Labor and Returns and Income to Labor

You are correct that returns are going to capital but ask yourself about labor. It is one of three typical inputs to production - along with capital and raw materials.

When one of these three components is 'mis-priced' or 'overpriced' they are substituted for.

With respect to Obama, he is further mispricing labor. As such, while he might want labor to get more, he is taking from labor for his extravagant health plan and all his other social benefits, further mispricing it.

If you approach it from a labor side, you feel you are not being paid enough. That is even clearer here in Europe where the distortions are worse. But the reality is that socialist transfer programs take a great deal of labor's production and use it for ostensible benefits. As these benefits are broadly distributed and highly wanted, labor isn't particularly conscious of what they've given up, they just are aware of what they don't have.

So you get the labor conundrum - which is one of the major issues afflicting our economy. The worker say produces a net available to labor contribution of 2,000. Out of that 2,000 government and benefits take 1,200. Thus labor is left with 800. (I'm not arguing for the exact numbers, the above is just an example).