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Guest Post: More Government, Less Wages
Submitted by John Aziz of Azizonomics
More Government, Less Wages
Yes; correlation does not prove causation. Yes; there are lots and lots and lots of other factors involved — the end of Bretton Woods, globalisation, deindustrialisation, the birth of the computer and the internet, financialisation, the United States’ growth into a global imperial power and more recently the beginnings of a decline.
But whatever the exact causality this does not make happy reading for those who lean toward the idea that more government involvement in the economy translates to a bigger share of the pie for the working class.
Quite the opposite — while wages have just hit an all-time low, corporate profits have just hit an all-time high:
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Here daddy,
Sorry mate, you dont know what the fuck you're talking about. Take it from a veteran private business owner who deals with the public sector on a fucking daily basis, your mob couldnt organise a piss up in a brewery. The red tape I have to jump through on a daily basis, and over the last ten years have nearly caused me to give in, close down, pay staff off for their fucking meddling and downright incompitance, drive us private sector wage payers into distraction.
And then I read comments like yours. Horseshit boyo.
Come and join the real world for a week. You couldnt last a day.
ABSOLUTELY have NOTHING to do with one another. In many areas government work was and has been one of the only reliable safe working opportunities there are.
This graph might as well be. The popularity of bowling as seen with wage stagnation. See as bowling loses popularity, my god wages go down, hence its our hatred of bowling causing us pain.
This article is a TOTAL Waste of time and space and is 100% BULLSHIT
Ahh but it's good Republican bullshit. "Small Guvvemint" bulshit.
Just try to keep your blinkers aligned so you don't notice that the large monopolies and the large "defense" industry are the biggest welfare queens out there.
So you agree that big government leads to negative consequences?
you aint the sharpest tool in the shed, are you?
You're the only tool I see around here.
IFF Halliburton and GE and JPM count as "government", yes.
JPM and Halliburton certainly count more to government than does any individual. What does that tell you about the nature of government and the insanity of asking an elite class to look out for the little guy even though the government has been created by and is run for the benefit of the elites themselves?
This article is an intresting commentary on the global debt crisis, I believe he got his fundamentals all wrong... Can anyone refute the "too much savings" comment? Seems crazy to me.
http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/947101...
"As soon as the debtors hit the brakes and slashed spending, the underlying reality was exposed. There is too much saving and too little consumption in the world to keep growth, and people in jobs. It is the 1930s disease. On this the Keynesians are right."
If you are a Keynesian ( and the author clearly is), any savings is too much savings. Remember, to a Keynesian economic growth = inflation, inflation = economic growth. What is inflation? It is too many dollars chasing too few goods and services. You can't have that chase if people and institutions are saving money; therefore, spending is good, savings are bad.
Bah! All this anti-government-employee talk and no mention of the security forces for the 'elite'?
When it becomes unsafe for the global elite it will be unsafe for everyone (government included), but at least they had the foresight to use OUR money to buy themselves riot police. More criticism needs to be aimed where it's due, or should we wait until the skies are filled with drones and free-speech zones no longer allowed?
I for one am glad firearms sales are up. In a WORST CASE SCENARIO, I don't see neighbors fighting neighbors and community collapse (especially if we build those ties now when it's most important), but, if a dehumanized force of stormtroopers comes around, the real 'enemy' should be clear (as they try to corner the market on ammunition).
And if it's just your 'job' to don a plexiglass shield and beat on unarmed non-violent protestors, there will come a day when the best decision will be to stay home, or walk across that line..
http://www.youtube.com/watch?v=66PZv7Vtw3I&feature=plcp HopeAndChange VS economic freedom
Tyler-
This is really a fabulous read. Maybe worth posting.
http://www.prudentbear.com/index.php/creditbubblebulletinview?art_id=10697
An excerpt:
There was a school of thought coming out of the bursting of the technology Bubble that a jump in mortgage Credit growth was necessary to help ward off dangerous deflationary forces. And, predictably, once the mortgage finance Bubble gained momentum no one was willing to take away the punchbowl. Today, our policymakers are using government finance to inflate system Credit and price levels, and are again willing to tolerate excesses that will only become more unwieldy over the life of this latest Bubble. Somehow, the Fed’s biggest concern is the timing of its next spike to the punchbowl.
From Bloomberg: (Sarika Gangar, August 16): “Sales of junk bonds in the U.S. have already set a record for August… Charter Communications Inc., the cable-TV provider that emerged from bankruptcy in 2009, and Energy Future Holdings Corp., the Texas power producer struggling with $36.6 billion of long-term debt, are among companies that have sold $29.6 billion of speculative-grade securities this month. That compares with an average $8.4 billion in August sales for the past five years… Companies are tapping into an unprecedented $44.9 billion of cash that has poured into funds that buy junk bonds in 2012 as the fourth year of near-zero short-term interest rates prompts investors to put their money into higher-yielding assets. Issuance accelerated even as the pace of earnings at speculative-grade companies slowed in the second quarter… ‘It has become such a feeding frenzy,’ Bonnie Baha, who helps oversee $40 billion as head of global developed credit at DoubleLine Capital… said… ‘It’s almost like credit fundamentals don’t even matter in markets like this. You’ve got too many dollars chasing too few bonds.”
Today from the Financial Times, “The Danger of Getting Hooked on Junk Bonds” and “Debt Dealers Await Move From Greed to Fear.” This week from Bloomberg: “Morgan Stanley Leading Long-Bond Sales to Record.” From the Wall Street Journal: “As Corporate-Bond Yields Sink, Risks for Investors Rise.” And from the New York Times: “Muni Bonds Not as Safe as Thought,” and “Risk Builds as Junk Bonds Boom.” Current excesses certainly go well beyond junk. With record issuance and market prices that make little sense, Bubble excess is increasingly conspicuous throughout the entire fixed income complex. To be sure, the Fed-induced yield chase has created historic price distortions from Treasury bonds to corporates to municipal debt.
Duhh! The Government needs to take resources somewhere!! It takes from Taxes and from repressed interest rates on Government bonds which is senioriage and the Fed is there to make sure that those are stuffed into the system. Now China has been paying taxes to the US since they own those bonds and purchased those bonds. Though those days things are changing. You can now buy some Yuan denominated bonds in Brasil quite easily. So that eventually the Brasil- China is slowly de-dollarized.
Nice chart. But WTF is "WASCUR" and "GEXPND"?
CONTEXT, dude. Unless the intent is to be deliberately obscurantist.
"Wascur" -- Wages in current dollars
"Gexpend" -- government expendatures
And I didn't know that ahead of time, I figured it out from context.
READING COMPREHENSION, dude.
I used Google.
Guessing "Wages And Salaries, CURRent" and "Gubmint EXPeNDitures".
Close, but not quite on the first. Compensation of Employees: Wages and Salary Accrual, I have no idea how that got WASCUR from that but it is what it is. In any case, FRED is a wonderful source and if you don't understand why something is what it is they actually answer emails, very nice folks.
GOO-GLE
less wages, more goverment
that's how it works
if you want less government you should increase wages
That... and Anarchy, bitchez.
Seriously though... doubling or tripling the minimum wage would give them the inflation they want and kick start the economy, but that's not what they want to do. They want to ruin the economy and starve a bunch of people to death. So I would say they have been somewhat successful in their goals, but never as successful as they think they're going to be. The elite are getting lazy and stupid just like everyone else, I guess. It's hard to kill a bunch of people without them noticing it, but that is basically what they are trying to do.
What's minimum wage right now? $7.50? so you want "them" to raise the minimum wage to $22.50 an hour? So the guy mindlessly sweeping the floor gets $22.50 an hour? How exactly does that help the economy, and what are the ancillary effects and unintended consequences. Enlighten us.
Idiot.
It works like that where?
Looking at the US, as wages increased government has increased right along with it. More wages equals more government because now it has more money and will find a way to use it and then some, less wages also equals more government as now everyone "needs" it.
Yeah but you get security. Those pyramid jobs went on for thousand years. Soviet collectives always had secure turnip, cabbage harvesting, by hand in the mud and rain jobs, union too with people's health clinic benefits every third of the
month!
and you had heros--don't forget the Worker Hero of the Soviet Union ribbons.
That's why I like to work in small shops so that I can win worker of the month, two or three times a year. I see that crooked, dusty poloroid and my chest just swells with pride( unlike those crass capitalist pig swine labor traitor materialists. )
Max Keiser predicts CIVIL WAR before April 2013 – 2008 was a pre-cursor to how bad it’ll get, 2013 will be CATASTROPHIC for everyone
He says it will be a Civil War of young against old. The kids will get pissed off that previous generations stole all the wealth and left them with poisoned land, water & air. Anyone over 30 will be slaughtered. Even those of us who don't act our age. ;)
Why this 40+ works out,maintain proficiancy in firearms.
Life clocks are a lie! Carousel is a lie! There is no renewal!
http://www.youtube.com/watch?v=XsoqKkI9yds
45 and I'm ready. Bring 'em on.
Fat little brats.
What's up with that chick he does the show with? Why doesn't she ever look directly in to the camera?
She loves Maxx--just has eyes for him.
The connection between bigger governments and bigger debt is rather clear......
As is the negative correlation between bigger government and freedom.
Working men on their own are weak, and only become powerful and independent, self-reliant producers when banded together for self-defense.
“Working men, keeping faith with the sacred tradition of Jefferson and Jackson…being independent producers, exploiting no one’s labor but their own, were engaged in mortal combat with the banks and monopolies and middlemen, who, unproductive themselves, grew fat and powerful on the labor of others.” --Albert Fried, Except To Walk Free.
And now, with the deliberate crushing of private sector labor unions in America by infiltrating them with Marxists, corrupted leaders and low-wage Third World labor and, then, opening America’s door to outsourcing and off-shoring and open borders, the unionized workers’ hard fought gains accompanied by a high standard of living for middle class Americans are being stripped from the mainstream.
Therefore, “salute (not) the Herbert Hainers who thrive on the exploitation of the world’s poorest” along with the skilled craftsmen and professionals to make their billions. Even now, his kind are in partnership with corrupt government leaders, driving the nails of ruthless greed and exploitation deeper into the heart of their Third World labor work forces.
In July, says Karl Denninger of The Market Ticker, “comments by adidas global CEO Herbert Hainer alerted the world to the cost-based shockwaves running through China’s manufacturing heartlands.
“’China produces about 50 percent of our shoes. This will change in the future as salaries in China become too high,’ Hainer said in an interview with German magazine Wirtschaftswoche. ‘We have entered an agreement with one supplier in India so far. We will jointly open production facilities there. Other countries such as Laos, Cambodia and Vietnam are also on our list.’ Hainer added that some of Adidas’ production in China may also shift back to Eastern Europe and Russia.’
“There is no intent to build a middle class, to lift people generally, to employ people who then buy your products and services with their salaries.
“No, this is a swarm of locusts. The only intent is to strip-mine the labor and poison the land, air and water. As soon as the people who you have been abusing get tired of it and start pushing back, you simply leave.”
Today, as in 1860, the individual craftsman, artisan and professional face a money monopoly setting the rate for his labor. Labor costs too high: move the plant to Mexico. Engineers getting too expensive for Apple and Microsoft: get thousands from China to drive the rate down. Getting too high in China, teach them a lesson in starvation and move on to India.
American workers—the producers-- must win back their political power from the amassed power of the Fed which is working in close alliance with government to favor only the money elite and the favored insiders (bankers, multinationals, and unionized public employees…), shielding non-producing capital and imposing the burden of government on the wealth-producing individual.
The American miracle is by definition : individual achievement in a free society. This form of government was not a money-powered oligarchy. Every man’s opportunity was to be protected by the entire society, guaranteed by statute. Inventing a successful instrument or process was a road to wealth; frugality was an avenue to security; moral business practices expanded one’s connections and financial success.
But that’s over now. The U.S. Congress is no longer an arena of representative government for individual citizens. Powerful forces have their way with politicians and corporations, and, yes, over unorganized citizens.
Ultimately, if successful, this alliance will reduce workingmen everywhere to a state of practical servitude.
America’s choice is slavery or freedom. It is time to resist; we become powerful when we renounce the lies and complicity that enable the Status Quo's doomed dominance,” says Charles Hugh Smith Of Two Minds. Here is the basic credo of liberation in Smith’s new book, Resistance, Revolution, Liberation – A Model for Positive Change:
“I no longer care if the power centers of our society—the distant, fortified castles of our financial feudal system—are changed by my actions, for I am liberated by the act of resistance. I am no longer complicit in perpetuating fraudulent feudalism and the pathology of concentrated power. I no longer covet signifiers of membership in the Upper Caste that serves the plutocracy. I am liberated from self-destructive consumerist-State financialization and the delusion that debt servitude and obedience to sociopathological Elites serve my self-interests.”
http://www.oftwominds.com/RRL-home.html
http://www.youtube.com/watch?v=GXcLVDhS8fM&feature=plcp
The debt will have to be paid.
And lousy unemployment too! US NON employment rate stuck at 41.6%, Carter recession levels.
http://confoundedinterest.wordpress.com/2012/08/18/unemployment-the-trac...
And here we arrive at the crux of it, and the only substantive point that Marx made... overproduction... which used to be considered one of the principle causes of the Great Depression until economists rewrote the history of the Great Depression as purely a matter of monetary supply (or lack thereof). The principle of overproduction is very simple... a worker produces X number of goods... the worker is paid less than the total value of all goods produced (where else would profit come from)... the worker cannot afford to buy all the goods that he produces... the result is overproduction. The lower wages are.. the more overproduction becomes a problem. This problem of declining wages and overproduction has been masked over by money-printing, credit-extension, currency manipulation (ala the Chinese-American trade deficit), and so on. However, the ability of our financial system to mask this problem is limited and is now being exposed. As long as the world continues to allow deliberate wage-suppression from multinational corporations, the worse the problem will become. This is a new global Great Depression. There is no "monetary solution." Wages must rise globablly for those whose labor produces real goods and services... certainly not the wages of non-productive state bureaucrats and their ilk.
Pandora's box of overproduction in outsourced mode that kills the first world home of democracy, without ensuring a sustainable model for human progress in developing world; as its down on its knees to suck the ***** of these feudal oil oligarchs and their surrogate political shills who sing "sorry, we're doing our best to make this God's world."
Correct; the labour content of production has to rise in a paradigm that recognises finite world and current ecological dementia.
A large percentage of production goes into things which ordinary workers don't buy like yachts, commercial airliners, highways and factories. The profit from sales of goods which is not paid out directly to the workers is recycled into the economy through capital and infrastructure improvements as well as through the personal spending of wealthy individuals. Because of this workers can provide goods and services to a larger market which consists of more customers than the individual workers themselves.
Lol you can't be seriously following Marx about overproduction, when the man invented the looney notion that scarcity is a conspiratorial capitalist doing. Money printing does not mask declining wages. It makes wages worse for the common worker. Wages change according to economizing views on economic variants. Just like prices of goods change. Prices are priced accordingly with goods, and services against each other. Lower prices means more consumption, because wages don't have to rise, but because prices are lower. If the price of food, the automobile, telecommunications, housing, etc, etc went down, on a overall trend, that is in effect like a wage increase. That's the goal of every economy is to make things cheaply, but also with quality in consideration. Do we have a oversupply of computers? From the 1980's, and onwards, computers saw a dramatic plunge in prices, at the same time, in dramatic increase in supply. That's the goal of every economy. Money printing does not change the equation. China simply has better labor, and investment environment than the US.
You can't have small government and have a standing military.
there is government involvement and government involvement; if its to help the Oligarchy class via crony capitalism, it begets a different result than if its "tax the rich and protect the poor".
Today, under Obammy, notwithstanding the ire of the libertarians, this government is STILL 90% behind the Oligarchs and 10% for social entitlements.
The facts : ZIRP to infinity, QE and op.twist, Tarp and Jon Corzine pardon, Liebor rip-off but look the other way; prove all that and it shows in these obscene corporate profits. WS is on a temporary high and if the future looks dismal its 'cos inpite of all the help to the "happy few", the debt pile and fiat money pile can't put humpty dumpty of capitalist hegemony together again.
So the happy few have created such an infernal machine to destroy their OWN teat of capitalism which feeds them, have opened so wide Pandora's box in their greed, that no amount of government aid; like calling the Gods to their side; will help them out of the Augean stables of their own construction.
Mythology does teach us good lessons now and then. Real history as it unfolds and blonde Jesus notwithstanding.
"blonde Jesus notwithstanding." Who said He was blond? You did. You statists just can't let go of your religion can you or your hypocrisy as you snipe at believers.
ha, ha , ha, good one!
Mix it all up, blame it on mame!
I dind't say he was blond; but someone else did, and it is amusing as you find it so rankling that this issue puts to the test your fundamental beliefs. Blond or not blond he stays Jesus; if you be true believer!
LOL!
Does his blondness make him less "hooked nose"?
As for being "statist", I am anti Oligarchy monopoly; doesn't make me "statist", makes me a protagonist of strong, efficient, balanced government, that exercises rule of law fairly, and separation of powers, with participation of civil society in decisions that concern fundamental laws. Good, strong representative republic that calls to "we the people" on fundamental issues and keeps the regulatory process effective and transparent.
That's the legacy of 3000 years of our history. It ain't THAT difficult, if we really wanted it to work, as citiziens with clear cut priorities and no penchant for dogmatic prejudice. As long as we don't allow undue concentration of power. From wherever it comes: state or oligarchy.
"and keeps the regulatory process effective and transparent." , "That's the legacy of 3000 years of our history". Now that's amusing.
I like the part where an undue concentration of power guards against an undue concentration of power.
;-)
listen, you are either in the real world or you are a sophist. Democracy is the best of systems....etc. etc. So much for differentiating beween legitimate "undue concentration of power", aka elected by the people, and "undue concentration of power" that is "mafia" or oligarchy controlled. Nuance, albeit imperfect I grant you.
If your penchant to criticise the human condition and its contradictions is greater than your ability to find concrete solutions, you are a sophist. We will never be immortals. And our politics and power structures stay imperfect; like us warts n all. The question is the degree of imperfection in face of the degree of accumulation of collective checks and balances and knowledge. Nobody said life would be a joy ride from cradle to grave!
The sole organizing principle of government is force. My real world experiences have shown me that more can be accomplished through cooperative effort than through the use of force. That's reality.
Julia does...
Gubmint fix everythang.
ROFLMAO!! ... you branded yourself a sophist with this howler:
Dream on, statist! LOLOLOL!
Then you move into a projection by accusing others of "penchant to criticise the human condition" while claiming to have learned from 3,000 years of history that government (a monopoly of force and cronyism) is inherently efficient and fair!
LOL! ... Stop it! ... You're cracking me up! .....
enjoy your laugh as the current reality is such that it warrants us to laugh at it.
Junk the government instead of fortifying it and you go from Charybdis to Scylla.
Your anarcho-libertarian creed died in History when Caesar said "I won't let you turn the other cheek, I'll exploit that meme to my advantage." And christianity became the instrument of despotism. That's REAL HISTORY.
Laff on delusional clown. Clowns do have their uses in society I'll grant you that !
Lol, democracy is not the best system. Democracy does not curtail government at all. The only difference is, democratic government make the voter accomplices on legal plunder. Read Bastiat. Lay off of Marx, and socialist theories and literature.
Jon I find I give you either 1s or 5s this is a 1. You are right there is no correlation.
How about a totally, fucking bought and paid for government leads to lower wages?
150 people applying for 1 minimum wage job is a big help too.
That's why they call it a job MARKET. Scarce labor creates higher wages. This is not a present market condition overall.
Low bidder wins.
So you're just waiting for a pure minded, altruistic government which will ignore the desires of its rich and powerful members in favor of the little guy? They ought to have that perfected any day now.
...2012, see the 666 Black Hole Horse Beast, being riden by the Whore of Babylon yet? Ah haa haa haa haaa. http://www.youtube.com/watch?v=HbCsvb3LnsE
http://www.disasternews.net/news/article.php?articleid=4989
http://earthquake-report.com/2012/08/17/major-earthquakes-list-august-18-2012/
http://quakes.globalincidentmap.com/
http://hisz.rsoe.hu/alertmap/index2.php
http://worldnews.nbcnews.com/_news/2012/08/18/13349393-tropical-storm-helene-slams-mexico-hurricane-gordon-heads-for-azores?lite
The correlation is real but the cause is the closing of the gold window in 1971. You'll notice the chart is range bound till around mid 1970s.
With gold as your currency and as the reserve currency, running a trade deficit causes gold to leave the country. It limits your ability to run a deficit. The value of gold increases with respect to other commodities. So it encourages local investment and local businesses to produce equivalent products. This means local, not chinese labour.
Fiat currencies have no such effect, they just keep printing and continue running a trade deficit. It's only under a fiat system that the America/China situation can occur.
In exactly the same way, with a gold backed currency, it isn't possible for a government to run a continuous deficit. Eventually they run out of gold. It's only since the closing of the gold window that government has been able to run a huge deficit, and hence increase it's proportion of GDP.
Basically. Gold is the great balancer.
maybe I see this differently than most but: if corporate profits are at an all time high from layoffs and cost cutting. Then what happens if demand slacks? More layoffs and cost cutting?. How can we avoid the deflationary spiral? inflation will only boost profits but at the same time create less demand. Am I missing something here?
You seem to be missing the 70s, as most Keynesians do.
.... how did my statement relate to keynesianism, fuktard?
another question: is a fuktard and computer connected to the internet considered socialism?
Corporatism, a vile thing.
It is not capitalism. It is not socialism. It is biggest banks and biggest companies allied to big government, and any big religion that will deliver votes - without the constraining influence of the checks and balances intended by the Constitution and Declaration of Independence.
See Jon Corzine for the latest example of its wicked ways.
what is fascism?
"correlation does not prove causation"
And then you go on to assume it does.
Maybe you can map the cost of apples to job creation, I'm pretty sure the cost of apples are why we have high unemployment and low wages as well.
Then you go on to make no case why government involvement would deter employment.
Figures don't lie, but liars do figure.
A big fat 1 star. Try harder.
"Yes; there are lots and lots and lots of other factors involved — the end of Bretton Woods, globalisation, deindustrialisation, the birth of the computer and the internet, financialisation, the United States’ growth into a global imperial power and more recently the beginnings of a decline."
Global financialisation or the...
F.I.R.E. economy
I think plays a bigger part than many realize.