quote:Third, is it Card's position that a worker should prefer an hourly wage of $0.00 an hour to $5.15 an hour?
A bull**** question. The real question is this: whether a business whose profitability depends on paying low wages to its workers ought be allowed to survive.
quote:Then the individual in question would refuse the work, no need to make it illegal.
You yourself said that the individual would NOT refuse the work, because it's better to starve later than to starve now. You can't just IGNORE that now, when your argument depends on it.
Individually it's better, socially it's worse. Because in the former case (starving later), you are also enriching the employer who is so starving you -- thus putting him in a position to drive out of business his better-wage-paying competitors, thus letting him starve even more people.
Like a slave working in a plantation, whose work will allow his master to buy even more slaves, while bankrupting the free labourers.
quote:If you unionize the industry, granting a monopoly to these few workers, then wages will rise and in the short-term average profitability will fall. But not all firms were profitable, some were on the verge of bankruptcy before wages went up, which means now they definitely will go bankrupt. This will reduce competition for customers, driving up prices, and restoring profitability to the long-term trend. Of course, it also makes the workers in those now closed firms unemployed
You are assuming that union workers are idiots that can't be trusted to serve their own good. Make the finances of each business transparent, and then unions can see by themselves whether it can survive an increase in wages or not -- whether the low wages were necessary for its survival, or if they merely were a result of greed by the employer.
Posts: 3318 | Registered: Feb 2003
| IP: Logged |
quote:The fact that automation requires far fewer people to accomplish the same level of production is a far bigger force pushing down overall employment rates than unions.
Exactly. Automation is not free, it costs money. As wages rise, firms invest in automation, reducing their consumption of labor. This is a good thing if wages are rising due to a labor shortage, as there were no workers for the jobs being lost. But, if wages are rising due to unionization then the automation driven job destruction will produce higher unemployment. And unemployment in the 19th century could mean death.
You're right that automation is not free. But automation allows fewer people to produce more. Labor saving inventions are the entire source of our wealth. Labor saving inventions are the only reason that 6+ billion people can survive at the same time on this planet.
Let me give you an example from history. In ancient Alexandria there was a design for a basic steam engine*. However the design was never taken past the form of a novelty or a toy because human labor was cheap. In fact human labor was often free because of slavery. The surplus of cheap labor may have set the human race back thousands of years in technological advancement. I agree that high wages are a driver of labor saving innovations that eventually cost jobs. However they maintain or increase productivity. So the people who were working to dig coal up from the ground can move onto jobs producing cars, building roads, building homes, teaching school, or providing any number of other services that were not available before. Those additional goods and services contribute to the wealth of society. Very cheap labor or slave labor is a recipe for a stagnating economy. Not just because no one has any money to spend but because there is no incentive for anyone to produce more with less.
quote:They are homeless, live with their parents and/or receive government aid. Why should taxpayers have to subsidize business owners who pay their workers poorly?
You don't. If American voters don't want to subsidize the poor they don't have to. Just change the law. I myself believe we should subsidize the poor, but that may just be me. What we should not do, however, is use our charity as an excuse to condemn the poorest among us to permanent unemployment.
I agree we should subsidize the poor. I don't agree that we should subsidize the poor just so corporations can pay below subsistence wages. If companies had a demand for more goods they would hire more workers. Eliminating the minimum wage would just shift employment costs from customers onto the general public. The owners get richer and the workers and taxpayers get poorer.
Honestly I would rather an individual get welfare for doing nothing than for $1/hr workers to get public subsidies while creating a new generation of robber barons. The disparity in wealth is already ridiculously high; getting rid of the minimum wage would only exacerbate that.
Posts: 1121 | Registered: May 2004
| IP: Logged |
quote:Why would higher wages for Rockefeller's workers depress wages for anyone else? If anything the increased wealth would have helped the other small businesses and workers in their communities.
But unions do not create wealth, at best they just transfer wealth from consumers to unionized workers. At worse, they make the whole of society poorer, including a growing army of unemployed workers and consumers which have been denied the production that these workers could have produced.
Unions helped created a wealthy society by helping to create a middle class.
Early unions were trying to achieve results like in this following scenario. Let's say that the typical cost of surviving in a city is $1000/year. Assume the $1000 will provide for food and shelter but nothing else. Now imagine a company where the owner pays workers $1000/year so his employees are squeaking by. Assume owner pulls in $1,000,000/year. Without changing the prices for anything he could pay his workers $1200 per year and make $800,000/year for himself. The workers now have $200 a year to spend in local businesses. The amount of productivity is the same, the prices are the same, the distribution of wealth is all that changed. This is what early unions worked for.
The distribution of wealth in a society is an important factor for growth. If too much wealth is concentrated in too few hands then the economy will not grow. I think this is one of the reasons for our current economic downturn. Production capacity has steadily increased but the median wages have decreased (after adjusting for inflation). However the wages at the very top have increased extraordinarily fast. CEO's in the 1980's made about 20 times what their workers made. Today it's about 200+ times as much. Sucking the spending money out of the middle class has dried up demand and is destroying our economy.
Posts: 1121 | Registered: May 2004
| IP: Logged |
Everyone is still making the mistake of assuming the number of mining companies is fixed. This is not so, a dynamic economy changes over time in accordance with changing circumstances through the price system. If owning a coal mine is wildly profitable, either from unemployment driving down wages or coal shortages driving up prices, then capital markets will fund people to start new coal mining companies which will buy up a tract of land, hire thousands of new workers, and being producing coal. Everyone benefits from this: the new mine owners profit, coal prices are bid down by the new supply, and unemployment falls. As unemployment falls to structural minimums, workers greedily bid up wages until the incentive to create jobs is eliminated. This is how a stable system operates: a lack of jobs produces lower wages which produces jobs. A shortage of coal produces higher prices which produces more supplies of coal. Without profits, old companies go away and new ones are not started.
It is this process of creative destruction that makes sure new jobs are created as population growth and immigration produces more workers, and that coal furnaces are well fed when it gets cold. It is also this process that can become haywire through unionization. Suddenly profitability has much less to do with the supply of coal or the demand for employment, which means society will want for both coal and employment.
quote:Honestly I would rather an individual get welfare for doing nothing than for $1/hr workers to get public subsidies
I have the opposite opinion. Humans benefit emotionally from work. Welfare dependence breeds crime and hopelessness while work breeds dependability and other skill sets that usually lead to upward mobility. It helps to contrast real people on this issue. Immigrants to France tend to land on welfare in the suburbs, only to be followed onto welfare when their children grow up. Immigrants to America tend to work hard for low pay, but eventually learn english and cultural norms on the job and escape poverty.
quote:The distribution of wealth in a society is an important factor for growth. If too much wealth is concentrated in too few hands then the economy will not grow.
Facts not in evidence. China's economy has never been more unequal, it has also never grown as fast as it is.
quote:However the design was never taken past the form of a novelty or a toy because human labor was cheap.
Not exactly. The design was quite crude and little more than a toy. But even if you gave them designs for an 18th century steam engine, they could not have used it, because the requisite metal was absurdly expensive. Also, a steam engine requires vast quantities of cheap energy to perform work, energy that did not exist back then because there were no coal deposits in Alexandria, only imported lumber. Even if there were, the transportation system at the time was too primitive to move it.
Labor was just as cheap in pre-industrial England as it was in Alexandria (non-technical civilization was driven by the iron-law of wages). The difference was England had vast supplies of the needed materials in close proximity and rivers sufficient to move the goods. And the trigger was a revolution in mining technology which put all this to work, making iron cheap enough to build bridges. The whole of Rome's iron output in a year could not have built a single iron suspension bridge. England had the world's first iron bridge in 1773. The industrial revolution was sparked by cheap iron, and the machines this allowed, not expensive labor.