Wednesday, March 18, 2015

Enslaved Workers vs. Blood-Sucking Employers?

There is an organization called Labor 411, which I came to learn of through my Facebook newsfeed. When I checked out the organization's website, its Mission Statement says, “We are committed to building a national Buy Union, Buy American movement as a means of improving the safety and economic well being of union workers and their families.”

I did not need to read more than that. It's quite obvious from that statement alone that it is nothing more than an interest group that is also not very well-versed in economics. To see why buying locally, which the phrase “Buy Union, Buy American” implies, is so utterly devoid of anything that resembles intelligence, see here, here, here, here, here, here, and here.

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Coming across an individual or a group of individuals or an organization that is economically illiterate is hardly a new experience for me. I come across more than my fair share of economic illiteracy on a daily basis whenever I turn on the news. So, it should not have bothered me too much.

What annoyed me enough to warrant a separate blog post was this picture that they posted on their Facebook page.

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The very first thing that caught my attention was the utter ridiculousness of this “conversation.” It is obvious that this conversation was not based on a real-life dialog between a CEO of some company and one of his employees. For one thing, contrary to popular belief, a business owner does not, in fact, have much to gain by making his employees feel small and insignificant. In fact, that's probably a good way to end up on the news for all the wrong reasons.

Talk about a PR nightmare
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What this meme did instead was expose the psychological condition of the creator of this particular meme, as well as those who liked it. It shows that they have convinced themselves that the employer, the business owner, senior management, the CEO, the rich, or whatever other term that is used to describe those at the upper rungs of the corporate ladder are evil.

By combining ad hominem attacks, appeals to emotion, straw man arguments, as well as forcing the viewers to rely on their own anecdotal evidence, Labor 411 and its supporters have made an argument without ever needing to make an actual argument. It is a type of argument that bypasses logic by means of raised eyebrows, shrugs, and snickers to express only one thing – disapproval – and which in reality is a confession of intellectual impotence. It is a type of argument whereby its supporters substitute moral judgment for intellectual argument.

Secondly, not only did this single picture betray their complete and utter ignorance of economics, it also exposed their complete and utter ignorance of how a business is even run.

Their idea of how a business is run seems to go like this – the workers (aka the slaves) toil away in the factories or cubicles (aka the cotton fields) in order to make a meager wage (aka just to avoid being whipped) while the employer (aka the master) lazes the day away while counting his money in his comfortable office doing nothing more than issuing orders, which anyone else with an elementary school education could do.

This actually seems to be the way many people think business is actually run!
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What these people don't seem to realize is that that is just not how a business works.

Case in point, any business owner, ranging from your corner grocery store to any one of your Fortune 500 companies, will tell you that regardless of what happens, assuming that the business is being run legally and legitimately, at the end of the day, everyone else will always get paid before the owner can pocket anything for himself. When running a business, profits only come later, if at all.

If you are reading this, you should try this thought experiment. If you worked at Company A for a whole month, and then your employer told you that he did not have enough money to pay you your contractually obligated salary before he drove off in his brand new BMW, how much longer would you keep working there?

Not only would you stop showing up to work the very next day, you would also most likely sue.

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Workers are always paid before the owner can pocket anything for himself because a worker's wages are guaranteed by law. However, an entrepreneur's profits are not guaranteed by law. There is no law that states that an entrepreneur is guaranteed the right to make a profit. Whether the entrepreneur makes a profit or not depends on his own abilities, entrepreneurial skills, and luck.

So, a business owner has to provide the money to make sure that the building and the facilities are built, maintained, furnished, and equipped. The business owner also has to pay his workers regularly for doing their work unless he wishes to be sued in court, which will likely end up costing him a lot more money. His suppliers will also have to be paid unless he wishes to be sued by them, too. He has to pay property taxes and payroll taxes unless he wants to make an enemy of the government. Only later, if the business is successful, does the owner see a return on his investment.

A very good example of this is Amazon. According to Forbes Magazine, Amazon was ranked as the thirty-fifth biggest American corporation as the company reported US$74.5 billion in sales and US$274 million in earnings in 2014. So, most people think of Amazon as a huge mega-business that has an almost unlimited stash of money; and to some people, Amazon is now a villainous company that tramples on everyone else for the sake of its own profit margins.

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However, what many people forget (or never even realized) is that even though Amazon was founded in 1994, the company did not make any profit until 2002. For seven whole years, which is much longer than most businesses last (8 out of 10 businesses fail within the first 18 months), Amazon hemorrhaged money, and lots of it. But during those seven years, Amazon's employees and its suppliers kept collecting their checks.

So, if anything, what the meme that caused this whole blog post should have said was:

Him: Lemme tell you something. The fact of the matter is that we all worked really hard to get where we are. It was a hard slog, but we made it. You put in the work and the determination that this company could not have done without. And I took the big risks trying to steer this thing through, which the company could also not have done without. I think you and I earned the right to buy a nice thing for ourselves just this once.

But that would have been too wordy, and it would have made too much sense. And why would anyone allow something like that to get in the way of trying to score cheap political points?

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