Monday, April 30, 2012
white particle magic
not much on green lantern fancy
but for those of a verdent hue amongst you
"In 1991, the eruption of Mount Pinatubo in the Philippines created a haze of sulfur in the higher atmosphere that cooled the entire planet approximately half a degree Celsius for two years afterwards"
sulfur is the star among white particles
if we had sulfur stacks out in the middle of our oceans ...
but for those of a verdent hue amongst you
"In 1991, the eruption of Mount Pinatubo in the Philippines created a haze of sulfur in the higher atmosphere that cooled the entire planet approximately half a degree Celsius for two years afterwards"
sulfur is the star among white particles
if we had sulfur stacks out in the middle of our oceans ...
firm balance sheet determinism
firm balance sheet determinism
is a product of atomized production systems
the notion too widely worshipped
we need firms killed off massively and periodically
to keep the production and commercial systems healthy
this a outrageously poor metaphor
in an era of potential hyper credit flow integration
there is much to learn pro and con
from the dot com boom/bust
about the value of failure in discovering success
at least
in a context of over rich credit flows
is a product of atomized production systems
the notion too widely worshipped
we need firms killed off massively and periodically
to keep the production and commercial systems healthy
this a outrageously poor metaphor
in an era of potential hyper credit flow integration
there is much to learn pro and con
from the dot com boom/bust
about the value of failure in discovering success
at least
in a context of over rich credit flows
wage control update
three graphs :
notice the interval below the strangulation red line
for wage target proxy aka core inflation
note the spikey temperament of this series
like new england weather
wait a moment and it changes qualitatively
this suggests no relation between depth of contraction and rate of reovery
nb
properly goosed and squoozen you could make
the inventory swings in a contraction and recovery
look like completely gratuitous
slap stick hook and ladder rear end antics
RPCE on new... limper ...trend line
but here is the iron claw at work:
that interval there 08 to middle of last year
suggests real wages got a nut squeeze in this slump
surprised ?
Sunday, April 29, 2012
toy thinking : considering the equation below...does the volume of investment determine profits or vica versa ?
,in a simple model this holds of income is either profits or wages and each class is distinct
and if wages every period are always spent in full the next period
P(t) => C( t + 1) + I( t +1)
OR
C (t) + I (t)=> P (t+1)
"Now, it is clear that capitalists may decide to consume and to invest more in a given period than in the preceding one, but they cannot decide to earn more."
yes they can spended their income or les then their income
" therefore, their investment and consumption decisions which determine profits, and not vice versa”.[
voila sez M Kalecki
if so consider C (T)
( capitalist class spending on household products)
lets hold C constant from t to t+1
then P in (t +1 ) is a function of I(t)
next period profits are a function of this period I
generalize some
let C vary over T
using
a fixed part A
and some fraction q of P
ie
BRING back in I
if
I = P -(A +q.P)
then
P = I + (A + q.P)
or
in a steady state path:
***
okay can we use this to claim to push for higher effective demand along the following lines ?( capitalist class spending on household products)
lets hold C constant from t to t+1
then P in (t +1 ) is a function of I(t)
next period profits are a function of this period I
generalize some
let C vary over T
using
a fixed part A
and some fraction q of P
ie
BRING back in I
if
I = P -(A +q.P)
then
P = I + (A + q.P)
or
in a steady state path:
***can we force up investment ? in a liquidy trap no
so enter public spending G and is offset taxes on profits T
forget the taxes on wages hey say they don't exist
all taxes are on profits
if G-T this period t is larger then last period P(t-1) - ( I (t) + C(t) )
then this period P will be larger then if G-T equals zero
or
why would corporate elites now prefer stagnation in the oecd
*** P=I + A +q.P
P - q.P =I + A
P(1-q) = A+I
P=A +I/1- q
hi fi top dog "compensation"
"In a way bankers are Marx's dream, it's the workers getting the fruits of their labours. "
jolly words of a stupid ass of a clown dog
"fruits of their labor"...who's labor ??
an analytic decomposition of top dog compensation
needs doing in a very public and protracted fashion
i'll gladly comment on it
i have my notions
so if a few big feet get it started...
as to the middle dogs of hi fi
"As external auditors we get to see the big banks payroll reports.
.. It's striking how people seem to make quite a lot more in jobs that are generic in nature. If you are in HR you are doing the same work as in any other industry,
yet you make 20, 30% more, plus a 10k bonus. Not every year but often enough.… "
"The money is a pull factor, to go into finance, why wouldn't it be? If you are offered two identical jobs and one pays 20% extra, which are you going to choose? …"
spreading the pelf among the troops
jolly words of a stupid ass of a clown dog
"fruits of their labor"...who's labor ??
an analytic decomposition of top dog compensation
needs doing in a very public and protracted fashion
i'll gladly comment on it
i have my notions
so if a few big feet get it started...
as to the middle dogs of hi fi
"As external auditors we get to see the big banks payroll reports.
.. It's striking how people seem to make quite a lot more in jobs that are generic in nature. If you are in HR you are doing the same work as in any other industry,
yet you make 20, 30% more, plus a 10k bonus. Not every year but often enough.… "
"The money is a pull factor, to go into finance, why wouldn't it be? If you are offered two identical jobs and one pays 20% extra, which are you going to choose? …"
spreading the pelf among the troops
defending the idiotic is fun ..if it pays well
we flew and flew successfully
before we had serious areodynamic models
macro policy does not require analytic clarity at the micro level
however micro stick figuring
adds nothing to the policy armamentorium
new keynesianism provides nothing policy hands
didn't comprehend since .....well ....
the post WWII peace boom
before we had serious areodynamic models
macro policy does not require analytic clarity at the micro level
however micro stick figuring
adds nothing to the policy armamentorium
new keynesianism provides nothing policy hands
didn't comprehend since .....well ....
the post WWII peace boom
butt plug pop out
brit macro-nit
nigel lewis carroll Halfmoon-Smitherington
" Internal consistency rather than external consistency
is the admissibility criteria for microfounded models."
translation :
"macroeconomic models will be rejected
if some parts are theoretically inconsistent with other parts
but not if some model property is inconsistent with the data."
".. the motivation for a paper will often be a ‘puzzle’,
which is an empirical fact that cannot as yet by explained
by a model....however .the paper is not required
to be consistent will all other relevant facts"
------------------------------------------
thru the looking glass:
stick figure parables
just so fables
ab-rah kadab-rah
nigel lewis carroll Halfmoon-Smitherington
" Internal consistency rather than external consistency
is the admissibility criteria for microfounded models."
translation :
"macroeconomic models will be rejected
if some parts are theoretically inconsistent with other parts
but not if some model property is inconsistent with the data."
".. the motivation for a paper will often be a ‘puzzle’,
which is an empirical fact that cannot as yet by explained
by a model....however .the paper is not required
to be consistent will all other relevant facts"
------------------------------------------
thru the looking glass:
stick figure parables
just so fables
ab-rah kadab-rah
rational anticipations herd expectations and markets nonsense
pk's rational expectations
based on CBO projections of U and inflation
means long rates now of under 2%
each of the sub intervals has its own story line
Reconciling growth in median hourly compensation and productivity, 1973–2011
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pk compiles an o'bama fiscal rap sheet
spending? over trebd by around $300 billion:
" the federal deficit is all, yes all, about the recession and aftermath."
wage price spirals and CB accomodations
the great fear of the establishment from 1946 to 1970
finally came true after 1971
with the ending of the fire wall holding down inflation
call bretton woods
the trade boom of the 50's and 60's was mediated and mediated more or less effectively
by
the dollar gold link and the major trading currencies link to the dollar
ie quasi fixed exchange rates for all and gold drain fears for uncle
yes some currencies were chronically under valued
most notably the mark and the yen
some like uncle's dollar and Sterling were over valued
all this "by design" of course
but a design that finally proved unsustainable by 1970
so dick nixon acted in 1971 !~
finally came true after 1971
with the ending of the fire wall holding down inflation
call bretton woods
the trade boom of the 50's and 60's was mediated and mediated more or less effectively
by
the dollar gold link and the major trading currencies link to the dollar
ie quasi fixed exchange rates for all and gold drain fears for uncle
yes some currencies were chronically under valued
most notably the mark and the yen
some like uncle's dollar and Sterling were over valued
all this "by design" of course
but a design that finally proved unsustainable by 1970
so dick nixon acted in 1971 !~
Devaluation as a way to partition capital flows part I
the effect of large devaluation is a de facto repatriation of currency
and as a potential outcome devaluation threats
imply a possible " penalty " to holding that currency
fear of a run out
MNCs thrive obviously on capital flows ,,,,,,,moving funds across borders
to mediate their domination of cross border trad and direct investment
not to mention playing the various hot money cross border
cross currency and cross security games
if a CB will act decisively in the interest of a majority job class
the global capitalists aren't safe playing in that currency its denominated securities
even its cross border trade
the use and effectiveness of this weapon is obvious
if internal class struggle requires a flexible exchange rate to avoid cyclical BOP crises
then control of the CB by the job class is an obvious strategic objective
british capital controled labor governments from the mid 60's thru the mid 70's
with well time BOP crises
after breton woods that became impossible
but the same result was achieved by other means
once the CB ....the BOL got the hang of flex policy
and the class struggle resumed
first
by simple wage hike escape
thru price spirals accomodated by the credit system
then by an independent LOB using its dfuardian powers to
stop further spirals
much of todays conventional wisdom
stems from the wrong reading of that early post bretton woods era
and obviously not only Thatcherism and Reaganism but evern the crisis of 2008
were the product of that interval
1973-1979
and as a potential outcome devaluation threats
imply a possible " penalty " to holding that currency
fear of a run out
MNCs thrive obviously on capital flows ,,,,,,,moving funds across borders
to mediate their domination of cross border trad and direct investment
not to mention playing the various hot money cross border
cross currency and cross security games
if a CB will act decisively in the interest of a majority job class
the global capitalists aren't safe playing in that currency its denominated securities
even its cross border trade
the use and effectiveness of this weapon is obvious
if internal class struggle requires a flexible exchange rate to avoid cyclical BOP crises
then control of the CB by the job class is an obvious strategic objective
british capital controled labor governments from the mid 60's thru the mid 70's
with well time BOP crises
after breton woods that became impossible
but the same result was achieved by other means
once the CB ....the BOL got the hang of flex policy
and the class struggle resumed
first
by simple wage hike escape
thru price spirals accomodated by the credit system
then by an independent LOB using its dfuardian powers to
stop further spirals
much of todays conventional wisdom
stems from the wrong reading of that early post bretton woods era
and obviously not only Thatcherism and Reaganism but evern the crisis of 2008
were the product of that interval
1973-1979
Saturday, April 28, 2012
Nit wit Econ con sited at random but with malice
"........most economists believe that the 70s inflation
was caused by loose monetary policy (and possibly oil shocks),
not by fiscal policy."
fisher effects can be part of overt peoples' macronautics
http://ineteconomics.org/sites/inet.civicactions.net/files/jayadev-arjun-mason-joshua-berlin-paper.pdf
this paper has a hot topic rising debt loads
it has a simple but startling conclusion
"if average rates of growth, inflation and interest had remained the same after 1980 as before
early 1950s,"
yes if we were running the combo of low rates and sturdy inflation paced by rising wages
then the present debt load would be no big whoop
lesson brisk inflation of wages and product prices combined with low interest rates contains the burden of debt
by in essence reducing its real weight ..outcome despite all the homestead price bubbling of the '00's
few today would be underwater and talk about a win win our homesteads resale value wouldn't have plunged
oddly the paper recommends a debt jubilee instead of resuming the giddy pace of wages and prices
prior to the Volcker dammerung under jimmy carter
if there was a time to emulate it was of course 1940 to 51
clamp a people's hammer lock on the FED and declare war on wall street and the browning of the planet
and its readily do able !!!!
this paper has a hot topic rising debt loads
it has a simple but startling conclusion
"if average rates of growth, inflation and interest had remained the same after 1980 as before
1980, household debt burdens in 2011 would have been roughly the same as they were in the
early 1950s,"
yes if we were running the combo of low rates and sturdy inflation paced by rising wages
then the present debt load would be no big whoop
lesson brisk inflation of wages and product prices combined with low interest rates contains the burden of debt
by in essence reducing its real weight ..outcome despite all the homestead price bubbling of the '00's
few today would be underwater and talk about a win win our homesteads resale value wouldn't have plunged
oddly the paper recommends a debt jubilee instead of resuming the giddy pace of wages and prices
prior to the Volcker dammerung under jimmy carter
if there was a time to emulate it was of course 1940 to 51
clamp a people's hammer lock on the FED and declare war on wall street and the browning of the planet
and its readily do able !!!!
share recovery during clinton second term "miracle"...but since ...
"labor share fell from 1973 to the mid-1990s and then
rebounded during the robust growth of the second
half of the 1990s"
note :
however there was a serious rise in upper end share in earned compensation between 95-00
however there was a serious rise in upper end share in earned compensation between 95-00
so
"Between the business
cycle peaks of 1973 and 2000
the labour share
the labour share
fell only 1.1 percentage points."
however
"the fall between 2000 and 2011
4.6 % from 63.1 per cent
to 58.5 per cent of GDP"
where it all went
data.
Reconciling growth in median hourly compensation and productivity, 1973–2011
Note: Totals for panels A and B do not exactly match due to rounding
Source: Analysis of Mishel and Gee (2012) Table 1
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"Labour productivity was
$33.68 (2011 dollars) in 1973
grew an average
of 1.56 per cent per year to $60.77 in 2011"
33 to 60
The new executive of the Reagan revival
The new ...now old executive of our giant corporations
is really a hi fi sector guy restricted to one corporation
There as a result is no serious contradiction between these CEO types and the private equity
LBO IBO VC and vulture outfits
The civic statesmen among them are no different at heart then the hacksaw guys
Attempts to appeal to production companies to rally against the wall street parasites
Is ridiculous
Combo mark upwarrent market and weintraub taxes
Imagine there's a price for warrant renewals
But new warrants are auctioned
The auction price is then the next rounds renewal price staggering the timing shortens the gap
Between feed back thru auction and renewal price
Perhaps the auction is just prior to renewal
However states should capture the max out of total gains from trade
States can recapture much of the gains from trade by using the border
to toll
the products and services crossing either way
Auctions may work better in conjunction with tariffs
Auctions allow at the margin price discovery if collusion can be pre empted
There are no small trading states in real international markets
All trading states have a sub set of trading partners that either impact or are impacted
by that states changes in trading policy
These convenient assumptions go out the window too
one world market leads to one world price
There are multiple prices and no rapid arbitrage based closure
In fact. Arbitrageurs work to maintain these opportunities
Small states can however never capture all existing arbitrage gain
if trading is mediated on both ends
by corporate traders that are in essence free to control pre tax or pre quota prices
for both imports and exports
The stations of the cross
First lesson in Marshall graphs
The various crossing positions including no crosses
Linear non linear
This frees the mind from the iconic Marshall cross
With one positive and one negative sloped linear pairings
Then the difference between a function
and the larger category called a relation
Too many students of Econ con 101
Have too little prior contact with these graphs in their vastly varied splendid algebraic geometric
Dancing postures
Fisher dynamics revisited
When neo hicksians of the monetary policy cyclopian variety like gentle Ben and Paul the rug rat
Circa. 2000 ie the era of japan bashing and superior posing of policy Rx's
They attack the so called liquidity trap state of the market economy
Thru lowering the real interest rate when now with a system in LT
They can no longer lower the nominal rate
Once all intertemporal securities with a fixed nominal value
Have a zero rate the burden of new debt can't be nominally lower
In a rationed credit system
except by changing the term structure
And of course the amount available on credit lines
The resort is a direct attack of the real value of existing debt itself since simply
recycling existing debt can't any longer reduce the de t burden beyond zero
Apart from lengthening the term of repayment or offering no payment initial periods
The only way to further reduce the burden of debt in a slump
Is to rev up inflation by devaluations and if that isn't acceptable
By some how changing inflational expectations
This is pure reverse fisher effect sort of a back end to pigou effect
But regardless what are the dynamics of this route even if it succeeds in changing inflationary expectations
And how does this process and policy compare with the straight out deficit spending and tax holiday approach
Conjecture
The back up version of pigou would be far slower
Imagine a contraction has occurred but is now over and the system stabilized
Might certain "players " in a for profit game refer to keep the pressure on weak competitors?
Ie not rapidly refloat the production system and the commercial system
Even the financial system might have a core of strong firms that prefer hard times ...for now
Strong firms might prefer a shake out period once the contraction is over
In this light
Perhaps instead of calling for more employment
we need to appeal to corporate self interests
Call for more profits
A faster bigger recovery means more profits ...no?
If yes then prove it and sell it baby sell it
BUT if you can't prove
a faster bigger recovery would be more profitable
If in fact your devised model proves just the opposite
If a stag is indeed at lesst for now ...more profitable
...then maybe you know why a faster bigger recovery isn't happening
Of course this exercise would be played out in wonderland
A battle of toy models
We would still require a leap of conviction to take hold
But at least the debate would reach to possible conflict of class interests no?
Yes a faster bigger recovery is good for the job class
But is it better for the profit
The Mellon preference
Imagine a contraction has occurred but is now over and the system stabilized
Might certain "players " in a for profit game refer to keep the pressure on weak competitors?
Ie not rapidly refloat the production system and the commercial system
Even the financial system might have a core of strong firms that prefer hard times ...for now
Strong firms might prefer a shake out period once the contraction is over
What level of macro output is most profitable ?
Why is the following question not asked ?
Given the system we have ie a profit driven production system
What level of demand produces the maximum profits ?
No we have no realistic models particularly closed form models
That spit out determinate answers
But the ball needs to get in play here
why would a community of for profit firms not want a profit Max macro policy?
Imagine now what it means that try obviously right now
DON' T want as fast an output recovery as possible here ?
Too much time is wasted repeating the existing pro and con arguments
Vis a vis inflation and employment
When profits are all that interests the most powerful political force in this country
Corporations
Thursday, April 26, 2012
sam webbs stages to ..people's government
"Socialism - more than a good idea, is "imperative," as Webb put it, "to preserve peace and our planet, expand democracy, eliminate gross racial, gender, and other forms of inequality, and to provide a secure life for the billions living on this earth."
Given their commitment to this goal, the delegates are preparing to discuss the various stages through which they see the struggle for socialism progressing.
Defeating right-wing extremism is seen as simply the first stage of the fight. Webb warned of that stage's critical nature. "If you don't believe me," he added, "take a look at Wisconsin, Michigan, and Ohio, where Republicans took control of the levers of power in 2010 and then ruthlessly rolled back rights, eliminated social programs, and attacked the labor movement.
Assuming an eventual victory over the right wing, the Communists see workers and allies then being able to enter an "anti-corporate" stage of the struggle, where they expect the fight for a peoples' agenda will bring the labor movement at odds with corporate/economic political power.
"This stage of struggle doesn't supplant capitalism," Webb remarked. Instead, it "brings the socialist stage closer as tens of millions become convinced in the course of the struggle that capitalism doesn't work for them."
In the next stage (the socialist stage), Communists see a substantial shift to the left among the "core forces" of social change, a deepening of anti-racist consciousness and practice, the consolidation of the anti-corporate alliance, and the growth of the Communist Party and other left organizations.
"This stage will culminate in the election of a peoples' government," Webb stated.
Important parts of this stage, he noted, are "steps to control the movement of capital, to institute a tax policy that weighs heavily on the wealthy, and to place under democratic control sectors of the economy, such as finance, that are a threat to the peoples' government and a socialist revolution."
Some of this is still a way off, and so another focus on the part of the Communists is turning their party into a far bigger one than it currently is."
Given their commitment to this goal, the delegates are preparing to discuss the various stages through which they see the struggle for socialism progressing.
Defeating right-wing extremism is seen as simply the first stage of the fight. Webb warned of that stage's critical nature. "If you don't believe me," he added, "take a look at Wisconsin, Michigan, and Ohio, where Republicans took control of the levers of power in 2010 and then ruthlessly rolled back rights, eliminated social programs, and attacked the labor movement.
Assuming an eventual victory over the right wing, the Communists see workers and allies then being able to enter an "anti-corporate" stage of the struggle, where they expect the fight for a peoples' agenda will bring the labor movement at odds with corporate/economic political power.
"This stage of struggle doesn't supplant capitalism," Webb remarked. Instead, it "brings the socialist stage closer as tens of millions become convinced in the course of the struggle that capitalism doesn't work for them."
In the next stage (the socialist stage), Communists see a substantial shift to the left among the "core forces" of social change, a deepening of anti-racist consciousness and practice, the consolidation of the anti-corporate alliance, and the growth of the Communist Party and other left organizations.
"This stage will culminate in the election of a peoples' government," Webb stated.
Important parts of this stage, he noted, are "steps to control the movement of capital, to institute a tax policy that weighs heavily on the wealthy, and to place under democratic control sectors of the economy, such as finance, that are a threat to the peoples' government and a socialist revolution."
Some of this is still a way off, and so another focus on the part of the Communists is turning their party into a far bigger one than it currently is."
toxic dixit
When
designing
and
implementing
my
ideal
safety
net,
governments
will
thoughtfully
balance
needs
of
the
short
run
and
the
long
run.
Short
run
economic
and
political
imperatives
are
real
and
should
not
be
neglected,
but
they
often
lead
to
excessive
stimulus
spending,
preservation
of
firms
and
industries
that
should
be
wound
down,
and
so
on.
Wednesday, April 25, 2012
greider is a gravel brained blimp
"As a longstanding critic of the Federal Reserve, I am
experiencing a role reversal of my own. In the new
circumstances, I find myself feeling sympathy and a
measure of admiration for Bernanke's willingness to
stand up for unorthodox ideas and to switch sides on the
sensitive matter of debt reduction for failing
homeowners."
" For many years, I have assailed the institution's unaccountable power
and anti-democratic qualities, its incestuous relations
with powerful banks and investment houses.
Those flaws and contradictions remain unreformed"
"yet I now think the country needs a
stronger Fed-a central bank not afraid to use its
awesome powers to help the real economy more directly."
experiencing a role reversal of my own. In the new
circumstances, I find myself feeling sympathy and a
measure of admiration for Bernanke's willingness to
stand up for unorthodox ideas and to switch sides on the
sensitive matter of debt reduction for failing
homeowners."
" For many years, I have assailed the institution's unaccountable power
and anti-democratic qualities, its incestuous relations
with powerful banks and investment houses.
Those flaws and contradictions remain unreformed"
"yet I now think the country needs a
stronger Fed-a central bank not afraid to use its
awesome powers to help the real economy more directly."
bairish sheila
"The Fed has maintained interest rates at or near zero for four years running
even though the financial system has been relatively stable since 2009. "
the fed went to ZIRP as part of the anti contraction campaign
it stayed at ZIRP because despite financial market recovery
job markets are still zonked out
so let the easy credit flow ...into free reserves
"The Fed's actions have kept Treasury bond prices high (while keeping the government's interest costs low), but the fundamentals do not support the high valuations, given the fiscal mess we are in."
what ?
the next 5 years of deficits will drive up rates dramatically ?
" Sooner or later, the bond bubble will burst "
maybe it'll be
just a slow goodby sheila
history suggests that route is plausible
as well as fed doable
but i'm not the only one to call Clio to the stand...
" History has shown .."
".. a structurally weak economy combined with a fiscally irresponsible government propped up by accommodative central-bank lending .."
gra something nailed to the floor ..
"..always ends badly."
poor Clio she can be forced to testify to anything .....in absentia
that always suggests we are hearing argument not fact
now comes the jeremiah shutter
" Absent a change in policies,
a toxic brew of volatile interest rates and uncontrollable inflation
could define our future"
a toxic brew of volatile interest rates
and uncontrollable inflation !!!!!!!!
a nice compact suticase full of shit sheila
even though the financial system has been relatively stable since 2009. "
the fed went to ZIRP as part of the anti contraction campaign
it stayed at ZIRP because despite financial market recovery
job markets are still zonked out
so let the easy credit flow ...into free reserves
"The Fed's actions have kept Treasury bond prices high (while keeping the government's interest costs low), but the fundamentals do not support the high valuations, given the fiscal mess we are in."
what ?
the next 5 years of deficits will drive up rates dramatically ?
" Sooner or later, the bond bubble will burst "
maybe it'll be
just a slow goodby sheila
history suggests that route is plausible
as well as fed doable
but i'm not the only one to call Clio to the stand...
" History has shown .."
".. a structurally weak economy combined with a fiscally irresponsible government propped up by accommodative central-bank lending .."
gra something nailed to the floor ..
"..always ends badly."
poor Clio she can be forced to testify to anything .....in absentia
that always suggests we are hearing argument not fact
now comes the jeremiah shutter
" Absent a change in policies,
a toxic brew of volatile interest rates and uncontrollable inflation
could define our future"
a toxic brew of volatile interest rates
and uncontrollable inflation !!!!!!!!
a nice compact suticase full of shit sheila
internal piigs devaluation proceeds in reverse or at best a snails pace
look at italian wage increases compared to germany
best cases
portugal gains 3 % on germany
ireland gains 5%
half that is the yearly progress
literally the wages of a frozen forex
share of low wage in wages part of the wage wars .... yanks win
Paine said...
France has a law that sets the minimum wage at a fixed percentage of the median wage
We can do the same
Of course that doesn't change two present trends
The upper 5% of the job force taking a larger share of the total job compensation aggregate
And that aggregate slowly losing share of total value added to non work income sources
Ya ya
You need to see all that non work share as a sy
Urplus extracted by an exploitation mechanism
To really get burned over this
But leaving it as just household income inequality is growing
And fighting over a the present size of the gap and how fast its growing and is it acceletating
misses the pressure points the lines of cleavage
Which are really between the non work income sources and the income that essentially pays to guard expand and secure the present system of exploitation
We can do the same
Of course that doesn't change two present trends
The upper 5% of the job force taking a larger share of the total job compensation aggregate
And that aggregate slowly losing share of total value added to non work income sources
Ya ya
You need to see all that non work share as a sy
Urplus extracted by an exploitation mechanism
To really get burned over this
But leaving it as just household income inequality is growing
And fighting over a the present size of the gap and how fast its growing and is it acceletating
misses the pressure points the lines of cleavage
Which are really between the non work income sources and the income that essentially pays to guard expand and secure the present system of exploitation
Mark A. Sadowski said...
A partial repost:
The graph comes from this paper which is essentail reading:
http://www.cepr.net/documents/publications/low-wage-2012-01.pdf
To summarize, the paper argues there are five lessons:
Lesson 1:
Economic Growth is not a Solution to the Problem of Low-wage Work
Statistical analysis shows no relationship between economic growth and the incidence of low wage work. This should not be surprising given the recent US history of a disconnect between productivity and compensation.
Lesson 2: More “Inclusive” Labor-market Institutions Lead to Lower Levels of Low-wage Work
By "Inclusive" the paper is referring to collective bargaining coverage and the degree of socila benefits.
Lesson 3: The United States is a Poor Model for Combating Low-wage Work
Lesson 3A: The U.S. Minimum Wage is Set Too Low to Reduce the Share of Low-wage Work
In countries where the rate of low wage work is low the minimum wage is set closer to the low wage threshold. The US minimum wage is far below that rate (See Figure 7).
Lesson 3B: The Earned Income Tax Credit (EITC) has Contradictory Effects on the Volume of
Low-wage Work and on the Well-being of Low-wage Workers
The EITC has the perverse effect of expanding both the demand for and supply of workers at a level below the low wage threshold.
Lesson 4: Low-wage Work is Not a Clear-cut Stepping Stone to Higher-wage Work
Low wage work is "sticky."
Lesson 5: In the United States, Low Wages are among the Least of the Problems Facing Low-wage
Workers
U.S. workers have the lowest level of employment security in the OECD and no legal right to paid vacations, paid sick days, or paid parental leave. But the most critical problem facing low-wage workers is the lack of access to health care.
So the solutions are common sense and should be quite familiar:
1) Raise the minimum wage closer to the definition of low wage.
2) Raise the wage levels at which EITC applies correspondingly.
3) Expand the right to bargain colllectively.
4) Increase social benefits.
5) Increase the legal rights of workers with respect to job security, paid vacations, paid sick days, and paid parental leave.
6) Establish universal healthcare.
The graph comes from this paper which is essentail reading:
http://www.cepr.net/documents/publications/low-wage-2012-01.pdf
To summarize, the paper argues there are five lessons:
Lesson 1:
Economic Growth is not a Solution to the Problem of Low-wage Work
Statistical analysis shows no relationship between economic growth and the incidence of low wage work. This should not be surprising given the recent US history of a disconnect between productivity and compensation.
Lesson 2: More “Inclusive” Labor-market Institutions Lead to Lower Levels of Low-wage Work
By "Inclusive" the paper is referring to collective bargaining coverage and the degree of socila benefits.
Lesson 3: The United States is a Poor Model for Combating Low-wage Work
Lesson 3A: The U.S. Minimum Wage is Set Too Low to Reduce the Share of Low-wage Work
In countries where the rate of low wage work is low the minimum wage is set closer to the low wage threshold. The US minimum wage is far below that rate (See Figure 7).
Lesson 3B: The Earned Income Tax Credit (EITC) has Contradictory Effects on the Volume of
Low-wage Work and on the Well-being of Low-wage Workers
The EITC has the perverse effect of expanding both the demand for and supply of workers at a level below the low wage threshold.
Lesson 4: Low-wage Work is Not a Clear-cut Stepping Stone to Higher-wage Work
Low wage work is "sticky."
Lesson 5: In the United States, Low Wages are among the Least of the Problems Facing Low-wage
Workers
U.S. workers have the lowest level of employment security in the OECD and no legal right to paid vacations, paid sick days, or paid parental leave. But the most critical problem facing low-wage workers is the lack of access to health care.
So the solutions are common sense and should be quite familiar:
1) Raise the minimum wage closer to the definition of low wage.
2) Raise the wage levels at which EITC applies correspondingly.
3) Expand the right to bargain colllectively.
4) Increase social benefits.
5) Increase the legal rights of workers with respect to job security, paid vacations, paid sick days, and paid parental leave.
6) Establish universal healthcare.
EMichael said...
Little grammar correction needed here. Unless of course all of these workers are wroking at CBS News.
:)
:)
Richard A. said...
How many here think migrant farm workers are overpaid? Many of our political leaders do. Their solution to overpaid migrant farm labor is to grant agribusiness an expanded privilege to import foreign indentured labor as guest workers to put downward wage pressure on these workers. This scheme is coming from primarily Republicans who like to talk tough on the immigration issue. They don't do this for the Hispanic vote--that's just their cover story.
jonathan said...
I've found more striking that so much attention is paid to working conditions in China, notably at Foxconn, which seems to do better than other Chinese employers. It's weird because even a little digging shows working conditions in the US can be worse. E.g., a writer worked at the largest warehouse fulfillment center in the US. Even though the supervisors were friendly, they were driven by handheld computers that set standards which meant they were always behind. As in, the item isn't in the right bin so you have to scan every item in the bin to prove it but that doesn't come off your mandatory items "picked" quota. If you were even a minute late during the first weeks, you were fired. If you had to go into certain areas, you were shocked by contact with metal. The book area was constant static shocks. It's a better story that other countries mistreat workers because we don't want to believe that is true about ourselves.
John B. Chilton said...
10% of US born workers have less than a high school degree. Of people employed in the US and having less than 8 years of education 70% are immigrants here legally. Depending on the data source employees can include undocumented immigrants, and this may be 30% of all immigrants. I'm not convinced that for those of us born in the US the US is a low wage country. If a large portion of low wage jobs are held by immigrants does mean the US is a low wage country -- no, it means the US offers opportunities superior to what the immigrants find in their country of origin.
DrDick said...
"US has the highest share of employees performing relatively low wage work "
Along with an extremely wealthy elite, this is what we call "advanced capitalism."
Along with an extremely wealthy elite, this is what we call "advanced capitalism."
ken melvin said...
If cheap labor's the solution, why is ...?
Aaron said...
I wonder how much of this is due to an overvalued Euro, and what the bar chart would look like if the Euro where to depreciate against the dollar by 30 to 49 percent, or if you used the exchange rates from the fall of 2001.
Mark A. Sadowski said...
Low wage work is defined as work earning less than 2/3 of the median wage. Thus low wage work is not defined in absolute terms. It is a measure of income distribution.
A change in the exchange rate would be more or less irrelevant.
A change in the exchange rate would be more or less irrelevant.
pete said...
Low wage? Wow, and Baker and Krugman think wages are too high and sticky downward, with the solution being price inflation to drive up the marginal value of product above the wage rate. Firms are sure to hire more workers if wages rise? Check out the biggest issue, unending structural inner city unemployment. Here there is no demand for like 25% of the young labor market, even at the minimum wage, which in fact rose 20% during the great recession. This was kind of like wage hikes in 1937. So raising the minimum wage even more will surely make these folks more likely to be hired? This is really weird economics.
Paine said...
I suggest as social improvers
The pattern of change we should use:
Industrial wages from the 1920's to the 1950's
A 40 year period
If our service sector organizes itself like industry did back then
we could see similar improvement
I note
education is not a factor in either case
The pattern of change we should use:
Industrial wages from the 1920's to the 1950's
A 40 year period
If our service sector organizes itself like industry did back then
we could see similar improvement
I note
education is not a factor in either case
revelo said...
I fail to see the problem with large numbers of low wage workers. 50% of the workers must, of mathematical necessity, earn less than the median wage. So? What the chart above shows is the distribution of incomes is less concentrated in the US than in European countries, which is another way of saying we have more income inequality than elsewhere. No news here. Most regulars in this forum would probably agree that taxes should be raised at the top and lowered at the bottom, and other measures taken to reduce the income (and also wealth) disparities.
The bigger issue is whether higher wages (in real terms) is the way forwards for the average American worker. I would say no. Americans already consume too high a percentage of the world resources, which is another way of saying average American wages are too high in real terms and need to come down. The way forwards for raising the American standard of living is lower costs and lower consumption of resources, so that low wages are enough to buy a high standard of living, not higher wages together with high prices and high consumption of resources. More walking, less driving. More consumption of services (restaurants, gyms and other preventative healthcare, tourism) less consumption of goods that require huge amounts of energy to build and maintain (motor vehicles, McMansions). Most importantly, more part-time job, more leisure and less work, and especially less make-work (think defense, sickcare, edumacation, legal, prison and other industrial complexes) which merely raises everyone's costs without really improving the standard of living.
In other words, the Walmart way is the way forwards, given the realities of global competition. Part-time jobs and low wages for most people, but rock-bottom prices that allow those low wages to go a long way.
The bigger issue is whether higher wages (in real terms) is the way forwards for the average American worker. I would say no. Americans already consume too high a percentage of the world resources, which is another way of saying average American wages are too high in real terms and need to come down. The way forwards for raising the American standard of living is lower costs and lower consumption of resources, so that low wages are enough to buy a high standard of living, not higher wages together with high prices and high consumption of resources. More walking, less driving. More consumption of services (restaurants, gyms and other preventative healthcare, tourism) less consumption of goods that require huge amounts of energy to build and maintain (motor vehicles, McMansions). Most importantly, more part-time job, more leisure and less work, and especially less make-work (think defense, sickcare, edumacation, legal, prison and other industrial complexes) which merely raises everyone's costs without really improving the standard of living.
In other words, the Walmart way is the way forwards, given the realities of global competition. Part-time jobs and low wages for most people, but rock-bottom prices that allow those low wages to go a long way.
mrrunangun said...
US median family income last year was $31,000 and median in France was $19,000. Rough numbers. only in the USA would an income of $20,000 be regarded as poverty.
Inequality is the issue of course. Raising the minimum wage is good for unionized workers with contracts tied to minimum wage. Not so good for the inexperienced undereducated low-skilled kids trying to get on the first rung on the ladder.
Weakening of collective bargaining laws did not send our neighbors' jobs to the American South in the seventies, Japan in the eighties, Mexico in the nineties, or to China over the past 20 years. Collective bargaining contributed to that. We midwesterners got the idea that the companies were our greatest enemies because they resisted our wage demands. In fact our greatest enemies were the guys in other places whom we had never heard of who ended up with our jobs. Strengthening collective bargaining will only work if we protect our production from low wage producers.
It's not 1965 anymore. Collective bargaining, higher taxes, higher inflation, etc will not bring 1965 back. The country has almost twice the population to support and it has competition to contend with that has much more competent government than we have. That competition knows that there is a game on while our elites remain in denial regarding the limits of our resources and the consequent need to make difficult choices about how to deploy those resources.
The steadily worsening degree of corruption in government has left it open to capture by small well-financed groups who use the government to exploit the citizenry. As long as the populace regards partisan election victory as more important than keeping corruption closer to the necessary minimum, the corrupters will thwart well-intentioned attempts to improve the well-being of the general public.
Inequality is the issue of course. Raising the minimum wage is good for unionized workers with contracts tied to minimum wage. Not so good for the inexperienced undereducated low-skilled kids trying to get on the first rung on the ladder.
Weakening of collective bargaining laws did not send our neighbors' jobs to the American South in the seventies, Japan in the eighties, Mexico in the nineties, or to China over the past 20 years. Collective bargaining contributed to that. We midwesterners got the idea that the companies were our greatest enemies because they resisted our wage demands. In fact our greatest enemies were the guys in other places whom we had never heard of who ended up with our jobs. Strengthening collective bargaining will only work if we protect our production from low wage producers.
It's not 1965 anymore. Collective bargaining, higher taxes, higher inflation, etc will not bring 1965 back. The country has almost twice the population to support and it has competition to contend with that has much more competent government than we have. That competition knows that there is a game on while our elites remain in denial regarding the limits of our resources and the consequent need to make difficult choices about how to deploy those resources.
The steadily worsening degree of corruption in government has left it open to capture by small well-financed groups who use the government to exploit the citizenry. As long as the populace regards partisan election victory as more important than keeping corruption closer to the necessary minimum, the corrupters will thwart well-intentioned attempts to improve the well-being of the general public.
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