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 ...
Only if they’re union.
It's really about viewing things as a system where maximizing a single part of the system might inadvertently sub-optimize the whole system. When viewed like that, then productivity itself becomes a team output rather than an individual output.
Compensation, therefore, has to reflect both the individual and system components. That might mean that the individual is rewarded for quality work (as well as seniority uplifts, etc.), and then everyone gets a bonus (pay-at-risk) if the system produces. This way, you avoid pockets of over-producers competing against each other at a cost to the enterprise, and yet reward everyone for exceeding quotas and quality standards.
If slackers under-perform, the system will under-perform and everyone loses the bonus. The team will self-motivate to keep overall performance of the system in balance.
-PJ
PUBLIC UNIONS HEH HEH
Unions.......
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