Why is FAIR TRADE better than FREE TRADE?

[Lumpenproletariat]

What is FAIR TRADE about, if not propping up the wage level? out of pity for the uncompetitive --

-- and to the detriment of all consumers who have to pay for it? including all the poor?

It is pretty clear that the OP poster has no clue what free or fair trade means. Fair trade is a version of free trade: people agree to buy products that meet certain standards.

But WHICH "people" and what "standards"? or WHOSE standards?

What if the "standard" is racist, requiring that only White-produced products are allowed -- is that then "fair" trade?

When penalties are imposed onto foreign-produced steel, e.g., especially Chinese, it seems that the "standard" is for imposing an artificially-higher price, to compensate for a product priced too low, so it was too competitive at the lower price, which is called "dumping" and "unfair" -- so the tariff is added to drive up the price, so that consumers have to pay higher. So the "standard" then compensates for the low price, which was too competitive or beneficial for consumers, who should be forced to pay more. So here's a case where "standards" = bad for consumers (higher prices = higher cost of living).


Name what the "standards" are. How much will they cost us?

Just tossing out a word like "standards" is nothing but dog-whistle language, unless you identify what particular "standards" you mean. When we get specific, it usually ends up being a demand for higher wages, or higher production cost, or some kind of backlash against cost-cutting.

So when you get specific and identify what the "standards" are, it usually turns out that the net result of them is to punish the consumers, deny them the benefit of lower price, meaning higher cost of living = lower living standard. The illusion is created that these wonderful "standards" mean more prosperity (for certain favored workers), smiling faces, etc., but when you look at the whole picture, especially the higher cost, there are millions (billions) of consumers who are made worse off by the higher prices, and the smiles turn to frowns, as poor people have to pay those higher costs, as consumers.

So you're not identifying what "fair trade" is unless you include what the "standards" are exactly. But if you can't identify what "standards" you mean, then you're running away and admitting that "fair trade" is delusional and actually bad for consumers, hurting their standard of living. And you're agreeing that free trade is better than "fair trade" because it doesn't impose the "standards" which do injury to the consumers.

So tell us what those "standards" are, or you're throwing in the towel and admitting that free trade benefits consumers, whereas "fair trade" injures them with higher prices, which serve no purpose other than to protect certain less competitive producers while doing net injury to all consumers = injury to the whole nation.

If this isn't what "fair trade" means, then give a specific example where it means something else. Tell us what the "standards" are and how they make us all better off, instead of just driving up the cost of production = higher prices = lower living standard.

people agree to buy products that meet certain standards.

Saying they "agree" implies that there is nothing imposed, but that it's all voluntary. Which is not the case because there is much pressure to impose the "fair trade" or "standards" by law, and otherwise pressure buyers and sellers into compliance. And when it's Trump's China-bashing higher tariffs, that doesn't mean "people" (buyers and sellers) agree to anything but that the "fair trade" is imposed onto them, forcing up the prices without the buyers and sellers agreeing to it.

It's best to stick to real examples, such as when you google the term "fair trade" -- and it's clear that it's mostly about driving up the wage level to above the market wage set by supply-and-demand. It refers to mostly low-paid workers in factories (or sweatshops) and to farmworkers. It's also about higher prices to some poor farmers.

(If "fair trade" is also about some environmental issues, this might be something more legitimate. "Free trade" cannot mean "free" to pollute, or to generate unlimited carbon emissions, or entitlement to cheap gasoline. So for just energy consumption, or conservation, some kind of "fair trade" might be better, but this isn't usually what "fair trade" is about.)

Businesses do this all the time when they mandate specs for their products.

That's not what "fair trade" is about. The only "spec" demanded by "fair trade" is that the price be higher, or the wages paid to workers. Name any "spec" required by "fair trade" other than a higher price to be paid, or higher labor cost = higher price to consumers.

. . . specs for their products. In fact, all trade involves either explicit specifications a product or service must meet or implicit ones (for example, not stolen).

This is a digression away from the "fair trade" topic, which is not about stolen goods or other crimes, or fraud, or quality control. You can overlap this into the topic of business ethics -- problems about copyright infringement and plagiarism, also prostitution and smuggling and scams and swindles, also child abuse and trafficking and so on. This goes way beyond what "fair trade" is about. It's not a broad clean-up crusade to purge out all evil among buyers and sellers.

We need to narrow down "fair trade" to something more specific than eliminating evil in all forms. To make any sense of it, the meaning has to be limited to trade, or buying and selling, and to the behavior or decisions going on in transactions -- not about crimes in general, all bad behavior -- but alleged "unfair" terms or conditions in doing the transactions -- and it's almost always about companies or employers paying the workers too low, or maybe in a few cases paying small operators too low.


defining "fair trade"

Why not limit this to what is found in a "google" search of "fair trade" so we're not all over the map. There's much terminology used, making it sound diverse, but when you read the details, it's usually (80-90%) about propping the wage level up higher, even though much of it seems to be described in other terminology. When you read the fine print, higher wage is always there. In some cases it refers to poor small farmers who should be paid higher prices.

If you search the term "fair trade" to find examples of it, it's clear that it's not about all evils happening in business and elsewhere, but rather mostly about the wage level being too low (because of supply-and-demand, intense competition) and trying to drive the wage level up higher. It's about making consumers feel guilty for taking advantage of lower prices due to cheap labor, pressuring them to shop with a "conscience" by refusing to buy the cheap products and instead pay higher prices, restricting their buying to only certified "fair trade" products, i.e., produced by higher-paid workers.

And in the partisan political propaganda it's about higher tariffs on China as punishment for using cheap labor, which is unfair to American workers who can't compete at such low wage levels. I.e., it's about Trump's "jobs! jobs! jobs! jobs!" etc., about China-bashers Trump and Bernie Sanders competing for labor union votes, competing for the "bring back the factories!" voting bloc. This too is what "fair trade" means.

It's not about product specifications or stolen goods or fraud and millions of other evils which might occur in business and everywhere else.

When the term "fair trade" is used, it's not about all kinds of misbehavior which might need policing, but about particular decisions of buyers and sellers in which the prices are too low -- and mostly the price for labor -- and this low-cost production is "unfair" to someone, such as those who can't compete at that lower price or wage level. So it's about a producer who is cheating by charging a low price, because it forces competitors to lower their price, which is "unfair" to them.


It's about "DUMPING" and "SLAVE LABOR" = "unfair" (too much competition)

E.g., when it's the price of steel which is too low, this then is called "dumping" by those who think the price is lower than a "fair" price and difficult to compete with. And if it's the price of labor which is too low, this is called "slave" labor or "scab" labor, and is unfair because it's difficult to compete with. This is mostly what "fair trade" is about, which retaliates against the "unfair" low price or low wage, trying to drive up the price or wage level, or penalize the low price/wage which is too difficult to compete with.

And examples like sweatshops follow a similar pattern to the above, where a price or wage level is too low, and so there is a crusade to somehow drive up the wage or price.

It's better to stick to this basic definition of "fair trade" and not pretend that it's about all evil practices where something bad might be happening.

If you find a case where it's about not destroying the Amazon rainforest, or other environmental issue, and "free trade" means to burn it all down or clear-cut it and destroy the planet as soon as possible, to maximize profit today, then of course in that case "fair trade" is preferable to "free trade" -- but that's not what "fair trade" is usually about. It's about protecting those who are less competitive from losing their jobs, or about boosting up their wage level, even though the value of their labor is decreasing because of competition and supply-and-demand, and so we need to feel sorry for them and artificially prop up their income somehow.

No one can give any reason why the market price, based on supply-and-demand, is not always the best price for anything being bought and sold. This is the question the "fair trade" dogmatist must address, rather than circumventing it with diversions into a million other directions.

What is the obsession with the wage level? 90% of the "fair trade" examples are about the need to push up the wage level. Why? Why do so many crusaders obsess on the need to drive up the wage level to higher than where it's set by the market, driven by competition and supply-and-demand? If you evade this, then you're really acknowledging that there is an obsession on this which does more harm than good to the economy. If you have reason to think artificially-high wages make the economy better, then explain why, instead of running off to hide, changing the subject instead of being honest and straightforward to present the economics of wages-propped-up-higher = higher living standard overall.

There is no case for this. It's competition and better performance by producers which makes the economy better, not feeling sorry for the less competitive. Perhaps more education. But not paying someone more than their value out of pity for them.

So to really make the case why "fair trade" is better than "free trade" you must explain why there is a compelling need to drive up the wage level, whatever it takes, above the free-market level. Because that's what "fair trade" is mainly about, when you get beneath the surface -- "the devil is in the details" -- what exactly are the "fair trade" crusaders demanding? The demand for higher wages is always there, sometimes disguised somewhat. You can confirm this by searching "fair trade" -- have you done this? Don't pretend you're addressing this if you have not looked up those examples.

Moreover the notion that free trade is the answer because it means lower prices for consumers means that free trade in goods produced by (literally) slave labor should be allowed.

But such goods don't exist today.

Slave labor is unrelated to the topic, in any practical sense, because today there is no slavery being practiced and recognized as legal anywhere.

(If there were any case, the world community could unite together to penalize the nation practicing slavery. There was such unity among nations to boycott S. Africa over Apartheid, and if any nation today did practice slavery, there'd be similar unity for a boycott, which would probably be successful.)

What is recognized throughout all public policy and economics is that lower price is good for consumers, and competition is necessary to force producers to keep their prices lower. Without this premise there would be no antitrust law and no regulation of public utilities, which both assume that lower price (competitive price) is good for the whole economy. If you favor antitrust law and regulation of public utilities, then you have to acknowledge the benefit of anything which produces lower prices.

But not crime, which is what slavery is.

Slavery is only one of many crimes going on. Other crimes are trafficking in illegal drugs, counterfeiting, forgery, blackmail. Also illicit trafficking in prohibited animal parts, like ivory, alligator skin, etc. Some of these are illegal in one nation but not another. To these could be added murder-for-hire companies. It does not follow that because free trade doesn't address all these crimes and produce a paradise where no crimes happen, therefore it has to be replaced by something called "fair trade" which promises (but does not deliver) "a decent standard of living" to everyone struggling to survive, but denies to them the right to work at a low wage as an alternative to having no wage at all.

Free trade lets the struggling one choose the lesser of the evils -- low-wage job -- which leads to more production and lower prices, while "fair trade" says the struggling one is not entitled to have that choice, leading to less production and lower living standard.

All in all, the OP's position is driven by emotion, not reason nor reality.

(This got misplaced. It goes in the "Wage Theft" thread.)

What's driven by emotion is the obsession to prop up the wage level above the market-level, set by supply-and-demand, like the prices of everything else are set by supply-and-demand. If you can't give a reason why wages should not be subject to supply-and-demand like everything else bought and sold, then we can only assume that this obsession is emotion-driven.

Is supply-and-demand and competition "reality"? If not, why is it that we regulate public utilities to force them to restrain their prices? These are a kind of business which is protected against competition, and therefore something has to replace the natural restraint the market provides when there is competition. If this isn't the reason we regulate those prices but not prices at the supermarket, then why do we regulate the public utilities?

And why do we have antitrust laws, if it's not to force companies to COMPETE in order to keep down their prices so these are determined by supply-and-demand? Is this not "reality"? that we recognize the need for competition, to make supply-and-demand set the prices? So then, why shouldn't all the prices be determined by competition and supply-and-demand? including the price for labor? How is this not "reality"?

 

[Lumpenproletariat]

It's good to be replaced by someone/something which does the job better (including cheaper).

I.e., we're all made better off if the more competitive (human or machine) replaces the less competitive.

You still haven't addressed my point that "free" trade often isn't free trade at the level of the producer.

. . . the problem with "free" trade is that while it might be free at the macro level it often is not at the micro level.

macro = millions/billions of micros

No, the trade is "free" for all of them, because they have free choice. But it's true that some workers replaced (by machines or by cheap labor) might be made worse off at first, as a result of free trade / competitive economy. These are a minority, and most of them will be better off later as a result of the better competition overall.

Free trade benefits everyone, just as automation benefits everyone. But it's true that a few may get screwed in the competition.

Some uncompetitive producers are made worse off, short-term.

However, everyone, even all the uncompetitive, are made better off overall because of a more competitive economy in the past.

So, the laid-off worker who was replaced by a machine (or by cheap labor) is still better off today as a result of earlier uncompetitive workers being laid off (50 or 100 or 200 years ago), even though he might be made worse off by being replaced today by a machine or by cheap labor.

So we have a much better society or economy today because of the competition in the past where some workers then were made worse off because they were replaced.

The vast majority today are made better off by workers being replaced today (by machines or by cheap labor). But a small minority are probably made worse off now. Most of these will become better off later, and their descendants definitely will be better off from all the benefits of competition today ("competition" = the more competitive (human or machine) replaces the less competitive).

No? So, they should never have invented running water, which eliminated so many jobs for people to carry water? All the inventions made us worse off because of all those jobs they eliminated?

 

[DBT]

It was the union movement that improved wages and conditions for workers. Atrocious conditions for workers being the very reason for the union movement in the first place..

 

[ZiprHead]

It was the union movement that improved wages and conditions for workers. Atrocious conditions for workers being the very reason for the union movement in the first place..

The greatest GDP numbers in record for the US was 1950-51. The last vestiges of WWII wage and price controls were finally abolished and labor unions flourished. It's good for the whole country to have well paid workers.

I got my point across in 38 words. I bet you're amazed by that, Lumpen.

 

[Loren Pechtel]

I.e., we're all made better off if the more competitive (human or machine) replaces the less competitive.

You still haven't addressed my point that "free" trade often isn't free trade at the level of the producer.

. . . the problem with "free" trade is that while it might be free at the macro level it often is not at the micro level.

macro = millions/billions of micros

No, the trade is "free" for all of them, because they have free choice. But it's true that some workers replaced (by machines or by cheap labor) might be made worse off at first, as a result of free trade / competitive economy. These are a minority, and most of them will be better off later as a result of the better competition overall.

No--what I'm saying is that in many cases the trades are not free on the micro level. The world markets are free trade but in many third world areas the local producers do not have direct access to the world markets, just one or a few local companies that rake in most of the profit.

Free trade benefits everyone, just as automation benefits everyone. But it's true that a few may get screwed in the competition.

So long as you protect against externialities. The company that fishes in protected waters will be cheaper than the one that follows the rules.

 

[Lumpenproletariat]

FREE TRADE to whining worker: Improve yourself! become more valuable!

FAIR TRADE to whining worker: Oh you poor victim! Let's guilt-trip your employer into raising your wage = higher cost of production = higher prices consumers have to pay = higher cost of living for all.

Workers without bargaining power have very little choice: 'that's our rate, take it or leave it.'

They have more bargaining power than the unemployed who are offered nothing, i.e., not even a "take it or leave it" because fair trade says they can't have that choice to take a low-paying job instead of having no job at all.

And those workers who are more valuable do have more bargaining power. If they are more difficult to replace, or the need for them is greater, they have more bargaining power. So, instead of whining that they have no bargaining power, workers need to make themselves more valuable, or more irreplaceable, so that their bargaining power increases. That makes everyone better off, because as people/workers become more valuable = more productive and improved in their performance, it benefits all consumers = everyone = the whole nation improves, as opposed to "fair trade" which gives pity to the less competitive and rewards them even if they don't improve their performance.

 

[DBT]

FAIR TRADE to whining worker: Oh you poor victim! Let's guilt-trip your employer into raising your wage = higher cost of production = higher prices consumers have to pay = higher cost of living for all.

Workers without bargaining power have very little choice: 'that's our rate, take it or leave it.'

They have more bargaining power than the unemployed who are offered nothing, i.e., not even a "take it or leave it" because fair trade says they can't have that choice to take a low-paying job instead of having no job at all.

That's blatant exploitation of the unemployed. A race to the bottom, incomes for vulnerable workers becoming too low to support a decent living standard, while corporate profit remains high and the rich get richer.

It's the stuff of revolution....those in positions of power saying ''let them eat cake'' until the point they find their heads on a chopping block.

And those workers who are more valuable do have more bargaining power. If they are more difficult to replace, or the need for them is greater, they have more bargaining power. So, instead of whining that they have no bargaining power, workers need to make themselves more valuable, or more irreplaceable, so that their bargaining power increases. That makes everyone better off, because as people/workers become more valuable = more productive and improved in their performance, it benefits all consumers = everyone = the whole nation improves, as opposed to "fair trade" which gives pity to the less competitive and rewards them even if they don't improve their performance.

It's not about whining. It's an issue of power imbalance. It is in the interest of workers to join unions and engage with management through collective bargaining, which goes some way in addressing the gross imbalance of power between management and individual workers.

 

[SimpleDon]

FAIR TRADE to whining worker: Oh you poor victim! Let's guilt-trip your employer into raising your wage = higher cost of production = higher prices consumers have to pay = higher cost of living for all.

<<snip>>​

This is the core of your argument. And you are wrong about this.

Higher wages don't result in higher prices. Higher wages result in lower profits.

How do you think that prices are set?

Who do you think sets prices? Your claim above indicates that you believe that a business can raise prices any time it needs to. This is wrong. A business is constrained by the market from raising prices.

 

[Lumpenproletariat]

Some workers (more competitive) should be paid higher wages. But --

-- But others (less competitive) should be paid less, because their value as producers is decreasing. Preserving their uncompetitive job, or paying them more than their value, makes everyone poorer.

You're no benefit to society unless you're paid union wages and spend it all -- otherwise your work is worthless. But if you're well-paid to twiddle your thumbs, you're a benefit to the economy. It's not your work but being paid well and spending money that's a social benefit. Sure. Snake-Oil Economics 1A

It's not always about maximizing profit for those at the top of the heap.

What it's about is maximizing reward to good-performing producers (at the top or bottom or middle) = rewarding the more competitive = maximum production for consumers (including lower prices they pay) = higher living standard for all (even if some "at the top" make more profit as a result) = a better economy/society/nation.

That's what it's about, not about paying more to uncompetitive crybabies just so they'll have more to spend. It's about the work done, not about the money spent by the worker.

You overlook the gross imbalance in wealth between those at the top and everyone else.

As long as "those at the top" earned it by being more competitive and productive through better performance, then the resulting imbalance is good for society. Those who perform better and produce more should have more than those who are less productive.

You have to distinguish between "those at the top" who earned it by better performance vs. "those at the top" who acquired it by corporate welfare or Trump's latest "fair trade" fraud or other scheme to rig the system or foist a hoax onto the idiot masses.

Poorly paid workers may help boost corporate profits, but . . .

And overpaid workers hurt the whole economy, by driving up the costs and driving down production. If companies have to pay artificially-high wages, this requires them to reduce production and increase prices, which makes all consumers worse off. If the higher labor cost is not in order to get better performance from the worker, then it is a net cost to society / net loss, and a reduced living standard, as it causes less production and higher prices.

No economic benefit is produced by artificially driving up the wage level above what is necessary to attract the needed workers. Propping wages up above this level, above the market level determined by supply-and-demand, results in a net reduction in the overall living standard for everyone, including the poor, because they have to pay higher prices.

Poorly paid workers may help boost corporate profits, but with limited disposable income they cannot spare money for a wider range of goods and services, consequently . . .

The same is true for 300 million American consumers whose disposable income is reduced due to higher prices when the wage level is propped up artificially high, above the market level, i.e., to a point where the higher wage is not due to improved performance by those workers. It does no benefit to the economy if workers receive a wage increase without earning it through improved performance. It's only for better performance that it's good for them to be paid more, as a reward for their better performance. When it's for better performance, then it's a reward for the benefit they add to the economy in the work they do, which is where they make their contribution. When the performance improves so that the production for consumers improves, then there's higher value which is worth paying for, depending on whatever is necessary in order to get that better performance.

But the higher wage does no good if the purpose of it is only to provide more spending money for the workers rather than being a reward for better performance from those workers. The reason to pay the workers is not to provide them with spending money, but to get the work from them. Which means paying higher in those cases where this is necessary to get the needed workers. But if all the workers needed are available at the lower wage level, then that's the right wage, not a higher wage than is necessary to attract the needed workers.

. . . but with limited disposable income they cannot spare money for a wider range of goods and services, consequently their incomes don't add as much to the economy at large as it could . . .

But it's not their income which is their addition to the economy -- It's the work they do to earn the income which is their contribution and nothing more. The income or wage is only the reward, or the "carrot" or incentive to get them to do that work.

Their function -- what they're hired for, and paid for -- is the work they do, not for the spending they "add to the economy" = snake-oil economics. When you're paid, it's not in order to give you spending money to contribute to the economy, but rather to reward you for your work which would not have got done otherwise. The point of paying you is to get that work done by you, not to provide you with spending money, as if your spending is your value. No, your value is the work needed from you, to get more stuff produced, not your spending or consuming which you add to the economy.

. . . consequently their incomes don't add as much to the economy at large as it could if they were better paid.

But the purpose of their income the employer pays them is not so they can add spending to the economy at large. The purpose of their wages is to get that work out of them, as the reward for that work which society needed them to do. It's to get that work from them that they're needed, serving their function by working, and then being rewarded for this, as needed to keep more work coming from them and others in the future. A wage increase, or higher income to them, is beneficial only as an incentive to attract more workers (if they're in short supply), to get more work done.

I'm sure you realize this.

What any sensible person realizes is that the higher wage may be necessary in some cases in order to attract the needed workers, or the better workers, so that the needed work gets done. But it's not in order to get more spending money into the workers' pockets so they'll spend more -- I don't realize that and neither do you. There is no need to get them to spend more. That's your delusion. It's fine even if they do not spend the money at all, but save it, even stuff it in their mattress and leave it there forever. The only need is to get the work done, not get them to spend money.

In the case of volunteer workers, the same social benefit is provided, getting the needed work done, but the workers are paid nothing. So they don't get additional spending money -- and yet, they are making a contribution, similar to the paid worker. Their contribution is the work they do, not the income paid to them so they'll spend money.

Perhaps it just doesn't suit your ideology to have a thriving economy where everyone . . .

The "thriving economy" is the one where the maximum work gets done, i.e., the production, but at minimum cost = lower prices = lower cost of living. But artificially-high wages means higher production cost = less production and higher prices = bad for everyone and less thriving economy.

. . . less thriving economy where everyone benefits to fair and reasonable degree.

The most thriving economy is the one with the optimum production, to meet demand, but at the lowest price/cost as necessary to get the production done. It is mindless wacko economics to make the production cost artificially higher -- to drive it up beyond what's needed, or to pay any higher cost except to get an improvement in the production, i.e., in the performance of the producers/workers who provide the production.

You prefer to favour the rich at the expense of ordinary workers.

What's preferable is to favor whoever produces better, i.e., to reward them better in order to get the better performance from them. They're paid not out of pity for them, because they need the income, or so they'll spend more, but rather to get the best possible production or performance from them, and to attract the workers needed.

And it's not a matter of which class to favor, to identify with a hero class vs. a villain class like it's a game of us vs. them or this gang vs. that gang or our side vs. their side. It's a matter of rewards and penalties, or of incentives to whoever can be motivated to do better or work better to get the needed work done, at whatever cost is required, but still at the lowest cost needed, so that we get the maximum return on investment. The wages as well as the profits, or any other reward, is paid out to the producers just up to whatever level is needed to get the optimum performance from them.

It's not the rich vs. the ordinary workers = crybaby economics ("fair trade") scapegoating employers and extracting higher wages from the greedy capitalist pigs who have to be shamed. Rather, it's the better performance vs. inferior performance which distinguishes the better economy from the inferior economy.

I.e., it's about getting companies to serve consumers better, not providing better babysitting slots to hapless job-seekers, or protecting the uncompetitive workers from losing their babysitting slots to foreign competition or other cheap labor.

 

[Lumpenproletariat]

Some things are wrong. But CRYBABY ECONOMICS is not the solution.

I.e., not simplistic employer-bashing and whining about inequality, etc., and scapegoating the rich.

Wages have been 'artificially' stagnating for decades.

Because of increased competition and technology, many workers have stagnated in value for decades. It's appropriate that those of decreasing value experience decreasing income.

But maybe some bad trends have happened which have kept down the living standard for some or many, so there is something wrong. If so, the solution is not to artificially prop up someone's wage above the market level set by supply-and-demand. To artificially target sympathy toward this or that victim group and reward them, even though their performance has not improved, does nothing to correct whatever is wrong. If we artificially prop up the wage level of steel workers, e.g., or other high-profile worker group, that only then imposes an extra cost burden onto everyone else in the society, including the poor, who have to pay that higher cost through higher prices and lower production.

The gulf between the highest paid and those below has been 'artificially' growing wider for decades.

It's not artificial if it's set by supply-and-demand in the competitive market.

But there might be something wrong which causes some of the rich to accumulate too much.

If so, the solution is not to artificially prop up the wage level of certain select worker victims, out of pity for them. All producers, including wage-earners, should be paid according to the market value for their performance, which is set by supply-and-demand.

But there are probably some other things which are wrong and should be fixed. You have to get away from the Crybaby Economics and look for real solutions, to make the economy more competitive for all producers.

Some higher taxation on the rich is probably part of the solution, including a tax on Wall St. And property tax is a much more efficient kind of tax on the rich than income tax which is easy to evade.


The out-of-control national debt is probably doing long-term damage.

The only benefit of these debts is the short-term economic stimulus. Since it all has to be paid back, principle and interest, this must have a long-term ANTI-stimulus impact.

The very high federal deficits, which began in the 1930s and have continued ever since, are probably causing some distortions in the economy. This is more likely to be causing some economic stagnation, long-term, rather than employers not paying high-enough wages.

There's a neglect of infrastructure which is probably causing much damage. Much of the solution to this is to hire more workers (not create unneeded and costly steelworker jobs), at low wages (to save on cost), and make the rich pay for it, instead of running up more deficit (which has to be paid back 10-20 years later, thus depressing the economy in later years).

So whatever is wrong, like stagnation, we need to find what's really causing it and fix it, rather than just mindlessly scapegoating the dirty capitalists and employers. This constant whining, with nothing of substance other than the class hate, only perpetuates whatever is wrong.

 

[DrZoidberg]

It was the union movement that improved wages and conditions for workers. Atrocious conditions for workers being the very reason for the union movement in the first place..

This is very much dependent on country and industry. The US and British trade unions have behaved in ways more reminiscent of a cartell and extorting companies out of money. Sometimes strangling them to death. The story of the US rail workers union for example.

While for countries like Germany the trade unions were more like partners to the capitalists. Both the trade union and the capitalists had a common goal to make the company thrive as much as possible. And since many brains work better than one, this model has led to the trade unions getting involved leading to better business for the company.

So saying that trade unions are a universal boon or bane isn't true. In USA mostly bad. In Germany mostly good.

 

[DBT]

It's not artificial if it's set by supply-and-demand in the competitive market.

That's where you basically go wrong, including what follows from these flawed premises. Wages are not set by a competitive market. Employers set the minimum they can get away with. Why? Because they are in a position to do so; they can. Without a strong union, employees have little say in the matter.

There is no competition.

Without a basic minimum set in law, it would likely be a race to the bottom.

Employers act in there own interest. They hold the cards, they offer a pay rate. The applicant can either take it or decline. If they are in need of of a job, they have very little option but to take what they can.

The issue here is not free trade or fair competition, it is a power imbalance between employers and employees. A balance that can tip in favour of a worker who has highly desirable skills, but that's not the case with many, if not most workers.

 

[DBT]

It was the union movement that improved wages and conditions for workers. Atrocious conditions for workers being the very reason for the union movement in the first place..

This is very much dependent on country and industry. The US and British trade unions have behaved in ways more reminiscent of a cartell and extorting companies out of money. Sometimes strangling them to death. The story of the US rail workers union for example.

While for countries like Germany the trade unions were more like partners to the capitalists. Both the trade union and the capitalists had a common goal to make the company thrive as much as possible. And since many brains work better than one, this model has led to the trade unions getting involved leading to better business for the company.

So saying that trade unions are a universal boon or bane isn't true. In USA mostly bad. In Germany mostly good.

Sure there are unionsthat have made mistakes, that have gone too far. That is true of both sides. The basic purpose of a union is to represent the interests of its members in a reasonable manner...which does mean punishing or destroying the company or make unreasonable demands....things that are not in the interest of workers in the long run, dealing with management in a reasonable manner.

 

[ZiprHead]

It's not artificial if it's set by supply-and-demand in the competitive market.

That's where you basically go wrong, including what follows from these flawed premises. Wages are not set by a competitive market. Employers set the minimum they can get away with. Why? Because they are in a position to do so; they can. Without a strong union, employees have little say in the matter.

There is no competition.

Without a basic minimum set in law, it would likely be a race to the bottom.

Employers act in there own interest. They hold the cards, they offer a pay rate. The applicant can either take it or decline. If they are in need of of a job, they have very little option but to take what they can.

The issue here is not free trade or fair competition, it is a power imbalance between employers and employees. A balance that can tip in favour of a worker who has highly desirable skills, but that's not the case with many, if not most workers.

I've said it before. Very few workers pay rates are based on the quality of their work or their unique skill. Professional sports is probably one of the few areas that buck that trend and even then most of the players with the standard union contracts are still the lowest paid of those.

Workers are paid based on how easily they can be replaced. Nothing more. The value of the work they do means nothing.

 

[DrZoidberg]

It's not artificial if it's set by supply-and-demand in the competitive market.

That's where you basically go wrong, including what follows from these flawed premises. Wages are not set by a competitive market. Employers set the minimum they can get away with. Why? Because they are in a position to do so; they can. Without a strong union, employees have little say in the matter.

There is no competition.

Without a basic minimum set in law, it would likely be a race to the bottom.

Employers act in there own interest. They hold the cards, they offer a pay rate. The applicant can either take it or decline. If they are in need of of a job, they have very little option but to take what they can.

The issue here is not free trade or fair competition, it is a power imbalance between employers and employees. A balance that can tip in favour of a worker who has highly desirable skills, but that's not the case with many, if not most workers.

I've said it before. Very few workers pay rates are based on the quality of their work or their unique skill. Professional sports is probably one of the few areas that buck that trend and even then most of the players with the standard union contracts are still the lowest paid of those.

Workers are paid based on how easily they can be replaced. Nothing more. The value of the work they do means nothing.

But is that wrong or bad? We want a social mechanic where people are willing to put up with the suffering of studying and getting a degree for five years, in order to get a job where they will be less replaceable. Unless low skilled workers are paid beyond what is fair (based on the value the employer makes) we will get a society with low social mobility. I want to maximise social mobility. Social mobility is my metric for how healthy a market is.

 

[DBT]

What is wrong and bad is an obscene concentration of wealth and power in the hands of a small percentage of the worlds population. Which is bad for society, the economy, ethics and human decency....

 

[ZiprHead]

What is wrong and bad is an obscene concentration of wealth and power in the hands of a small percentage of the worlds population. Which is bad for society, the economy, ethics and human decency....

And social mobility.

 

[DrZoidberg]

What is wrong and bad is an obscene concentration of wealth and power in the hands of a small percentage of the worlds population. Which is bad for society, the economy, ethics and human decency....

I don't think it's bad for the economy. Quite the opposite. It's unethical? Based on what? Human decency? Lol... wut? But I agree it's bad for society.

There's no relation between unskilled workers being exploited and some people getting obscenely rich. That's just an old Marxist trope that has never been true. All the IT billionairs haven't become rich from exploiting unskilled workers. They've gotten rich from "exploiting" obscenely overpaid developers. I am one of these people. There are no underpaid labourers in the IT development world since there's been a perpetual shortage of IT professionals since the moment the computer was first invented. Microsoft was always an awesome place to work. So is Google. And Amazon in the IT department. Oracle. So that's a completely bullshit argument. I am not going to cry for Amazon workers in Amazon's mailroom. They're already so expensive that Amazon needs to have them replaced by robots asap. That's true even if they're now being paid starvation wages. It's just a dying sector. It's like the sharecroppers of the 1930's. Their jobs were dissapearing. That's why they're getting shit wages. They need to work with something else.

But some people being obscenely rich is a problem for democracy. Because we want to avoid a situation where singular individuals are so powerful alone that they alone (or in a cartell with other rich people) can manipulate elections. That is arguably already a problem in USA. That is a good enough reason to take their money IMHO. History is full of people who seized power based on an unequal distribution of wealth. I think that's the story behind every post-colonial country whose democracy failed in a coup soon after indipendence.

 

[DBT]

It's bad for the economy because workers are also consumers. If workers don't have money to spare, cafe's, restaurants, cinemas, service centres, etc, lose business.

Consequently, having a significant number of struggling workers is not good for the economy or society.

 

[DrZoidberg]

It's bad for the economy because workers are also consumers. If workers don't have money to spare, cafe's, restaurants, cinemas, service centres, etc, lose business. Having a significant number of struggling workers is not good for the economy or society.

That's Keynsianism. It's the fallacy that the GDP is equated with real wealth creation. After WW2 GDP goes up because everybody is rebuilding the shit bombed during the war. But everybody understands that if we hadn't bombed the buildings and just had let them stand, we'd actually been more wealthy. But that kind of capital/wealth retention doesn't show up in economometrics. With your logic having people on welfare is good for the economy. It's not. People on welfare is purely a cost. It's like taking things you value highly in life and just burning it in a furnace. It adds nothing other than mental calm for those on welfare.

Real value in a market comes from creating real value for the consumer. The pile of money or how much you pay for it, or ever how much you value it is irrelevant. Except in extreme cases the market value of something is it's real value. By using unions to push up wages is actually wealth destruction. I'm still for it. But I have no illusions about what is going on. It looks to me like you are trying to justify wealth distribution by warping reality around it. It's a leftist bad habit. I think we can be honest about the cost of wealth distribution.

USA has a deregulated cut-throat market with weak protection for workers, and that is a major reason why USA is so rich today. Being poor in USA is materially better than being poor in Europe. This is based on the kind of consumer goods they buy. The wheels of the economy in USA are spinning more efficiently than in Europe. It comes at a cost. The lack of job security probably explains the higher rates of substance abuse and prescription pill abuse in USA. But if we're talking just the economy, USA is doing great.

The number of multi-billionairs in an economy isn't a sign of dysfunction in the economy. It's usually a sign of that the entire economy is doing well in that economy. Even the poor people.