A compelling (left-wing) article. What do you think?

[Sir Kenyth]

I am posting an article I found. This guy appears to be the exact polar opposite of Ann Coulter, so keep that in mind as you read it. He's way left. He does make a compelling argument though. Please comment as I'd like to know everyones view on this article, but please don't go at each others throats about it.


"PERSONAL RESPONSIBILITY" AND WAGES
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Cheap-labor conservatives claim to believe in "personal responsibility". That's why they say they don't like social spending. They say that everyone should "stand or fall" in a competitive economic environment. They say that the working poor in such an environment are just "losers". They say the unemployed should "get a job" -- regardless of unemployment rates. They say there should be no minimum wage, and corporations should be free to export jobs to third world dictatorships. And they don't like unions.

So what happens to the wage scale, when we do things on the "cheap labor conservative plan". What happens when we abolish the minimum wage, eliminate all social spending, open our borders to cheap goods from the world, and capital flight to the third world. Which direction will average wages paid to Americans go. Do they go up? Or do they go down?

The answer of course, is down. We are talking about policies whose effect -- I say the intended effect -- will be to erode the wages and living standards of ordinary American wage-earners. We are talking about a deliberate effort to undermine the bargaining position of American labor. We are talking about an economic environment of 'haves" and "have nots".

What sort of "personal responsibility" is possible in such an environment? If a wage earner's only asset is his ability and willingness to do a day's work for a day's pay, where does he get the wherewithal to improve his circumstances? He gets that wherewithal from the wages he earns. But in the environment created by conservatives, that wage scale will not support accumulatioon of any savings. It will not support job training or higher education. It will allow the wage earner to survive -- in an economic environment where he lives paycheck to paycheck, hoping he doesn't lose his job.

But that isn't what the cheap-labor conservatives mean by "personal responsibility". What they mean is "blame". If you have nothing, and can accumulate nothing "its your own fault". Thus does the conservative wash his hands of the poverty and exploitation inevitable in such an economic environment. It isn't his fault, it is "impersonal market forces". It is the "natural order" of things -- which government has no business correcting, according to him.

All of which utterly overlooks all of the laws, institutions and government created infrastructure that benefits the wealthy. First on the list of these is the corporation itself. Corporations exist because state law creates their possibility. State laws give them a benefit no partnership enjoys -- limited liability for investors. They were and are a government created means to encourage investment in large scale industrial enterprises.

They amount to "organized capital", and have grown into institutions so large, many have annual revenues that exceed the Gross Domestic Product of many third world nations. They obviously create an imbalance of economic power between those who hold capital on the one hand, and wage earners on the other. Add to that the rapid movement of capital made possible by technology, and you have an even more uneven playing field. That rapid movement of course, is made possible by computers -- developed with government subsidies and assistance -- over communications networks built by government subsidy. [Any private companies out there launching communications satellites?].

In fact, the largest beneficiaries of all government built infrastructure, including hydroelectric dams, railroads, air traffic control systems, and even roads and schools, are the corporations who buy power, transport goods by rail and over the roads, and employ workers educated at public expense. They are the primary beneficiaries of the banking system, of Federal Reserve efforts to stabilize the currency, and of the regulation of securities creating confidence in the financial markets.

But Conservatives are oblivious to all this government spending, government infrastructure, and government regulation that directly benefits American corporations. They only see the government spending that helps the wage earner -- and hypocritically claim that the "wage earner" should "stand on his own two feet" -- as if they do.

In fact, they stand on the backs of labor. Having formed hugely powerful corporations, they complain when wage earners respond by forming unions to counterbalance the power of these giants. Apparently, it is okay for capital to "stick together", but not labor.

So don't even bother suggesting to these cheap-labor conservatives that we build a "wage earner friendly" economic environment. Don't suggest that we strengthen unions. Don't suggest that we adopt labor friendly trade policies -- that at a minimum restrict the ability of American corporations to take advantage of third-world police states. Don't suggest that we put full employment over controlling inflation in our list of priorities. Don't suggest fiscal policies -- read that, "balanced budgets" -- the help create a low inflation environment supporting "full employment".

All of those things are "big government". Cheap-labor conservatives believe in "less government" -- for them anyway.

[aleph_null1]

Originally posted by Sir Kenyth: The answer of course, is down. We are talking about policies whose effect -- I say the intended effect -- will be to erode the wages and living standards of ordinary American wage-earners.

Right, so the entire argument -- which is indeed a good one -- is based on the assumption that this secondary null hypothesis is true.

This is never justified; it's never even argued. Our author here says, "The answer, of course, is down." Sweet, it's obvious...

OK, I don't know what the effect of these policies would be. Intuition & past experience would lead me to argue that wages would rise, but that's not the point.

The point is that our friend makes a wonderful argument based on nothing.

[Sir Kenyth]

I don't know about that. Increasing the supply of any good, including labor, drives the price (wage) down. Doesn't it? Shipping IT jobs to other countries hasn't done wonders for my job field, I can tell you that much. I mean, if shipping the jobs away wasn't cheaper, they wouldn't do it. Cheaper competition can only drive wages down.

[ 10-28-2004, 12:02 PM: Message edited by: Sir Kenyth ]

[Timber Loftis]

Right, so the entire argument -- which is indeed a good one -- is based on the assumption that this secondary null hypothesis is true.

You quote from paragraph 2 and call it a nully hypothesis. From what I can tell paragraphs 6 and 7 provide the real backing for this argument.

[aleph_null1]

Originally posted by Sir Kenyth: Cheaper competition can only drive wages down.

It depends which view of macroeconomics you subscribe to. I would argue that ours is not a zero-sum, closed market system, i.e. money can be created through innovation & hard work. That said, a good/service is worth only what the market can sustain; if Indians supply decent code for $0.85 / hr, then that's all decent code is worth.

We adapt & overcome, changing our role in the world as the market for services changes. If management is worth 20x what acceptable coding is, we may all become PHB's

Again, I'm no expert. I only note that the author isn't, either, and brushes off a strong counter-argument with a slyly placed "of course"...

[Timber Loftis]

Labor standards and minimum wage and safety laws are a basic requirement for the workplace. As the article mentions, there are a lot of laws benefitting business, including the very existence of the corporate entity. Conversely, some regulatory minimums help fill the gap in worker safety and fairness.

That said, I despise unions. Unions had their purpose before minimum wage laws, environmental laws, and OSHA came along. Now, all they do is provide a weight dragging down both business and the laborer. Right now in Chicago we have 2 teacher unions, one hotel employee union, and some airline unions striking or threatening to strike. Somebody's always striking.

But, what's worse is I've seen unions in action. Seen them dole out slap-on-the-wrist punishments to men who by all rights ought to be fired and never work again for anyone. Seen them force a business to keep promoting the tenured lazy-asses while refusing to let them promote younger better more hard-working workers.

Labor laws good. Unions suck.

And this guy's so far out in left field on the labor thing, you'd think he's French.

[aleph_null1]

Originally posted by Timber Loftis: From what I can tell paragraphs 6 and 7 provide the real backing for this argument.

I agree -- for the second argument. I'll be the first to agree that capitalism encourages the wealthy to be wealthier, encourages large business to thrive over small, and tends to increase class disparity.

Which has nothing to do with the notion that competition reduces wages.

[Cerek]

Interesting perspective. But many of his arguments and comments are flawed.

First and foremost, "full employment" will never be achieved because the cold hard fact is that there will ALWAYS be people who would rather draw money from the government than to get an honost job. Welfare is a wonderful program that helps many people in need, but it is also grossly abused and many people consider it the ONLY acceptable way of life. WHY get a job when they can get money from the gov't instead? And some people work very hard to cheat the system. Ironically, they end up putting in just as much effort to get a "free ride" as they would if they just got up and went to work each day...but they don't want to do that.

I live in the very tip of Western NC. The state borders for GA and TN are less than a 20 miles away from my hometown. And it only takes about 1.5 hours to get into SC from here. There are some people that have addresses in ALL FOUR states (and especially in NC, TN, and GA where they can go to the Post Office in each of these 3 states in the space of an hour) and draw Welfare checks and Food Stamps in all each state. At the first of the month, you can see an unusually large number of cars with TN or GA license plates at the local Post Office.

The fact is that many people COULD find jobs, they just don't want the jobs available. I have a B.S. Degree in Financial Planning and Marketing. But I worked for two years after college as a dishwasher in a restaurant because it was the only job I could find at the time. Even now, my job has absolutely nothing to do with my college degree. In fact, a college degree is not even a requirement for my job - even though it is mid-management level.

Unions are another area where the author is only showing one side of the coin. I agree that unions were necessary to offset the horrendous control wealthy employers used to exert over their workforce. But as the unions have grown, they have become just as domineering and manipulative as the business owners they are opposed to. "Fair wages" for union workers have skyrocketed to the point that it IS cheaper to ship the labor overseas. Unions also exert tremendous influence on elections. There are documented cases of union officials standing outside voter areas in metropolitan areas and handing brochures to any union worker going inside to vote. The brochure lists the candidates the union worker is supposed to vote for. No listing of policies or issues, just a list with the names they are supposed to put their "X" beside on the ballot.

When conservatives talk about the poor "standing on their own two feet", they are talking about the ones that abuse the system - not the ones that truly need it. Several efforts have been made to reform Welfare. Workfare is one alternative, where the person is still required to do some form of menial work to qualify for the assistance they recieve. That really isn't asking too much, IMHO. Instead of being paid money, they gov't is saying they want "X" number of hours of labor in exchange for the assistance they are giving the person. Of course, that system can be abused by the employers. Michael Moore's movie "Bowling For Columbine" documents one specific example of this - where a mother was away from the home all day long because of the Workfare Program adopted by the State of Michigan (IIRC). During her absence, her son killed another child with a handgun he gained access to.

So no plan is perfect and there will ALWAYS be those who abuse ANY system of assistance the gov't puts in place.

I believe the power of corporations and unions BOTH should have limits on them, but I don't know of any way to actually achieve this.

Ours is not a truly free capitalistic system. Businesses may start out equally, but as soon as one business becomes bigger than their competitor, the competitor will start claiming they are at an unfair advantage and will seek assistance from the government. Sometimes this is a legitimate complaint, and sometimes you have to accept the fact that some businesses are going to fail. Every business that opens can't be successful. Their simply isn't enough demand to go around.

I do believe that efforts should be made to provide incentives to corporations to keep jobs in America. My area suffers tremendously from the loss of manufacturing jobs. We have had several major plants close down because it was cheaper to send the jobs to other countries (thanks to NAFTAA). We lost a plant for Levi's and Lee jeans. We also lost the largest plant in the area (a manufacturer of outboard motors for boats). EACH of these plants represented the loss of 300-400 jobs locally. We have had two new industries brought in to replace the plants garment plant that were lost and our local Wal-Mart became a Super Wal-Mart. Still, that only absorbs a percentage of the lost jobs. One town in particular is literally "dying" because the Lee plant was the major employer there. The loss of those jobs still hasn't been replaced.

So I see both sides of the issues. The people who lost their jobs ARE willing (sometimes even DESPERATE) to work, but it is difficult to lure companies into this rural area. On the other hand, we have several resident that would rather sit around watching TV all day and waiting on their monthly check instead of going out and working at a regular job 6-8 hrs a day.

So, the guy has some valid points in his argument. But his assertion that Repubs cater to corporation and trample on the little man is way off base. You HAVE to "cater to corporations" in order to get them to stay here and provide jobs for "the little man" in the first place. And if there are ample employment opportunities, the wages will take care of themselves.

The hospital I worked at before payed CRAPPY wages because their wasn't many other employment options for most of their workers. And if they did lose someone, they had several applications for the job that was vacated. I worked in the Purchasing Dept for SEVEN YEARS...and I was making LESS than $7.00/hr when I left. And - after working there for 7 years - the only response I got when I turned in my notice was "Gosh, we'll miss you. Stay in touch." They didn't even attempt to make a counter-offer of any kind. Now if the hospital I am at now beleives in supporting the employees better. We also face stiff competition for our C.N.A. (Certified Nursing Assistants) because they can get a job at two local resorts working in housekeeping making just as much money (or more) without doing all the "shit" work involved in the C.N.A. job (sorry for the expletive, but it is a factual description of some of their job duties).

So competition is what helps increase wages and benefits offered to employees. We don't have (or need) unions. Our wages are competetive with every other hospital in a 250 mile radius and are also competitive with the other employers of in other industries around here.

[Timber Loftis]

Originally posted by aleph_null1: (1) I'll be the first to agree that capitalism encourages the wealthy to be wealthier, encourages large business to thrive over small, and tends to increase class disparity. (2) Which has nothing to do with the notion that competition reduces wages.

I added the numerals, because I want to point out that #1 appears to logically contradict #2, especially when you look to class disparity.

So, I think those paragraphs do in fact back the notion that wages will go down, as does your conclusion in #1. And, it's not capitalism we're talking about. Let's be truthful with ourselves, the corporate form of business is a deviation from capitalism. True capitalism doesn't allow an investor to only be "on the hook" for his investment amount. In true capitalism, and investor is perfectly welcome to invest $100 in a bad deal that results in $1,000,000 losses to him. The corporate form shields all the investor's money above $100, thereby making it nearly impossible to just heavy-handedly apply Smithian economics to the model.

[Sir Kenyth]

Competition for jobs DOES reduce wages in the short run as well as increases profits for the employer. I'm sure the economy will eventually compensate, but the same can be said for competition for employees. Certainly it stimulates new markets to use the surplus (and now cheaper) workforce. But in the interim, the workforce suffers and the employers benefit. It's not very ethical to send work overseas to avoid paying higher wages and paying for environmental concerns. All you do is ship the problem elsewhere. Out of sight, out of mind, right?