for the US cappies: your paycheck should be twice as big

[Sasha]

so lets ignore that whole revolution and communism business for a moment, lets assume that we will never convince each other on that stuff for now and lets talk some basic economic justice:


Your Paycheck Should Be Twice As Big (http://slog.thestranger.com/slog/archives/2011/11/22/your-paycheck-should-be-twice-as-big)

Posted by Jonathan Golob (http://www.thestranger.com/seattle/jonathan-golob/Author?oid=224756) on Tue, Nov 22, 2011 at 4:32 PM

http://www.thestranger.com/images/blogimages/2011/11/22/thumb-1322007377-productivityvswages.png (http://www.thestranger.com/images/blogimages/2011/11/22/1322007377-productivityvswages.png)

Jonathan Golob vs BLS


If you understand this graph—and I'm far from the only person to have ever made (http://www.thepaltrysapien.com/2011/03/why-your-life-sucks-productivity-vs-wages/) this graph (http://www.epi.org/publication/bp195/)—you understand why the United States is flailing.
Since the end of World War II, American workers have met the challenges of increasing international competition and complexity in the world by becoming ever better at their jobs. Americans steadily have produced more per person-hour each and every year; Americans remain the most productive people on the planet. The blue line in this graph traces this trend.
What we get paid for all this excellent work has not kept pace. Americans—in real dollars (adjusted for inflation)—have not had a pay raise since the mid 1970's.
Put it together: We work harder, and better, than ever before. In a time period where we've tripled the value of what we do in an hour, our hourly salary has only crept up by inches. This is the beginning and ending of our economic woes. Workers aren't paid enough to work—not paid what they're worth.
If workers—rather than executives and owners—reaped the benefits of their productivity gains, your salary would be twice what it is right now.
Grab your last paystub and double it.
Think about what that would mean for you—your household budget, your ability to enjoy life—if you were paid what you're worth. If you own a business, think about what it would mean for you if your customers were paid what they are worth.



can we agree that capitalism is self destructing?
o.k. lets go talk about communism again...

[RGacky3]

keep in mind this began in the early 1970s, which was the begining of the neo-liberal revolution, or the takeover of the economic sphere by neoliberal economiscs, and as the economy became liberalized, it acted more and more as marxists and other socialists expected it too.

This should just tell you something about economics, as the market becomes liberalized it acts less and less how neo-classical economists and austrians predict that a market should work and more and more how marxists and other socialist economists say a market would work.

So then neo-classicals are stuck with defending the outcomes OR juts demanding that you need MORE liberalization and somehow the trend will reverse, both of which are indefensable.

[Black_Rose]

There are a few people, namely Peter Thiel, Michael Mandel, and Tyler Cowen, who advance the thesis that the global economy is now experiencing an innovation crisis. Thiel, a libertarian, uses this opportunity to rail on the government stifling innovation, and recommends more free market prescriptions to nurture an innovative environment.

Mentioned here: http://vimeo.com/7339317 (Thiel on the Singularity an Macroeconomics)

http://vimeo.com/30022734 (another video)

http://www.leveragingideas.com/2009/10/04/notes-peter-thiel-singularity-summit-talk/ (a written summary on the singularity talk)
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Thiel cites a lack of innovation in the fields of transportation, energy, medicine, and education, and this is manifested in low wages and low interest rates. (Of course, information technology and computer hardware is remarkably successful.) So much for the dross of the Chase commercials that proclaim "that's a step forward". Fucking financial parasites!

I agree with Thiel's macroeconomic thesis that innovation indeed stagnated. In the field of transportation, he noted that transportation hasn't increased, the last greatest advance available to consumers the Concorde jet and it is limited to wealthy individuals and only able to travel in unpopulated areas (and look how crowded urban freeways are during the work week)
-----

Now, how is this germane to the OP? We all know that income inequality has ballooned since the 70s. Of course, not all the wealthy are technological innovators in computers like Gordon Moore, Sergei Brin, and Larry Page. But if the wealthy aren't producing Promethean advances, creating jobs, exhibiting extraordinary virtue, or entertaining the public (as professional athletes do), then why are they rich? To me, the answer is that they thieves who profit from unipolar geopolitical environment free from any serious contender of neoliberal globalization that facilitates the free movement of capital, US imperialism that gives investors access to uncooperative access and enforces this regime ad baculum, central banks that provided liquidity for fanciful financial speculation and consumer consumption in the absence of wages, a government regime that allocates wages to finance bailouts and military action, and low taxes.

This means that any rational person must abandon the notion that the wealthy earned their wealth, and realize that most of it is systemically purloined from underdeveloped countries and the working class of developed countries.

That's why I am leftist who does not bow in obeisance to wealthy (and a teenager who merely wants to rebel against tradition and any authority). The reason why I am a revolutionary leftist is from the realization that liberal democracy cannot dislodge the current parasitic neoliberal regime and that capitalism itself perpetuate this injustice and needs to be abolished.
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PbT5M4BeZBI

Ano koro to kurabe Mae ni susumeta?
Kotae wa NO ja nai Dakedo tarinai


Compared to back then, have you moved forward?
The answer isn't no, but it isn't enough

[Thug Lessons]

Okay. These sorts of comparisons are great for demonstrating the tendency of free market economics to create inequality, but they're on much shakier ground when they try to offer a practical program like the one outlined above. The way bourgeois economists calculate 'productivity' doesn't really have much to do with productivity in the sense ordinary people understand it - it's actually more or less a measure of input-output ratios. When orthodox economists say that one worker is more productive compared to another, what they actually mean is that one worker is more effective at creating profit, that is, at advancing the interests of capital.

The problem here is that what's productive for the capitalist isn't necessarily productive for the worker. If you were to actually implement the program described in the OP and double workers' wages, (assuming that's possible), you wouldn't see a doubling of living standards, or even anything close to it. You'd just get massive inflation. There aren't enough goods and services to accommodate a doubling of wages. There aren't enough luxury car makers to give everyone a Lexus, there aren't enough construction workers to build everyone a mansion, and there aren't enough doctors to provide everyone with state of the art healthcare. To that you might say, "well, we could just reorganize production around things that are more productive for the workers, or maybe it could have developed that way in the first place if we had done it correctly". Well, not really. If we did that these productivity gains would be massively reduced if not outright erased. They were only possible in the first place because of a fundamental shift away from that sort of economics, the dominance of financial capital over productive capital, and financialization in general. We could definitely have a more equal society in the US under capitalism, but certainly not double what it is now, more something like European social democracy. And that's just looking at it from a practical economic perspective and not even worrying about the environmental issues, dysfunctional energy trade and third world exploitation that come as part of the price tag of US economic success.


Now, that may sound harsh, but I don't necessarily have a huge problem with articles like the OP. It's decent enough leftist, bring it up if you go to Occupy or whatever. But don't take it to heart, because not only is it essentially social democratic ideology but also fundamentally flawed. What these graphs really demonstrate is the failure of orthodox economists, their total irrelevance to practical economic policy. That's an opening for us, as socialists, to propose something entirely different, and not just pick at the edges of capitalism and say maybe we can give workers higher wages, or better healthcare, or a new car.

[RGacky3]

The point is'nt higher wages, its to show that Capitalism DOES'NT WORK.

As for the thesis of an innovation crisis, thats rediculous, there have been plenty of innovations, now if capitalism requires exponentially growing innovations in order to work, well then its a crap system is'nt it? it just goes along with the Socialist critique that a constantly and exponentially growing capitalism necessarily leads to collapse.

[Black_Rose]

The point is'nt higher wages, its to show that Capitalism DOES'NT WORK.

As for the thesis of an innovation crisis, thats rediculous, there have been plenty of innovations, now if capitalism requires exponentially growing innovations in order to work, well then its a crap system is'nt it? it just goes along with the Socialist critique that a constantly and exponentially growing capitalism necessarily leads to collapse.

Maybe that's why Clarium Capital, Thiel's global macro hedge fund, had three consecutive down years 08-10. :blushing:


Innovations such as??

I don't consider iPhones to be innovative; maybe i conflate innovation with product that actually make life easier and remove stress which is just a semantic definition of innovation. Hell, even conservative sources criticize the notion that Steve Jobs was a great inventor.

Here are some articles concerning the field of medicine:
http://robertfortner.posterous.com/if-heart-drugs-keep-improving-will-we-be-able
http://robertfortner.posterous.com/the-contours-of-medical-progress-in-depressio
https://ub.cbm.uam.es/publications/teaching/curso_verano_uah_2011/intro.pdf (Bernard Munoz, lessons from 60 years of pharmaceutical innovations; shows diminishing returns of new chemical entities that made it to the market per dollar spent. a notable point he made that regulation increases standards and encourages innovation since pharma companies are the few enterprises that have the capital to finance large trials which act as a barrier to entry. Now, pharma companies have to compete with older drugs with similar mechanisms or use a different target on a given disease.)

[Black_Rose]

Mods: I never talked like a Keynesian in quite a long time, and I almost forgot how to think and articulate Keynesian thoughts. Do not interpret my Keynesian circumlocution as an endorsement of liberalism.


The problem here is that what's productive for the capitalist isn't necessarily productive for the worker. If you were to actually implement the program described in the OP and double workers' wages, (assuming that's possible), you wouldn't see a doubling of living standards, or even anything close to it. You'd just get massive inflation. There aren't enough goods and services to accommodate a doubling of wages.

You are indeed correct than an increase in wages would cause inflation, since that would increase the amount of money chasing a finite amount of goods and services. This is expected as the middle class and poor generally have a higher marginal propensity to consume which means that the velocity of money would increase. The quantity of money equation (M*V = P*Q), the ideal gas law of monetarism, predicts that if the velocity of money increases and the quantity of goods and services remains constant, then the price level must increase (or money supply decrease).


*(M = quantity of money, V = velocity of money, P = price levels, Q = quantity of real goods and services); ideal gas law = (PV = nRT; p = pressure, v = volume, n = molar quantity of gas, T = absolute temperature, R = a proportionality constant known as the gas constant.)

However, it is unlikely that an increase in wages would result a commensurate increase in inflation; inflation would indeed rise, but it would rise at a slower rate, resulting in a net increase in real wages. Your concern about inflation, although it is soundly based on rudimentary economic theory, seems to be reactionary as many monetarists and neoliberals believe that inflation can be managed through increased unemployment, as opposed to high unemployment being the accidental consequence of economic vicissitudes, not a deliberate result of government policy. This invokes the principle of the Phillips curve, which is an observation that their is an inverse relationship relationship between inflation and unemployment, but further expounds on it by purporting that an unemployment rate too low, below the NAIRU, the non-accelerating inflation rate of unemployment, causes inflation not merely to increase, but to accelerate, potentially jeopardizing the economy and causing a crisis of confidence by eroding the value of money and discouraging long-term capital investment. Hyperinflation harms the working class because the upward stickiness of wages means that their wages would not keep up with inflation, but mild inflation, provided that nominal wages increase on pace with inflation, is benignant to the working class since it erodes away the real burden of loans.

Inflation is a threat to the value of money because it effectively reduces the purchasing power of a given amount of currency overtime. Unemployment is necessary to reduce inflation thus unemployment is a structural necessity to keep the value of money for the greater good of future economic growth even though it harms the entire labor market by reducing the demand of their labor resulting in lower wages. Since laborers are also potential consumers who could spend the money that they earn on goods, lower wages denies them nominal currency that they can use in the marketplace effectively reducing aggregate demand. As a result of lower wages, these workers do not have surplus income to demand the labor intensive goods and services of other workers further reducing the demand for labor causing lower wages. Therefore, in order to keep money valuable in a fiat regime, money is not kept scarce by pegging it to a finite quantity ,such as gold or silver bullion or prudent fiscal and monetary policy, but instead labor is devalued so money itself can retain its value. Those who derive their income from capital (or from a differentiated form of labor whose demand and value is not affected by this) benefit from this trade off because of lower inflation because of the reduced competition from the demand side since they do not have to compete with many consumers.


Thus, preserving the value of money, an agenda generally beneficial to owners of capital, since they own fixed-income assets, possess large quantities of cash, and typically lend money, would allegedly require a "medicinal" level of unemployment. The paradigm of Keynesianism primary tenets are an active fiscal policy, often including social spending, in periods of recession to stimulate demand and encourage the economy to revert to a level of "full employment" when the consumer and investment sectors are in the doldrums, and active monetary policy to increase the quantity of money by encouraging loans through lowering short-term interest rates through central bank open market operations. Keynesianism's focus on "full employment" is logical from a welfare economics perspective since unemployment harms people, but inflation harms money. However, Keynesianism does not provide a theoretical justification for an anti-inflationary policy as a primary economic objective as opposed to full employment. In order for the general populace to perceive inflation as the primary economic malady instead of inflation, the ruling class must then disingenuously equivocate hyperinflation with inflation, and influence the electorate to endorse monetarist and supply-side policies and abandon Keynesianism.

Military spending increases inflation since it increases the velocity of money by transferring it to arms manufacturers, operations, and military personnel. With the exception of some forms of technological innovation that eventually reaches the consumer market, military spending rarely increases the quantity of available goods and services as military hardware is often stored in inventory, sent into the theater of combat, often being damaged or destroyed. Under full employment, wages cannot rise rise ahead of inflationl thus during an environment of prodigal military spending, wages can only rise if there is inflation, and that would harm capital. The ruling class knew the critical trilemma of full employment, low inflation, and military spending, and choose to abandon full employment as guns were deemed necessary in a geopolitical environment hostile to Western capitalism.

[RGacky3]

Innovations such as??

I don't consider iPhones to be innovative; maybe i conflate innovation with product that actually make life easier and remove stress which is just a semantic definition of innovation. Hell, even conservative sources criticize the notion that Steve Jobs was a great inventor.


Innovations in the sense as its a new product starting a new market for that product and a new production line up and everything.

Innovations are not necessary in capitalism because of what exactly they innovate, they are important because it creates space for the market to grow, thats why financial innovations, which does'nt do ANYTHING to improve human society, were highly valued, because it creates space for the economy to grow and profit to be made. The problem with Capitalism is it needs exponentially growing growth, when certain markets reach their limit and get consolidated new markets HAVE to start up otherwise you'll have a crisis. Markets generally pop up but at this point the markets that have been growing are just bubbles, innovations have happened, i.e. new inventions, but they arn't enough to hold up the economy anymore, Capitalism right now is at its braking point imo.

As far as the wages are concerned in your keynsian analysis, I think we'd also have to look at savings rates, i.e. after a certain wage excess wage increases would lead to diminishing raises in consumer spending. So I think inflation WOULD happen, obviously, but after a certain point savings would take a larger and larger chunk of the wages.

[Jose Gracchus]

Okay. These sorts of comparisons are great for demonstrating the tendency of free market economics to create inequality, but they're on much shakier ground when they try to offer a practical program like the one outlined above. The way bourgeois economists calculate 'productivity' doesn't really have much to do with productivity in the sense ordinary people understand it - it's actually more or less a measure of input-output ratios. When orthodox economists say that one worker is more productive compared to another, what they actually mean is that one worker is more effective at creating profit, that is, at advancing the interests of capital.

We all know this. All you are demonstrating is how capital ipso facto must exploit living labor to create value. Inflation must obliterate the consumption allowance for the aggregated, total social worker, in the event of mass wage-increases in order to maintain sufficient surplus available for, generally speaking, expanded accumulation.

Which incidentally is why we are revolutionary leftists, and not tinker-here-and-there-with-this-and-that-knob reformists.