Why do non-wealthy people believe in the "free market"?

$200 profit, wow

 

I don't see any problem with the shareholders receiving more money from the sale of iPads than the engineers or the laborers. Guess what, the shareholders are the owners of the company. They are paying the engineers and the laborers to make the iPads. Anyone is allowed to buy stock in Apple and get a piece of that profit. If the engineers didn't think they were getting enough money, they would quit and work somewhere else. The same with the laborers. No one is forcing them to work for Apple. Apple is paying them what they are willing to work for.
On the other hand, the engineer and laborers are not taking any risk. The shareholders are the ones whose fortunes depend on the success or failure of the corporation, and thus they are the ones who benefit the most with a successful product. If such were not the case, why would they invest at the start?

 

yeah what do those engineers have to do with anything, those ipads grow on trees.

i don't have a problem with what engineers are paid but your dismisal of their function is ridiculous

 

I would take it a step further. Without the investors, iPad is still possible. Without the engineers/designers, iPad is impossible. The most significant drivers behind corporate success are not the CEOs, it's the employees. Hell, even the CEOs are taught in business school that the #1 asset of the company are the people that work for them, not the management or the investors. You need all 3 but employees are the backbone.

 

SM's post also emphasizes much of thadeus' original argument.

 

That is funny, considering I have worked in computer engineering for Intel and Cisco Systems. Guess what, if there were no one to pay them, the engineers would not be able to make the iPad. No individual engineer has the resources needed to make a product like this. They don't have the fabrication facilities for one thing, so even if one person could design the whole thing from scratch, they wouldn't be able to build it.

The engineer who works for a corporation knows that whatever they design will belong to the corporation, not to the engineer. When they hire you, you have to sign documents to that effect. If they could make something that will have $200 per unit profit and sell millions of units, do you really think they would work for Apple? Only if they are stupid (which is unlikely for an engineer). Instead, they choose to work for a big corporation because they know that while they have a contribution to make, they are a cog in the machine. They are compensated in exchange for that, and the corporation (and by extension the shareholders) get the bulk of the profit for the output.

The engineer faces little to no risk. If they can't build the device they may be fired, but they won't lose their money. If the device works but doesn't sell, they won't even be fired. The investor bears the risk of loss. Instead of the iPad, look at the Zune. The engineers who built it don't have to worry that it has a paltry share of the market, but the shareholders of Microsoft are more directly affected.

 

so they couldn't build it just because they couldn't get paid?

edit: i believe if they come up with the idea on their own, they can make it. they can outsource work they don't have the resources to do themselves

the rest of your post i don't disagree with, i understand how capitalism works, thanks, but there are other ways to come up with capital

 

First off, there's no way we can break it down so black and white but since you have, I'll try to do the same.

Tell me this, if Steve Jobs left Apple and took every designer/engineer with him to open Orange Inc and took a $1 salary and every employee invested everything they had into Orange, which company would be more successful in a 5 year span? Which company would you want to invest in?

You are right that it is improbably for an engineer to have the monetary resources to build/sell the iPad successfully. But it is IMPOSSIBLE for an investor to have the labor resources to build/sell the iPad. Apple without it's management and investors could still manage better than Apple without it's employees.

That's the issue I have. Why isn't there regulation to protect the engineer and his contribution to the company. Where are the executives cutting down on costs to increase the workers' salaries instead of their own? Who is lookin out for the backbone of the company? Guess this is the crux of it. One side believes its the corporation (management/investors) which is the driver for company success while one side thinks it's the employees.

You're saying being fired is little to no risk? That's the biggest risk of all as most working class consider losing their job as same as losing money. They are risking their jobs, their time spent on education, and, hence, their livelihood. Trust me buddy, you have much more to lose than the CEO of your company. Let's see how long a laid off Apple employee lasts versus someone whose portfolio lost a couple percentage points cause iPad 3 not selling as hot as iPad 2.

 

Not true. Without management and capital, Apple needs to lay off its employees. With management and capital it can go hire some. (And...employees are not forbidden from being owners. In fact, at Apple type companies, part of their renumeration is often stock related).

Kind of a weird argument, this one. The iPad, a high tech toy for the relatively wealthy and trendy -- produced by a company that pays quite well -- is probably a pretty poor example of the flow of money from the poor to the wealthy.

 

yeah, the only issue with most of these tech companies in relation to the american companies is outsourcing jobs and work to china

 

...or a college kid with a credit card.

 

Engineers could choose to bargain as a collective with management. I don't think this typically happens.

I don't think there should be any special regulation regarding engineers' compensation and I'm an engineer. There are already employment laws.

Engineers as a whole are not complaining about any imbalances inherent within the system so why try to fix something that ain't broken?

Companies that mistreat their engineers will perform badly and any sane manager knows about the value of their technical staff. If a CEO chooses to give his engineers slave wages, then that is his or her choice and the performance of the company will suffer. If a company performs badly and closes down, it is not the responsibility of the government to ensure that the engineers still get paid. We have unemployment insurance for that.

I don't think we should have government decide what fair compensation is.

 

Very true. Though, again, with the iPad example, the outsourced manufacturing has likely led to much much more US based jobs and capital since they essentially created a huge new product and market that wouldn't have been possible with higher costs. Or with restricting sales to the US market.

This isn't the case in many other industries -- which makes the iPad example kind of a poor one with which to criticize the stuff Qball's raising.

 

yeah engineers are IPads are not a good example of "bad capitalism" or labor abuse.

Engineers are decently compensated as a whole and tend to have many employment options.

 

as a complete sideline, if I had to rate the factors that make a successful company I'd rate them as follows:

1) vision -- this is Jobs over Ballmer -- the person who has the ideas and drive
2) management -- ones who make sure it gets done
3) capital -- almost put this ahead of mgmt, but bad mgmt burns through capital, and good mgmt helps attract it
4) employees. The one's who get it done. Super important, but frustrated without good mgmt or a lack of capital.

You need all four. #4 is the easiest to get and replace. #2 and #3 will keep a company going. And #1 will give it the potential to be truly great.

carry on.

 

Guess what, at that point the engineers and designers have become the evil investors. Congratulations, you just proved that you need the investors to make a successful company. Apple would likely hire new engineers out of college or away from other companies. They would also be sitting on a number of patents and have a wealth of business goodwill, so they should be fine. The new company would have to come up with all new products from scratch and do so with only the resources that can be brought to bear by a group of engineers? I would probably invest in both. Apple should still be a safe investment and with the sudden exodus of Jobs and the entire engineering department should come at a very good price. Orange, though risky, would have the potential for great returns since you have a proven team and could get in on the ground floor. I imagine any IPO would be pretty outrageously priced, but a small investment could reap great rewards.

Employees are easier to replace than capital and management. That is why they make less. If your fantasy world was true, no intelligent person would ever work for one of these large corporations.

You think there should be laws preventing corporations contracting who owns the products their employees invent? You would single handedly destroy the tech industry. No corporation is paying employees to design things that the employee then has 100% ownership of. There would be no reason to do so.

The CEO of Intel (while I was working there) had a salary of $1 per year. Microsoft in the '90s had more millionaire secretaries than any company in the world. The tech industry was a terrible example for you to use if you wanted to make this argument. Beyond that, it would simply be a terrible business practice to have management try to maximize worker profit while minimizing shareholder profit. No one would invest to start a company that does that. You would now limit all business to sole proprietorships with no employees.

The employees look out for themselves. It is called freesdom to contract. The employer offers the least that they think the employee will work for. The employee asks for the most they think they can get. It is called the labor market. These are not slaves, they are people selling their labor.

They are only at risk of being fired if they 1) do not produce, or 2) produce at a cost that is higher than someone else. A competently run corporation is not going to fire their engineering team if the current product doesn't meet sales expectations. That is why they are at little risk. Certainly being fired is terrible. But the odds of being fired are much lower than the odds of losing money on an investment. Because there is less risk, there is less reward. This is very basic stuff. It just would not work if the safest things had the highest potential returns.

 

I agree with this to an extent. I think "regular" employees often fail to realize how replaceable they are and tend to highly overrated their own job performance.

I think to a time I sat with an in-law and her friend who had just left the company. The statement was made "that place is going to fall apart without you, just wait and see." Company is still going strong. Hardly missed a beat.

 

Something to chew on... I agree with most of the analysis below; Marx was quite accurate in some of his critiques.

Harvard Business Review: Was Marx right? (Note that I cut out the overly-done disclaimer at the beginning of the article)

 

04-20-2011, 12:57 PM

04-20-2011, 03:16 PM

04-20-2011, 03:35 PM

What!