14-02-2003 06:10									#31
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Unions want more wages because their 'standard of living is going down' and then their increased wages means more inflation and then they are back to square one.

	14-02-2003 06:28									#32
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quote: if you believe everything he says just because you don't understand it you're naive

No, I believe what he says because we've both been on these forums for a couple years and I've found him reliably sane and accurate. Not being left-wing doesn't mean that you're wrong, just that you have misplaced priorities

	14-02-2003 06:49									#33
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quote: Originally posted by Boshko No, I believe what he says because we've both been on these forums for a couple years and I've found him reliably sane and accurate. Not being left-wing doesn't mean that you're wrong, just that you have misplaced priorities

That's fine Boshko, but when somebody claims that such and such is a fact because of such and such economic study it's my duty to speak up about it.

	14-02-2003 07:11									#34
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When in doubt, go back to the basic demand and supply diagrams.

	14-02-2003 08:18									#35
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quote: Originally posted by Lawrence of Arabia Unions want more wages because their 'standard of living is going down' and then their increased wages means more inflation and then they are back to square one.

Hmmm...let's extend that reasoning: Businesses should not seek to increase profits because increased profits lead to inflation, and so we're back to square one.

	14-02-2003 08:21									#36
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Zkribbler - not necessairly. More profits can result from either more products being sold or a price increase. If the company increase quantity, then the price will drop (a shift of the supply curve to the right)

	14-02-2003 08:23									#37
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Don't forget breaking unions

	14-02-2003 11:16									#38
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quote: Originally posted by Lawrence of Arabia Zkribbler - not necessairly. More profits can result from either more products being sold or a price increase. If the company increase quantity, then the price will drop (a shift of the supply curve to the right)

You are not refuting him. He was speaking of the results of gaining more profits, you are speaking how to make more profits. Doesn't fit.

	14-02-2003 21:15									#39
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UR - yes it does, because inflation is measured by the prices of a basket of goods. ZKribbler was saying that when corporations make more profits, inflation increases. THis is not true. They can make more profits, and still have prices which go down. This shift in the supply curve can be due to an increase in productivity. THis is why during the 90s, inflation did not increase as dramatically as it should have because companies were increasing their productivity at a very fast rate.

	14-02-2003 21:20									#40
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quote: Originally posted by Lawrence of Arabia UR - yes it does, because inflation is measured by the prices of a basket of goods. ZKribbler was saying that when corporations make more profits, inflation increases. THis is not true. They can make more profits, and still have prices which go down. This shift in the supply curve can be due to an increase in productivity. THis is why during the 90s, inflation did not increase as dramatically as it should have because companies were increasing their productivity at a very fast rate.

There are atleast two ways that at firm may raise its price while it's costs may remain the same.

1)increased demand

2)more market power

	14-02-2003 21:36									#41
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Actually, I was just extending LoA's argument to the other side of the business/employee dicodomy to try and point out the LoA's argument was faulty.

An increase in the standard of living of a company's employees does not necessarily lead to inflation. For example, look at what happened to the standard of living of the U.S. working class (those non-college-educated persons employed in skilled blue collar jobs or in lower-level white collar jobs).

For twenty years, starting in 1972, their standard of liviing remained stagnant, even during periods of inflation. Starting in the early 90's, their standard of living began to increase, but there was no inflation.

	14-02-2003 21:46									#42
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Ah, well in this case one or both of the following two things would have to happen.

1) firms profit would decrease

2) increase in productivity (this would probably happen if there is tech to so it.)

	14-02-2003 21:49									#43
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Zkribbler,

Unfortunately union memebership declined during that whole period.

	14-02-2003 21:53									#44
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Zkribbler - what is your definition of standard of living. Is it more GDP per capita, higher wages, mroe benefits (insurance, healthcare etc)

I am not saying that 'dont increase wages because then inflation will increase' What Im saying is that Unions who demand more wages are not fixing their predicament - in a couple of years, their wages will again lose real value. The act of demanding higher wages means that these companies will either leave the country and there will be an unward pressure on inflation.

When these companies leave america for other countries, the union are the first ones to complain. However, it was them in part who made the companies costs too high. So the Union faces a choice, between higher wages now, and unemployment later, or lower wages now but employment for a while

I find nothing wrong with unions demanding more wages, or with companies leaving. Unions quicken the specialization of economics and also increase the comparative advantage which developing countries have in labor. When these companies leave, we can get our products cheaper.

	14-02-2003 22:17									#45
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quote: Originally posted by Lawrence of Arabia When these companies leave america for other countries, the union are the first ones to complain. However, it was them in part who made the companies costs too high. So the Union faces a choice, between higher wages now, and unemployment later, or lower wages now but employment for a while I find nothing wrong with unions demanding more wages, or with companies leaving. Unions quicken the specialization of economics and also increase the comparative advantage which developing countries have in labor. When these companies leave, we can get our products cheaper.

Workers can not be at fault for demanding a higher wage when their wage is too low. How do you expect them to get what's fair if they don't. We should look at the companies closing the factories down when workers do so. That's where the problem is. Now you saw that other countries have a comparative advantage in labor. I say you can't have a comparative advantage in labor. This is a bastardization of the concept. There can be no comparative advantage in labor. Labor is the same everywhere. If anything the labor in the United States is better. It's simply a matter of the firm being able to exploit the foreign workers more. And that is a bastardization of the term.

	14-02-2003 22:31									#46
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hehe. no. There is a comparative advantage in labor in third world countries because it they demand less wages. Simple as that. They are less skilled, and unemployment is much higher. Just like any good which is in large supply but low demand, the price will be less. How is labor in the US 'better?' And what is 'fair?' Is that an opinion? I think so.

	14-02-2003 22:37									#47
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quote: Originally posted by Lawrence of Arabia hehe. no. There is a comparative advantage in labor in third world countries because it they demand less wages. Simple as that. They are less skilled, and unemployment is much higher. Just like any good which is in large supply but low demand, the price will be less. How is labor in the US 'better?' And what is 'fair?' Is that an opinion? I think so.

Ricardo also said that it would be more efficient not just cheaper. That is that there would be a greater division of labor. Cheaper does not amount to a greater division of labor if the only thing that makes it cheaper is greater exploitation of labor.

	14-02-2003 22:41									#48
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Not necessairly. remeber that firms are trying to maximize profits, not efficiency. In most third world countries, there is are very few machines. This is because machines were invented to be the work of many humans. Machines in third world countries will lead to more unemployment, and increased costs. Firms replace union workers in the US who monitor hi tech equipment with non union workers who do the work all by themelves without any capital. Also, how do you define exploitation? It is definitly not with wages, because when multinationals go to third world countries, their wages are a lot higher then the average.

	14-02-2003 22:47									#49
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I'm not talking about profits. That has nothing to do with the division of labor.

Yes, paying lower wages and breaking up unions is exploitation.

	14-02-2003 22:54									#50
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I don't know a whole lot about labor union economics, nor have I ever worked in a union, but I have seen their effects and several things about them concern me:

a) the ability for the employees to control market prices... this should be base on demand and not what they are willing to make the product for.

b) the ability of the employee to control production based on personal agendas... I know this will happen all the time, but what I am worried about is that because of belonging to a union they are not encouraged to flex their power on the work floor, book over time, or attempt to better their performance.

c) Incredulous Labor Unions can control the destiny of too many people... So could an incredulous company, but at least you aren't paying the Co. to protect your rights as an employee.

I am sure that the standard of living for union members is much better than those in the same job that are not in a union, yet the union automatically sets the roof of their potential when they join.

I see a union as the choke chain and leash when training my dog... If she does as I say she gets a treat, and as long as she continues to do as I say she will continue to be happy and well feed. But, if she wants to go off running, or roll over, or tries to take a treat from my hand... whamoo!!! she can't.

	14-02-2003 22:59									#51
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LoA,

Adam Smith was really the first one to discuss the concept. In the wealth of nations. The wealth of nations increases as greater division of labor is experienced. One nation can produce more of one thing another nation can produce more of another thing. The nations trade and there is more consumption over all. He doesn't talk about the cost of labor in these countries at all, and he isn't saying that one countrie should send its corporations to the other country and take advantage of its cheap labor. He is only saying that one resourse (not labor) is in greater supply in one country and another resource (not labor) is in greater supply in the other country. The two countries trade the two goods to increase overall consumption in both countries.

The inclusion of trading labor itself totally bastardizes his idea. Because when corporations start exploiting labor around the world then they neglect to factor in where the goods would be produced if labor costs were the same everywhere. Where the goods would be produced if labor costs were equal everywhere is where the division of labor is greatest and where overall consumption is greatest.