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Why is FAIR TRADE better than FREE TRADE?
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You have never established that they have. You have established that the highest-paid CEOs make more but you haven't established that that's not just a function of company size.
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CEOs rake in 940% more than 40 years ago, while average workers earn 12% more
Are companies 940% bigger?
DBT
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That's neither an argument or justification for your own claims. I have supported what I say.
Lumpenproletariat
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supply-and-demand: nonreplaceability = value = competitive = more scarce, etc. etc.
This is mostly incorrect -- in general they are paid according to skill and performance. However, you can name some other factors too. And there are factors which are ambiguous, such as their personalities, likeability, who they know, their status or class standing, etc. These other factors may be partly artificial, but there's no way to dictate to the employer what the legitimate factors are. Some factors may be subconscious, and you might have to interrogate the employer intensely, shining a bright light into his eyes and beat the truth out of him -- to expose why he really preferred that particular applicant over another. In some cases it was the pretty face or the sexy (female?) body. Etc. So obviously there are many other factors, some of which might not be detectable.
It would be pointless to try to isolate ALL the factors and force every employer to be totally impartial and judge each applicant on legitimate factors only. So of course you can claim there are other factors.
What else could there be? Replaceability is essentially about "quality of their work or their unique skill."
What is replaceability? Why is someone more easily replaced than another? Precisely because s/he is less valuable, or their skill or work is less valuable. Or, they're more difficult to replace because they're more valuable. Because higher supply = less value, and lower supply = more value. It's both the demand for something plus the scarcity of it which makes it more valuable.
more "value" = less replaceability
They're essentially the same thing. It's because they're more valuable that they're more difficult to replace. The demand and scarcity are almost interchangeable. I.e., because it's more valuable, it's more difficult to find, i.e., because it's difficult to produce value, or to make oneself more valuable, making the more valuable ones also more scarce, as they get chosen and removed from availability, whereas those of less value are easier to find, or are more available.
This is a simple contradiction, and nonsensical. Because more replaceable means precisely less valuable (or to have less value). And less replaceable means precisely to have greater value.
Lower-paid worker replaces higher-paid worker
When this happens, the lower-paid worker is more valuable, and this is why the higher-paid worker is replaced. The value of the worker is not determined by the wage paid, but by the work done, or performance.
So the lower-paid worker is more valuable, at the moment s/he replaces the higher-paid worker. When the replacement takes effect, the higher-paid worker no longer exists, because from that point on that (formerly) higher-paid worker is producing nothing = no value. After the replacement, there is no higher-paid worker left, but only the lower-paid worker. The higher-value (but lower-paid) worker now does the same work for the economy as the replaced worker had earlier performed, but at lower cost. So that lower-paid worker causes more value or production to take place, because that cost savings goes to producing other value, or additional value which before was not being produced.
replacement = more total value now than before as a result of the work.
So the total value produced INcreases as a result of replacing the higher-paid worker with the lower-paid worker -- the same as if the higher-paid worker was replaced by a machine which does the job cheaper. The replacement of the worker by something which does it cheaper results in more total value taking place, even if the replacement does the same work as before, because this replacement saves on cost, and that cost savings then goes into something else of value, so that the total value increases as a result of the replacement.
In some cases the replacement leads to an INCREASE in the same work done as before = more value produced, but it can also lead to the same work done as before (NO increase) but also a cost savings, and then this cost savings translates into additional value elsewhere, so that the replacement has the effect of increasing the total value one way or another. So cost savings always results in increased value or benefit to the society.
So when a worker is replaced, by cheap labor or by automation, it always increases the total value, and that replaceable worker really had lower value when s/he became replaceable -- or, you could say, became lower in value, or became less valuable at the point when it became possible to do the replacement.
And it's nonsensical to say workers are paid only according to their replaceability and not according to their value = incoherent. It's both. The replaceability and value of their work (performance) are what determine the wage level and thus the replacement of workers by someone or something less costly.
I.e., it's the less replaceability and the higher value and the more scarcity which cause the wage level to be higher. And it's the opposite -- the more replaceability and lower value and less scarcity -- which causes the wage level to be lower (or the replacement of a worker more likely).
This is mostly incorrect -- in general they are paid according to skill and performance. However, you can name some other factors too. And there are factors which are ambiguous, such as their personalities, likeability, who they know, their status or class standing, etc. These other factors may be partly artificial, but there's no way to dictate to the employer what the legitimate factors are. Some factors may be subconscious, and you might have to interrogate the employer intensely, shining a bright light into his eyes and beat the truth out of him -- to expose why he really preferred that particular applicant over another. In some cases it was the pretty face or the sexy (female?) body. Etc. So obviously there are many other factors, some of which might not be detectable.
It would be pointless to try to isolate ALL the factors and force every employer to be totally impartial and judge each applicant on legitimate factors only. So of course you can claim there are other factors.
What else could there be? Replaceability is essentially about "quality of their work or their unique skill."
What is replaceability? Why is someone more easily replaced than another? Precisely because s/he is less valuable, or their skill or work is less valuable. Or, they're more difficult to replace because they're more valuable. Because higher supply = less value, and lower supply = more value. It's both the demand for something plus the scarcity of it which makes it more valuable.
more "value" = less replaceability
They're essentially the same thing. It's because they're more valuable that they're more difficult to replace. The demand and scarcity are almost interchangeable. I.e., because it's more valuable, it's more difficult to find, i.e., because it's difficult to produce value, or to make oneself more valuable, making the more valuable ones also more scarce, as they get chosen and removed from availability, whereas those of less value are easier to find, or are more available.
This is a simple contradiction, and nonsensical. Because more replaceable means precisely less valuable (or to have less value). And less replaceable means precisely to have greater value.
Lower-paid worker replaces higher-paid worker
When this happens, the lower-paid worker is more valuable, and this is why the higher-paid worker is replaced. The value of the worker is not determined by the wage paid, but by the work done, or performance.
So the lower-paid worker is more valuable, at the moment s/he replaces the higher-paid worker. When the replacement takes effect, the higher-paid worker no longer exists, because from that point on that (formerly) higher-paid worker is producing nothing = no value. After the replacement, there is no higher-paid worker left, but only the lower-paid worker. The higher-value (but lower-paid) worker now does the same work for the economy as the replaced worker had earlier performed, but at lower cost. So that lower-paid worker causes more value or production to take place, because that cost savings goes to producing other value, or additional value which before was not being produced.
replacement = more total value now than before as a result of the work.
So the total value produced INcreases as a result of replacing the higher-paid worker with the lower-paid worker -- the same as if the higher-paid worker was replaced by a machine which does the job cheaper. The replacement of the worker by something which does it cheaper results in more total value taking place, even if the replacement does the same work as before, because this replacement saves on cost, and that cost savings then goes into something else of value, so that the total value increases as a result of the replacement.
In some cases the replacement leads to an INCREASE in the same work done as before = more value produced, but it can also lead to the same work done as before (NO increase) but also a cost savings, and then this cost savings translates into additional value elsewhere, so that the replacement has the effect of increasing the total value one way or another. So cost savings always results in increased value or benefit to the society.
So when a worker is replaced, by cheap labor or by automation, it always increases the total value, and that replaceable worker really had lower value when s/he became replaceable -- or, you could say, became lower in value, or became less valuable at the point when it became possible to do the replacement.
And it's nonsensical to say workers are paid only according to their replaceability and not according to their value = incoherent. It's both. The replaceability and value of their work (performance) are what determine the wage level and thus the replacement of workers by someone or something less costly.
I.e., it's the less replaceability and the higher value and the more scarcity which cause the wage level to be higher. And it's the opposite -- the more replaceability and lower value and less scarcity -- which causes the wage level to be lower (or the replacement of a worker more likely).
Note that their source is the EPI--not exactly the best of data. Furthermore, it's not "CEOs", it's the CEOs of the biggest companies. I don't know how much they merged but that seems quite possible.
Jayjay
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I don't know for a fact, but probably they are. "940% bigger" is approximately a factor of ten. If S&P 500 is any indication, the market value of 500 largest companies is about 25 times what it was 40 years ago.
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That doesn't mean the companies themselves are that much bigger, just that they are that much more valuable.
Has GE built ten more plants for every one in production since forty years ago? General Motors? Boeing? McDonalds? Anyone?
It's stock market manipulation, plain and simple.
Jayjay
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Plants and buildings don't decide CEO salaries. Stockholders do. Even if stock prices were inflated, they reflect the perceived value of the companies and in particular, their ability to pay dividends in the future.
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Exactly my point. These people are not the paragons of industry some here try to make them out to be. They're hucksters.
Jayjay
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What does that have to do with whether their salaries are fair or not? The point that Loren was making was that CEO pay is relative to size of the company. It certainly looks like that is the case.
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It's not the size of the company though, it's the size of the stock value. It's paper value, fairly unrelated to the product or service provided. Employees are no longer important to creating good products or services. it's the stock prices that count. It's a house of cards that could tumble at the drop of a hat. To these people It's like 1929 never happened.
These people aren't ceos, they're glorified stock brokers.
DBT
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As shown in Sweden, high CEO salaries and bonuses and benefits are not necessarily tied to performance or quality of management:
''While investors around the world are rising up against excessive executive pay in a movement dubbed “the shareholder spring”, there has been barely a peep in Sweden - with good reason.
In a country famed for restraint and long social democratic traditions, Sweden’s executives are generally rewarded far less than rivals in the rest of Europe and the United States and appear to perform just as well, or better, for shareholders.''
''Executive excess need not be etched in stone. Just look at the Nordic region, where an egalitarian tradition and a high quality of life leave top managers content with lower paychecks.
Though corporate pay scandals do occur and the gap between executive and average salaries has risen, company bosses in Sweden, Denmark, Finland and Norway earn lower wages on average than in the United States and elsewhere in Europe, data show.
Yet there is little sign of Nordic executives and top talent manning the long-boats in search of better pay abroad.
"There's more to life than money," said Leif Borge, chief financial officer at Aker Solutions, Norway's biggest oil services company, who made about $862,000 in 2011.
"I'm happy with my salary, it covers my needs.''
''While investors around the world are rising up against excessive executive pay in a movement dubbed “the shareholder spring”, there has been barely a peep in Sweden - with good reason.
In a country famed for restraint and long social democratic traditions, Sweden’s executives are generally rewarded far less than rivals in the rest of Europe and the United States and appear to perform just as well, or better, for shareholders.''
''Executive excess need not be etched in stone. Just look at the Nordic region, where an egalitarian tradition and a high quality of life leave top managers content with lower paychecks.
Though corporate pay scandals do occur and the gap between executive and average salaries has risen, company bosses in Sweden, Denmark, Finland and Norway earn lower wages on average than in the United States and elsewhere in Europe, data show.
Yet there is little sign of Nordic executives and top talent manning the long-boats in search of better pay abroad.
"There's more to life than money," said Leif Borge, chief financial officer at Aker Solutions, Norway's biggest oil services company, who made about $862,000 in 2011.
"I'm happy with my salary, it covers my needs.''
I already explained what's going on--mergers. GE didn't build a whole bunch more plants. They bought other companies. We have fewer, bigger companies.
And note that it doesn't need to be 10x--the relationship between company size and CEO pay isn't linear.
DBT
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CEO expectations are raised whenever another company is offering more, they feel that this is the current rate that they themselves should aspire to....consequently, unlike ordinary workers who have little or no leverage when it comes to pay negotiations, the executive class enjoy hefty remuneration packages while wages for workers languish in the doldrums. One is a race to the top, the other with incomes and conditions steadily eroding away, gradually losing past gains.
Lumpenproletariat
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FAIR TRADE = scapegoating poorer producers > INcrease in "obscene concentration of wealth"
FREE TRADE > more competition = increase in production = increase in prosperity for all
Assuming there really is an "obscene concentration of wealth and power in the hands of a small percentage," nothing about this will be improved by bashing the world's employers, targeting the more desperate producers for elimination, which is what "fair trade" does or tries to do. Shutting down companies which pay low wages won't make society or the economy or ethics or human decency or social mobility any better.
Most of the targets of "fair trade" are smaller marginal companies which are struggling to survive, not the top 1%. There's no reason to believe "fair trade" would do anything but INCREASE the concentration of wealth and power in the hands of the rich and powerful. It would eliminate companies not a part of the rich and powerful, and it would eliminate (or does eliminate) jobs of the most desperate poor people who will end up worse off, because "free trade" allowed them a low-paying job, while "fair trade" leaves them with no job at all.
No one has denied this or answered how the world is made better by eliminating these jobs and this production.
FREE TRADE > more competition = increase in production = increase in prosperity for all
Assuming there really is an "obscene concentration of wealth and power in the hands of a small percentage," nothing about this will be improved by bashing the world's employers, targeting the more desperate producers for elimination, which is what "fair trade" does or tries to do. Shutting down companies which pay low wages won't make society or the economy or ethics or human decency or social mobility any better.
Most of the targets of "fair trade" are smaller marginal companies which are struggling to survive, not the top 1%. There's no reason to believe "fair trade" would do anything but INCREASE the concentration of wealth and power in the hands of the rich and powerful. It would eliminate companies not a part of the rich and powerful, and it would eliminate (or does eliminate) jobs of the most desperate poor people who will end up worse off, because "free trade" allowed them a low-paying job, while "fair trade" leaves them with no job at all.
No one has denied this or answered how the world is made better by eliminating these jobs and this production.
Lumpenproletariat
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Eliminating employers won't make desperate workers better off.
But how does taking away their low-paying job give them any more money? All "fair trade" does is eliminate their low-paying job. It does not provide any jobs to replace the "unfair" jobs which it destroys. So those low-paid workers end up even lower-paid than before, after "fair trade" gets finished punishing their "unfair" employer. Those workers already have the best deal they can find. Taking that away from them can't possibly leave them higher-paid than before.
They lose even more business when you eliminate those low-paying jobs, because now those (formerly) low-paid workers have less to spend than before.
And what "fair trade" does is make it worse, so there is a greater number of unemployed who have less to spend than before, which is rotten for the economy.
Why do you insist on making it even worse, by eliminating those employers or companies which pay the low wages, and so leave those workers struggling even worse than before?
Why is your only solution to anything just to scapegoat employers, rather than proposing anything to improve the production?
This shows again that "fair trade" is not about improving the economy generally, but only to scapegoat employers and obsess on certain workers selected for victim status, to be pandered to, while stomping under all other workers who are made worse off because of the reduced production and higher prices inflicted onto all, who have to pay the cost of the pandering.
But how does taking away their low-paying job give them any more money? All "fair trade" does is eliminate their low-paying job. It does not provide any jobs to replace the "unfair" jobs which it destroys. So those low-paid workers end up even lower-paid than before, after "fair trade" gets finished punishing their "unfair" employer. Those workers already have the best deal they can find. Taking that away from them can't possibly leave them higher-paid than before.
They lose even more business when you eliminate those low-paying jobs, because now those (formerly) low-paid workers have less to spend than before.
And what "fair trade" does is make it worse, so there is a greater number of unemployed who have less to spend than before, which is rotten for the economy.
Why do you insist on making it even worse, by eliminating those employers or companies which pay the low wages, and so leave those workers struggling even worse than before?
Why is your only solution to anything just to scapegoat employers, rather than proposing anything to improve the production?
This shows again that "fair trade" is not about improving the economy generally, but only to scapegoat employers and obsess on certain workers selected for victim status, to be pandered to, while stomping under all other workers who are made worse off because of the reduced production and higher prices inflicted onto all, who have to pay the cost of the pandering.
DrZoidberg
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Yeah, that's pretty fucked. But then again, Austrailia's economy is very healthy. So is that a problem? Are construction workers of Autralia exploited? I have a hard time believing that there's any workers in the western world who doesn't have the ability to tell their boss to fuck off and then get another job.
Or to put it another way, do the laws of Australia enable construction companies to form a cartell to control wages? And do they? Based on the numbers I've seen Austrailia looks on par with the rest of the western world.
DBT
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It's not that construction workers are 'exploited' but that - as pointed out - there has been a steady shift away from collective bargaining to individual contracts or workplace 'agreements' where each worker is presented with a contract specifying rates and conditions, so much overtime to be done, no strikes, etc, which they are to sign as a condition of employment, a legal document.
At the time, the Howard government wanted to go even further down that road but they were voted out.
The point being; there is a power imbalance between management and individual workers that allows the management to more or less set terms and conditions in their own favour. Which helps raise profit margins for the business, but results in a reduction in disposable income for workers.
DrZoidberg
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Yeah, but we would expect wages to go down as a result of automation. That's across the board in all jobs that doesn't work with automating things specifically. Construction workers are not special. If you want to make out the bosses of construction workers as extra evil we should see the salaries of construction workers flatten out more than any low skilled work. It looks to me like they're just responding to changes in the work market in general?
Unions getting weaker is a result of their successes in the first half of the 20'th century. They're not as necessary any longer. When your job is vanishing because of robots taking them over, then striking is just going to accelerate the introduction of robots. It's not a great time to be a protesting worker.
It's still wrong to make striking illegal. It's the only weapon workers have against an exploitative employer. My point is that even without that law I'm not sure it would have made a difference.