Economic Fairy Tale: Increased worker productivity is good for everyone.

[Zalatix]

Economic Reality:
[img][/img]

The next time a conservative spreads these fairy tales, be sure to ask them if they can come up with a counter to the above graph.

[Amak8]

1. Lump of labor fallacy?

We could go back to ox & plow farming and get 100% employment. Bread would cost $100, but everyone would have jobs. Productivity is good, but it's the government's job to make sure everyone shares in the gains.

[truedelphi]

3. I am not convinced that it is the government's job to see that everyone shares

In the gains, or not. But it certainly should not be the government's job to offer up and transfer the wealth of the Middle Incomed in order to Bailout the Wall Street crowd that just happens to be good buddies of many of those who now hold Higher Political Office.

[Zalatix]

6. Then who's job is it?

[truedelphi]

36. I think government exists to

Allow for a decent infra structure that provides basic services and a safety net. Basic services, for me, include a literate society, so libraries and schools exist by that design. So do community hospitals. Decent affordable MediCare for all style health care.

But let's face it, there are always free loaders. People who would just as soon have you send them a check as make them look for work, develop skills, or hold down a job.

I am not equating those free loaders with people who are down on their luck and need the support of a safety net. I am talking about pure laziness, and also there are greedy people. People who fake a disability so they get workman's comp, but then they are working secretly, or spending all day on the golf course. No society is immune from this type of safety net abuse.

[Live and Learn]

29. Then what is the purpose of a society?

If it is not to share the gains who would want to join? Yet, we have no choice to opt out short of revolution.

A government can only survive if a vast majority of the people support it.

[truedelphi]

4. Oh and welcome to DU. n/t

[Zalatix]

5. $100 bread or bread rotting on the shelves while poor people go hungry, which is worse?

Under Capitalism those are your two choices.

Government intervention isn't enough. Capitalism itself has to go.

[Amak8]

7. Oh, come on.

Are you more likely to go hungry in North Korea or Sweden? A capitalist country can and should provide basic services like food and healthcare.

[Zalatix]

8. North Korea is socialist only in name.

It is a clear and obvious fact that they do not distribute their productivity evenly. The political class is quite well-off there. The people? Not so much.

The "No True Scotsman" defense does NOT apply here. North Korea is as Socialist as the Westboro Baptist Church is a compassionate Christian group.

[Amak8]

9. .

So in a capitalist system everyone looks out for themselves, but in a communist system everyone looks out for each other. yea, right.

[Zalatix]

10. Like I said, which is worse...

$100 bread or you being hungry, staring in the window at piles of hot bread, of which some will get thrown out?

When you're hungry and looking at food you can't afford, North Korea vs Sweden vs America doesn't mean shit. The system has failed.

[quaker bill]

20. There is a place in the middle

The choices are not so stark. It is true that with higher productivity, by definition, it takes fewer manhours to produce the goods we consume. The number of available manhours grows as the size of the employment aged population increases. The inevitable result is that some of the available hours are not used (unemployment).

The simplest adjustment would be to reduce the number of hours in a work week. This reduces the aggregate number of manhours available for production, done right, to a level that results in near full employment.

Conditions of near full employment drive wages higher as competition for skilled workers comes into play.

Beyond this, there is a large amount of potential work out there that isn't being done at all. Our infrastructure is variably falling apart and due to our apparent collective unwillingness to collect taxes from those who have the money to pay them, "we can't afford it".

Finally there are national issues. Currently, if you invest in building a business that employs people to make things at a profit, you pay a 35% tax on the profits.

However, if you invest in building a business that employs no one to make anything, but instead focuses on flipping financial instruments for capital gains, you pay a 15% tax on the gains. Beyond this you never have to get a government permit, negotiate wages with a union, have your product compete in the market place, deal with supplier problems and equipment breakdowns, deal with intellectual property issues, cope with no OSHA workplace rules....

We have created a vast financial preference for easy money in law and policy. Accordingly, much of our wealth creation activity now focuses on the easy money sector.

Flip this over so that flipping financial instruments is the path to higher tax rates, smaller profits, and higher regulatory burdens and the money will flow elsewhere.

[Zalatix]

21. Interesting ideas. All of this bears some serious in-depth analysis.

The first problem I see is that if the pay doesn't increase for workers, fewer hours means the standard of living will go down for people who have a job.

We need a massive jump in the minimum wage. And a FIREWALL to keep money from leaving the country.

That's just my initial observations...

[quaker bill]

22. A jump in the minimum wage for certain

Market forces can be employed to raise wages, but unless competition for any labor is very stong, market forces are of little assistance at the bottom of the wage scale. During the Clinton admin, I did see the fast food operators starting new hire at minimum + $1.00 an hour and tossing in stuff like healthcare and college tuition assistance plans. This died as soon as Bush* took office. In short, the job market has to be really hot for the action to reach that far down. It is good to remember that a sizeable increase in the minimum wage was part of what kicked that boom off.

I think the concern about money leaving the country could be overblown. Overseas markets are becoming more and more pricey to do business in and while a margin still exists, it is apparently not as large as advertised when logistical problems and shipping costs start pricing in. In some industries where the margin is quite small, (cheap clothing for an example) low wages can make a significant difference, but in a great many industries wages make up such a small portion of the total price that higher wages / labor costs hive very little impact on the bottom line. The same goes for taxes, and dare I say it, regulation.

If higher wages, marginal taxes, and more stingent regulation had anywhere near the impact on business that they advertise, the jobs in MA would have drained to the south a long time ago. They haven't and studies conducted on the matter indicate that none of these factors make a measurable difference. I do not think capital flight is nearly the threat most imagine it to be.

The real question comes down to tax preferences, some of them quite large, for non productive financial activity and keeping profits off shore. Revise and then collect these taxes and virtually all the advantage to the current bs disappears.

[truedelphi]

35. Very nice points being made. Thank you. n/t

[OverseaVisitor]

2. Well

Everyone work towards a common goal.

[Zalatix]

11. We could have that here, too, if we didn't ship our manufacturing jobs to China...

[OverseaVisitor]

12. Nope as long as socialist is a bad word

And capitalist is God it is not possible.

[Zalatix]

13. Sadly we may have to wait until Capitalism exhausts itself out of existence.

Problem is, if we have to wait that long, it may take humanity with it.

[OverseaVisitor]

14. Capitalism will always exist in one form or another

What is wrong in US is that the system of Capitalism had been game so badly that is will only benefit the rich.
The worker do not get a fair shake and it just treated as an expense items for the sake of profit.

[Zalatix]

15. I contend that this inequality is the very nature of Capitalism.

If you try to work within the Capitalist system it will just keep pushing things toward this level of inequality.

[OverseaVisitor]

16. Nope

Capitalism is an economic system that is based on private ownership of the means of production and the creation of goods or services for profit.

Example. The above video. The village as the whole is the private owners. They got together to own the means of production. The profit derive from the goods and services was then converted into more good and services which they receive back as pay in kind or share of profit other then their wages.

We can debate on this but. Hey their wages are free from such items as medical, education, housing even cooking oil???
It ultimately means that they have more money to spend and well if you have a food stalls there you get more customers due to the fact that people can afford to eat out more. The money get circulated.

Not only that by pooling their resources they managed to sell their goods worldwide bring in more profit which is used to fund activities that make the village a better place for all.

The Inequality as it exist is due to the exploitation of the many for the few. It is not the fault of the economic system but more of a model or a mindset that allows socialist to become a bad word so as to retain the profit for the benefit of the few

[Zalatix]

17. That works for a small village, for a limited time.

Imagine every worker in China earning that kind of money for their work. They would no longer be able to sell anything to America, because it would become too expensive. Capitalism works for them because they bleed other economies dry of jobs and income. When you run out of people to bleed dry, a collapse is imminent. And America is about to run dry.

Let me recap: what's happening in that town is the direct result of degrading the lifestyles of others. What's going on in that village will come to a shocking end. I promise you that.

[OverseaVisitor]

18. Nope

It would be shocking to you that a waiter/waitress working in Cambodia take home an equivalent of USD 25 a month.
Their then total pay per year is 300 USD.
Sometime this has to do with value of currency.
The exchange rate is nothing but a huge casino with lots of speculation.
It use to work to the benefit of the West.
Now it work against them with globalization.

America would not run dry if the is a more equitable share of wealth.
After all economy is based on consumption by the masses.
A simple study on your distribution of wealth and your tax structure will tell you where USA go wrong.
Your Corporation are big and powerful and when they have too much say in influencing your elected official then shit happen.
They have to pay their due, they cannot be allow to game the system for their benefit, they have to be regulated.

Corporation by is very nature is based on creation of profit.
They are sitting on trillions while the majority get bled dry.

Why blame others for US in ability to have a fair system.
You allow it to happen you pay the price

[Zalatix]

19. You're not addressing what I said.

America would not run dry if the is a more equitable share of wealth.

What I said was, Huaxi's economic success depends largely on a big trade surplus with other nations - particularly America. Trade surpluses invariably mean jobs coming into your country, and jobs leaving another country - namely, leaving America.

When we run out of jobs to send to China, Huaxi's trade surplus will implode; and then their economy will implode.

If all of China enjoys Huaxi's standard of living, their wages will go up. Then it will be too expensive to export goods to America OR Europe, for that matter.

You do know how dependent China is on exports, right?

[OverseaVisitor]

23. Let address this then

1) Huaxi economic success depends largely on big trade surplus. Ok true but it is because they priced them self competitively in the market place. Hence they have a bigger share of the business which is translated into a trade surplus. Of course with greater market for their goods more job are created to fulfilled the demand. I am not from China. The reality is Globalization. Like it or not it is here to stay.

Running out of jobs in US is bad.

All of China does not have the same standard of living. Their ability to compete comes from mass production. Their population base is 1.3 bil. They will always have an advantage.

China can look at what went wrong in US and does not need to make the same mistake. They have a very stable governing system. They fail when they fail the people

[Zalatix]

24. No, that is wrong.

"1) Huaxi economic success depends largely on big trade surplus. Ok true but it is because they priced them self competitively in the market place"

Uh, no. China's currency manipulations made their labor competitive. 100 Chinese yuan is far less than $100 American dollars.

All America needs to do is print lots of dollars and we can be just as competitive as China. In fact, our devaluing currency is already causing jobs to trickle back to America. If we did what China did, our vastly superior per capita productivity would mean we would become the export capital of the world.

And globalization isn't necessarily here to stay - it is wobbling on a global economic collapse.

[HiPointDem]

27. No, it depends on proletarian labor. Huaxi's 'socialism' is as mythological as china's.

While each villager is required to work at a Huaxi business seven days a week, virtually all the manual labor is performed by what Marx might have called the proletariat: thousands of outside workers, many of them migrants, who receive better salaries and benefits than many workers elsewhere, but do not share in Huaxi’s profits. For that, one needs a hukou, or residence permit — and Huaxi hands those out with great care.

Published but unverified reports indicate that the corporation employs at least 25,000 people, many of whom live in the urban area of about 30,000 that exists outside Huaxi’s cramped legal boundaries.

http://www.nytimes.com/2011/07/12/world/asia/12huaxi.html?_r=2&sq=HUAXI&st=cse&scp=1&pagewanted=all

[Zalatix]

28. Ouch... gotta love those half-truths. Even moreso when they're exposed!

Well done!

[HiPointDem]

25. That is a potemkin village. They use outside workers ('non-owners') whom they exploit just

like any other capitalist business.

Yet what is branded as socialism looks from the outside a great deal like an old-fashioned capitalist corporation, apparently savvily managed, with 2,000 shareholders who live comfortably off their dividends. Indeed, Huaxi’s affairs are run by a company, the Jiangsu Huaxi Group Corporation, reported to shelter 57 subsidiaries, including seven more holding companies. The town has interests in everything from extruded aluminum to traditional medicine to spun polyester cloth to real estate.

Published but unverified reports indicate that the corporation employs at least 25,000 people, many of whom live in the urban area of about 30,000 that exists outside Huaxi’s cramped legal boundaries. A 2009 report in a state-run newspaper said annual revenue totaled 50 billion renminbi, about $7.7 billion at current exchange rates.

While each villager is required to work at a Huaxi business seven days a week, virtually all the manual labor is performed by what Marx might have called the proletariat: thousands of outside workers, many of them migrants, who receive better salaries and benefits than many workers elsewhere, but do not share in Huaxi’s profits. For that, one needs a hukou, or residence permit — and Huaxi hands those out with great care.

"This is called exploitation," said Fei-Ling Wang, Professor in the Sam Nunn School of International Affairs, in reference to the treatment of migrant workers in Huaxi, China. "Because the outside workers, by law, cannot become a local resident. They cannot share the results of their works. They are paid by wages, and if they lost their job, they are simply sent home." Wang has studied Huaxi as part of his research into Jiangsu Province villages. Huaxi, a village of 2,000 residents, recently built a 74-story skyscraper in a display of its newfound prosperity. Huaxi has gained national fame in China for the success of its publicly-owned business ventures. Source: New York Times, July 18, 2011

http://www.iac.gatech.edu/news-and-events/story?id=68917

[HiPointDem]

26. It's a corporation with 2000 shareholders and most of the work is done by labor hired from outside.

Who aren't owners and are exploited just as other workers are.

It's not socialist at all. It absolutely depends on this outside labor.

[Live and Learn]

30. Increased worker productivity is only beneficial

if you have a shortage of workers otherwise it leads to unemployment which doesn't benefit society at all.

[Monk06]

31. Capital will use division of labor to drive the value of labor to zero. Then it will feast on itself

I believe Marx has already covered this. And he was right. Capital expropriates all the products of labor until labor itself is a commodity and then there is nothing left except bank vaults full of cash and the mass of humanity in abject poverty. At which point money is worthless and the whole system collapses. We are looking at the early stages of that now.

Can international capital rein in it's own greed in time. That's the question.

[Zalatix]

33. It can't. Capitalism won't rein in that which sustains it.

[quaker bill]

32. The path forward

is smaller, more local, and artisan / craftsman / tradesman based.

Mega industry does not need very many people anymore. In Henry Ford's day, it took alot of people with specific and highly trained skills to make a Ford. Almost all of this is now done by industrial robots with greater precision and speed, and without lunch breaks. The people it needs have to be able to successfully compete with robots for their jobs, which means they get paid very little. Even then, our robots are beginning to displace Chinese workers, because they have gotten a raise or two.

The bottom line is that half of the people here, and everywhere else for that matter, have a less than median IQ. I know the IQ test is controversial, but measure it anyway you want, random assortment of genetic material leaves some of us more able than others and in different ways. Do anything you want to "reform education" and some of us will still never be Architects, MDs, or rocket scientists, but all of us need a decent way to make a life while we are here.

The larger question is how do we add quality of life to living when the "career" in the mega corp industry is dead as a vehicle for most of us. My take is that the clue lies in the real value of a loaf of bread that has been cared for by human hands, the dishes that were thrown on a local potter's wheel... It sounds like going backwards, but it isn't.

The point is that you can use the greater productivity which frees up human resources (currently in a bad way) to instead use these resources to add quality to life. Locally made bread requires bakers not robots. When more of business is conducted on a scale that makes robots impractical because the upfront cost is too high to amortize over fairly low volume sales, workers are hired. There are a growing number of niches where this model works. You do not have to be a rocket scientist to throw a lovely pot or bake a delectable loaf of bread.

*** Thought of one example, craft beer. It takes more people working in many more places to make craft beer compared to the same number of bottles of Bud Light. But we like craft beer and pay more for it.****

[HiPointDem]

34. Not really. It's just niche marketing to the upper 20% who has most of the money. It typically

employs students, trust funders, etc. at low wages. There's no model of mass employment at family wages there.