[Principled]

The basic idea is that if I am making a pizza and I save 10% on my pepperoni, and 10% on my cheese, and 10% on my flour, and 10% on my labor, and 10% on my rent-- I have not saved 50% of my costs. I have reduced my costs by AT MOST 10% in this example.

Everything you say is correct - and the 10% savings will be allocated to lower prices, higher wages, or improved ROI according to competitiveness.

This pizza example is only one level of production. It's the savings from previous steps you ignore. Do you deny the existence of savings in previous steps of production?

[RobFromGa]

No the savings will exist in every stage, and percolate through to the next stage as a percentage of their cost at the next stage. If we assume that labor savings are 7% due to the elimination of Employer-half SS/M and we start at the lowest level and determine that the best case savings for a company that is all labor is 9%, then that is the most savings that we will see on any component of cost.

If you have ten components of cost and the most that any of them are reduced is 10%, then you are going to have less than a 10% reduction in your total cost.

To argue against this, you would need to come up with a hypothetical company that can save more 22-23% at ANY level of production, without assuming inputs that are dropping by unrealistic amounts.