PeakTrader.com

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PeakTrader:

What’s great about unions from labor’s perspective is the lack of incentives. You can do a lousy job and not get fired, and you can do that lousy job while being grossly overpaid. Add favoritism, e.g. for relatives and friends, and it’s even better, although not necessarily good for consumers.

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Lower prices and higher quality is a rising tide that lifts all boats.

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I actually worked in a union – the CWA. There was no performance pay, except if you took a higher level position.

If I was twice as productive as someone who started the same day I did, we would be paid the same just based on seniority (and they paid very well, with amazingly great medical & dental benefits).

And, although I was twice as productive compared to another worker, that worker would not even come close to getting fired.

And, yes, relatives and friends worked there. There were even large extended families.

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Consumers want low prices and producers want low wages.

When goods are abundant, prices fall. When labor is abundant, wages fall.

We need more pro-growth and fewer anti-growth policies from our politicians, to raise employment and living standards.

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If I wanted an overpaid job where I could slack-off and not get fired, where performance isn’t rewarded and actually discouraged, I’d want to be in a union.

Was it just a coincidence when union power peaked in the 1970s, quality reached its trough.

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It depends how you measure the peak:

http://politicalcalculations.blogspot.com/2006/03/union-membership-trends-in-us-private.html

And, by the 1970s, after Japan and Germany rebuilt from the devastation of WWII, U.S. automakers with the UAW couldn’t compete.

Not all unions are the same:

“In Germany, management and unions worked closely together in the interests of the common good. Indeed, by law all major German firms are required to set up Works Councils, where the bosses and the unions must work together ‘in a spirit of mutual trust’.

In Britain, by contrast, car factories in the 1960s and 1970s became daily battlegrounds, where militant shop stewards and complacent managers fought out an overt class war.

German manufacturing is one of the great success stories of the post-war age.”

http://www.bbc.co.uk/news/magazine-23406467

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I worked for the CWA and also worked for the federal government. I’d say, half the workers couldn’t last one day working for minimum wage at McDonalds (those two jobs paid great and had great benefits, including paying only $5 for any dental work, e.g. a root canal or gold crown, and could get my teeth cleaned every three months. However, those jobs weren’t for me – there was no challenge).

Also, I may add, I could pick my dentist, paid for no dental insurance and had a $5 co-payment for each visit, no matter what needed to be done.

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Obviously, the U.S. needs a lot more great dentists, particularly great dentists who will work hard for almost nothing

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Jack, at both the union and government job I had, if you were a lousy worker, who put in minimal time and effort, you wouldn’t want to quit. It may be almost as bad as the post office

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Obviously, some people here believe workers don’t respond to incentives, and disincentives have no effect either.

In Germany, per capita real GDP is over $10,000 a year less than the U.S., and Germany’s net exports adds to its GDP.

The reality is since unions in the U.S. began to decline in the late 1970s, the U.S. economy became much more dynamic.

Today, the U.S. not only leads the world in the Information and Biotech Revolutions, it leads the rest of the world combined (in both revenue and profit).

Complacency and expending enormous resources fine-tuning old industries really hasn’t worked out well for German living standards.

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It’s more accurate to say, which I stated originally above, union power began a massive decline in the late 1970s. Chart:

http://photos1.blogger.com/blogger/8076/693/1600/private-sector-union-trends.jpg

The auto industry became much more competitive after Germany and Japan rebuilt from the devastation of WWII.

U.S. consumers benefited enormously from the massive resources Germany and Japan directed into auto production.

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U.S. real median household income increased about $10,000 from 1980 to 2000 (also, average household size decreased from 2.76 in 1980 to 2.62 in 2000). Chart:

http://stateofworkingamerica.org/charts/real-median-household-income/

Of course, from 1980 to 2000, there has been massive low-skilled immigration, although they tend to be productive and underpaid in low-wage jobs.

Raising the minimum wage, perhaps, up to $15 an hour, would go a long way to correct underpaid jobs.

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The top 20% are the fastest growing income group:

Rising riches: 1 in 5 in U.S. reaches affluence
December 6, 2013

“New research suggests that affluent Americans are more numerous than government data depict, encompassing 21% of working-age adults for at least a year by the time they turn 60. That proportion has more than doubled since 1979.

Sometimes referred to by marketers as the “mass affluent,” the new rich make up roughly 25 million U.S. households and account for nearly 40% of total U.S. consumer spending.

In 2012, the top 20% of U.S. households took home a record 51% of the nation’s income. The median income of this group is more than $150,000.”

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Denis says: “American labor…completely re-unionize.”

The danger there is labor will be overcompensated, e.g. resulting in higher prices and lower quality, or a slower improvement in living standards. It’s similar to a minimum wage that’s too high, e.g. $20 an hour, which will cause more harm than good.

If labor is partially unionized, then some workers will be overcompensated and some workers will be undercompensated.

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PeakTrader:

Accommodative monetary policy raises consumption and reduces saving, along with raising asset prices, for households and firms.

Low interest rates make it easier to consume, borrow, and invest, and harder to save.

Unfortunately, a self-sustaining cycle of consumption-employment failed to take hold.

So, this deep depression is turning into a long depression. The U.S. economy is shrinking, as the destruction of potential output continues.

And, up to $1 trillion a year of output is lost forever.

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Also, I may add, the Fed has been trying to raise income = GDP = output. The problem has been too many ineffective and counterproductive policies by Washington politicians.

We’re in this train wreck from too much household debt, too much regulation, too much squandering in government spending, and the tax cuts were too small and too slow, to jolt the economy into a real recovery.

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In a severe recession, when millions of individuals, or households, lose their jobs, good paying jobs become more scarce, and jobs become more competitive, it becomes more difficult to make monthly debt payments, particularly when debt levels are high.

When there’s more involuntary unemployment, lower paying jobs tend to replace higher paying jobs, which makes monthly debt payments more difficult, along with reducing consumption.

The U.S. is a most dynamic economy. Tens of millions of jobs are created and destroyed each year.

From article:

“In 2010…employers made over 47 million hires, and there were over 46 million job separations.

This happened in a labor force of 154 million…about 30 percent of all jobs turn over in a year, and the labor market in the United States is in a constant state of flux.”

http://www.realclearmarkets.com/articles/2012/01/19/the_economy_creates_and_destroys_jobs_every_year_99471.html

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Batmensch, all my econ comments are based on mathematical and empirical models. I’ve proven my statements in many prior comments. Maybe, you don’t believe in Keynesian economics either, or believe the article Marko cited is wrong.

If there’s something specific you disagree with, rather than a complete denial of economics, then let me know, and I can explain why you’re wrong, mathematically and empirically

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