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Metatone Jumps the Shark II - The Economist on capital, labour and productivity

by Metatone Fri Feb 28th, 2014 at 07:08:19 AM EST

Here's how the author sums up their piece - which is well worth reading in full:

Labour markets: A theory of troubles | The Economist

Since this post is long and not exactly bursting with colour, I'll go ahead and share the gist of the story in hopes of enticing you to read on: because we rely on market wages to allocate purchasing power we have resisted technology-driven reductions in employment, and because we have resisted that decline in work we have trapped ourselves in a world of self-limiting productivity growth. Enticed? Good.

front-paged by afew

What I'd add about the piece is that in the details it strips out the pejorative anthromorphisation if the market "we rely on market wages" - "we resisted technology-driven reductions in employment."

In fact, as the detail explains, these are systematic effects created by the market system.

Of course all of this article ignores some of the political choices that got us here, but in ending on a call for large scale government interventions, the piece at least acknowledges that there's nothing self-correcting about the labour/capital/productivity market...

Why did I say "Metatone Jumps the Shark II" ?
Because I've been banging on about this for a while now...
by Metatone (metatone [a|t] gmail (dot) com) on Tue Feb 25th, 2014 at 12:59:39 PM EST
we have resisted technology-driven reductions in employment

Absolute nonsense.  Businesses have replaced their backroom workers with computers since the introduction of the 1401 in 1959.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Tue Feb 25th, 2014 at 01:43:34 PM EST
But we still cling to this absolutely specious notion that people must work forty hour weeks to be able to make rent.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 25th, 2014 at 05:50:33 PM EST
[ Parent ]
From the first dozen paragraphs of the article it seems he ignores the disparity of the role of monetary issues between the US dollar and the British pound. Both are fiat currencies, which is a giant advantage compared to the Euro, but The City is the chief center of eurodollar finance, not europound finance and the US$ is the de facto world reserve currency, not the pound. That, together with the massively different weights of the two economies supporting the two currencies, makes the British pound much more vulnerable to inflation in the presence of a trade deficit. That structural issue needs to be considered before drawing any conclusions about real wages in the two countries and I did not see that he had even made such an attempt.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 26th, 2014 at 11:17:29 AM EST
I read it as 'Of course wages are too high' - because he does keep saying wages are 'too sticky'

This happens to be nonsense given that they've fallen by at least 5% in real terms since 2008, and more like 10% for most earners.

Which is why we have working people claiming benefits so they can afford to eat, while also trying to get food from food banks and trash bins.

The whole was pretty much at the level of analysis I'd expect from the Econo.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Wed Feb 26th, 2014 at 11:33:37 AM EST
[ Parent ]
And an example of why I stopped subscribing.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Feb 26th, 2014 at 05:07:00 PM EST
[ Parent ]
he pops this phrase into it, buried in the blurb...

Labour markets: A theory of troubles | The Economist

What might a potential solution look like? Fiscal expansion could help, but the gain from fiscal policy is likely to be limited unless it is structured to try and reduce labour supply. That's right, reduce labour supply.

The most attractive options to accomplish this are probably those which seek to voluntarily reduce the number of hours of "full-time" work. John Maynard Keynes was right; a 15-hour work week should be sufficient to provide a worker with a "full-time" income. But this will require subsidies from the state; in the form of wage top-ups, perhaps, or a universal basic income.

(my bold)

wtf? the cog-diss is so freaking bizarre... if they know what to do, then why waffle (whoffle?) on ad nauseam trying to square the circle, when it's obvious that it can't be done, or it would have by now.

it will never be 1950 again...

how did this lone para of lucidity survive the censor?

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Fri Feb 28th, 2014 at 07:58:58 PM EST
[ Parent ]

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