2 comments in reply to "Slides from Crested Butte talk"

  1. Smith says:

    Things not discussed and considered

    1) To what extent is flat productivity tied to stagnant wages and reflecting metrics vs actual production? Is productivity measured in such a way that stagnant wages and lower prices of goods tend to suppress the factors used in measuring productivity.
    2) The larger issue assuming 1) is not a significant factor, is the idea that suppressing labor costs has become a substitute for improving productivity. This would be a failure of the management class, the elite who run large companies. They’ve been taught and studied how to downsize, alone, with extra hours extracted from exempt employees, who are under constant threat of being downsized or outsourced, or through mergers where operations are combined. They’re able to relocate facilities to southern lower wage states or foreign countries. They’ve gutted R & D to reduce costs thus sacrificing future productivity gains (assuming some measure of R&D would be devoted to productivity). Pre-financial-crisis they expanded into the financial sector of the economy where easy money in credit could be had. They’ve buried money in off shore accounts to avoid taxes and borrowed against those cash reserves to buy back stock instead of investing in operations that could be more productive. Even if they invested, lack of demand for those investments is a problem because they don’t pay their workers enough to buy anything, plus the workers are in debt, and many paying usurious rates. You can’t have any productivity gains when management has been taught to boost profits by other means.
    3) Immigration may be great for America since we are except for Native Americans, a nation of immigrants. But one must point out that the period of greatest equality, robust growth, and high productivity gains occurred during the post war period when immigration was severely restricted. The counter argument says it was restricted before and all through the depression too. The counter counter is that there would be a generational lag as only the new immigrant’s children were fully Americanized and able to take better advantage of the closed labor market. At the very least, this is an underdeveloped area of research.
    4) Another point on immigration, (since it may well be the #1 issued in the presidential campaign, and as it already was in Brexit), the lower income groups are affected most by immigration, the most vulnerable, and the people most in need of help. This includes (ironically and especially) the most recent immigrants.
    5) The full employment metrics targeting unemployment are less than useless. College graduate unemployment was 2.5% yet wages all through the 2000s for that group were stagnant. That is without considering the fact that a large segment of college graduates take jobs (from the less skilled) that don’t need those degrees (despite high debt incurred). Somewhere someone has to at least acknowledge there is a glut of overqualified workers and a lack of high skills jobs, just the opposite of what “conventional wisdom” says. The more we educate the workforce and pretend education is the answer to economic ills, the more we worsen the problem. Construction jobs for infrastructure are very much needed, but so are large scale investments that create new high skills jobs (in education, research and development, medicine).
    6) Nowhere is any mention or thought given to the effect of a small or large portion of the labor force without labor rights (high skills and low skills employer sponsored work visas). If you have 5 to 10% of all new jobs taken by a pliant workforce with no leverage and global wage expectations, what is the effect? Small because it’s only 10% of the 1% new jobs (so .1% of labor force)? Or is it large because 10% is very significant, and new job wages are where wage trends are set and controlled in the U.S.’s highly fluid labor market.

    All these factors may deeply affect productivity, but are mostly absent from economic discussions of very serious people and even people who deride very serious people.

    Do liberal Democrats (with many exceptions) not know? Or is it that they don’t want to know?

  2. Smith says:

    a) You can’t restore the balance in our society if profits and paychecks rise together. Paychecks have to rise while profits remain stagnant for five to ten years assuming productivity averages at least 1 to 2% (three and a third if we get to 3%)
    b) The whole idea that workers and employers can be smart, fair, work together and figure out ways for both groups to benefit is wrong. Employers have to be dragged kicking and screaming to give up anything to workers, let alone giving back 10% of the nations income.
    c) The idea of keeping things as they are now (20% of income going to 1% of population), but distributing future productivity gains at historical rates (10% going to the 1%, or even 0% going to the 1%) is wrong and won’t work. Check on a spreadsheet (I just did). 3% productivity all going to workers restores 10% going to 1% in 25 years. Split it 2/3 for workers and 20 years later, the 1% has still increased their share to 27% of income. What’s worse is the 1% are measured and rewarded based on increased profits including and especially rate of return vs. overall or absolute amounts.

    This business of a rising tide has been rendered nonsense by the greed and selfishness of the 1%. Even with 3% productivity growth for 25 years straight with the entire 3% going to workers and not the 1% it would take 25 years to get back to where we were previously, what was considered normal. It wasn’t exactly an egalitarian paradise either. Somebody better check this math. It’s astounding. Meanwhile platitudes come from the win win camp:

    Mrs. Clinton recently spoke at a Pittsburgh union hall, where she echoed Bernie Sanders in denouncing income inequality. “We need both a growth economy and a fairness economy where profits and paychecks rise together,” she said.
    That quote is from this article

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