Illusions of recovery
Posted by aogFriday, 19 March 2010 at 14:54 TrackBack Ping URL

Our Bret wrote an excellent post on the costs to the putative beneficiaries of minimum wage laws. Of course, it’s clear that the actual beneficiaries are labor unions, but that’s not something supporters of such laws like to have discussed.

But a rather different if related thought occurred to me, which is that the claims about increasing productivity during Obama’s War on Prosperity, are likely to prove disappointing mirages. That is because during economic downturns like this, it is the least productive who are the first to lose jobs. This of itself will cause a noticeable increase in average worker productivity. It’s one reason that European economies look more productive relative to the USA than they really are, because restrictive labor laws cause low productivity workers to be unemployed and therefore not counted in the statistics.

Comments — Formatting by Textile
erp Friday, 19 March 2010 at 16:49

In France at least it is virtually impossible to fire an employee for any reason whatsoever.

Bret Saturday, 20 March 2010 at 00:56

There is another aspect of rising productivity that’s not all positive. Because it’s now more expensive to hire/keep employees (due to minimum wage and other regulations), employers invest more in productivity enhancing capital equipment instead of hiring. Thus the existing employees really do get more productive. The downside is that the unemployed will remain unemployed longer because they’ve been replaced with that capital equipment leading to an even more jobless “recovery”.

P.S. Thanks for the compliment.

Hey Skipper Saturday, 20 March 2010 at 23:26
Of course, it’s clear that the actual beneficiaries are labor unions, but that’s not something supporters of such laws like to have discussed.

Often, things are more easily explained by incompetence instead of malevolence.

To be a liberal requires being an economic illiterate; no surprise those who favor minimum wage laws have allowed their feelings to get ahead of analysis.

Bret Sunday, 21 March 2010 at 13:05

Hey Skipper wrote: “Often, things are more easily explained by incompetence instead of malevolence.

Maybe. But let’s look at it from your “hive-mind” perspective. A hive-mind that is successful like the democratic party is not incompetent by definition (i.e. it survives and thrives). Can a hive-mind be malevolent? Good question. I think yes, in that their survival is based on damaging, perhaps badly, other entities.

I think this is a case of a effectively malevolent hive-mind purposely screwing the young, low-skilled, poor for its own benefit.

AVeryRoughRoadAhead Tuesday, 23 March 2010 at 11:21

Frank Capra depicted bankers as prejudiced predators, angling to direct America toward a rapacious existence under their sphere of influence. In my opinion, he was too generous, as the Wall Street bankers of today personify pure evil. Only soulless parasites could create subprime, no doc, and Option ARM mortgages, sell them as packages to pension funds, bet [that the MBSs they themselves put together] would collapse1, beg for a taxpayer rescue, use the money to gamble in the stock market, and pay themselves billions in bonuses. That defines American capitalism today.

- James Quinn

1 In other words, the financial industry assembled and arranged very complex financial instruments, sold them to the institutions that had the greatest need for financial stability by claiming that they were “as safe as Treasuries”, then only three years later began betting against their own customers, arranging to profit if their own “good as gold” products blew up - which they did. Cynical doesn’t even begin to describe it.

erp Tuesday, 23 March 2010 at 11:54

Rough, of course, Capra was full of it and you’re entitled to your opinion even if it’s wrong, but the fact is Wall Street has been in bed with the socialists for a very long time.

Annoying Old Guy Tuesday, 23 March 2010 at 12:23

Beyond erp’s comment, one might note that the government solution to that problem was to bail out the bankers and stiff the taxpayers. Once again, government takes a bad situation and makes it worse, and then people wonder why I don’t favor government intervention even in bad situations.

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