The Rand Formula

[Guest eureka]

You are not too far off intah compures will rake over many jobs, except those that, as Cartman points out, require brawn.

That is a significant problem that has been with us for some time and that Europe has responded to more seriously than we. When productivity outpaces growth, more jobs are lost. We are still stuck in the two week huliday; forty hour or more week which is no response.

This productivity should be translating into more leisure time and improved benefits, not ever driving down labour costs in the name of competition. As if the cost of labour was only part of competition when it is driven down to subsistence levels.

Therein lies a great need for greatly expanded unionism: to achieve the benefits of progress as some areas of the world are trying. It is also a reason that trade with Europe can not be liberalized beyond where it is. There is nothing new about the realization of job loss. Some writers have been prophesying a world without significant work for a generation or so. Would it not be a good idea to start preparing for it?

[Hjalmar]

This productivity should be translating into more leisure time and improved benefits, not ever driving down labour costs in the name of competition. As if the cost of labour was only part of competition when it is driven down to subsistence levels.

Does the word "enough" exist in your vocabulary? It is one thing for a person to strive to better themself and quite another when people are demanding more than they are worth. That is why people are clamoring against labour unions -- they seem to be the only ones that manage to extract more for themselves than they are worth. That is not right, and you know that.

I believe the minimum wage should be scrapped. It is not fair at all and all it accomplishes is that it sets young people up for union employment. A 16 year old living at home with parents does not need a liveable wage. You start young people up with too high a wage and it spoils them because it comes too easily. Allow the marketplace the freedom to set wage rates. I agree with strict provincial labour laws but governments should not be dictating rates of pay.

[Cartman]

I believe the minimum wage should be scrapped.

Wow...I truly commend you on your honesty. I personally think that neo-liberal politicians should be so honest...really. I would like to know what would actually happen if a provincial government were to implement such a scheme (try it in Ontario first). Might you not have really crappy employees? If fast food restraurants were to pay say $2.50/hour (or whatever the market

"demands"), would it not be difficult to get good employees? Would many teens just avoid employment and thus raise wage levels because of reduced labour supply?

How do we know that the market would always demand lower wages? In the oilfields in Alberta, non-union people with virtually no skills (as we commonly think of them) can easily earn $7-8000 per month with much time off. This seems rather high to me.

[Hjalmar]

How do we know that the market would always demand lower wages? In the oilfields in Alberta, non-union people with virtually no skills (as we commonly think of them) can easily earn $7-8000 per month with much time off. This seems rather high to me.

That's as good an example as any of wages being set by the law of supply and demand with the marketplace setting wages. And that's how I truly believe it should function.

[Cartman]

That's as good an example as any of wages being set by the law of supply and demand with the marketplace setting wages. And that's how I truly believe it should function.

I used this example because I also believe it shows the effects of supply and demand. We should also keep in mind though that wages are high in part because there are few people from the third world competing for them here (because immigration restrictions reduce competition and are in a way protectionist). I was kind of hoping you might respond to whether it is rational though. Sometimes markets crash. Also, should the market dictate that "riggers" earn the same wages as nurses or social workers? Pop stars earn so much more than doctors etc etc. (you have heard this b4)?

[Hjalmar]

Also, should the market dictate that "riggers" earn the same wages as nurses or social workers? Pop stars earn so much more than doctors etc etc. (you have heard this b4)?

I believe in the future that wages will be far more attuned to the value of the work being performed. Notice how sports players wages are now following the trend of movie stars. Do you recall what hockey players or baseball players salaries were about 20 years ago? Others will follow. Pay will be based far more on the value to the employer of the work being performed. Labour unions will no longer be able to skew the value of work.

[Guest eureka]

Do you really understand what you are saying when you write of the "value" of work or "supply and demand?"

Is the value of one of the physical labourers on the "oil rig" really two or three times that of a crewman on a fishing boat or some similar occupation?

When you fill up at the pumps, do you never think that you might pay less if the wages of those employees in the extractive side of the business were not so much more than were justified in any comparison of worth?

Do you never consider how ill paid are social workers, nurses, and a few others I could name, by comparison with the lesser educated - and skilled, darlings of your dreams: how ill paid are those who are paid wuth your tax dollars because there is the power of government opposed to them in your service? Do you really think that you merit greater remuneration than them?

[Hjalmar]

Do you really understand what you are saying when you write of the "value" of work or "supply and demand?"

Based on your postings, I believe I have a better understanding of economics than you.

Do you never consider how ill paid are social workers, nurses, and a few others I could name, by comparison with the lesser educated - and skilled, darlings of your dreams:

Social workers and almost all government employees are the most overpaid of all. Why do you think that is? I can tell you why -- In the private sector, employers know their bottom line and they reject union demands that they are unable to meet. Failing that, they go out of business. On the other hand, when unions make excessive demands in the public sector, governments simply raise taxes. Not hard to understand when you consider that over 65% of provincial government spending goes towards wages. Government benefit packages border on insanity. Indeed they have become so generous that I think employees are becoming embarassed about displaying them. Have you ever noticed that when union negotiations are taking place, very rarely do they discuss these same benefits -- they like to keep them sort of hidden from the public.

[Hjalmar]

Further to my previous posting--

Can anyone answer this question? Is it fair that taxpayers should be paying the monthly medical premiums, including generous extended benefits, for government employees -- not only while they are working and drawing a paycheque, but after retirement as well?

[Cartman]

Social workers and almost all government employees are the most overpaid of all. Why do you think that is? I can tell you why -- In the private sector, employers know their bottom line and they reject union demands that they are unable to meet.

I will find the link, but it is my understanding that public employees wages have now eroded below that of the private sector and the gov't is losing some valuable employees.

As for your question, what extended benefits are you referring to? Are they benefits that we should all be getting?

[Hjalmar]

As for your question, what extended benefits are you referring to? Are they benefits that we should all be getting?

I'm referring to BC government employees. They don't pay anything for medical premiums while working or after retirement.. That includes extended benefits as well. Can you tell me who else gets that? Where is the fairness when no one else [that I know of] gets this. Why saddle taxpayers with paying these premiums for a select few. That's what hardball tactics and coercion will get for you.

[Guest eureka]

I am pleased that youadded "that I know of" since those kinds of benefits are available to many private secto employees. In Ontario, the former "right wing" government tries to take them away from some public sector workers - already underpaid.

Public sector workers are lower paid that private, generally. That is why, in the public sector, it is becoming increasingly difficult to attract the best qualified. That is fact not your perception. Teachers are a good example: it is estimated that about one third of teacher college graduates do not go into the profession and that another third leave it in the first five years. These losses are to the private sector where the rewards are greater and the stress is less.

BTW, I am still waiting to see where it is that your expertise in economics is greater than mine. You remind me of Economics 100 where it was taught that Savings plus Investment equals....... etc. It takes a few more years to understand that it is not so outside of "perfect" models.

[Hjalmar]

Some of the positives about a global economy

[1] It will force labour unions to work for wages that are competitive worldwide.

[2] It will force a lowering of prices for most products that we in Canada, the USA and Western Europe require for basic survival.

[3] It will, over time, tend to improve living standards in many of the poorer regions of the world as wages gravitate upward to lessen the spread between wealthy countries and Third World countries.

[4] It will not lower living standards for people living in Canada, the USA and Western Europe except for people that rely on income derived from union employment.. This is a positive and will help more people than it harms.

[5] It will, for the first time in history, force governments to compete with one another from a tax standpoint. Any country that fails to do so will lose their most talented and desireable citizens.

[Hjalmar]

I am all for pay based on performance and productivity which doesn't exist in the union sector... Having said that, something that needs to be addressed here in Canada and that is the prohibitive severence packages that are being negotiated in the public sector these days... Some of these executive severence packages are insane and no doubt have sprung up in the past few years because of competition for top executives with special skills... As previously stated, I believe in pay for performance but it must end at termination of employment.. How do you reverse this trend? .. I don't have the answer...

[Black Dog]

Can anyone answer this question? Is it fair that taxpayers should be paying the monthly medical premiums, including generous extended benefits, for government employees -- not only while they are working and drawing a paycheque, but after retirement as well?

Of course the gaping hole is that government employees pay taxes too. Their paycheques get as many deductions as anyone else, so the burden does not rest on the taxpayer, but remains on the individual. They pay, just not directly.

[1] It will force labour unions to work for wages that are competitive worldwide.

"Competitive" in this case being the lowest common demoinator.

[2] It will force a lowering of prices for most products that we in Canada, the USA and Western Europe require for basic survival.

The trends would indicate otherwise. Consumer prices have been mostly on the rise through the last few years, even as glopbalization picks up steam. Meanwhile, wages stagnate or fall, creating even more pressure on consumers.

3] It will, over time, tend to improve living standards in many of the poorer regions of the world as wages gravitate upward to lessen the spread between wealthy countries and Third World countries.

The growing gap

[4] It will not lower living standards for people living in Canada, the USA and Western Europe except for people that rely on income derived from union employment.. This is a positive and will help more people than it harms.

Declining wages and rising costs would drag everyone down. We're seeing that right now in the U.S: falling wages, soaring real unemployment and more and more menial, low-paying jobs.

[5] It will, for the first time in history, force governments to compete with one another from a tax standpoint. Any country that fails to do so will lose their most talented and desireable citizens.

That's pretty simplistic, as I doubt taxes are the key consideration for the vast majority of emigres.

I can't believe how completely obstinate your reasonig is, especially in the face of prevailing economic trends. We can see what your union-free world looks like: it ain't pretty.

[Hjalmar]

Of course the gaping hole is that government employees pay taxes too. Their paycheques get as many deductions as anyone else, so the burden does not rest on the taxpayer, but remains on the individual. They pay, just not directly.

That's pretty simplistic -- So government employees pay taxes too and their paycheques get as many deductions as everyone elses. Therefore, with your reasoning, they are paying for their own medical premiums-- is that correct? Now could you explain to me why my paycheque should be contributing to their medical premiums? Think that over carefully before responding. And you're stuck for an answer, right??

The trends would indicate otherwise. Consumer prices have been mostly on the rise through the last few years, even as glopbalization picks up steam. Meanwhile, wages stagnate or fall, creating even more pressure on consumers.

Is that right? Then explain how the the price of so many products continue to drop. I'll name a few -- Television sets, computers, Stereo sets, clothing, and even automobiles that are made ofshore. For instance, compare prices of Honda or Toyota [made in North America] with comparable models of Hyundai or Kia [made in South Korea]. Many, or most of the products mentioned above, with the exception of clothing, that we see in the stores are now manufactured offshore. You can save over $3,000 by purchasing a Kia instead of a Honda or Toyota. And you want to convince me that consumers don't benefit from this?

Declining wages and rising costs would drag everyone down. We're seeing that right now in the U.S: falling wages, soaring real unemployment and more and more menial, low-paying jobs.

It's the way of the future -- accept it because you can't change it. It will benefit more people worldwide than the other way around.

I can't believe how completely obstinate your reasonig is, especially in the face of prevailing economic trends. We can see what your union-free world looks like: it ain't pretty.

I have never advocated a union-free world. But they need to have many of their powers reduced or eliminated altogether. I support a workplace where individuals have the freedom to opt in or out of a union as well.

[Guest eureka]

I don't know what business you are in, but let's suppose that you are a not very sucessful seller of snake oil. Would you not admit that it is unfair that your customers are paying for your medical insurance, your children's schooling, your CPP and your contributions to an RRSP?

That makes as much sense as your absurd posturing about government employees. You use their services and you have to pay for them. They earn their money. I suspect that they are more deserving of it than one who thinks a couple of mutual fund owners who are peddling their own interests through faux books on economic theory (Blood in the Streets) are prophets of the future.

[Guest eureka]

Have you ever been exposed to the fact of inflation? In most of the past 25 years, that spook has outpaced wage gains for all but the top twenty % of society. You have just been presented with the evidence of that and it confirms what I have told you before. I did not post evidence since anyone who puts himself forward as a disputant on economic theories and performances should have known it

It really does not matter whether one car is cheaper than another. The reality of the pricing of even the middle classes out of the market is with us. The abuse of capitalistic power is largely responsible for that.

[Hjalmar]

eureka

I think you may be brainwashed.. I'll post this for you to digest.

The Myth of Perpetual Inflation

-- The oil crisis in the early 70's triggered worldwide inflation.

-- Labor unions were quick to follow suit with their inflationary wage demands.

-- Today oil prices are fluctuating between a high of $45/barrel and a low of $12/barrel... Gasoline prices are impacted accordingly.

-- We all know that market prices fluctuate based on supply and demand.

-- Labor unions want to mimic the market-based system which they claim their wage demands are based on... But mysteriously, there is never an oversupply of labor... An imagined shortage is used as leverage to ratchet up wage rates.

-- Even governments have learned the lessons of a market-based economy.. Today, governments are struggling to keep income tax rates competitive with other jurisdictions in order to prevent the brightest and most ambitious amongst us from making their exit to more favorable tax jurisdictions in a mobile, global economy.

-- In the meantime, public sector unions are attempting to thwart these efforts with their outlandish demands and, in so doing, hold taxpayers to ransom.

-- Why are labor unions allowed to lock in high long-term wage rates while the market based system is faced with fluctuating prices?

-- How can labor unions continue to use the lame excuse that they must have a wage increase to keep up with inflation...a by-product of their own creation?

-- If labor unions want to drive inflation they better be prepared to also eat it.

[Guest eureka]

Inflation has been with us for as long as their has been what could be called an economic syste. Apart from short periods of more destructive deflation, their has never been anything else.

Mild inflation is considered one of he driving forces behind growth. Yet, inflation that we have not known how to integrate into the economy has also destroyed nations in the past - Spain in the 16th century is a prime example when a whole century of inflation caused by the overseas gains inflated the economy without the constraints of modern societies on its effects.

One of those constraints is unionism. That constraint is slackening and we face the poosibility of the Spanish disease as the gaps between the "classes" widen and the "consumptive" society weakens with goods that people cannot buy

There has also always been a surplus of labour in Capitalist socieities and probably always will be. If there is not, then there is no productivity gain and inflationary pressures will collapse an economy.

Please find another source for your citations. Those snippets do not stand up to examination and I ould like to see some argument from others who might support the "prophets."

[Hjalmar]

Please find another source for your citations. Those snippets do not stand up to examination and I ould like to see some argument from others who might support the "prophets."

History tells us that over the past 250 years we have had inflationary cycles lasting approximately 50 years and each one has been followed by a depression which has brought prices down to the level they were at before the inflation started. Do you wish to refute that eureka?

[Guest eureka]

Indeed I do! The history of that period is one of economic progress followed by depression. The cycles are "Kondratieffian cycles" named for the Russian economist who discovered them but could not explain them. He was sent to Siberia for his pains, by Stalin.

Depression is not the same thing as deflation though the latter may be a factor in the creating of depressions. Prices have never come back down to where an inflationary period started. They may be depressed and may come down to the inflationary levels that existed before the depression, but they never go down to any greater depth. The history of the past 250 years is a steady increase in prices.

Again, it is a reason for the strengthening of the Union movement so that Capitalism can not force living conditions downwards to conserve its own privileges at the expense of the people.

[August1991]

The following quotes all come from eureka:

In most of the past 25 years, that spook [inflation] has outpaced wage gains for all but the top twenty % of society. You have just been presented with the evidence of that and it confirms what I have told you before. I did not post evidence since anyone who puts himself forward as a disputant on economic theories and performances should have known it

Again, it is a reason for the strengthening of the Union movement so that Capitalism can not force living conditions downwards to conserve its own privileges at the expense of the people.

There has also always been a surplus of labour in Capitalist socieities and probably always will be. If there is not, then there is no productivity gain and inflationary pressures will collapse an economy.

I think eureka's viewpoint is that capitalism leads to the rich getting richer and the poor getting poorer. This happens because capitalism requires "surplus labour" and inflation hurts poor people more than rich people. Capitalism means a race to the bottom for poor people. Unionism curbs all this by protecting poor people.

These ideas were common in the 1930s and represent a crypto-Marxism version of Keynesianism. All the evidence of the past several hundred years show these ideas to be false.

In economies that can be characterised as "free market", the poor people alive today have never been so rich. They have more and better food, housing, clothing, transportation.

You state eureka that real incomes of poor people have fallen in the past 25 years. Please provide evidence of this. Can you provide evidence of it in the past 50 years?

The simple fact is eureka that free markets provide the best means for ordinary people to have a better life. The sooner the Left understands this, the better for everyone. (There are many things yet that are still bad.)

But eureka when you go around using Marxist nonsense to criticise capitalism, you just sound like an anachronism. No one argues that the world is flat anymore.

[Guest eureka]

At last a reasoned post, August. However, I think someone provided the link to the stats on the decreasing real incomes of the poorer not too far back.

Your point about the bettered living conditions of the poor does not hold up unless you think that the wealthy - or fortunate - in a society should benefot in a disproportionate way. The poor certainly are better off than they were prior to the decline of the past few decades. What relevance does that have to a "fair" market?

The rich are better off and have never not increased their share of the pie.

Their is nothing crypto-Marxist about my thinking. Again, unles you think that a belief in justice and the potential for economic progress that can be shared by all is exclusive to Marxiat thinking.

I would like to see someone try to justify the widening gap in wealth and incomes and the reality of increasing poverty in terms other than "the Market." We all know that the market is merely a convenient fiction: it does not exist other than as an explanation for the dominance of one group over others. It is a system that has emerged in the place of barter to give controls that are not evenly applied.

[Hjalmar]

Here are the cycles referred to in my previous post

-- Commodity prices peaked in London in 1711. The South Seas Bubble burst in 1720. -- Depression followed.

-- Producer Prices peaked in London in 1763. The London stock market crashed again in 1772. -- Depression followed.

-- Commodity prices peaked in London in 1816. The London stock market crashed in 1825. -- Depression followed.

-- Wholesale prices peaked in New York in 1864. A worldwide assets crash began in May 1873. -- Depression followed.

-- Wholesale prices peaked in the United States in 1919. Wall Street crashed in 1929 -- Depression followed.

--Commodity prices peaked in Tokyo in 1980. The Tokyo stock market peaked in 1989 and crashed in 1990.

Span of the cycles:

From 1720 to 1772 ----- 52 years

From 1772 to 1825 ----- 53 years

From 1825 to 1873 ----- 48 years

From 1873 to 1929 ----- 56 years

From 1929 to 1990 ----- 61 years

Are we due for another depression soon?