What do we do?

[Canuckistani]

Are we really helpless to see our manufacturing and hence our middle class get gutted out? Is it inevitable, or are there things we could be doing? Germany seems to have done well keeping it's manufacturing base, but then they always had a very solid one to begin with. But they do seem to have taken steps to keep it going as well as can be after the crash. Could we learn from them? Are there alternatives to manufacturing industries that can employ a lot of people at decent wages without requiring very high technical skills? I think Canada could certainly do much better in the training it provides to people, like Germany does. And the suggestion has been made to take the extra tax revenue from resource exports to infrastructure and other supports to manufacturing.

What can we do to prevent the splitting of society into a 20% elite and the rest continuing to lose ground?

[Michael Hardner]

Is losing manufacturing so bad ? Do we think that people will be that much worse off working in home renovations, as massage therapists, or other jobs even if they might pay somewhat less ?

Also, isn't the loss of manufacturing due to trade imbalance a temporary, if medium-term, phenomenon ?

What can be done to have other types of high-paying wages grow in North America ?

[Canuckistani]

Is losing manufacturing so bad ? Do we think that people will be that much worse off working in home renovations, as massage therapists, or other jobs even if they might pay somewhat less ?

Also, isn't the loss of manufacturing due to trade imbalance a temporary, if medium-term, phenomenon ?

What can be done to have other types of high-paying wages grow in North America ?

I'm not an economist. But it seems to me there's never been anything like manufacturing to employ large numbers of people at semi-skilled or medium skilled occupations getting good wages. Ie lifting people into the middle class. I don't think there are enough positions for home renovators or massage therapists to take up the slack - they need to be employed by people making decent coin, and if we just have a small elite doing that, there just isn't sufficient demand for their services. That's what wrong with trickle down theory. The rich can only spend so much, what really moves an economy is a large group in the middle having decent disposable income. Or so I'm told.

Don't know how long term the problem is, but it seems to have been going on for quite some time without abating.

And what alternatives are there to manufacturing is my question too.

I'm going to post this video that I saw on another forum. I didn't post it there, so presumably I'm not cross posting. If this is a problem, lmk and i'll edit it out. His contention is that decreasing taxes on the rich does not boost job creation. That as the tax rate has gone down, unemployment has gone up. And if median income in the US had kept pace with economic growth, it would be 92,000 now instead of 50,000. "If lowering taxes on the rich created jobs, we'd be drowning in jobs." "What creates jobs is a feedback loop between consumers and business." (If consumers don't have money, they can't spend. Henry Ford figured that one out.)

[Michael Hardner]

I'm not an economist. But it seems to me there's never been anything like manufacturing to employ large numbers of people at semi-skilled or medium skilled occupations getting good wages.

That sentence contains a few modifiers that load the dice, I think. What exactly are "good wages" ? The middle class as we know it is a 20th century invention so what else could we be talking about, right ?

Ie lifting people into the middle class. I don't think there are enough positions for home renovators or massage therapists to take up the slack - they need to be employed by people making decent coin, and if we just have a small elite doing that, there just isn't sufficient demand for their services.

Now we're in an economic argument. If that's the case, then the idea of the trade agreement is that the country with the comparative advantage specializes in what it's "good" at, and both countries reap an economic benefit from the lower cost to produce.

The only downside is redirecting those economic refugees into different occupations. In our cases, it's resources and new occupations that arise.

So it's not just the two examples I gave, its the overall economy that benefits. Government has to make sure that the benefits are generally felt.

The thing I want to point out is that manufacturing, especially assembly line, isn't a "good" job. People who do it report on how tedious and physically difficult it is. I always think about Chaplin's Modern Times and the guy who goes crazy on lunch break and tries to adjust everything with a giant wrench.

I'm going to post this video that I saw on another forum. I didn't post it there, so presumably I'm not cross posting. If this is a problem, lmk and i'll edit it out. His contention is that decreasing taxes on the rich does not boost job creation. That as the tax rate has gone down, unemployment has gone up. And if median income in the US had kept pace with economic growth, it would be 92,000 now instead of 50,000. "If lowering taxes on the rich created jobs, we'd be drowning in jobs." "What creates jobs is a feedback loop between consumers and business." (If consumers don't have money, they can't spend. Henry Ford figured that one out.)

Decreasing taxes makes no sense to me. What we should be talking about is what services we're providing at what cost. And, given that the economy is better and better (at least according to the rosy theories of economics) then we should be providing more services at less cost.

You can post that video, it's not original content so therefore not cross-posting.

[Canuckistani]

That sentence contains a few modifiers that load the dice, I think. What exactly are "good wages" ? The middle class as we know it is a 20th century invention so what else could we be talking about, right ?

I knew you'd get me on that one. Of course the middle class is a recent invention. A good one I think is worth keeping. Good wages means that the majority of people earn close to the median wage, and it is hoped, that median wage is sufficient for the lifestyle that allows good quality housing and nutrition, enough money for recreation and for saving for retirement. I know these aren't hard numbers, but I think we know what I mean.

Now we're in an economic argument. If that's the case, then the idea of the trade agreement is that the country with the comparative advantage specializes in what it's "good" at, and both countries reap an economic benefit from the lower cost to produce.

The only downside is redirecting those economic refugees into different occupations. In our cases, it's resources and new occupations that arise.

So it's not just the two examples I gave, its the overall economy that benefits. Government has to make sure that the benefits are generally felt.

The thing I want to point out is that manufacturing, especially assembly line, isn't a "good" job. People who do it report on how tedious and physically difficult it is. I always think about Chaplin's Modern Times and the guy who goes crazy on lunch break and tries to adjust everything with a giant wrench.

I don't think we've done a good job of redirecting those economic refugees, is my point. And relying on a strictly resource based economy is a mugs game, IMO. I know manufacturing isn't a good job in the sense you say. At one time we thought we could automate it and eliminate people doing those jobs. But that only works if you spread the benefits of automation around, don't just leave them for the bosses. In retrospect, for a lot of people, the boredom of the assembly line looks a lot better than the boredom of under or unemployment.

[Michael Hardner]

I knew you'd get me on that one. Of course the middle class is a recent invention. A good one I think is worth keeping. Good wages means that the majority of people earn close to the median wage, and it is hoped, that median wage is sufficient for the lifestyle that allows good quality housing and nutrition, enough money for recreation and for saving for retirement. I know these aren't hard numbers, but I think we know what I mean.

Sure. But, the "upper class" as in the bourgeoisie could be seen as kind of recent too.

I think we need to talk about wage disparity too, but we need to speak about absolutes. This is only possible in a community where those who are winning see themselves as part of the solution, not as gamblers who will pull up stakes and move their investments if we don't give them a tax break.

But I don't think that investors see themselves that way either.

I don't think we've done a good job of redirecting those economic refugees, is my point. And relying on a strictly resource based economy is a mugs game, IMO. ... In retrospect, for a lot of people, the boredom of the assembly line looks a lot better than the boredom of under or unemployment.

You sound like someone who has good values, and also wants to learn. That's how I view myself too. I would like to dialogue with people who have knowledge and are open-minded, and don't fall back on caricatures of capitalists and workers...

[Canuckistani]

You sound like someone who has good values, and also wants to learn. That's how I view myself too. I would like to dialogue with people who have knowledge and are open-minded, and don't fall back on caricatures of capitalists and workers...

"I was so much older then, I'm younger than that now."

I can't talk about absolutes of economic equality. I think there's a mushy middle there, where too little causes social disruption (like now) too much stifles initiative. We need to harness both greed and "communalism" to build the best society we can. That's where IMO both Marxism and Objectivism fail.

[Michael Hardner]

...I second your point about the mushy middle. In fact, that's probably all it is. From a presentation on Government 2.0 I attended last week, that mushy middle sees government SERVICES as government.

The debates we have on here about libertarianism vs socialism... all of that is but entertainment for those of us who love talking, and love ideas. The real folks don't care - they want value for taxes, and a sense that they live in a fair country.

To that end, government definitely has to pay attention to the whining, and to the legitimate complaints such as "I spent 20 years working in IT and then my job went offshore without any public debate".

Economics doesn't trump virtue every time, however, although B_C and Morris Dancer may disagree. If that were true, why aren't we all prostitutes and drug dealers ?

[Canuckistani]

Economics doesn't trump virtue every time, however, although B_C and Morris Dancer may disagree. If that were true, why aren't we all prostitutes and drug dealers ?

I'm not a prostitute because my market value is too low to make it worthwhile. At one time I was willing to sell my soul for a Fiat Spyder, but even then I realized nobody seemed to be buying even at that small price.

I don't deal drugs because it's illegal and I think I'd be caught. I also think I'd be chewed up and spit out by the criminals. Since I think drugs should be legalized, I would also be undercutting my own financial position. I don't know what I'd do if offered a million dollars to facilitate the distribution of say crystal meth, with no chance of being caught. I like to think I'm moral enough to say no, but I don't really know, and will never find out.

[GostHacked]

Is losing manufacturing so bad ?

Made in China.

[Michael Hardner]

I'm not a prostitute because my market value is too low to make it worthwhile. At one time I was willing to sell my soul for a Fiat Spyder, but even then I realized nobody seemed to be buying even at that small price.

Don't sell yourself short. There are lots of bodies and souls for sale if you're in the market.

I don't know what I'd do if offered a million dollars to facilitate the distribution of say crystal meth, with no chance of being caught. I like to think I'm moral enough to say no, but I don't really know, and will never find out.

Sheesh... not much of a resume... I guess I won't be calling your for my distribution business then...

[bleeding heart]

Economics doesn't trump virtue every time, however, although B_C and Morris Dancer may disagree. If that were true, why aren't we all prostitutes and drug dealers ?

You're right. I was a prostitute, better known as a copywriter for an ad agency; and while the money wasn't astounding, there was definite opportunity to climb. But other values eventually took precedence.

[bush_cheney2004]

....Economics doesn't trump virtue every time, however, although B_C and Morris Dancer may disagree. If that were true, why aren't we all prostitutes and drug dealers ?

Because some of us can whore ourselves in far more lucrative ways. But everyone has to start somewhere!

[Argus]

Are we really helpless to see our manufacturing and hence our middle class get gutted out? Is it inevitable, or are there things we could be doing? Germany seems to have done well keeping it's manufacturing base, but then they always had a very solid one to begin with

Germany is a poor example. The reason they're doing so well as is the EEC. They sell most of their goods to the rest of Europe. If it weren't for the EEC the German currency would have risen enormously in comparison to most of the rest of Europe by now, making their goods prohibitively expensive, and thus spurring local manufacturing in other countries. Because they have a common currency, however, Germany gets to have a booming economy without any restrain on it. By comparison, as Canada's economy boomed (largely driven by resources) our dollar appreciated enormously, to the point this damaged our manufacturing sector. At the same time, the Americans and Chinese (among others) have worked to lower their currency value to make homegrown goods cheaper than imports, and to make their exports less costly to others.

I think one of the things Canada should do is try to lower the value of our currency. I'm not an expert in how to do this, however, without spurring inflation.

What can we do to prevent the splitting of society into a 20% elite and the rest continuing to lose ground?

People focus too much on tax % and not enough on tax laws and how they influence who pays what. People say we need to tax the rich more but don't understand how. There are a number of changes to the tax code which would have those who earn/make huge amounts pay higher taxes. At the same time, I believe those who earn less should be paying at least some percentage of their income in order to have a real stake in government. The government could also do more to change corporate taxes in order to encourage local employment by removing employment taxes (for example), which, at present, increase a company's taxes based on how many employees they hire. A clever economist could probably also devise ways of encouraging companies to give their employes more benefits.

[Canuckistani]

Germany is a poor example. The reason they're doing so well as is the EEC. They sell most of their goods to the rest of Europe. If it weren't for the EEC the German currency would have risen enormously in comparison to most of the rest of Europe by now, making their goods prohibitively expensive, and thus spurring local manufacturing in other countries. Because they have a common currency, however, Germany gets to have a booming economy without any restrain on it. By comparison, as Canada's economy boomed (largely driven by resources) our dollar appreciated enormously, to the point this damaged our manufacturing sector. At the same time, the Americans and Chinese (among others) have worked to lower their currency value to make homegrown goods cheaper than imports, and to make their exports less costly to others.

I think one of the things Canada should do is try to lower the value of our currency. I'm not an expert in how to do this, however, without spurring inflation.

People focus too much on tax % and not enough on tax laws and how they influence who pays what. People say we need to tax the rich more but don't understand how. There are a number of changes to the tax code which would have those who earn/make huge amounts pay higher taxes. At the same time, I believe those who earn less should be paying at least some percentage of their income in order to have a real stake in government. The government could also do more to change corporate taxes in order to encourage local employment by removing employment taxes (for example), which, at present, increase a company's taxes based on how many employees they hire. A clever economist could probably also devise ways of encouraging companies to give their employes more benefits.

What you say about Germany makes sense. But they also instituted a system where during the recession the govt paid companies to keep their employees on payroll. This meant that when demand for their products returned, they were ready to go, had the people in place. Also, they have an industrial strategy where the companies, government and the unions work cooperatively. We could emulate some of that.

Second point isn't about taxes. It's about our society splitting into a 20% elite who earn good wages, while everybody else goes down. Using the tax system to redistribute the wealth may be necessary, but better would be to have the 80% share in the wealth in the form of income. Then they would be in a position to pay those taxes.

[Argus]

What you say about Germany makes sense. But they also instituted a system where during the recession the govt paid companies to keep their employees on payroll. This meant that when demand for their products returned, they were ready to go, had the people in place. Also, they have an industrial strategy where the companies, government and the unions work cooperatively. We could emulate some of that.

There are certainly things Germany does we could emulate, including their post-secondary training strategy, and their health care system.

Second point isn't about taxes. It's about our society splitting into a 20% elite who earn good wages, while everybody else goes down. Using the tax system to redistribute the wealth may be necessary, but better would be to have the 80% share in the wealth in the form of income. Then they would be in a position to pay those taxes.

Well how about this as an example. The CEO of Potash Corporation makes, I believe, about $18,000,000 a year, which given the state of their stock, seems absurd, but nevermind. They have about 5,000 employees. If you instead paid the CEO 1,000,000 a year, which seems a fairly handsome salary, you could divide the other $17m among their employees, which would give them about another $3,000 a year each. Or there's the CEO of Nova Chemicals at about $20 million. Since they have 3300 employees. Giving him 2 million would let you divide the other 18 million and pay the employees an extra $5400 apiece.

Getting the idea?

[Canuckistani]

There are certainly things Germany does we could emulate, including their post-secondary training strategy, and their health care system.

Well how about this as an example. The CEO of Potash Corporation makes, I believe, about $18,000,000 a year, which given the state of their stock, seems absurd, but nevermind. They have about 5,000 employees. If you instead paid the CEO 1,000,000 a year, which seems a fairly handsome salary, you could divide the other $17m among their employees, which would give them about another $3,000 a year each. Or there's the CEO of Nova Chemicals at about $20 million. Since they have 3300 employees. Giving him 2 million would let you divide the other 18 million and pay the employees an extra $5400 apiece.

Getting the idea?

I said top 20%, not top .0001%. I bet the guy making the median wage of 47,000 would be very happy to get a 10% boost in salary. But if we had the same division of increase in economy we used to have, ie benefits of GDP growth flowed to people in the same percentage they used to, that media wage earner would now be getting over 90,000 a year. He'd be ecstatic about that. How about that idea?

[dre]

They sell most of their goods to the rest of Europe. If it weren't for the EEC the German currency would have risen enormously in comparison to most of the rest of Europe by now, making their goods prohibitively expensive, and thus spurring local manufacturing in other countries. Because they have a common currency, however, Germany gets to have a booming economy without any restrain on it.

Thats about right.

By comparison, as Canada's economy boomed (largely driven by resources) our dollar appreciated enormously, to the point this damaged our manufacturing sector.

Our dollar didnt appreciate... everyone elses just lost more value than ours. In terms of what real goods you can buy with it the Canadian dollar is definately depreciating.

I think one of the things Canada should do is try to lower the value of our currency. I'm not an expert in how to do this, however, without spurring inflation.

If you want the dollar to lose value then why do you care about inflation? Inflation is exactly what you desire. And we ARE lowering our currency value, just slowly in relative terms.

Edited June 4, 2012 by dre

[dre]

Well how about this as an example. The CEO of Potash Corporation makes, I believe, about $18,000,000 a year, which given the state of their stock, seems absurd, but nevermind. They have about 5,000 employees. If you instead paid the CEO 1,000,000 a year, which seems a fairly handsome salary, you could divide the other $17m among their employees, which would give them about another $3,000 a year each. Or there's the CEO of Nova Chemicals at about $20 million. Since they have 3300 employees. Giving him 2 million would let you divide the other 18 million and pay the employees an extra $5400 apiece.

Getting the idea?

Any suggestion that anyone besides the corporate elite should have any money what-so-ever will be shot down as communism and Canadians are stupid enough to believe it.

No... Im afraid the gap between the corporate and financial elites and everyone else has a fair bit of growing to do before we get serious about it. Canadians are still too comfortable for revolution... give it another decade or two.

[jacee]

Argus said ...

The government could also do more to change corporate taxes in order to encourage loca employment by removing employment taxes (for example), which, at present, ncrease a company's taxes based on how many employees they hire.

We hear this refrain all the time, and billions in taxpayer money for tax cuts and corporate subsidies have been spent with no accounting of whether any jobs were created.

Until employers can demonstrate job creation in direct relation to tax cuts and subsidies already in place, there shouldn't be any more perks for them from the public purse.

[Argus]

We hear this refrain all the time, and billions in taxpayer money for tax cuts and corporate subsidies have been spent with no accounting of whether any jobs were created.

You misunderstood my intent. I don't mean to further cut corporate taxes. I meant cut employment taxes, and whatever amount of money was previously raised in this manner should be raised by increasing overall corporate taxes to make up for it. The amount coming from the corporate sector would remain the same. But those with larger numbers of employees would not be penalized for that, as they are now.

[thoughtpolice]

Because they have a common currency, however, Germany gets to have a booming economy without any restrain on it.

of course they have restraints on their economy, their currency is the Euro and many other countries have an influence on the value of the Euro. Perversely, what Germany =seeks to do and has done is to keep the relatve value fo the Euro low(not high) since as an exporting nation a low Euro enance the value of their exports- they get more Euros for the same product than if the Euro is high. To keep it low, they oir their banks have to lend money and guarantee loans to places like Greece, Spain, Italy Portugal..... it is a tightwire act. If the Euro fails, the Germans will revert to the mark and their currency will soar- plunging them into recession.

Another threat to German domination, since they are now effectively now the financial rulers of Europe, is the two sides of fiscal union. The EU and Eurozone are floundering on policies that have cannot create monetary union, whne the real money resides in a common fiscal policy. But a common fiscal policy means much stronger political ties and a real loss of national soveriegnty for all members. That won't sell in Germany or many other places, and until it does their problems may be unsolveable.

[quoteAlso, they have an industrial strategy where the companies, government and the unions work cooperatively. We could emulate some of that.

]Could we really?

I don't see much evidence that Canadian unions or industry have much interest in beiong told what to do by Harper, or any other PM. Because- in the end- fiscal policy MUST be a govt directed function, though I agree that union/corporate sensibilities must be recognized.

[-TSS-]

We in Finland are witness Nokia being slowly and certainly phased out of existence and ready to be swallowed by Microsoft. It has been going on since Stephen Elop became CEO of Nokia. Btw, he is your fellow countryman.

[bush_cheney2004]

We in Finland are witness Nokia being slowly and certainly phased out of existence and ready to be swallowed by Microsoft. It has been going on since Stephen Elop became CEO of Nokia. Btw, he is your fellow countryman.

Nokia was very slow to recognize the potential of smartphone platforms and partnering with service providers. Nokia only has itself to blame, not Microsoft.

[August1991]

Are we really helpless to see our manufacturing and hence our middle class get gutted out? Is it inevitable, or are there things we could be doing? Germany seems to have done well keeping it's manufacturing base, but then they always had a very solid one to begin with. But they do seem to have taken steps to keep it going as well as can be after the crash. Could we learn from them? Are there alternatives to manufacturing industries that can employ a lot of people at decent wages without requiring very high technical skills? I think Canada could certainly do much better in the training it provides to people, like Germany does. And the suggestion has been made to take the extra tax revenue from resource exports to infrastructure and other supports to manufacturing.

What can we do to prevent the splitting of society into a 20% elite and the rest continuing to lose ground?

Would you keep the jobs of typists, bank tellers, telephone operators? Do you believe that their jobs are less important because women usually did these jobs, or these jobs are not "manufacturing"? Does a modern economy need typists, bank tellers, telephone operators? Does it need "manufacturers" of toasters?

Typists lost their jobs years ago, and now you talk of the middle class. Should we return to a 1950s world of the typing pool?

Canuckistani, I hate to sound like Bill Clinton but the world moves on. As the scriptwriter of the movie Primary Colors put it, America has to learn to use the muscles between its ears.

-----

I think otherwise. If your neighbour finds a faster way to get to work in the morning, is that bad for you? And, if a Chinese worker manages to find a way to earn more money, is that bad for you?

Life is not a zero-sum game.

Edited June 18, 2012 by August1991