Defending the Truth

Jaxian,

First off I have to give you kudos for the story. Upon first reading I found it rather fascinating and a slight bit of a challenge. However, after further thought and pondering, I have some slight problems with it.

First off, while the premise begins alright, in the end it comes down to a zero-sum game, with a winner and a loser. However, the market does not always follow this rule. The free market is not zero-sum, just because one business, or in the case of your story, person, wins, it does not necessarily mean that the second business, or person loses.

In your story we have a clearly superior and clearly inferior cake. In your story the rewards only go to one person. However, in the market there is room for both products. For instance, if you or I were to need an entertainment center, for our television, cable box and DVR, we could go to a furniture store and buy a nicely crafted and well made entertainment center for somewhere around $600.00. This would definitely be the superior product, however, we could also go to WalMart, or any other discount retailer and buy a inferior made product for around $150.00. Granted the individual or company making the first product reaps a larger profit from the sale of their item than the second individual or company, the second company can actually in the end reap larger profits do to volume sold. Your story turned the free market into a competition, but, the freem market is not merely a competition. It may rely upon competition, but in the end, what matters the most is the demand for the product. In this case there can be several different winners.

Another point lacking from you story is the discussion of capital. Where as Ashley and Cindy are the clearcut leaders of the respective groups, you do not take the time to discuss who pays for what. Who paid for all the supplies needed to make the cakes, only the team leaders or the entire team? Nor do you tell us who pays for the pots and the pans and the ovens and the electricity needed to cook the cakes.

In the market, capital is needed to begin any business. Supplies need to be bought, building purchases or leased, utilities paid, employees paid, taxes paid, and various other miscellaneous fees. Most businesses, these monies come from either an investor, or the individual beginning the business.

Income is what is left over after government takes it share and not what it grants you. My income is determined by my skills, my merit and my ability to negotiate with my employer over what my compensation should be for providing my services to them. It also requires that the company have a need for my services. The more sought after my skills the more income I will make, the less sought after, the less income.

The question is to extent do I have a right to reap the benefits of my rewards. I am a small business owner, and I work two other jobs for employers, however, I am also an employer. I have two individuals who work for my business helping me to put together my pictures for sale. I pay each individual $2.00 per photo. Now, the way it works is that when I get an order I divide up the total and have each employee put the picture together, it takes about 5 - 10 minutes to make one photo package. That means they can earn anywhere from $12 to $24 per hour depending on how fast they want to work. I usually pay my employees with each order, for example, last week I received 2 orders of 1000 pictures each, which means I gave each employee a 1000 picture order. When they finish that order how nice would it be just for me to pay them $2000 each and be done with it. But the world does not work that way, no instead, I must deduct 7.65% from their payroll to pay the payroll taxes. Not to mention, I must pay 7.65% as the employer for their payroll taxes as well. So instead of getting a check for $2000 instead their check is for $1847. While at the same time I am paying $153 from my profits to pay their share of the taxes. Not to mention the fact that I am paying a 2.5% sales tax, plus my own payroll taxes at 15.3%.

Now on top of it all, in order to make sure that the government gets it fair share of my profit, I can either take time away from business to take care of the paper work for the taxes, or I can hire an accountant to do this, again, this is taking additional money from my profit, and I haven't even gotten to the income taxes yet.

All these items are missing from your story, in the end, it is just about someone being a winner and someone being a loser. The winner is heaping all the rewards, and the loser is left to sulk. In the business world there will from time to time be losers, peoples who products do not sell, but that is not because of someone else selling a product, instead is because of the consumer demand.

I have come to determine that for each dollar I make this year in profit, 50% of it will wind up going to the government. I am doing all the work and they are getting half of my profit. Go figure.

You see, yours is a much nicer story and has a much happier ending, than does what happens in real life.

dmk
Our government embraced the capitalistic system because of our belief in the social contract described by Locke. Included in locks beliefs were a government created with and by the consent of the governed, one which placed a premium on the individual right to life, liberty and property. Government did not create property, but rather property and the need to protect it created government. Today our government exists to protect the property of its citizens and their rights.

Then you have been on another planet.

I..uh...huh?

That is what I thought.

Read the article.No one on that list makes your "90-100 million" a year.

there, i fixed it for you.

compensation is more than salary.

still don't see any anyone making 100 million, 40 million(almost) is a close as it gets.....it must suck to be him

Okay, you have gone from $2.5 mil to $40 mil. Keep looking. They still only pay FICA on the first $90,000.

The Social Security contributions in the FICA tax are generally considered regressive, meaning the tax rate progresses from high to low as income increases. The rate is 12.4% on an amount of income adjusted annually for inflation (e.g., $94,200 for the year 2006). Half of the tax is withheld from the employee's pay with the other half being paid by the employer. By contrast, self-employed individuals pay the entire amount of applicable tax (on the annually adjusted income amount). However, whether this tax should properly be called regressive is disputed because the untaxed income cannot be counted in the benefit formula for computing retirement benefits (meaning the redistribution of the tax is progressive, giving a higher percentage to those with low income). Therefore, this limit could be taken as a penalty on high-income earners (they are denied the ability to fully participate in the Social Security retirement program and receive no benefit from Medicare). Conversely, it is argued that they can invest the untaxed portion of their income and earn higher returns than a majority of recipients earn on the money they contribute to that program.
Federal Insurance Contributions Act tax - Wikipedia, the free encyclopedia

First of all, Bush did NOT cut taxes!
What Bush did (with Republican Congressional help) was a tax transfer from current tax payers, to future tax payers.
The taxes the wealthy pay today may have decreased. But our deficit and debt has increased. The Bushies have simply replaced current tax revenue, with borrowing.
And because of the increased debt service, Bush's "tax cuts" actually INcreases the amount of taxes that will have to be paid.
It is politically conservative to promote fiscal conservatism, balanced budgets, and no debt.
U.S. President Clinton not only presided over consecutive federal budget surpluses. He handed over to Bush a federal government budget that was in surplus.
It didn't take Bush long to turn that around.

The irony is, Clinton was the fiscal conservative. Bush is the fiscal liberal (spending our children's money like a drunken sailor).

Conservative columnist George Will makes this clear.
I am a political conservative.
It is painful, PAINFUL to me to hear the younger President Bush being called a political conservative.

He's not.

He's a social conservative. More precisely, he's an authoritarian, with a theocratic social agenda.

United States President Bush (the younger) is NOT a political conservative; nor is he a fiscal conservative.

PS
An intelligent discussion of this topic should include mention of the Laffer Curve. GalatiansC4V16 didn't.