How do artificially HIGHER WAGES and "JOB CREATION" benefit the economy?

[Harry Bosch]

There are a few skill sets where things can be reversed.

Major league pitchers.

But you have to be a rare rare individual to get this treatment.

It is what happens when a real negotiation takes place. And it is a negotiated wage, not a market wage.

The vast majority are paid the lowest possible wage. A market wage.

What unions did was give all workers negotiating power.

For that they have been illegally attacked and virtually destroyed.

If there was a union factory no matter the profits, if possible, it went overseas.

Agreed. Generally, even in Harry's example, remuneration is based on how easily someone can be replaced, not the value of the work they do.

Well, determining the value that a person contributes is very difficult. The two highest people in our company now are the head engineer and our three sales people. There aren't too many companies where the owner is the fifth highest employee! Now, how would I assign a value to the engineer? It takes a large team to develop from scratch a new product. The engineer is critical to the development of the product and the continuous errors that we find. But if he were to leave, I have to be in a position where I can find a replacement - or else the whole project would stall. But does that mean that he's not generating all the value? You might think that the salespeople don't add value, but I can tell you that if we can't sell the product, no one is going to get paid. We hired a salesperson with great connections and experience in selling medical devices in Europe. We will double our sales this year due to him. How much value is he responsible for? My only point is that determining "value" is not as easy as it sounds.

 

[Harry Bosch]

But we're prepared to pay substantially more if we need to. You might be surprised to hear that in my experience what drives most workers is pay and benefits - not equity in the company.

It does not surprise me at all. In general people will NOT want to take risk. The average person is a big pussy that will do anything possible to avoid risk. Which is why most of us are not $ billionaires. It is very rare to find a risk taker like Trump.

It is also the primary reason there is still (and will always be) a pay gap between women and men. Men can accept more risk than women. You either sleep well or you eat well.

Agreed, most people are risk adverse. For good reason. Smart people should be risk adverse! The 75% of all startups fail. My first two startups basically failed. I tell my daughters all the time, run from entrepreneurs!

 

[DBT]

However the 'economic value' of a person is determined, human society and the overall economy of a nation does not benefit by having permanent 'subclass' of people who struggle to make ends meet, social unrest and crime being the most obvious problems.

 

[untermensche]

However the 'economic value' of a person is determined, human society and the overall economy of a nation does not benefit by having permanent 'subclass' of people who struggle to make ends meet, social unrest and crime being the most obvious problems.

That is what makes capitalism work.

Capitalism is slavery but only daytime slavery.

And the master does not have to care about the health of the slave one bit. Unless they have a rare skill.

And you need an abundance of desperate out of work people to make it work.

When people are looked at as only a very cheap commodity you want a steady supply of replacement parts.

The masters want a lot of very desperate people.

They fight any measure to make the lives of workers more secure.

 

[Harry Bosch]

However the 'economic value' of a person is determined, human society and the overall economy of a nation does not benefit by having permanent 'subclass' of people who struggle to make ends meet, social unrest and crime being the most obvious problems.

That is what makes capitalism work.

Capitalism is slavery but only daytime slavery.

And the master does not have to care about the health of the slave one bit. Unless they have a rare skill.

And you need an abundance of desperate out of work people to make it work.

When people are looked at as only a very cheap commodity you want a steady supply of replacement parts.

The masters want a lot of very desperate people.

They fight any measure to make the lives of workers more secure.

Shoot we had you off the "slave" meme for a couple years. Now your touting it out again? Are you running out of fresh retorts or something? I'm on the side that wants a larger safety net for workers. I favor unions. I favor lowering barriers. But continuously pulling out the slavery card is so ridiculous and banal that it hurts your position. You'll turn away liberals and moderates towards the dark side with such insensitive and incorrect attacks. There are more actual slaves today than in anytime in history. You cheapen their plight...

 

[untermensche]

However the 'economic value' of a person is determined, human society and the overall economy of a nation does not benefit by having permanent 'subclass' of people who struggle to make ends meet, social unrest and crime being the most obvious problems.

That is what makes capitalism work.

Capitalism is slavery but only daytime slavery.

And the master does not have to care about the health of the slave one bit. Unless they have a rare skill.

And you need an abundance of desperate out of work people to make it work.

When people are looked at as only a very cheap commodity you want a steady supply of replacement parts.

The masters want a lot of very desperate people.

They fight any measure to make the lives of workers more secure.

Shoot we had you off the "slave" meme for a couple years. Now your touting it out again? Are you running out of fresh retorts or something? I'm on the side that wants a larger safety net for workers. I favor unions. I favor lowering barriers. But continuously pulling out the slavery card is so ridiculous and banal that it hurts your position. You'll turn away liberals and moderates towards the dark side with such insensitive and incorrect attacks. There are more actual slaves today than in anytime in history. You cheapen their plight...

It's no meme.

And I was never off it. It's just something that causes cognitive dissonance in people so I avoid it.

It's the nature of the master/slave power relationship.

A master/slave relationship is where one party has all the power to give orders and the other either follows or is harmed. How the master wants to treat the slave is not part of the relationship. Some masters can treat their slaves well, as Thomas Jefferson did. And some can torture their slaves, as most did. But all the power is on one side.

That is master/slave. That is boss/worker.

In capitalist structures all orders come from a small minority and all others either follow them or leave.

It is a master/slave system where the slaves are free to leave when their shift is over.

 

[Harry Bosch]

Shoot we had you off the "slave" meme for a couple years. Now your touting it out again? Are you running out of fresh retorts or something? I'm on the side that wants a larger safety net for workers. I favor unions. I favor lowering barriers. But continuously pulling out the slavery card is so ridiculous and banal that it hurts your position. You'll turn away liberals and moderates towards the dark side with such insensitive and incorrect attacks. There are more actual slaves today than in anytime in history. You cheapen their plight...

It's no meme.

And I was never off it.

It's the nature of the master/slave power relationship.

A master/slave relationship is where one party has all the power to give orders and the other does not. How the master wants to treat the slave is not part of the relationship. Some masters can treat their slaves well, as Thomas Jefferson did. And some can torture their slaves, as most did. But all the power is on one side.

That is master/slave. That is boss/worker.

In capitalist structures all orders come from a small minority and all others either follow them or leave.

It is a master/slave system where the slaves are free to leave when their shift is over.

Sorry, but the below are slaves:

https://www.thesun.co.uk/news/7139542/sex-slave-trade-nigeria/

Comparing US workers like myself to actual slaves cheapens their misery. It creates the cover allowing people to ignore and even accept actual slavery. I'm sorry that no one will pay you to watch spongbob all day. But you aren't a slave....

 

[untermensche]

Never made the comparison.

You are deflecting with that nonsense.

I described the master/slave relationship.

It is the exact same relationship as the boss/worker relationship in capitalism.

Yes the masters now are less harsh. The treatment of the slave is not part of the power relationship. There is nothing inherent to the power relationship that the master will torture the slave. That is just how brutal Americans did it.

The decent treatment is because unions changed the laws.

Not because masters have changed.

 

[untermensche]

The master/slave power relationship:

The master has all power except in some cases not the power to force the slave to stay. The slave has no power. The slave either submits to all orders fully or leaves.

That is the power relationship.

How this relationship is expressed can differ.

There can be many perky and happy slaves. The harshness they face is not part of the power relationship. And the power only exists during working hours.

Human power relationships. That is the real world.

 

[ZiprHead]

The idea that it's okay to have employees working at less than a living wage is abhorrent. That employees cannot even afford food without assistance. And many want to take even that assistance away. What you are essentially saying is that it's okay for people to sacrifice their very lives for someone else's business.

 

[SimpleDon]

Your questions answered #3

The entire OP is based on the idea that the benefits of the low prices outweigh the damage from the lower wages from the lower demand. This idea defies reason in so many ways that it is easy to say it is a fiction.

The money spent on the imported product leaves our economy. Because it leaves our economy it doesn't simulate any further economic activity in our economy. It doesn't pay any more wages in our economy. It doesn't create any additional demand that encourages additional investment. All of these are things that would have happened if the money had spent on a product made here.
2.	The money supply has to either increase as the economy grows or it has to increase in velocity, the exchanges of the money have to happen quicker. The money that leaves our economy to buy imported products in excess of the money gained from exports reduces the money supply in our economy and if anything it reduces the velocity of the money in our economy which is related to how consumers feel about the future, whether they spend or they save. In my mind, it would be hard to argue that globalization and all of the other wage suppression that you champion has made the middle-class consumers more secure in their futures. This money spent on imports in excess of our exports has to be replaced in our economy. Money is created by debt, not just by the Fed printing money. The debt that creates money is either sovereign government debt or it is private bank debt. Sovereign debt is the federal government spending more money into the economy than they take out of the economy in taxes, i.e. the federal government's budget deficit. If the federal government doesn't spend enough money into existence to cover the trade deficit (the current account deficit actually), the difference is made up by private debt, if the consumers are willing to take on the additional debt. If they aren't the economy contracts by the difference.
3.	The dollars that are spent to buy foreign products eventually have to be balanced with the local currency, they say that the two currencies have to be cleared. The owner of the factory that made the product you bought needs his country's currency to pay his workers and his suppliers. He exchanges his dollars for his local currency that his bank gets from his government's central bank that the central bank issues in exchange for the dollars. Eventually, the foreign central bank comes to the US Federal Reserve Bank, our central bank, and exchanges the dollars that they hold for any of their currency that the Fed holds. If the Fed doesn't hold enough of the local currency to exchange for the dollars then the Fed has the US Treasury to issue US bonds, i.e. T-Bills, to use to buy back the rest of the dollars, which are then destroyed. This is how the trade deficit adds to the US's national debt. I have explained this to you before and you said that I was crazy, that the US trade deficit doesn't add to our national debt because our national debt is "bad" and free trade is "good" with no further details of why your rather subjective argument is correct and why my more objective argument is wrong. You have this opportunity to correct this failure on your part.
4.	What should eliminate this completely from serious consideration as being valid is that if it were true the logical end result would be the return of slavery, the lowest wage cost possible and therefore the highest benefits possible from cost products, according to your argument. I suppose you would volunteer to be one of the slaves to help the economy, right?
5.	But if this isn't sufficient to convince you, consider this, the entire benefit from the lower prices from offshoring the production of consumer products to China has been completely wiped out by the private debt created because of the decrease in the financial support for colleges and the increased cost to the student. This results in the student carrying a huge debt load after leaving college, at a time that they should be buying a car, getting married and buying a home.
6.	The price savings from the offshoring has never registered looking at the overall economy because the Fed adjusts the short-term interest rates to induce a small amount of inflation in the economy, say 2%, to avoid the possibility of the economy going into deflation. This means that while the prices of the offshore sourced goods drop the benefits are yet again canceled out, this time by increased prices on other goods to add up to the 2% inflation.

[td="width:30"]1.[/td]

There are more reasons that this isn't even close to being true, which will be in, Your questions answered #4, below.

 

[Bomb#20]

The idea that it's okay to have employees working at less than a living wage is abhorrent.

That employees cannot even afford food without assistance.

When a person does not know how to do anything that will increase any employer's revenue as much as eating costs him, he's not going to be able to afford food without assistance. When that happens, we have a number of options for getting him enough to eat. (1) He can increase some employer's revenue by less than it costs to feed him, and we can all chip in to make up the difference. (2) We can all chip in to feed him all he needs, without him being even partly self-supporting. (3) He can increase some employer's revenue by less than it costs to feed him, and the employer can make up the difference out of the goodness of her heart. (4) He can increase some employer's revenue by less than it costs to feed him, and the employer can make up the difference because we all order her to hire employees she doesn't benefit from employing, and take a loss on them. (5) We can all make the amount he knows how to increase an employer's revenue larger, enough larger that he'll be able to afford food, by helping him learn new skills. (6) We can all make the amount he knows how to increase an employer's revenue larger, enough larger that he'll be able to afford food, by preventing some of the other unskilled workers from working at all, thereby reducing the overall employment of unskilled labor, and count on the law of diminishing returns to make it benefit employers to employ the reduced subset of unskilled workers who are still given the opportunity to work.

Apparently you abhor option 1. Which options do you not abhor?

And many want to take even that assistance away. What you are essentially saying is that it's okay for people to sacrifice their very lives for someone else's business.

Not seeing where Lumpenproletariat essentially said that.

 

[DBT]

It's more about a matter of power imbalance, any given firm in relation to a job applicant or an expendable employee, itself operating within a system that favours those who are at the top of the pecking order. We live in a highly stratified world.

 

[RVonse]

So the basic question is:

Why are the HIGHER WAGES and "JOB CREATION" beneficial to the economy?

Hey Lumpenproletariat, did you listen to Trumps conference on USMCA? The tariffs he threatened aren't going to be used anyway. It was simply part of negotiations for a fair playing field.

Rest easy Lumpenproletariat, because jobs are going to come to the US even without the tariffs you seem to hate!. And the Democrats are going to be big losers voting time when the working class realizes first hand just how bad (Clinton signed) NAFTA really was for them!

 

[Harry Bosch]

It's more about a matter of power imbalance, any given firm in relation to a job applicant or an expendable employee, itself operating within a system that favours those who are at the top of the pecking order. We live in a highly stratified world.

Workers have legal protections in employment dependent on the country where they live. But yea, if you work for someone, you generally are going to have to follow their rules. If you don't like following the rules you can start your own company, become an artist, or become a consultant.

 

[DBT]

It's more about a matter of power imbalance, any given firm in relation to a job applicant or an expendable employee, itself operating within a system that favours those who are at the top of the pecking order. We live in a highly stratified world.

Workers have legal protections in employment dependent on the country where they live. But yea, if you work for someone, you generally are going to have to follow their rules. If you don't like following the rules you can start your own company, become an artist, or become a consultant.

I wasn't talking about legal protections. We know about legal protections and how far they go.

 

[Lumpenproletariat]

Which scientist has proved what the right wage or price should be in each case, or . . .

. . . how much spending and consuming and investing there should be?


Barroom Brawl over the definition of "artificial"

I reject the premise that higher wages set by law or collective bargaining are "artificial".

Like President Trump's higher wages to auto workers as part of the new trade law?

What is the reason to single out a particular class of workers and prop their wages up higher than the competitive market level, but not do the same for all other workers?

What's the reason for this particular class of workers to receive such special pity and not other workers? Consumers will have to pay higher prices for cars because of this extra labor cost, including many who survive on lower incomes than these auto workers are paid. What is the reason to inflict this cost onto poor people in order to increase the incomes to higher-paid auto workers?

If no reason can be given for this free benefit to a select few which must be paid by others who are struggling to survive, isn't there something artificial about it? Isn't it artificial to impose injury onto many/most in order to provide an unearned benefit to a select favored group, like auto workers, or steal workers?

Isn't it good for poor independent contractors to compete with each other?


So then, Why shouldn't wage-earners compete with other wage-earners?

What if a desperate job-seeker is willing to do that job at a lower price/wage in order to get hired? Why should this job-seeker be denied a chance to get hired, if this is the only way he can get someone to hire him? Isn't it OK for a poor independent contractor to compete with another by offering a lower price? Then why not also a poor desperate job-seeker?

Isn't any government-set price (or wage) artificial if there's a seller desperate for business who offers the same product/service for less? and a buyer who'll pay that lower price but not the higher government-set price?

Suppose the barbers' guild sets the minimum price for a haircut, which the government then imposes onto all barbers. Isn't that an "artificially" high price if some barbers want to go below it in order to "steal" business away from the other barbers?

(The opposite is the case -- it's illegal for providers to set prices.)

How is that different than wages being set by the guild or by the government? What if some of the barbers are poor and desperate and are willing to do the job for less, to get some business? like a small company trying to "steal" business away from the more established companies? What if a job-seeker is desperate and would do that job for less, in order to undercut the other workers and "steal" the job from them?

Why should any worker of any kind be prohibited from offering his service at below the fixed rate, in order to compete and "steal" business away from another who charges a higher rate? Wouldn't it be best for consumers if any producer is allowed to compete by underselling the competition? Why isn't the competitive price always the best price? and isn't the price imposed by the government "artificial" by propping up the prices consumers must pay, and thus making all consumers worse off?

If an artificial price set by government is necessary in some cases -- e.g., forcing up the price of tobacco or alcohol or gasoline -- doesn't there have to be a specific reason why this is necessary, for the good of the whole society, or a social benefit? It can't just be to prop up the incomes of a select class of producers to the detriment of everyone else, can it? like certain privileged auto workers or steal workers?

Why is there a need to prop up the incomes of auto workers or steal workers? which everyone else then has to pay for, thus making everyone else's real income lower? including poor consumers whose income is lower than that of the privileged auto workers or steal workers? Why should these poorer members of society be forced to subsidize the incomes of higher-paid auto workers or steal workers?

If the competitive price/wage is not the best price, then what about the barber? (or plumber, gardener, etc?) Should there be such a price schedule imposed on all the barbers which prohibits any barber from offering a haircut below the set price?

With that in mind, the answer is that two thirds of the economy consists of consumer spending.

Why is that important? What if it was only one half? or only one third? What's the significance of the economy being 2/3 consumer spending instead of only 1/3? Why would it matter if it was only 1/3? Or why would it matter if it was 80% or 90% consumer spending? Should the government do something different based on what percent of the economy is consumer spending?

Higher wages, more spending, more consumption, more investment.

Like more bridges to nowhere = higher wages, more spending, more consumption, more investment.

Is the point supposed to be that higher wages lead to more spending and consumption and investment?

Is there something desirable about more spending and consumption and investment? What's desirable about it? Should something be done to cause people to spend and consume and invest more than they do already? Why? What's the need to cause more spending and consuming and investing?

Why shouldn't the government just ALLOW the spending and consuming and investing? Why does it have to whip it on, drive it faster, faster, faster -- like the buyers and sellers are dragging their feet and need to be herded on like cattle, or prodded with an electric shock.

What is the need to make people spend more, or make someone be paid more, or to make someone consume or invest more? What's wrong with leaving everyone alone to decide for themselves how much to spend, or to consume or invest, or to be paid or pay someone else? Why not assume that the actual level -- "natural" level -- of spending and investing is best, with no need to make it go to a higher or lower -- "artificial" level?

How do you know the right amount of spending or consuming or investing there should be?

 

[fromderinside]

What's wrong with leaving everyone alone to decide for themselves how much to spend, or to consume or invest, or to be paid or pay someone else? Why not assume that the actual level -- "natural" level -- of spending and investing is best, with no need to make it go to a higher or lower -- "artificial" level?

How do you know the right amount of spending or consuming or investing there should be?

For a model such as you suggest there need be sufficient money in each persons account for them to decide, not be coerced or driven to buy or keep money. After all not having that is the basis for your natural and artificial levels.

Remember a person free to choose has the wherewithal to choose.

 

[untermensche]

There is no such thing as a "natural" price.

There is no such thing as a "natural" wage.

There is no such thing as a "natural" price of a car.

What is gold worth "naturally"?

The economy is ENTIRELY human activity, carefully constructed human activity. Constructed by those wishing to profit off others. Constructed by those mostly interested in themselves.

In an economy littered with powerful dictators of wealth that use that wealth to control governments you end up with the sickest most self interested making all the rules.

There is NOTHING natural about any of it.

It is all about power, control and scarcity.

 

[Harry Bosch]

It's more about a matter of power imbalance, any given firm in relation to a job applicant or an expendable employee, itself operating within a system that favours those who are at the top of the pecking order. We live in a highly stratified world.

Well, I don't know where you live. But in the US, you can start a new company and have any rules that you deem necessary (as long as you follow the minimum laws within each state). You can start a company with no hierarchy. No power differences. No leadership. No rules. And I'm sure that there have been many such companies started. But they rarely last. They don't work. Companies are too competitive today to have some workers producing, others watching sponge Bob all day.