation in this topic improving if I actually got into the weeds of effective activism.

I am sorry if that leaves you hanging a bit, wondering what to do about all the stuff I’ve mentioned. Hopefully someone else willing to soak up some abuse will take up the gauntlet, or maybe we could continue another day, in a less hostile venue.

[Lrrr]

I've read a lot in this thread about the responsibilities of employers for paying employees "fairly" in a capitalist system.  Frankly, I'm more interested in opinions concerning the responsibilities of the employees for making their skill set valuable enough to earn a higher wage.  Is not the law of supply and demand in the labor force the employees' best means of obtaining a higher wage for their work?  It certainly was for me and the people I've supervised.


I'm well aware of special cases where individuals, through no fault of their own or lack of effort, fail to build a valued skill set by employment age.  Let's leave those people for another discussion in the interest of limiting the size of the walls of text that will inevitably follow.

[Skynet]

It's common for many talented and educated people to be turned away from jobs because they're "overqualified." Certain high-skill jobs such as EMT people are criminally underpaid in spite of the need for their skills. Stories like an NYC doctor making ends meet via moonlighting with an OnlyFans (and conservatives trying to get her fired) was a big thing that happened last year.

While it's possible for business owners to be moral and treat their workers well, capitalism encourages quantity over quality and for people to perform and produce as cheaply as possible. When wages stay the same but costs go up due to inflation, this is accompanied by a reduction in living standards. To say nothing of the fact that business owners and the rich rarely get prosecuted for crimes to the same extent as the middle and lower classes. The richest of the rich will fight to keep wages as low as possible on a systemic level, up to and including breaking the law by hiring illegal immigrants to work at below minimum wage while paying politicians to keep open the laws that allow for tax loopholes.

It's natural to expect more out of employers than employees given how much power the former hold over the latter.

[Skynet]

One more thing to add for Lrrr: some of these jobs have been literally outsourced to China's prison system and the Third World, and it's impossible to compete with unpaid labor unless the United States brings back slavery. Trump and the Republicans ran a campaign telling Americans that they can "bring the overseas jobs back," which is more or less impossible to do so under capitalism given that many of these corporations are literally international and so they can avoid the laws of individual countries or even have US courts rule in favor of them:

https://www.cnbc.com/2021/06/17/supreme-court-rules-in-favor-of-nestle-in-child-slavery-case.html
https://www.ft.com/content/1416a056-833b-11e7-94e2-c5b903247afd

[Oniya]

Back on topic - since it came up in my feed just now - there's an interview in The Verge with John Carreyrou, the reporter that has been covering the case since 2015.  Looks like there's an audio version, for those inclined.

[gaggedLouise]

Many "buzz bizes", companies that generate a lot of talk and claim to have an amazing business idea, don't really get close to breaking even, or achieving a net profit from their core husiness - the things or services they're actually supposed to sell. They survive by credit, and by attracting investment capital. Spotify is a typical case, they finally git introduced on Wall Street to the tune of many billions of dollars but have never been close to making a profit from their music streaming. The record companies and artists who own the music are not getting any serious money either. The whole thing seems to be financial institutions and hedge funds betting on that one day the company will actually make a profit - or speculating in the value of the shares.

The IT business sector has many classc examples of this kind of "betting on the golden pot at the end of the rainbow" to attract investor money and drive share prices into the sky. Some of these companies later crashed, but the moguls and CEOs behind them often walked away without being held liable.:the money just "disappeared". Occasionally a few of the key people behind it had to serve long prison sentences - such as the guys sentenced in the Enron and WorldCom scandals, including the two biggest bankruptcies in US history before Lehman Bros - but often they could just continue with new ventures.