SuperTramp: I see you haven't changed a bit, Dancin.....still a complete asshole.

And life's hard. Deal with it or check out.

ghare: Alas, the collective IQ of fark has dropped an entire standard deviation with the return of this one moron. Back to the loch with ye, Nessie.

Well, bless your heart.

Anonymocoso: OK, so our economy is going to collapse because poor , low-skilled workers don't make enough money.

Sounds reasonable.

So then, why is the current administration going to open the borders so millions more poor, low-skilled workers can move here & authorize amnesty for millions of poor, low-skilled workers who moved here without going through the correct procedures?

Oh, you mean those immigrants that are now leaving the US in greater numbers than they come in?

You're free to keep f*cking that chicken though.

Saiga410: Cinaed: It's almost as if the past 30+ years of conservative policies have farked the lower and middled classes while enriching the upper class.

Shocking, just shocking.

What policy can you point your finger at that would allow for the loss in worker compensation. Most people will point to tax policy in reguards to the top bracket but that makes no sense in that if people were willing to work at these wages then the company would pay these wages with or without high taxes on the rich.

The stagnant minimum wage policy and its lack of COLA adjustments? Just a wild guess.

iaazathot: Saiga410: Cinaed: It's almost as if the past 30+ years of conservative policies have farked the lower and middled classes while enriching the upper class.

Shocking, just shocking.

What policy can you point your finger at that would allow for the loss in worker compensation. Most people will point to tax policy in reguards to the top bracket but that makes no sense in that if people were willing to work at these wages then the company would pay these wages with or without high taxes on the rich.

The stagnant minimum wage policy and its lack of COLA adjustments? Just a wild guess.

Oh please. If we made minimum wage $10/hr, inflation would eat your dog. Socialism would mug you in an alley every night on your mandatory 8-mile walk home from work (because dirty cars are bad, comrade), Muslims would set up a mosque in your bedroom, Democrats make a "1 abortion per family" rule (modeled on China's one child policy), and no employer would be able to afford filet mignon. EVER. AGAIN.

roc6783: rumpelstiltskin: roc6783: ***snip***
OK, that seems like a serious response, and deserves a serious answer.
First, what your math claims is simply that a company can make a boatload of money by hiring one more cheap laborer and selling his product for much more than the labor costs. That's true. But here we're measuring a worker's output by how much he can make that the company can sell, not how much the worker can make. So if a worker costs 1 penny per day, and can make a hundred widgets worth a thousand dollars, it doesn't make sense to hire one more worker unless you can sell a hundred more widgets, no matter what the cost of hiring one more worker is. And if the company can sell a hundred more widgets, it makes sense to hire the worker for as little as possible.
I acgually agree with your claim that as productivity increases, the benefits should be allocated more eve ...


What your missing is what is economically defined as "labor." You think of labor as of a guy on a line making a widget. Economics defines it as "The aggregate of all human physical and mental effort used in creation of goods and services."

So within the construct of your example, if the revenue to be gained by selling one more widget, is greater than or equal to the cost of hiring the staff to sell one more widget, economics says it is the most efficient to do so.

Within the construct of these findings, which I agree do not seem to be the best statistic with which to make an economic argument, if productivity is outpacing the cost of labor this significantly, than there is something inherently wrong with the economic system. It is not operating efficiently according to economic theory.

///My wild-ass guess as to the root of the problem? Companies are taking fewer and fewer research risks. We are getting more and more incremental innovations while actual breakthroughs are slowing. Since today's stock prices are more important than the long term success of companies, investments into pu ...

My example doesn't care if you lump all of the costs associating with selling a widget into the cost of a laborer making the widget or not. You are assuming that if a widget can be made, it can be sold. That's the only way you can jump from talking about output as revenue to output as "what was made", and make any kind of marginal profit argument. That's not true, and that's why I argue that firms have no reason to hire just because labor is cheap relative to anything at all. The firms are operating efficiently.
What you are trying to claim is that the price of labor will rise according to the output of labor. If a worker sees that his goods sell for a certain price, he will only accept that price for making them. If a company does not agree, the worker will make them for someone else, and at some equilibrium, the worker's contribution will be exactly matched by the market's value of his output. That ignores a number of things, most importantly the fact that modern labor markets rely on contingent renewal contracts. The nature of these guarantee that workers will be paid less than they contribute.

Dr Dreidel: iaazathot: Saiga410: Cinaed: It's almost as if the past 30+ years of conservative policies have farked the lower and middled classes while enriching the upper class.

Shocking, just shocking.

What policy can you point your finger at that would allow for the loss in worker compensation. Most people will point to tax policy in reguards to the top bracket but that makes no sense in that if people were willing to work at these wages then the company would pay these wages with or without high taxes on the rich.

The stagnant minimum wage policy and its lack of COLA adjustments? Just a wild guess.

Oh please. If we made minimum wage $10/hr, inflation would eat your dog. Socialism would mug you in an alley every night on your mandatory 8-mile walk home from work (because dirty cars are bad, comrade), Muslims would set up a mosque in your bedroom, Democrats make a "1 abortion per family" rule (modeled on China's one child policy), and no employer would be able to afford filet mignon. EVER. AGAIN.

Can I still get arugula?

natazha: Can't even pay myself a living wage, much less hire someone.

What do you do?

kg2095: It didn't kill small business in the 60s did it? Also, the minimum wage in Australia is significantly higher than it is in the US yet the unemployment rate in Australia is only 4.9%.

Well then let's raise it. What do you think? $15/ hour? $20?

Trolljegeren: Make it 2% of the average CEO pay.

Good thinking. You are willing to pay this yes?

Dancin_In_Anson: Good thinking. You are willing to pay this yes?

Sergeant Grumbles: Were you gone because of a head injury? And your rehabilitation has progressed enough that you can type again?
Because your "I've got mine, fark you" and "Poor people are lazy" trolling in this thread really doesn't seem like you're bringing your A game.

D.H. Lawrence's description: "competition that ever turned men into fiends."

Sergeant Grumbles: Were you gone because of a head injury? And your rehabilitation has progressed enough that you can type again?
Because your "I've got mine, fark you" and "Poor people are lazy" trolling in this thread really doesn't seem like you're bringing your A game.


What the fark does this mean? That you are unwilling to do what you would make someone else do? This "you've go yours, fark you and give me some of it" and "I'm lazy" trolling in this thread is typical.


inglixthemad: We used to do that, before NQS (Next Quarter Syndrome) took root. A company might delay a "real" profit for a couple of years while laying in capital improvements. The objective was to build shareholder value over time, not tomorrow. You didn't buy 5000 shares of stock for 90 days, you bought them for a couple of years easily. The emphasis was on steady, even, growth and improvement.

We? This is how you run your business?

The undeniable economic fact remains that labor is not being compensated at its marginal product - the market is operating inefficiently, by economic definition.

Explaining away the gap between productivity and compensation as somehow 'correct' and/or 'expected' is both false and a red herring: The issue is that labor is not being compensated at the rate that efficient free market economics dictates, and the system is completely out of balance.

/steady decline of bargaining power is the culprit
//no equal bargaining power = no efficient economic outcome

Unimpressed Man: gameshowhost: The undeniable economic fact remains that labor is not being compensated at its marginal product - the market is operating inefficiently, by economic definition.

Explaining away the gap between productivity and compensation as somehow 'correct' and/or 'expected' is both false and a red herring: The issue is that labor is not being compensated at the rate that efficient free market economics dictates, and the system is completely out of balance.

/steady decline of bargaining power is the culprit
//no equal bargaining power = no efficient economic outcome

Just out of curiosity, do you have any data on the difference between the marginal product of labor and the marginal product of capital over the same time span that TFA covers?

If the marginal product of capital has been increasing faster than the marginal product of labor and firms have been investing proportionally more in capital and less in labor while the labor pool keeps growing, the labor pool will bid the real wage down.

If you are calculating labor's marginal product as (total product)/(total labor) your post is not undeniable, and not economic fact. There are two factors of production. It's just that only one can cry and make you wet yourself over the fact that they're not being paid "enough".

I'm not saying that there isn't a compensation problem in the US. I'm saying your post is silly.

:-|

[1], there's this: http://en.wikipedia.org/wiki/Marginal_product

[2]... you do realize that in efficient free market theory (which, of course, is the analytic framework used in capitalism) the idea of capital as an input - and thus as a productive factor - is nonsensical. Consider the fundamental presupposition of zero barriers to entry; to introduce a separate element of capital input is to introduce a barrier to entry (since capital input is not free for the taking - it bears a real cost), which contradicts the presupposition 'zero barriers to entry'. Economic theory *still* hasn't accounted for the absurdity.

[3]... even if you refuse to address the logical conundrum above, you still have the http://en.wikipedia.org/wiki/Cambridge_capital_controversy. 'Capital' in economic systems is a theoretical disaster.

"Macroeconomics textbooks discuss 'capital' as if it were a well-defined concept - which it is not, except in a very special one-capital-good world (or under other unrealistically restrictive conditions). The problems of heterogeneous capital goods have also been ignored in the 'rational expectations revolution' and in virtually all econometric work."

Huh? What 800 lb gorilla?

Unimpressed Man: I can't actually tell if you're arguing with me.

Well. I too can't tell... but it's if you're intentionally dodging the issue I raised. I'll presume we're simply not communicating very well.

I'm questioning the framework's construct WRT capital inputs; it's riddled with holes.

Go back to [1]... last paragraph... "In the neoclassical theory of competitive markets, the marginal product of labor equals the real wage. In aggregate models of perfect competition, in which a single good is produced and that good is used both in consumption and as a capital good, the marginal product of capital equals its rate of return. As was shown in the Cambridge capital controversy, this proposition about the marginal product of capital cannot generally be sustained in multicommodity models in which capital and consumption goods are distinguished." Of course marginal product exists... but MPK doesn't jibe within macro framework unless it's being analyzed in an impossibly-oversimplified, unrealistic scenario. MPL does not suffer that burden.

The fact that capital has costs is not the conclusion of [2]; it's ~evidence that leads to the conclusion~ that capital inputs *necessarily* contradict an essential, limiting parameter ('no barriers to entry') of the framework itself. You can't write off the contradiction as a mere limitation; the theory doesn't square up, so - as always - the theory must be changed/scrapped. By comparison, it's *not necessarily* a contradiction (when the same scrutiny is applied) in having to hire labor, as one always has one's own labor at one's disposal.

[3] Isn't simply "eh, some disagreement here" -- it clearly displays a gaping wound in macro theory, and its framework is being used to set *economic policy*, potentially affecting everyone, whether market participants or not. You should really take a deeper look at the Cambridge capital controversy, especially since the field essentially conceded that the problem exists and that nothing has been resolved in decades.

Yes, capital does exist, it's more than conceptual... but that doesn't mean that economic theory is tackling it correctly.

Here's the deal: There's been a very simple proposal to try to address the difficulties associated with capital input: Represent it as function of the sum value of labor over time. Capital input is, after all, nothing but labor's output... it's merely an issue of substitution... not a simple task, to be sure, but one worth pursuing. If it doesn't work, it doesn't work.

IMHO no one wants to touch it because of the hypercharged rhetoric that would inevitably come with such an idea... since *eek* Karl Marx proposed the idea... though he's not the only political economist to have done so. I just hope someone gets the balls to push it hard, within the academic community, because we're constantly stacking more theory on top of a rickety foundation.

Anyhow. There's my gripe.

On a not-so-tangential note, why ignore the fact that labor's bargaining power decreased dramatically over the time period? Such distorted bargaining power presents exactly the opportunity to accomplish what has been presented in TFA: Ownership and/or management squeezing MPL for unmerited economic profits.

/of course rent seeking and regulatory capture represent critical inefficiencies in our system
//but those are things for which we have the tools to address; they're not issues of flawed theoretical underpinnings