The Decline Of Small Business And The Middle Class

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The only way to not just survive but thrive as an entrepreneurial enterprise is to destroy fixed costs and labor overhead.

It is not coincidental that the middle class and small business are both in decline. Entrepreneurial enterprise and small business have long been stepping stones to middle class incomes and generational wealth, i.e. wealth that is passed down to future generations rather than consumed. As the headwinds to entrepreneurial enterprise and small business rise, the pathway to middle class prosperity narrows.

The Washington Post published a study that found U.S. businesses are being destroyed faster than they’re being created. While not exactly a surprise, it was sobering evidence that small enterprise is in structural decline:

The decline of small business also hurts employment. Successful small businesses expand and hire employees. As small businesses close, jobs vanish en masse.

I have addressed this systemic decline many times, for example: The Decline of Self-Employment and Small Business (April 22, 2013)
Here's Why Small Business Isn't Hiring, and Won't be Hiring (July 11, 2011)

What are the headwinds to entrepreneurial enterprise and small business? Here are a few key dynamics:

1. Barriers erected by cartels and the government. Cartels prosper by eliminating competition, and the easiest, cheapest way to restrict competition is to influence government to create regulatory barriers that raise the cost to levels no small business can afford. There are dozens of examples of regulations that do little to "protect the public" (the usual rationalization) whose primary intent and effect is to suppress competition.

Sickcare and higher education, to take two egregious examples, are protected from real competition: there is little real transparency in pricing and little accountability for the efficacy of the product (diplomas, wellness).

2. Overcapacity. Supply exceeds demand in almost every nook and cranny of the global economy. There aren't many high-value opportunities to pursue because every field is already crowded or restricted.

The market ultimately sets the value of any output. You can ask $30 for a lunch plate but the market will determine the value. If your cost is $20 per plate and the market value is $15, you will lose money and go out of business.

3. High cost structure. Many people are calling for small businesses to pay their employees a living wage. I understand the emotional source of this demand: a desire to close the income gap and raise the standard of living of the working poor. But since the market sets the value of any enterprise's output (good or services), and the business has fixed costs (rent, utilities, business licence fees, taxes, inventory, back-office overhead such as accounting, etc.), a business can only pay wages and labor overhead out of gross profit--what's left after fixed costs are deducted from revenue.

Fixed costs and labor costs are both skyrocketing. Commercial landlords have inflated expectations of rent, thanks to the Fed-induced real estate bubble: since they overpaid for the building, they need to charge high rents to cover their mortgage payments and property taxes.

As I have explained in previous entries in this series on the middle class, the costs of labor overhead--healthcare insurance, pensions, payroll taxes, worker compensation, etc.--are rising. That leaves less available for wages.

Local governments are responding to their own soaring healthcare and pension costs by raising junk fees and taxes on small business: in many areas, a new small business faces a blizzard of fees for licenses, permits, etc.

The fundamental context of our economy is not conducive to small business or conventional employment: the cost of human labor keeps rising while technology that replaces human labor gets cheaper; fixed costs keep rising while overcapacity and anti-competitive barriers reduce high-value opportunities.
Any enterprise exposed to free-market forces must create value. If businesses can only create low value good and services, i.e. goods and services with thin margins, they can only pay low wages--not just to employees, but to the owners/entrepreneurs.

The only way to not just survive but thrive as an entrepreneurial enterprise is to destroy fixed costs and labor overhead. The food services enterprises that will thrive are those that share the expensive fixed costs of a kitchen. The enterprises that thrive will not own vehicles, they will share vehicles. The enterprises that thrive will not have employees, they will draw upon self-employed people who organize to complete a specific project/task and share the revenue.

The way to destroy fixed costs and labor overhead is to pay no business rent, own no vehicles, have no employees, owe no debt, own your own tools/means of production and nurture human and social capital. This model for small enterprise is overturning all the skimming cartels and bureaucracies: commercial real estate, local government fees and property taxes, etc. etc.

The future of middle class prosperity is entrepreneurial enterprise and joining the class of Mobile Creatives who minimize fixed costs and overhead and maximize productive cross-fertilization of skills, human and social capital and debt-free ownership (or shared access to) the means of production.

I cover all of this in my new book Get a Job, Build a Real Career and Defy a Bewildering Economy, which is in essence a how-to guide on becoming a Mobile Creative as a means of securing middle class prosperity in the emerging economy.

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Dr. Engali's picture

That last chart should have took the blue pill.


Edit: Small businesses are being destroyed faster than they are being created? I call bullshit. The birth/death model says we created 234,000 small businesses this past month alone. And if it's good enough for .gov it's good enough for me.

lordylord's picture

The only person to blame is the American consumer.  The Mom-and-Pops go out of business because you want to save 50 cents on screw drivers at Walmart.  Stop asking government to fix your problems (talking to you libtards, occupy protesters, etc.) when you can fix them yourselves.

Al Huxley's picture

I think a lot of people aren't asking the government to fix the problems, just to get the fuck off their backs, and stop spying on them, regulating and taxing them to death.

TBT or not TBT's picture

Jeremiah Wright preached to the Obamas that the pursuit of "middleclassness" is wrong. Apparently the pursuit of aristocracy is right, however.

drendebe10's picture

Standing ovation for a job well done for the arrogant narcissistic corrupt illegal indonesian kenyan sociopayh liar in chief so it can live its grand imperial golf lifestyle on backs of tax paying US citizen serfs and peasants. 

Dr. Engali's picture

Hell, right now I would settle for not having a daily dose of Zero's ugly mug and his teleprompter on teevee telling me how good things are and how evil anybody is who opposes him. 

drendebe10's picture

Sandpaper its lying skin off and bury it in salt.

Cathartes Aura's picture

consider not watching/owning/contributing to TeeVee.

lordylord's picture

"I think a lot of people aren't asking the government to fix the problems, just to get the fuck off their backs, and stop spying on them, regulating and taxing them to death."

Government justifies regulation and taxation by claiming to be  helping or fixing some problem.  Your claim is just flat out wrong.

Harbanger's picture

You're both right.  He's describing libertarians and conservatives, you're describing liberals and the FSA.

Al Huxley's picture

Just because the government claims something neither makes it true, nor makes it true that the people believe what they're saying.  When the fuck does the government NOT claim that whatever they're doing is to 'help the average guy'.  Fucking TARP was claimed to be about helping the average guy.

lordylord's picture

You are arguing claims I never made, buddy.  How about some reading comprehension around here. I won't even waste my time. 

kchrisc's picture

There are only two types of Americans right now:

1) The sheeple that don't understand the crushing weight of the government and banksters that is upon them.

and 2) Those that do and are doing all they can to get out from under it.

“Lighten the load, throw the government and bankster criminals overboard.”

FredFlintstone's picture

3) Government and banksters who are piling on

zaphod42's picture

American consumer is busy trying to keep up with real inflation in necessaries - food & energy.  They cannot buy screwdrivers at WalMart or anywhere else.  But if they absolutely, totally NEED a screwdriver, they have to scrunch it into their budget, and that means the lowest price possible.  Might be WalMart, maybe Target, perhaps even flea market or hock-shop if they are smart about it.  

Unless and until the wage earners are being paid sufficiently, they will be unable to turn this economy around.  Since Wall Street has educated Corporations that the way to higher stock price (and bonus) is through greater profits, and that means lower pay to the workers, and fewer workers, that is not happening today.  They (Corporations/Wall Street) do not recognize that wage earners are the consumers businesses need to buy their goods.  You cannot kill the goose that lays the golden eggs, and still get golden eggs.  Just short term roast goose.


TBT or not TBT's picture

Right, we should totally go backward to a time of lower productivity per worker. Let's make people dig ditches manually. Or go one better, make them use spoons. A lot of holes will need digging.

Telemakhos's picture

The contrary position (not to troll, but because there's an argument that I want to test) is that it's natural for consumers to seek the lowest price, which, combined with the general principle of efficiencies of scale, predicts that Wal-Mart will put Mom-and-Pops out of business.  Mom-and-Pops, like Wal-Mart, are middlemen who profit by marking up the wholesale price to retail, that is, to the consumer's detriment: they only distribute goods, creating nothing, and thus their profit on those goods is merely parasitic in the larger scheme of transactions between the ultimate consumer and the original maker.  The parasite who sucks the least money out of the consumer, is, in the end, the one the consumer most tolerates.  Add to this the diversity of products available at Wal-Mart, and it makes sense for consumers to consolidate their shopping in one trip instead of visiting several smaller stores specializing in certain classes of merchandise.

Why should either the consumers or Wal-Mart be blamed for that?  The consumers have a simple desire to minimize their costs.  Wal-Mart fulfills that desire better than the Mom-and-Pops.  This is a natural progression in the development of retail, brought about by greater capital availability, logistical support, and scale.  

By making the artificial decision to avoid Wal-Mart and pay higher prices at Mom-and-Pops, the consumer would, in effect, be subsidizing unnecessary employment in the distributive sector, adding nothing to production of goods (manufactured or grown).  One could make the argument (and I'm sure someone probably has) that state-supplied welfare has the same effect.  Since the distributive sector produces nothing, but sucks money out of the producer-consumer equation, there's little difference between having all consumers be gypped of a few bucks to support the distributive workers at Mom-and-Pops and all consumers be gypped of a few bucks in taxes to support the same people when out of work.

That argument doesn't glorify or humanize retail: such humanization of distribution is an important part of seeing the shopkeeper and his employees as part of a golden "middle America," but the argument against Mom-and-Pops would claim that seeing the shopkeepers as essential is a hollow vision of the middle class, glorifying parasitic inefficiency on the same level as productive work like manufacturing, service, and agriculture.  That's got deep ideological implications for what the "middle class" is, so the argument would likely be controversial.  Also, it could be seen as a specific branch of the more general argument that increased efficiency inevitably leads to unemployment, as fewer workers in an age of mechanization and advanced logistics are necessary to satisfy consumers' demands.  While the general theory of unemployement through greater efficiency does describe many effects seen today, it doesn't offer a solution for the employment crisis that it predicts must come.  One might note here, however, that a version of the same theory was available even in the sixteenth century: Thomas More's Utopia describes a world of universal employment achieved by the reduction of working hours; it's also an unfree regime akin to communism.

KCMLO's picture

I'm one of those "always buy from Mom & Pop" kind of people and haven't set foot in a Walmart in years.  Your observation is extremely astute regarding overall inefficiencies in distribution and it really made me think about my position.

I choose to support local shop keepers out of pure selfishness.  I would rather spend a slightly more amount of money on goods locally so that my money stays... local.  Of course that's not true, they're paying distributors all over the world just like Walmart, but if the shopkeeper is also may neighbor and they are able to pay their mortgage, property taxes, etc.  then that money comes back (in fractions admittedly) right back to where I live. 

I've also frequently been able to help out some of these folks who I now know personally and in return get goods in trade.  Not a bad arrangement if our wage/currency crisis continues to worsen. 

Telemakhos's picture

The latter parts of your comments point to where the purely economic argument fails: there can be a human element to transactions.  Wal-Mart seems to do its best to eliminate that element: you rarely know anyone in a Wal-Mart, and the service people are kept to a minimum number necessary to handle the present customers, which minimizes the service-customer interaction.  The ideal Mom-and-Pop, on the other end of the efficiency scale, probably tries to maximize its humanization: you interact with the owner and employees, you know their names, you care about them.  There's a psychological benefit there that isn't present at Wal-Mart.  The Mom-and-Pop's position is that the value of humanization offsets the difference in price between the stores, and that choosing always to seek the lowest possible cost is psychopathic.  The counterargument on behalf of Wal-Mart is that humanization of lucre is illusory, and that middlemen who project a friendly countenance are motivated by the desire to justify their higher prices.

In the final analysis, the decision to buy, and where to buy, rests with the individual, and so it's a value decision on his part as to seek the lowest possible price, regardless of other factors, or to pay higher prices for the satisfaction of feeling that his commerce was more human and responsible.  Neither I nor either side of the argument should be able to make that decision for the individual, because that decision is fundamental to liberty: it's a branch of the more general question of the relative values of private property and communal benefit.

Citxmech's picture

The extension of your concept is that retail commerce ends up being conducted through online outlets like Amazon.  Why have the inefficiencies of brick and morter?

Personally, I think I get a tangible benefit for my money from the mom and pop retailers.  I buy my produce direct from local farmers at the market for instance.  Farm to table with no middlemen.  Way better quality and accountability.  

Another example is the local old timey hardware store which has more knowledge in one of it's employee than the entire staff at any Home Depot I've been to.

Local resiliancy is a community benefit worth paying for.  

fallout11's picture

Excellent point Telemakhos, and exactly why capitalism tends to produce monopolies.....because whoever is the most efficient, lowest cost provider of an identical good or service inevitably gains ALL of the market share. Further, without competition funds formerly spent on R&D, product and vendor differentition, advertising, and similar can be saved as well (lowering costs).

doctor10's picture

Small business is the enemy of big government. Big government needs licensure, taxation, insurance and regulatory requirments to justify its existence and expansion.


All that destroys capital and small business

CoastalCowboy's picture

You nailed it doctor10.

Small business is the enemy of the fascistic control grid that is being constructed. The government uses the parasitic relationship it has with the megacorps to implement policies that it cannot do on its own. While the megacorps use the power of government to develop sanctioned monopolistic powers.

It's all about control nothing more and nothing less.

I hate to tell these sacks of economy destroying shit that starting small businesses have been the only way I and many of my friends have been able to make a living since the economic collapse.

We lost our jobs, and nobody wanted us so we were forced into entrepreneurship. It beats the hell out of sucking government tit or playing megacorp PC bullshit.

BullyBearish's picture

JOLTS report from this morning:

The March Job Openings and Labor Turnover (JOLTS) report showed job openings fell 111,000 in the month to 4,014,000 after climbing 251,000 to 4,125,000 in February (revised down from a 299,000 increase to 4,173,000). February openings were a six-year high.

Hirings slid 74,000 to 4,625,000 after February's 183,000 rebound to 4,699,000 (revised from 71,000 to 4,587,000). Quitters rose 1,000 to 2,476,000 following the 107,000 increase previously to 2,475,000 (revised from 2,382,000). Though dated, these figures are part of Federal Reserve Chair Janet Yellen's labor market watch list.

Read more:

OC Sure's picture

What tyranny wants tyranny takes.

CPL's picture

Only if you give it your time, energy and treat it like it deserves something.

OC Sure's picture

No. The nature of tyranny is to take regardless of reciprocity from the subject; therefore, the means of tyranny's nature is force.

centerline's picture

No worries CHS, .gov will figure out a way to tax the fuck out of the gypsy worker too.

Raging Debate's picture

Centerline - They already are. I got a notice from IRS that my one subcontactor's 1099 was filled out improperly from 2012 so expect 28% interest on the employees income which was $13,000 and pay withholding Soon I'll get a tax bill for $4k including penalty and interest.

I owe $1,900 to State of Maine. The bill I got was $2,100. Penalties and interest for "not paying". I called with online banking in front of me showing those two payments supposedly "missing" had cleared. Now I have to go to the bank and get them special clearance codes from the bank.

Back in 2011 I was forced by the State of NH to pay $7,000 for employees on UI going back to 2007. I called the state and they said it was a retroactive law that had passed. So the UI I paid as a social contract was broken. I told them I was going to head up to Concord with all my payments to UI and a lawyer and that I demanded a hearing. The next day they took the money right out of my bank account.

Behaving honestly isnt working. Perhaps it is better if I pay no taxes for a year, pack my bags and head out to South America. The rich escape taxation and the poor having nothing to tax that leaves the middle class....

zaphod42's picture

How did you fare with your lawyers in NH?  A bill that reaches back like you described is called "ex-post facto" and is against the Constitution.  You should have won easily.


Dingleberry's picture

no. Cali passed a tax law retroactive on the "rich" and they got hosed too.

Perhaps it applies to criminal law only?

Raging Debate's picture

Zaphod42 - She wasn't going to take the case on contingency. Fighting the state to get my money back would have been a wash. I moved my business out of state. I had moved to Maine in 2004 because the politics were horrible. Female dominated state legislature that had come up from MA in the mid 1990's. Few know the state of NH went bankrupt in 2011.
Maine politically had changed over 40 years, people back then moved from Maine now it is a good state.

You pay income tax but the courts aren't the tax collector so they dont use cops to harrass the people. Not happy with them "losing payment" scam they just pulled though. I do not have time for this shit.

I am a data analysts and marketer. I learned database programming this last year to save labor costs and you know what? It is in demand in every country. I know spanish and always got along with people from latin America. I think I have decided I will leave next year. The culture is rotten to the core now. Your either connected to the government or you get ass-reamed. I'll take a job at someplace down very south as a DBA, think I'll do tourism industry. I am a bit sick of marketing it is always shades of grey even in better times.

centerline's picture

Sorry to hear RD.  I already have some experience with working across various state lines.  Continues to amaze me how stupid it all is.  There is no way most people can stay in compliance.  It is all so complicated and mired in numerous statutes, rules and laws.  Almost becomes a full time job just trying to sort out the endless line of assholes that are supposedly due $ for whatever reason.

Raging Debate's picture

Centerline - Thank you. I didn't complain when I didn't pay enough in 2011 and my income was decent that year so I owed money, despite having it deducted by payroll. I fired my CPA and bookeeper. I paid a price for a learning curve. I don't blame government for that and I paid nearly all of it off.

But the rest of what I mentioned was theft - pure and simple. You ever seen a 1099? It is the friggin easiest form in the world. UI was quartely payments. All were made. Paying Maine and having them misplace payment is a scam for penalties and interest. This was very recently.

I complied and all it did was point me out as a stooge that had something left to rob.

centerline's picture

I have had friends who have been shaken down in a similar manner.  One decided to take it to the mat.  Cost him a bundle.  He was really pissed off though.  The net difference in the end was like $100 - and I think it was the State that owed him!

It's going to get alot worse.  At some point these agencies are push the wrong people the wrong way.  I definately sense a dramatic rise in violence coming up.  So does the government, which explains the massive ammo purchases for nearly every agency.

Kaiser Sousa's picture

"The Destruction of Small Business and the Eradication of the Middle Class..."

there its fixed.

Comte d'herblay's picture

None of the nostrums suggested in this piece will work over time.

e.g. Sharing kitchens by restaurants.  

That destroys jobs in the Kitchen appliance manufacturers and others dependent on those employees for their jobs. 

At best it substitutes one class of employees for another a zero sum game.

The ONLY nostrums that will work over time are these three:

1) a dramatic decrease of a billion or so human beans. Two billion would be better.

2) Inventors of products and services that require billions of well paid employees

3) some combination of the two 

The only other possibility Kurt Vonnegut dealt with decades ago. 


centerline's picture

Within the current ponzi paradigm it would called economic cannabalism.  That is what is happening now and will continue until the system outright fails.

Telemakhos's picture

I upvoted you because, while I disagree with your three proposals (which I suspect earned you the others' downvotes), I think you're right that the overhead-sharing and independent contractor model of employment are not reasonable solutions.

A decrease in population likely won't solve employment issues, most simply because it decreases demand.  The percent of population employed does not depend on the overall size of the population, but on things like degree of mechanization and the demand for goods and services.

Likewise, you can't count on inventors of unknown and possible impossible technologies to solve problems.  Technology from the industrial revolution onward has generally increased efficiency and reduced the numbers of workers needed to satisfy consumer demand: fewer workers produce more crops, goods, and services.

As for the points that I agree with: kitchen-sharing is an especially awful example of how to increase efficiency.  Few or no restaurant owners build and maintain kitchens with the surplus capacity to support a second restaurant, and cook staff generally don't laze about idly.  A kitchen-sharing restaurant consortium would have to build entirely new facilities capable of supporting multiple restaurants, and the cost savings are not going to be as high as the author imagines.  If efficiency gains could be made in that sector, they would already have been made: restaurateurs work in a mature field that conducts an amazing amount of research on efficiency.

Likewise, the freelancer model of employment only works well in fields of highly volatile demand, where it makes sense to contract out work on specific jobs.  You don't run a factory that way or a kitchen.  It does work for some small start-ups, which are the author's main focus, but that's an initial stage of development: entrepreneurs generally want to grow their businesses into stable income sources, which in turn usually implies stable employment for their workers.

The author's antepenultimate and penultimate paragaphs, once you cut through the buzzword mumbo-jumbo, constitute an example of short-term thinking.  Businesses engage in debt not because their owners are stupid, but because the profit that results in the long run exceeds the debt service costs and depreciation on assets purchased with that capital.  That's how you build a stable, lasting business rather than a short-term startup that dies before it reaches any kind of maturity: you plan for the long-term.  Like with the author's views on freelance/contract employment, his debt-free approach is only appropriate for short-term projects of marginal profitability.

No rent, no employees, no overhead, no debt, but "nuture human and social capital?"  Really?  And how exactly do you "nurture human and social capital" without any stability or long-term plans, investment, or even a fixed place of business?

This sounds more like a rallying cry for some inexperienced, ideologically motivated crowd mixing convenient parts of the libertarian and Occupy positions, eager for buzzwords (sickcare! junk regulations! middle class! nuture human capital! cross-fertilizaton of social capital!) and empty promises of What Might Be If Reality Were Totally Different, than it does a sound business strategy.

Citxmech's picture

You know who "shares kitchens?"  The LDS community.  Many still have communal or mobile canning kitchens the community uses to prep - a trend that may be expanding to other likeminded types:

MedicalQuack's picture

Today we have the Pope calling for "Legitimate Redistribution" of money around the world.  It's good statement and wish it could happen but the US is under the Attack of the Killer Algorithms and as you folks all know here, the Lord can't stop the algos. 

Remember DOJ Lanny?  He truly represents what we all despise. I don't know how long it will take to finally sink in but it's all computer code running on servers 24/7 that addicts you and takes your money.  Credit card fees, bank fees, 401k fees, all done by algorithms...Listen to him on the video clip "it would have killed my career to prosecute the banks"..geez..

Sadly the President and most of the government executives live in "The Grays" and they can't tell the difference between virtual world values and the real world and this says it.  Even the pope came out today wanting a legitimate redistribution of wealth..won't happen as long as we are under the Attack of the Killer Algorithms and Algo Duping persists.

Everyone can have their own opinion but if you want the "real" world on what's really happening this is it.  Here's a collection of videos from people smarter than me and the Quant documentary here is pretty astounding as they were right on the money and the video was released 2 days before the flash crash.

It's up to you as far as what you want to think, who you want to blame but remember Obama said with Healthcare.Gov, he doesn't write code so he couldn't fix it, same thing applies to markets and everywhere else in a broken system. To me anyway the recent Obama/Biden selfie kind of says it all, they too are in "The Grays" and embrace virtual values over real world values. 


cro_maat's picture

The Pope is calling for redistribution?!!  LMAO!!

Is the Vatican planning on distributing their trillions that they have ammassed over 18 centuries of wars, inquistitions, ponzi schemes, coercion, political aliances, Jesuit skulduggery, etc.? I think not. There is a reason the Vatican is a fortress and the Pope Mobile is armor shielded.

intric8's picture

We are all headed towards the lower rungs of maslows pyramid

zaphod42's picture

Just call it the "race to the bottom."  




Citxmech's picture

That is a very chilling way to put it.

FredFlintstone's picture

You think I will become focused on my physical needs again like sex?

Tabarnaque's picture

But the BLS birth death model said that last month 234,000 jobs were created by small businesses! No contradiction here, right?!  

the grateful unemployed's picture

the idea here may be that people are already working, they just aren't being paid for it. i know a lot of people who do volunteer work, help friends family and strangers, and receive no compensation. add to that people working in the shadow economy, cash under the table, and the real economy is twice as large as you think. people are not sitting around on their butts with nothing to do. while some of us dont like boomers, boomers are not the motor home consumer generation that their parents were after retirement, boomers want to stay active, and contribute something. to that purpose all these people need to be counted, and in a theoretical economic sense they need to be paid, (that of course is highly HIGHLY inflationary) even if everyone who mowed their neighbors lawn while they are sick got $5 the roof would blow off. where is the money coming from first?? imagine that everyone who did something for nothing or was underpaid was paid something or paid fairly for their work?? so its an academic economy run by academics like it was a controlled case study. they have an interest in NOT counting you and to that end they have had to raise the stakes, counting fewer and fewer people all the time. (as well the workers who have been automated out of jobs have a right to the profits made by machines) thats another story

Totentänzerlied's picture

Unpaid "work" has never been counted. Work compensated in things other than monetary wages or financial assets is not part of modern standard economics.

" imagine that everyone who did something for nothing or was underpaid was paid something or paid fairly for their work??"

Many kinds of labor really do have no market value, and/or no monetary (exchange) value, whatsoever, or even negative value.

If the real economy is larger than econometrics indicate, well, no surprise there, no one ever claimed it included everything, and it never has.

"as well the workers who have been automated out of jobs have a right to the profits made by machines"

No, no they don't, because the machines - paid for by someone else (consumers, in the form of company profits) - are doing the work, and not them...

NotAMathWhiz's picture

Sorry, but there is absolutely 0 reason to start a legitimate on-the-books small business in a socialist redistributive society.  Next time start with a chart showing government transfer payments, then stop there.