Saturday, March 15, 2014

Saturday Morning Links

Assorted content for your weekend reading.

- Paul Krugman points out how the U.S.' corporate elites are agitating to make sure that any economic recovery helps only those at the top, rather than reaching most workers in the form of wage increases:
Suddenly, it seems as if all the serious people are telling each other that despite high unemployment there’s hardly any “slack” in labor markets — as evidenced by a supposed surge in wages — and that the Federal Reserve needs to start raising interest rates very soon to head off the danger of inflation.

To be fair, those making the case for monetary tightening are more thoughtful and less overtly political than the archons of austerity who drove the last wrong turn in policy. But the advice they’re giving could be just as destructive.
(A)lthough the current monetary debate isn’t as openly political as the previous fiscal debate, it’s hard to escape the suspicion that class interests are playing a role. A fair number of commentators seem oddly upset by the notion of workers getting raises, especially while returns to bondholders remain low. It’s almost as if they identify with the investor class, and feel uncomfortable with anything that brings us close to full employment, and thereby gives workers more bargaining power.
Is wage growth actually taking off? That’s far from clear. But if it is, we should see rising wages as a development to cheer and promote, not a threat to be squashed with tight money.
- And Robert Reich writes that neither soaring executive compensation nor the suppression of most workers' wages has anything to do with productivity or merit:
Fifty years ago, when General Motors was the largest employer in America, the typical GM worker got paid $35 an hour in today’s dollars. Today, America’s largest employer is Walmart, and the typical Walmart workers earns $8.80 an hour.

Does this mean the typical GM employee a half-century ago was worth four times what today’s typical Walmart employee is worth? Not at all. Yes, that GM worker helped produce cars rather than retail sales. But he wasn’t much better educated or even that much more productive. He often hadn’t graduated from high school. And he worked on a slow-moving assembly line. Today’s Walmart worker is surrounded by digital gadgets — mobile inventory controls, instant checkout devices, retail search engines — making him or her quite productive.

The real difference is the GM worker a half-century ago had a strong union behind him that summoned the collective bargaining power of all autoworkers to get a substantial share of company revenues for its members. And because more than a third of workers across America belonged to a labor union, the bargains those unions struck with employers raised the wages and benefits of non-unionized workers as well. Non-union firms knew they’d be unionized if they didn’t come close to matching the union contracts.

Today’s Walmart workers don’t have a union to negotiate a better deal. They’re on their own. And because fewer than 7 percent of today’s private-sector workers are unionized, non-union employers across America don’t have to match union contracts. This puts unionized firms at a competitive disadvantage. The result has been a race to the bottom.

By the same token, today’s CEOs don’t rake in 300 times the pay of average workers because they’re “worth” it. They get these humongous pay packages because they appoint the compensation committees on their boards that decide executive pay. Or their boards don’t want to be seen by investors as having hired a “second-string” CEO who’s paid less than the CEOs of their major competitors. Either way, the result has been a race to the top.
The “paid-what-[you're]-worth” argument is fundamentally misleading because it ignores power, overlooks institutions, and disregards politics. As such, it lures the unsuspecting into thinking nothing whatever should be done to change what people are paid, because nothing can be done. 
Don’t buy it.
- The Star-Phoenix notes that the Sask Party's ideology is preventing it from even considering a poverty strategy or other steps which might give Saskatchewan's poor a fair chance (even when they could also reflect a sound investment from a money standpoint alone). Murray Mandryk writes that the Wall government is similarly evidence-averse when it comes to evaluating the tens of millions of dollars being poured into "lean" consulting. And Craig Jones observes that the Cons' dumb-on-crime agenda is likewise based purely on political calculation rather than any public policy purpose.

- But Thomas Walkom laments the unwillingness of our major political parties to make the case to fund social goods. And based in large part on similar concerns, Matthew Taylor theorizes that much of the work to be done in developing policy which actually considers the public interest will have to take place outside of the partisan sphere.

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