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Forum Post: Capitalism for the Workers and a New Global Economy

Posted 11 years ago on Aug. 19, 2012, 12:25 a.m. EST by Misaki (893)
This content is user submitted and not an official statement

Let's get this straight: smart people are to blame for high unemployment because they have too much confidence in the current economic system.

The weak labour markets over the past few decades have led to a decreased share of national income going to wages. If, say, the top 20% of income worked half as much, this would instantly eliminate our unemployment problems and give employees enough bargaining power to raise wages for the 150 million workers in the United States by 10%. One person doing this might not have much of an effect, but this is because they would be influencing prices for the entire nation.

If it takes 12 million new job openings to go from 8.3% unemployment to nothing, this means a single new job that is created by employees at a company working less raises everyone's wages by 10%/12,000,000, or 0.000000833%. But since it affects 150 million people, the total increase is 125% of the average wage rate, while the business that does this pays essentially the same rate for the work that is done.

Since flexible work policies attract talent, individual companies have every reason to support this too. The only question is how to get people to work less without changing payroll costs, but this has an easy solution.

Think of what happens when someone works less with the current systems of monthly salaries or hourly wages and overtime. If someone takes a day off with the salary system, they're generally expected to make up for it another time or else it forces someone else to do the extra work. With hourly wages, if someone can't work it might force the company to pay someone else overtime wages and a higher total cost of the work.

A better way is to pay a lower rate for extra amounts of work so people will agree to do it without feeling that the extra income is required, but also use the same lower rate for decreases in the amount of work done. If employee salaries accurately reflect their productivity, then these adjustments exactly balance out and someone won't feel bad if they need to, for example, leave work a few hours early to attend a parent-teacher conference or go to a doctor's appointment.

Neither should they feel bad if they delegate tasks to other people and focus on their key responsibilities, because the system would recognize that no special privilege is involved and fairly decrease their compensation to match the lower contribution to the company.

This would end up helping workers in low-wage countries around the world while harming countries that sell luxury goods to the rich, but this is a feature, not a bug. It would also mean fewer people on food stamps or other types of welfare in the United States, and therefore lower government deficits and inflation, but this is also intended even if some people think that deficits lead to higher growth.

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[-] 3 points by trashyharry (3084) from Waterville, NY 11 years ago

I liked your post-I find it very interesting.At the time of the Reunification of Germany,it was soon discovered that nearly 29 bn usd's worth of debt was left behind by the defunct East German banking system.At the time it was generally known that a mess of this kind would surely be found, many were probably relieved that it was no worse,and the problem explained the noticeable lack of celebration in the West at that time.Nevertheless,Germans assumed responsibility for these debts,and the country was plunged straight into a deep recession.One of the ways the dreadfully high unemployment was combatted was by an employment configuration similar to what you have mentioned in a couple of your posts-the Germans instituted a policy called 'job sharing" which involved reducing employed workers wages and hiring more workers so more people would have at least something and so the ill effects of long term unemployment would affect fewer people.It took the Germans 10 long years of belt tightening and frugality,but they managed to get through and the German Economy is now the largest and strongest economy in the EU.Americans are oblivious to the tough slog the Germans had for so long,but I follow the news of the world with close attention and I admire the way the Germans stuck together and cared for each other and got through a really discouraging crisis.I only wish Americans cared about their country and each other the way the Germans do.

[-] 1 points by Misaki (893) 11 years ago

It's also popular now: http://www.guardian.co.uk/commentisfree/2012/jul/03/why-americans-should-work-less-way-germans-do (also http://www.yesmagazine.org/new-economy/between-overworked-and-out-of-work and http://www.cepr.net/index.php/blogs/cepr-blog/hows-that-hopey-changey-work-share-thing-doing)

The difference is that with that system (which is actually available to employers in the US, and was simplified earlier this year), the government puts companies 'on the dole' as one commenter said, and ends up paying poor workers to work less. This is not much different from being on welfare, which is seen as an embarrassing thing to do.

When people work less, it will generally be high-income people who choose to do so and it doesn't cost the government anything, so it becomes much more socially acceptable to do. This is sort of like what James Cook did to prevent scurvy:

...At that time it was known that poor diet caused scurvy but not specifically that a vitamin C deficiency was the culprit.

Sailors of the day were notoriously against innovation, and at first the men would not eat the sauerkraut. Cook used a little trick, one he had never known to fail. He ordered it served to himself and the officers, and left an option for crew who wanted some. Within a week of seeing their superiors set a value on it the demand was so great a ration had to be instituted.

[-] 2 points by Middleaged (5140) 11 years ago

You have good determination and the proper attitude. Your plan is as good as any. I suffer from a little cynicism. Bill K. Black and Robert Reich say beware of cynicism... as it is form of giving up.

You already know the hurdles. I just keep trying to look at the different pieces where you will meet obsticals. 1) Government officials always seem consumed with other projects and empire building 2) Conservatives will call the idea socialsim or communism 3) Libertarians don't really like ideas... rather they want the constitution restored and see new ideas as bigger government 4) Capitalist will see it as raising management costs, labor costs, benefit costs, and human resrources costs. 5) Unions might see it as increasing costs for benefits that they have to divide between all Union workers 6) Local government might see it as a way to increase income tax revenue.

Your plan would certainly fit well with a Universal or National Health Care funded solely by the government as health care is one of the costs.

[-] 1 points by Misaki (893) 11 years ago

Ironically, Obamacare makes it more likely people would use it since there are already companies planning to keep people under 30 hours/week to avoid the mandatory health coverage costs.

1) Government officials don't really have any ideas because to them the ways of creating jobs are either "the government does it", or through interest rates both of which have been tried.

2) It is about having less welfare since people with jobs don't need welfare. This is unique though since it is basically the only way to help poor people without taxing the rich. (Things like trade barriers help the poor in one country but harm those in another.) So while it might seem like socialism, it really isn't.

3) I thought libertarians want smaller government?

4) Benefit costs can be treated as a portion of wages. Management costs do go up if there are more employees... but employees can also be more productive when they are more rested. A lot of it is also culture, an organization can have a lot of middle management that does not help much.

5) (unions have become less popular anyway in the US)

6) it might increase local flat tax revenue, but would decrease federal progressive income tax revenue. But the government would need to spend less money to create jobs or on welfare, since there would be higher private sector employment.

It all depends on convincing the rich to work less though, since other people see them as setting the example for the "time macho" work culture. http://www.thepetitionsite.com/783/697/872/tell-the-1-how-they-can-help-the-economy/

[-] 1 points by crazyquilter (1) 11 years ago

I just read a real good book " Who stole the American dream" Its a real eye opener. Also " The koch Brother's exposed" is a good movie to watch. Also " Capitalizem a love story" is good.

[-] 1 points by Misaki (893) 11 years ago

Generally, politicians do what the middle class wants them to.


They DON'T do what the poor want them to but that's because the middle class does not support policies that would help the poor as much as they would like (such as by creating jobs).

[-] 1 points by Misaki (893) 11 years ago

So no one liked it. What needs to change? Pointing out the current system isn't getting better? Linking to polls that show that most people who would vote for Romney would do so because he isn't Obama?

Maybe showing that the top 20% of income can easily afford to work less and still have a decent standard of living?

“If a designer shoe goes up from $800 to $860, who notices?” said Arnold Aronson, managing director of retail strategies at the consulting firm Kurt Salmon, and the former chairman and chief executive of Saks.

“This group is key because the top 5 percent of income earners accounts for about one-third of spending, and the top 20 percent accounts for close to 60 percent of spending,” said Mark Zandi, chief economist of Moody’s Analytics. “That was key to why we suffered such a bad recession — their spending fell very sharply.”

Part of the demand is also driven by the snob factor: at luxury stores, higher prices are often considered a mark of quality.

Most of the 1% work; only 5% of them don't work.

Edit: or maybe the fact that we are just getting stupider as time goes on?