I have seen a pretty mocking post of Capitalism, ironically by Socialists, comparing the supposed value extraction from labor to taxes, and implying that basically taxes are no big deal and the real theft is the theft resulting from the exploitation of your labor by possibly low wages, bad working conditions, lack of democracy in the workplace, you know the usual rhetoric , etc...

The post can be found here, read it, analyze it, and then read my rebuttal to it:

Now I wanted to respond to this earlier because I can't really let nonsense of this magnitude just pass in front of me without me saying something about it, but I was pretty busy this week.

The beautiful thing about philosophy is that truth wins in the end, it doesn't matter if your opponent covers the truth under a mountain of lies, truth will rise to the surface eventually. And truth can only be uncovered through reason, logic, verifiable evidence, basically using the scientific method and applying it rigorously on the subject in question. So I am not going to speak in metaphores here, or trying to confuse you with long arguments:

I am going to directly demonstrate that that picture is a flat out lie, and that you lose overwhelmingly more to taxes, and Government interference than to "entrepreneurship" or how they call it "labor exploitation".







Rebuttal

Now there are 2 sides to this rebuttal, first I need to demonstrate that taxes are much worse than show there, basically socialists in general barely have any problems with taxes despite the fact that in 2017 the taxes around the world are higher than they ever were in known human history. So they clearly ignore or downplay the effect that taxes that have on your labor.

Then I have to demonstrate that the "value extracted from your labor" does exist, but it's insignificant. In some industries it might be as low as a few percent points just to keep the company afloat. However there are industries where this effect does occur, so they are partially correct, but it's not a general effect of Capitalism. It has more to do with IP Laws, "Free trade agreements" (which are corporate protectionists and have nothing to do with the free market) and Government Regulations.





1) Taxes

Ok so on that picture it looks like the taxes stolen from a worker looks something like 12% (I have measured it in a photo editor). Ok so the socialist claims that taxes on average are 12%. This is a total lie.

Germany : 47.5% Personal Income Tax + 20.43 % Individual Social Security + 19% Sales tax (on the remainder) = 73.8613% Total Income Tax

: 47.5% Personal Income Tax + 20.43 % Individual Social Security + 19% Sales tax (on the remainder) = France : 50.2% Personal Income Tax + 14.2 % Individual Social Security + 20% Sales tax (on the remainder) = 71.52% Total Income Tax

: 50.2% Personal Income Tax + 14.2 % Individual Social Security + 20% Sales tax (on the remainder) = Sweden: 57.1% Personal Income Tax + 7 % Individual Social Security + 25% Sales tax (on the remainder) = 73.075% Total Income Tax

(and so on.... source: TradingEconomics)

And I haven't even included local municipal taxes, property taxes, and the inflation of the EUR and other forms of Government theft. Of course there are deductions and different tax brackets, but that is not the point, the taxes are indeed this high or it could be this high for certain workers.

So from a 12% Tax rate that the Socialists claim we actually have over 70% taxes in Europe. That is a pretty big downplay of the taxation effect don't you think?

Every Socialist complains about long working hours and small pay? Well guess what, you'd only need to work 2 hour/day instead of 8 if there were no taxes. Or work 8 hours and keep 3 times more money.





2) Labor Exploitation

Now despite the fact that the Government is stealing 3/4th of every penny you make, could the Capitalist give you higher wages? Could the Capitalist give up some of his profits and give them in as higher wages to the workers?

I guess it could but the profits aren't that high in many sectors of the economy. To put it in perspective, an average food and beverage producer only has a 2-5% profit margin. This means that the supply chain is efficient, and most of the income of the company goes to pay his suppliers, contractors, taxes and ultimately workers.

So to raise the worker’s salary by only 1% he would either cut his 5% profit margin by 1% or he would have to increase prices by 1%.

Cutting the profit margin below 5% is really dangerous from a risk perspective, most companies that operate even on 15-20% profits have troubles, because they either need that money to upgrade and expand the company or for other expenses.

Raising prices on the other hand is never advantageous, because that will come back on the consumers anyway. If all supermarkets raise their prices by 1% to pay the workers 1% more, then the workers will have to buy their food anyway, so they will pay 1% more there, essentially earning the same in the end.

However if that money is spent on the company, to upgrade it in some way, then the prices might go down by 1%, resulting in actually a net increase of the wealth of the workers indirectly.

So in Capitalism, you only help workers through innovation, hence prices will always go down, and even if the worker doesn’t get a wage raise for years, he will enjoy more and more purchasing power through lower prices.

The tech industry is really the best example why deflation is so great. Computer prices went down from 1 million $ in 1950 to basically 5$ in 2014.

Isn’t Capitalism empowering? You can do now what kings couldn’t do 100 years ago? People have been empowered through technology and innovation, brought by well allocated capital investments, and it is continuing to do so through cryptocurrency investments.

Giving money directly to people can be foolish anyway. They might be gambling that money away or wasting it on alcohol or other useless stuff. But if money is well invested, we can all reap the rewards and benefits of it.

Now of course there is Inflation which steals away your purchasing power, so if you are earning now 1000$ after taxes, that might only be 700$ of purchasing power in a couple of years, so I can understand why people demand higher wages, they are just trying to earn the same amount as they did a few years ago. But this is caused by the Banksters, and the Central Banking System, which mostly exists to fund the Government in it’s reckless and useless spendings resulting in an increase of tyranny over time.

So if a company makes 2-5% profits, that is efficient, and there is nothing left to do there. Looting that company further with minimum wage laws and such, will only result in a net damage to those workers and to the community.

However you might say that some industries make shameless profits either through employing 3rd world sweatshop slaves or by Government interference and regulation.

Well I am against that I don’t condone that. But the sweatshops in 3rd world countries exist with the approval of their local corrupt politicians. The entire political system is in on it, it’s not an economic issue, it’s a moral issue.

When you have a choice between a Corrupt Government and a Tyrannical Government, you will hardly end up in a good position with either choice.

So it looks like it’s not Capitalism’s fault, it’s the Government’s fault. The Government is those corrupt politicians that approve the horrible working conditions in the 3rd world, and the Government is the bad entity that steals 3/4th of your labor at home.





Conclusion

So it looks like Socialism fails once again, and the actual graphic should look like this:

(Feel free to share this picture under CC0 license, I am not an evil IP law exploiter Capitalist! :) )





Sources:

https://pixabay.com