Posted on 12/07/2016 3:14:22 AM PST by expat_panama
An article by Lance Selfa, a columnist at the "Socialist Worker", argues that economic growth does not help working people:
“One of the orthodox assumptions of both liberal and conservative economics is that a more productive economy leads to higher living standards. According to the theory, when workers are better educated and better trained, and when technology is intelligently deployed to increase economic efficiency, the overall economy produces more and workers earn more. Or so the theory goes. What's the evidence?”
In fact, Selfa's argument has been routinely rejected by economists for the following reasons.
First, the article ignores the law of diminishing returns...
...Second, the article ignores the power of economic growth. The main reason why workers’ wages have not grown as quickly as socialists like Mr. Selfa might like is low economic growth...
...Third, the article ignores the important role technology and productivity play in economic growth....
...Fourth, using the right methodology reveals different results. The analysis by the EPI only took into account workers’ salaries and wages. However, workers can receive higher benefits even if their incomes are stagnant...
...Once you take into account these discrepancies, there is no difference between productivity growth and income compensation growth.
Fifth, rising income inequality does not prove the poor are becoming poorer...
...If productivity leads to workers with larger paychecks, increasing productivity is a more efficient way of benefiting America’s working class. Increasing the productivity of corporations and small business will increase the median wages of American workers without increasing unemployment the way minimum wage laws do. In other words, it is important to remember that the economy is not improved by raising wages; wages are raised by improving the economy.
(Excerpt) Read more at americanthinker.com ...
It all comes down to supply and demand.
When someone has a rare, unique skill, and there is a strong demand for it, the competition for the skill will cause the compensation for the person with that skill to rise. Others will try to get that skill until it is a common skill.
If the individual has a rare, unique skill that nobody wants, then compensation is low.
If the individual has a common skill that nobody wants, then compensation is low.
If the individual has a common skill, but is widely wanted, then those who want that skill can pay whoever accepts the least for it.
On the relationship between labor productivity and all productivity you have hit on something that may provide the missing link to my hypothesis—and I repeat. I’m not stating a proven truth but advancing a what if:
One of the big disconnects between classical free market theory and reality over the past 10 years has been the absence of hyperinflation. With $17 trillion in debt and QE1,2,20, where is the money going?
I have argued that the computer/robotic revolution has so astronimically increased productivity that money/prices haven’t caught up and that we have been in a deep deflationary hole.
So what you may be saying is that labor productivity can only go so far, even for the brightest, most skilled people. Yes you can invent a great new process, but physically implementing it is subject to your own limitations of time, space, and health. MACHINE productvity, while not limitless (they break down) nevertheless is of vast orders of magnitude more than human.
It is the productivity gain of machines/computers that we have been unable, I think, to properly value since 1990, and once we get that, the biggest struggle will be to better re-connect human productivity inputs to them on a MARGINAL scale so that labor is more proportionately recompensed.
And I have no idea how to do that. The patent system just isn’t built for that, but neither is the old hourly wage system.
And how much your boss likes you.
And on a related subject, why do actors and pro athletes make so much money?
I was a state government employee for 8 years and worked my but off. I’m sure a lot of government employees work hard and do a great job.
They didn't always, even in recent history. Same with artists. Even today, only a few make the bigtime.
They couln't make that much money if nobody was willing to pay it, so there must be a big enough pool of money, somehow, to feed the pigs. Public popularity is what drives much of it, and in the case of sports, public money too. The taxpayers put up the venue, freeing up big bucks for the players.
Lets.
Over the past half century the U.S. population has increased by a third while U.S. federal payrolls have fallen by 60%. If we say that the Fed gov't now is doing the same work as it did 50 years ago, then fed employee productivity growth is about equal to that of the average U.S. worker, namely a doubling of real output during the period.
If we believe that the federal gov't is now doing much more than it did back then we'll have to say that increases in fed employee productivity is way above that of the average U.S. worker.
I came in today. I have nothing on my schedule until 2:30 PM. Everything is running fine.
I could go home and call into that meeting.
Here's a counter-argument, union-focused:
What if you make 10 widgets and I make 5 widgets, but the next step in the assembly line is to insert those widgets into a larger machine and that process is timed to perform at 5 widgets per hour? What happens to the extra 5 widgets that you made? What are the costs of removing those widgets from the assembly line and storing them?
Can one over-produce in a way that degrades value once the sweet-spot of supply and demand is passed?
-PJ
There will always be openings w/ those of strong back and weak mind, but just not as many. No problem, the fact is that people on average are getting smarter from year to year anyway (re: Why our IQ levels are higher than our grandparents').
Sure, especially if the other guy happens to be using a widget machine that costs as much as another worker.
That’s because there’s now a mismatch between productivity and the need for workers. More automation means higher productivity with fewer lower skilled more replaceable and therefore lower paid employees.
Lucky you,,, Im busy procuring components all day,,
FR does relieve the stress
The tank maker for the Soviet Red Army designed and built for a useful operational life of 6 weeks, and built 3 times as many units. The supplier for the Wehrmacht built tanks to last 9 months; but, couldn’t keep up with battle attrition. How did that work out?
And free-market capitalism is exactly why paying a worker for the time worked and not based on his performance is such a bad idea.
I will say, as a federal employee, that I work more than the 40 hours per week that I am supposed to work (no overtime for me, either), and I feel like the undone tasks are piling up, waiting to come down like an avalanche on my head. Most of my people work quite hard (and I cannot allow them to work overtime the way I do).
Although we work hard, I think that a lot of the work is unnecessary--it is the result of regulations, of having to take over 100 hours of training every year, of having processes and procedures that make what seem to be simple tasks hopelessly complicated.
I blame computers for a lot of it. Most of my day is spent answering and sending emails. This seems to be how things are done these days. In the pre-computer age, it seemed like paperwork was not nearly as cumbersome or prolific. Yes, computers make things easier--so there are more things to do that more than fill any time the computer might have saved.
the rich elites have ridden on the backs of the working class for a long time and it has increased exponentially the last 10 yrs, where the rich have increased their wealth drastically while the worker might get lucky to have a 2% raise, let alone keep their jobs....
when an American industry can dump all its obligations and show up in another country to produce their goods leaving thousands unemployed, without pay nor bennies, then something is wrong....
and the workers have noting to say about it..
..they'll get lectured about how their huge wages, whatever that means, weren't cost effective....
but at the same time, does the product of the big company go down in price?.....hardly..
I'm sure some govt or military retiree safe in their fat pension will come on and dispute this....
US automakers were making so much money in the 70's that they blew off reliability and product life (cheaped out on product development and quality) and conceded to union demands for wages and benefits.
I'm sure some union member safe in his fat pension will disagree that union demands and lazy company negotiators have any fault in the resulting loss of US employment.
What you describe sounds like the old Soviet method of manufacturing, in which the goal was not to produce anything of quality, or even functional items. The goal was to produce a quota.
So, for example, a washing machine factory might have a quota to produce 200 washing machines per month. Maybe they had parts for only 100 machines. They would make those 100, and then go on to make another 100 that simply did not have whatever parts were missing. So they might not have agitator shafts, or motor belts, or tubs, or whatever. But that didn’t matter—as long as the factory met its quota.
And I’m sure all the workers were paid exactly the same.
That’s the problem with divorcing productivity from wages and using measures of productivity that are equally divorced from real-world considerations. Unions and leftists want to view the employer as a vehicle for keeping workers employed, regardless of outcome, and the outcome in those situations shows it.
> Although we work hard, I think that a lot of the work is unnecessary—it is the result of regulations, of having to take over 100 hours of training every year, of having processes and procedures that make what seem to be simple tasks hopelessly complicated.
If it’s any consolation, the government has done that to the rest of the economy also. That’s why things have ground down to subsistence level, and even then people have to routinely skirt rules and just hope not to get persecuted for it, in order to get anything done.
Obviously, there are a lot of factors going on besides just output and quality. The end use of the product is a factor, as is the end customer. Regardless, the worker's wage should be no more and no less than his value to the company. His productivity and quality of output is a big part of that value. If the company's need is for a worker to produce 5 widgets per hour with less than 0.01% measured deviance from the the established standard, then the worker who produces 6 widgets per hour at that quality is worth more and should be paid more.
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