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- novenator, on 05/04/2009, -9/+61To top it all off, CEO pay in this country over 400x what the average worker makes. Other countries do not have this degree of inequity. http://img8.imageshack.us/img8/6738/payratioceotoa ...
- ForumDriv, on 05/04/2009, -4/+43It sounds counter intuitive, but immigration reform can help here. With 5.4% of the workforce undocumented immigrants, they have a harder time bargaining for better (or even acceptable) wages and working conditions for themselves and therefore are easy to use (or threaten using) as a competition for hourly employees, especially in the low-wage/low-skill sector. That's 1 in 20 workers. Assuming that we can't deport or drive them and their families out (a very safe assumption, because 12,000,000 people aint leaving), then forcing them into the legal system protects their labor rights but also strengthens labor rights across the economy, starting at the bottom. Wages -- and prices -- would rise across the economy and wages and productivity would rise rather steeply in a short time for the immigrants themselves. But this would be more than offset by the increase in buying power (and taxes) added to the economy (even subtracting the percentage sent off to family members back in the country of origin). This was exactly the experience of the legalization passed in '86 and implemented roughly '87-'91.
If future immigration is allowed to occur legally at approximately the level of real demand (minus those who may become a public charge or have criminal/health backgrounds that don't pass), then immigrants absorbed into the economy will do so without significant downward pressure on wages because they will be protected by labor laws like everyone else.
With a domestic population growing more slowly because of lower birthrates, an aging society, and a more educated society, we will want to incorporate immigrants over the long haul to keep the economy growing (or growing again, as the case may be). It would be best to do so with a legal immigration system that is up to the task with legal levels tied to the needs of the economy.
Too much legal immigration and we get slack labor markets, which is why this will be tricky. But if we keep legal barriers too high, as we are doing now, we get illegal immigration, which puts more downward pressure on wages. - Firstdaughter, on 05/04/2009, -5/+23Oh but Nov - that's just class warfare.... /s
The special interest group for my profession just published its yearly salary survey and the trend continues as the grunts and peons make pennies in comparison to their superiors. And as usual, women make on average 30% less for the same job as a man.
As jobs continue to be scarce and men are still seen as the main breadwinner this will continue. - scottknick, on 05/04/2009, -8/+22FTA: And soon we may be facing the paradox of wages: workers at any one company can help save their jobs by accepting lower wages, but when employers across the economy cut wages at the same time, the result is higher unemployment.
Which will bother the employers not at all. That's why the government needs to be putting upward pressure on the job market, by creating more jobs, strengthening unions and extending the minimum wage. - davewelsh79, on 05/05/2009, -1/+10Except that, for public companies, executive backscratching is paid for with the shareholder's money.
- Firstdaughter, on 05/04/2009, -4/+13Well obviously women are not paid the same so does that mean we aren't the average joe?
Additionally the grunts and peons in my field do the overwhelming majority of the work while the people in charge take credit. The levels of responsibility and skill are not different enough to warrant such a large pay-scale discrepancy. - arcticsoft, on 05/05/2009, -1/+9Until the government bails them out with our money!
- TexanRudeBoy, on 05/05/2009, -0/+7Based on him openly calling for Greenspan to inflate a housing bubble as a cure to the dotcom bubble bursting. He couldn't see the impications of trying to solve too much borrowing and spending with more borrowing and spending.
http://www.nytimes.com/2002/08/02/opinion/dubya-s- ...
"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble." - lnxfi, on 05/05/2009, -0/+6Hate to say this, but my company is doing the same thing. We currently have an ad out looking for someone with a BS for 25 hours a week at $10 an hour- $13k a year with no benefits or anything for someone with a college degree. And we probably won't have a problem filling that position. It's sad.
I'm just waiting and praying not to get laid off. - TexanRudeBoy, on 05/05/2009, -0/+6Yeah lets keep listening to this tool. His cure for the looming recession after the dotcom bubble burst was:
"To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."
http://www.nytimes.com/2002/08/02/opinion/dubya-s- ...
Yeah blowing up a housing bubble really worked wonders for us............... - Swift2, on 05/05/2009, -1/+6It's bad business.
- saigumi, on 05/05/2009, -1/+6No, what they are saying is that the person running the company shouldn't be making 10,000,000 times more than the janitor. I understand the idea and while I feel no one person should be paid that much, that isn't my main reasoning.
Think about it this way instead:
That millions the CEO raked in had to come from somewhere. You could say it came from the employees, but that wouldn't be correct. It comes from what they sell. Where does it come from? The consumer. Now, imagine a company like say Imagined-Up Canned Tuna that pays its CEO and other C-Levels a combined $10,000,000 and that is from the sales of 100,000,000 cans of tuna that they sell each year for $1.00 a can. That means that 10 cents of that can of tuna you buy is just to pay the C-Levels. Wouldn't you like to save 10%?
I wish I could find one of the research papers I found with actual hard info. But the research and investigation found that about 25% of what you pay for groceries goes just to pay executives. Wouldn't that be nice to have back? - BrandonAbell, on 05/04/2009, -9/+14Based on what?
- revisrev, on 05/05/2009, -0/+5Except for the part where that extra labor added to the amount of goods produced and brought prices down... other than that it's still a pretty flawed hypothesis.
- opinionsstink, on 05/04/2009, -12/+16A counter point to Krugman
Standing Keynesianism on Its Head (a bit long)
http://mises.org/story/3424
Krugman and "Falling Wages"
http://blog.mises.org/archives/009890.asp - deathandtaverns, on 05/05/2009, -0/+4What really gets me is how little the median household income has gone up since the 60s even though most households are duel income homes. With two incomes, adjusted for inflation, the median income should be roughly double, but as you can see here http://www.recessioneering.com/wp-content/uploads/ ... that is not the case. Where does all the wealth that we produce go? As long as they gave us cheap credit we didn't notice because our standard of living went up.
- gn84, on 05/04/2009, -9/+13Does anyone else find it disturbing that all of Krugman's solutions to economic problem involve solving our debt problem by borrowing more? You don't fix a flooded ship by adding more water-- you patch the source of the leaks, then dump the water out one bucket at a time.
Krugman is partly right-- the only way to escape the crisis quickly may be massive inflation. But what will the costs of that massive inflation be? How can he be so sure that the future costs of inflation won't eclipse the pain of a larger recession/deflation now? Especially when his predictions and "paradoxes" are based on generalities and assumptions that frequently turn out to be false. - TexanRudeBoy, on 05/05/2009, -1/+5Revisionist much or have you just not bothered to check facts?
Read his own words at least:
"We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action…. No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times…. For the first time in the history of depression, dividends, profits, and the cost of living, have been reduced before wages have suffered…. They were maintained until the cost of living had decreased and the profits had practically vanished. They are now the highest real wages in the world.
Creating new jobs and giving to the whole system a new breath of life; nothing has ever been devised in our history which has done more for … "the common run of men and women." Some of the reactionary economists urged that we should allow the liquidation to take its course until we had found bottom…. We determined that we would not follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction."
Then you can move on to he facts.
http://mises.org/story/2902
I would love, LOVE to see some evidence of Hoover's free marketeering. - rjey, on 05/05/2009, -0/+4If I could digg you up 100 times I would.
- Swift2, on 05/05/2009, -1/+5No. But the average differential in the '50s was about 30 to 1. Now it's hundreds of times, and the lower wages have been stagnating or in decline for 30 years. Tax 'em, I say. Make the rich, and their corporations, pay a fair share for using our infrastructure. What happens? Wages go up. Look at history. Lose cheap wages? Yeah, but you have more customers to buy your things.
- bipolarruledout, on 05/05/2009, -0/+4A primary problem is that capital is no longer a close representation of labor.
- deathandtaverns, on 05/05/2009, -1/+5sort of. They get all this money partly due to them figuring out how to pay subordinates less. So yes they are getting paid with money that would normally go to people lower on the pay scale.
- pathouston22, on 05/05/2009, -0/+4Are you volunteering to take a wage cut at your job then? Go tell your boss, now.
- Tenareth, on 05/05/2009, -0/+3Except Minimum wage is a huge problem already, and is the reason illegal labor is better for some businesses. If you suddenly had to pay everyone minimum wage, there would be a dump of jobs, not an increase.
- johnnyg113, on 05/06/2009, -0/+3"If all American companies lower their wages by 15% then foreign currency is attracted because our products are now more affordable to them."
That'd be true if we were the only country having economic problems. Considering this is a global recession, it wouldn't just be American companies lowering their wages by 15%, but every other countries also. So our products would be no more affordable then any other countries. - inactive, on 05/05/2009, -0/+3I would too.
- DLit, on 05/05/2009, -4/+7THEY TOOK OUR JOBSSS!
- hdrkid, on 05/05/2009, -0/+3How about being called in to work the weekend for free. AND, if you complain you are FIRED!
- saigumi, on 05/05/2009, -1/+4Unfortunately, their salary is decided by a group of people that are C-Levels of other companies that they are on the board of directors themselves.
And to veto that vote, 50% of the stockholders have to show up for a specific meeting in New York... which is near impossible. - Kevin108, on 05/05/2009, -1/+4That George Clooney writes some interesting stuff.
- m3arvk, on 05/05/2009, -1/+4On top of this consider that we are actually strongly inflating our currency. So not only are you getting paid less, you are getting paid w/ less valuable dollars.
- TexanRudeBoy, on 05/05/2009, -2/+4Also if you want to know how the market fixes a recession cause by central bank credit expansion look into the 1921 recession. This contraction was the sharpest in American history.
- pathouston22, on 05/05/2009, -2/+4Men and women are not equal.
- bipolarruledout, on 05/05/2009, -0/+2No, there worth whatever they can convince a board what they are worth because they are "so much more important" than the people doing actual work for the company. They should be required to take an IQ test to prove they are in the top 1% but then this notion is absurd because intelligence is not the most important trait in business but we like to perpetuate this myth and understate the impact of other factors.
- bipolarruledout, on 05/05/2009, -0/+2All these people would have to actually attend a board meeting and cover their expenses in the process.
- MrFunStuff, on 05/06/2009, -0/+2Great point TexanRudeBoy
- SambekZX, on 05/05/2009, -0/+2IMHO, the path to economic recovery cannot come by increasing wages first. Why? Because no business will ever seek to increase its costs BEFORE it has prospects of increased revenue, and certainly not in some altruistic effort to stimulate the economy. Even if wages are increased by law, the employers will simply hire fewer workers. Doesn't solve the unemployment negative feedback loop.
- TexanRudeBoy, on 05/06/2009, -0/+2Ohhhh boy, here we go.
For starters, falling prices don't equal a depression. It is universally held that the productive capability of the United States increased GREATLY during this period. It was a period of great economic growth, but because we are trained into thinking high prices equal prosperity (thanks Keynes) it is viewed as a depression. True there was great price deflation throughout, but this was a great thing. It spread the gains from society's booming productive capacity to all consumers. How can you call it a depression when all indicators (other than prices falling) indicated a great expansion of productivity?
If we follow the traditional Keynesian thought lines the computer industry should have gone belly up LONG ago. For how could they possibly survive (instead of strive as they have been) when their products constantly become cheaper and better at the same time? - mtraskos, on 05/05/2009, -0/+2Krugman again throws out that the "paradox of thrift" is destroying this country (the thought that if everyone saved then there would not be exchange of goods).
Think about this: how does an economy? Does it grow by going out and buying a consumer good (e.g. DVD players), or does an economy grow based on increases in productivity or efficiency? To grow the economy requires increase in capital goods, and this is done by saving and investment.
If effect what Krugman is saying is that people need to go out and buy more stuff .... you know... get back to spending more than 100% of take home pay. Spending more than 100% of your income works until the bills come due ... which is part of the reason that the country is in a recession. - johnnyg113, on 05/04/2009, -3/+5He named his post "Krugman and 'Falling Wages'". This would lead one to believe the post would comment, discuss and/or refute the points the article made. None of which was done in the blog post. It was a general bash piece on Krugman and Keynesian economics, while containing very little actual economics. If that's all he wanted to do, fine, but it in no way countered any of the specific points made in the article.
And the "Our Hero" and "The Great One" comes off more as pompous ass than sarcasm. In my opinion resorting to that just belittles any point trying to be made.
I didn't read the full article yet, too long to read right now, but bookmarked for later. And I wasn't trying to come off as saying there isn't a good counter argument made Krugman's points, just that that particular post didn't contain it. - Swift2, on 05/05/2009, -0/+2We have to do everything at the same time. There's no choice.
- Swift2, on 05/05/2009, -1/+3It is not "better" for businesses to pay starvation wages. Better tomorrow, maybe. Better for the society, and in the long term, our businesses? No, it's not. It's that pressure downwards that eventually leads to the deflation cycle that we're in danger of today. Then you can stick your low-wage businesses up where the sun don't shine, because we're all screwed.
The American way, for 200 years, was to pay higher wages than anywhere else. Suddenly, our productive work force is either out of work or flipping burgers. That's where Republican economics leads. - TexanRudeBoy, on 05/06/2009, -0/+2The underlying causes of recessions are the same. To pay for WWI the country massively inflated the currency. This set the economy on unsustainable paths. After the inflation it takes a little time for the economy to restructure in light of the actual level of savings in the economy. We saw this in the 1920's as wages and prices were allowed to fall freely, bankruptcies went unhindered, and the government slashed taxes and expenditures. Recovery was swift. Contrasted to the only experiment in massive stimulus in American history causing over a decade of depression I really am baffled that the myth of the New Deal has persisted.
Let me ask you then, why didn't we suffer the same negative shocks after WWII as after WWI? And why is WWII credited with ending a depression while WWI (according to you) caused one? - Ddraig, on 05/05/2009, -0/+2Yep, my pay is getting cut this year, so much for that payroll tax cut. Why not just get rid of the payroll(Income) tax all together like quite a few people have suggested...we're the ones that drive the economy by buying, and spending on goods and services. Not multi-national megabanks.
- johnnyg113, on 05/04/2009, -7/+9All that blog post did was make ad hominem attacks. It didn't refute or even talk about Krugman's article other then quoting it.
- johnnyg113, on 05/06/2009, -0/+1in⋅fla⋅tion
/ɪnˈfleɪʃən/ Show Spelled Pronunciation [in-fley-shuhn] Show IPA
–noun
1. Economics. a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency (opposed to deflation ).
So, if you redefine inflation to mean just an increase in the money supply, then yes. But, unfortunately that is not the actual definition. Right now we are seeing deflation. You can make an argument that printing all this money might cause inflation and the price of goods will rise, but this has not yet happened. "The consumer price index fell at an annual rate of 0.4% in March". Right now we are in a deflationary period. - LAReader, on 05/12/2009, -0/+1If this is the strongest argument against falling wages from a Nobel prize winning liberal, there isn't a very strong argument against them.
Yes of course falling wages, or layoffs, can contribute to a downward spiral of less spending, less production, even lower wages. Just as higher wages can contribute to an inflationary spiral.
- I doubt Krugman opposes wages increases
- It doesn't go on forever. Things bottom out and the economy recovers.
- companies don't just force lower wages on workers because they have the power. they are facing bankruptcy.
- could it be that some wages were too high and ought to come down? Autoworkers who were getting way over the average workers wage, for instance? - johnnyg113, on 05/06/2009, -0/+1Treating recessions/depression as one in the same is intellectually dishonest, at best. The recession in the 20s was caused by the end of WWI. We had millions of men coming home unemployed, factories having to adjust from war time manufacturing, etc etc. The situation we are in now is more like the Great Depression then any other recession, since this has more to do with debt and banks failing.
Ideologies aside, you cannot treat every recession as the same thing, situations vary dramatically. - gn84, on 05/07/2009, -0/+1If a farmer is in debt before he even has seeds to plant, he probably shouldn't be in the business of farming.
And the negative savings rate is one of the biggest problems our economy has. Decreasing it seems unlikely to improve things.
What's more, how can the government make a rational decision on who to give the money to? How can one predict its effectiveness? How do you know that this will actually work? It didn't work in 1932, or 1934, or 1937. It didn't work during WWII, as real recovery didn't occur until the sudden government contraction in 1946.
Aren't you ethically bound to have answers to the above questions before you spend (otherwise unwilling) citizens into generations of endless debt?... Assuming it's ethical to spend unwilling citizens into debt in the first place... - aheinzm, on 05/09/2009, -0/+1@johnnyg113
"These both involved collapses of major stock exchanges and included deflation (not inflation like you claim every single recession is caused by)."
Thats the point. The recessions come when the deflation happens, but the deflation did not cause the recession. The prior inflation created the need for a recession which includes deflation.
There was enormous inflation to fight the civil war in the US which created a boom in a number of industries which was unsustainable when the war ended. The correction to the unsustainability is what a recession is. -
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