Tenets of After Corbu: At Least It’s an Ethos

From the comments:

My parents invented their our industry, a previously non-existant niche in the international market. This took over twenty years of endless work and sacrifice. If the government forced them to give parts of the company to their employess, tell me how that’s NOT wrong.

Explain to me why.

–Jeremy Clagett

A fair question. Let’s look at your parent’s case:

They start their own business, build it into enough of a success that they need to hire someone to take on part of the work — hereafter named Enjefu — who allows them to sell more product increasing sales. In the transaction, your parent’s are allowing the employee to take advantage of their previous work (which created the job in the first place), while your parent’s are taking advantage of Enjefu’s willingness to work for less money than he brings in. This difference — what the Marxist’s call surplus value — is their profit.

At the level of your parent’s getting part-time help from a dude looking to move on to something else soon, this hardly is a case that concerns me. However, say Enjefu works there for 10 years along with 10 other schmoes. At a certain point, your parent’s endless finite work and sacrifice have been paid back, and they’re on the purely positive side of the trade and remain so indefinitely.

This is problematic for those who believe a fundamental principal of remuneration should be fairness — people should be rewarded commensurate to the work they have completed. A system where your parent’s can take a percentage of Enjefu’s work indefinitely, effectively sets the value of their own initial labor as infinite, which I’m sure we can all agree is a little one-sided.

This situation would be less troublesome if Enjefu and the parents were equally powerful actors negotiating a mutually beneficial contract. Then we can all just agree Enjefu’s a lousy negotiator and move on. However, there’s a reason slanted employment agreement’s are the norm: power is not equal. Not even close. “Normal” unemployment levels ensure that there’s always plenty of competition for jobs (not to mention the poor overseas masses clamoring for jobs) and high entry costs (few people have enough money lying around to start a business and survive the profitless first years) keep much of the riffraff from starting their own enterprise. Plus capital is not infinitive; there’s only so much land, trees, water, oil, etc. and it’s all already owned. Sure, new markets emerge, but these don’t balance the playing field; GE is much better positioned to dominate the emerging toaster/blender market than I am.

Now it’s perfectly rational for employers to take advantage of the disparate power dynamic when hiring, but that doesn’t make it right, which is what I think we’re talking about. It’s pretty easy to imagine a system that corrects these problems while still respecting and encouraging entrepreneurship and innovation:

Require that companies be equal partnerships, that new employee/owners buy into when they first join, either in the form of an upfront fee, or a percentage of profits over time (similar to how certain companies allow employees to vest into profit-sharing agreements now). Your parent’s could decide how much their initial investment of time and effort was worth, which would affect the terms of their employees buy-in.

There are complications that would need to be introduced to avoid various problems with this kind of ownership structure, but it would definitely seem to be ‘fairer’ that what we have going now. And I think it meets the ‘not wrong’ test.

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