Alf Bentley Posted 3 December 2013 Posted 3 December 2013 I think fighting for workers rights etc is very worthwhile. [...] Once workers rights start infringing on the ability of a business to succeed, it has gone too far. As a student, 20 years ago, I answered an essay question based on a quote from Marx: " 'What the bourgeoisie creates above all are its own gravediggers'; Discuss". As I recall (simplifying), Marx's theory was that competition between capitalists would drive down wages, conditions and living standards, inevitably leading to revolt, socialism and communism. I played the smart arse and concluded that ultimately the bourgeoisie (capitalists) signed the working class up to its vision through rising living standards and material enrichment. I felt very smart, concluding that "the bourgeoisie buried its own gravediggers". But maybe I was wrong? Maybe, shock horror, Marx understood more than me, even if he under-estimated the complex historical development of capitalism?! Maybe he just under-estimated the timescale and the global competition element? Fierce capitalist competition is becoming global, real living standards are stagnating and falling across the West (even if they are still rising - slower than before, but still rising - in the developing world). For how long does it all remain a win-win scenario for capitalists and workers alike? What happens when large numbers of people, even in the West, are not winning? If, as Moosebreath suggests, the ability of business to succeed takes precedence over workers' rights - and business competition becomes ever more cut-throat - is there no bottom line for workers' rights? Is slavery acceptable, provided that business succeeds? Which is more important, humanity or business?
Webbo Posted 3 December 2013 Posted 3 December 2013 As a student, 20 years ago, I answered an essay question based on a quote from Marx: " 'What the bourgeoisie creates above all are its own gravediggers'; Discuss". As I recall (simplifying), Marx's theory was that competition between capitalists would drive down wages, conditions and living standards, inevitably leading to revolt, socialism and communism. I played the smart arse and concluded that ultimately the bourgeoisie (capitalists) signed the working class up to its vision through rising living standards and material enrichment. I felt very smart, concluding that "the bourgeoisie buried its own gravediggers". But maybe I was wrong? Maybe, shock horror, Marx understood more than me, even if he under-estimated the complex historical development of capitalism?! Maybe he just under-estimated the timescale and the global competition element? Fierce capitalist competition is becoming global, real living standards are stagnating and falling across the West (even if they are still rising - slower than before, but still rising - in the developing world). For how long does it all remain a win-win scenario for capitalists and workers alike? What happens when large numbers of people, even in the West, are not winning? If, as Moosebreath suggests, the ability of business to succeed takes precedence over workers' rights - and business competition becomes ever more cut-throat - is there no bottom line for workers' rights? Is slavery acceptable, provided that business succeeds? Which is more important, humanity or business? So what's your solution, increase pay and conditions and hope that basic economics don't apply to us?
Alf Bentley Posted 3 December 2013 Posted 3 December 2013 So what's your solution, increase pay and conditions and hope that basic economics don't apply to us? Funny enough, at the moment the UK economy could really do with an increase in pay and conditions so that the "green shoots" of growth become sustainable. As the Governor of the Bank of England pointed out, growth is currently being fuelled by consumer debt, which is only sustainable in the short-term....if pay and conditions increase (to a viable extent), then demand might be maintained and UK growth might become sustainable; if not, the bubble will burst at some point. So, it is currently in the interests of the economy - and the Tory government - to have stronger trade unions (within reason)! I'll put the question to you, Webbo: if real incomes in the UK continue to fall, public spending continues to be cut and international trade remains flat, who is going to buy the goods and services produced by our businesses? Really must work now!
MooseBreath Posted 3 December 2013 Author Posted 3 December 2013 if real incomes in the UK continue to fall, public spending continues to be cut and international trade remains flat, who is going to buy the goods and services produced by our businesses? Really must work now! Is international trade still flat? I was under the impression it was growing again. To answer your question though, it will be the same kind of people who have always bought our goods and services. If our businesses are free to innovate then we can increase our proportion of world trade even if the total level is falling. Conversly if we stifle the ability of people and businesses to innovate we very quickly fall behind and then our proportion of world trade falls, leaving us with say a lovely high minimum wage for formally low-paid workers or a very lefty-popular high tax rate on businesses, but no actual businesses or workers anymore because they have been neither incentivised nor able to afford to take risks on innovating the products and services we need to remain competitive.
Alf Bentley Posted 3 December 2013 Posted 3 December 2013 Is international trade still flat? I was under the impression it was growing again. To answer your question though, it will be the same kind of people who have always bought our goods and services. If our businesses are free to innovate then we can increase our proportion of world trade even if the total level is falling. Conversly if we stifle the ability of people and businesses to innovate we very quickly fall behind and then our proportion of world trade falls, leaving us with say a lovely high minimum wage for formally low-paid workers or a very lefty-popular high tax rate on businesses, but no actual businesses or workers anymore because they have been neither incentivised nor able to afford to take risks on innovating the products and services we need to remain competitive. Jury's still very much out on international trade. The figures for the second quarter were good, but the latest stats for the third quarter sound pretty disastrous (see quotes below). If the EU economy stabilises and if a trade boost follows Cameron's visit to China, then it might just be a blip....but that's a couple of big "ifs". The main part of trade growing just now is imports, which doesn't sound so good... Then again, the BBC reckons that consumer spending accounts for 2/3 of UK economic activity, so even a large improvement in exports and successful innovation will mean little if real incomes continue to fall, as sooner or later the growth in consumer spending will collapse - medium-term we can't achieve economic growth through ever increasing consumer debt! However innovative our goods and services may be, someone needs to have the money to buy them... http://www.bbc.co.uk/news/business-25118514 ONS stats: Economic growth in the UK was driven by consumer spending in the third quarter of the year, Office for National Statistics (ONS) figures show. The ONS kept its estimate for economic growth in the quarter at 0.8%, which is the fastest pace for three years. Consumer spending, which accounts for nearly two-thirds of the UK's economic activity, also rose by 0.8%, the most since the second quarter of 2010. The ONS figures showed that business investment grew by 1.4% in the July-to-September period, after dropping 2.7% in the previous quarter. But exports from the UK fell by 2.4% in the third quarter, while the net trade deficit widened to £8.9bn from £5.5bn. Jeremy Cook, chief economist at currency brokers World First, said the growth in private consumption, house building and investment had to "make up for a violent slip in exports". Business investment also grew, but exports fell in the quarter. BBC correspondent: "But those hoping for a rebalancing of the economy away from consumption and imports will be disappointed. Exports in the third quarter experienced the biggest drop for more than two years. Net trade proved to be a major drag on overall economic growth. The UK is expanding more rapidly than other advanced economies. The debate will continue over whether that growth should ideally be more broadly based".
Alf Bentley Posted 3 December 2013 Posted 3 December 2013 What's the figures on consumer debt Alf? Got to go on the school run now, but here are a couple of articles (BBC & FT), which include some stats: http://www.bbc.co.uk/news/business-25152556 http://www.ft.com/cms/s/0/9825ad6a-0bda-11e3-8f77-00144feabdc0.html#axzz2mQLHltZG
Guest Posted 3 December 2013 Posted 3 December 2013 Why are the countries with supposedly so many hard working people still in the shit and are the poorest ? Korea are poor?
Guest MattP Posted 3 December 2013 Posted 3 December 2013 Got to go on the school run now, but here are a couple of articles (BBC & FT), which include some stats: http://www.bbc.co.uk/news/business-25152556 http://www.ft.com/cms/s/0/9825ad6a-0bda-11e3-8f77-00144feabdc0.html#axzz2mQLHltZG A tad worrying on that reading but also possibly a result of confidence in the markets and of a recovery.
leicsmac Posted 3 December 2013 Posted 3 December 2013 Korea are poor? You'd be surprised. There's a massive housing bubble over here and the amount of people in hoc to their plastic because they want the latest gadget/handbag/videogame is unreal. Exports are the only thing keeping this place running smoothly. And being over here I can definitely say staying at work for masses of hours does not equal hard work and productivity.
Webbo Posted 3 December 2013 Posted 3 December 2013 Funny enough, at the moment the UK economy could really do with an increase in pay and conditions so that the "green shoots" of growth become sustainable. As the Governor of the Bank of England pointed out, growth is currently being fuelled by consumer debt, which is only sustainable in the short-term....if pay and conditions increase (to a viable extent), then demand might be maintained and UK growth might become sustainable; if not, the bubble will burst at some point. So, it is currently in the interests of the economy - and the Tory government - to have stronger trade unions (within reason)! I'll put the question to you, Webbo: if real incomes in the UK continue to fall, public spending continues to be cut and international trade remains flat, who is going to buy the goods and services produced by our businesses? Really must work now! If we didn't need to export anything, if we couldn't buy things from abroad instead of home grown products, if companies in this country couldn't move to countries with lower costs and if the increase in costs wouldn't lead to inflation here lowering the purchasing power of the increased wages that'd be a really good idea, in the real world however it'll make things far worse. More people working will increase demand more than a lot less people working but with higher wages.
The God Emperor Posted 3 December 2013 Posted 3 December 2013 As a student, 20 years ago, I answered an essay question based on a quote from Marx: " 'What the bourgeoisie creates above all are its own gravediggers'; Discuss". As I recall (simplifying), Marx's theory was that competition between capitalists would drive down wages, conditions and living standards, inevitably leading to revolt, socialism and communism. I played the smart arse and concluded that ultimately the bourgeoisie (capitalists) signed the working class up to its vision through rising living standards and material enrichment. I felt very smart, concluding that "the bourgeoisie buried its own gravediggers". But maybe I was wrong? Maybe, shock horror, Marx understood more than me, even if he under-estimated the complex historical development of capitalism?! Maybe he just under-estimated the timescale and the global competition element? Fierce capitalist competition is becoming global, real living standards are stagnating and falling across the West (even if they are still rising - slower than before, but still rising - in the developing world). For how long does it all remain a win-win scenario for capitalists and workers alike? What happens when large numbers of people, even in the West, are not winning? If, as Moosebreath suggests, the ability of business to succeed takes precedence over workers' rights - and business competition becomes ever more cut-throat - is there no bottom line for workers' rights? Is slavery acceptable, provided that business succeeds? Which is more important, humanity or business? you and Marx aren't far off. the reason its not a win-win scenario anymore is not due to any fault with capitalism (free markets etc) but with industrialists themselves. the fact is big business isnt fond of free markets, they like government regulated markets. If the government is to regulate a market then it needs to have a large amount of centralised power and positions of power are very attractive to corrupt people. big business is then able to use these corrupt bureaucrats to rig the game in their favour with rules and regulations that limit the chances of smaller competition from entering and succeeding in the market. Nasty foreigners importing the same goods you provide but they're a much higher quality and cheaper than yours? no problem! get your bureaucrat mate to raise some trade tariffs in the name of "protecting british industry from unfair competition". someone's invented a new product that could threaten yours? no problem! get your bureaucrat mate to limit the sale of the product to "protect jobs" or buy the patent and now you have a legal monopoly for a few years. made lots of bad business decisions and now you might be going bust? no problem! get some newly printed currency and some tax payers money for good measure in a nice bailout and screw the common man twice. none of that happens in free markets, industrialists are made to put up or shut up and rely on the merits of their product/service rather than how many favours they can lobby the gubbermint for. competition is fierce in every market, cartels and monopolies do not occur when there is no government influence, and that includes the labour market. businesses compete with each other for the best labour and on top of that trade unions are able have better leverage when they are negotiating with smaller businesses rather than government backed 'too big to fails'. the lower wages we have now do not come from employers but is due to quantitative easing eroding the purchasing power of peoples wages leaving us with the situation now where multiple incomes are a necessity for alot of households. very long winded reply and it has nothing to do with amazon but I'll post it anyway
Alf Bentley Posted 3 December 2013 Posted 3 December 2013 If we didn't need to export anything, if we couldn't buy things from abroad instead of home grown products, if companies in this country couldn't move to countries with lower costs and if the increase in costs wouldn't lead to inflation here lowering the purchasing power of the increased wages that'd be a really good idea, in the real world however it'll make things far worse. More people working will increase demand more than a lot less people working but with higher wages. There are too many variables to do more than approximate, but I think you're being very optimistic if you reckon increased employment will sustain growth without a reversal of declining real incomes. There are currently just under 30m people in employment in the UK. Let's assume that 1m extra jobs are created in the next 2 years (an extremely optimistic scenario). That would equate to an increase in gross demand of 1.65% per year (31m/30m as % divided between 2 years) Here are the official ONS stats showing that real wages fell 8.5% between 2009 and 2012 (i.e. -2.83% per year): http://www.ons.gov.uk/ons/rel/regional-trends/regional-economic-analysis/changes-in-real-earnings-in-the-uk-and-london--2002-to-2012/sum-real-wages-down-by-8-5--since-2009.html Here is an Indie article describing how real wages are at their lowest since 2001 and still falling: http://www.independent.co.uk/news/business/news/downturn-sees-average-real-wages-collapse-to-a-record-low-8885044.html Average pay settlements are still well below inflation (i.e. real incomes are still declining). It is reasonable to assume that certain major expenses (e.g. housing, food, travel) will continue to drag prices up. It is also reasonable to assume that interest rates will start rising within a couple of years, making mortgages, overdrafts and credit card debt more expensive. Increased employment is very helpful, but unless pay rates also start rising, I can't see it being enough to sustain the growth currently being generated by borrowing and improved confidence. Something may turn up (an export boom? some sneaky public spending? pre-election tax cuts?!); if not, sustained growth requires a reversal of declining incomes, I reckon....
Webbo Posted 3 December 2013 Posted 3 December 2013 I'm quite aware that wages have been rising slower than inflation but we are slowly coming out a huge recession so that's to be expected. It might be that we have to accept being a little worse off if we are to pay our way in the world.It's not ideal but real life rarely is. You haven't explained where the money will come from for these higher wages that will fuel growth.
Rincewind Posted 3 December 2013 Posted 3 December 2013 That'll be a great comfort to those left without heating and food this winter.
The God Emperor Posted 3 December 2013 Posted 3 December 2013 There are too many variables to do more than approximate, but I think you're being very optimistic if you reckon increased employment will sustain growth without a reversal of declining real incomes. There are currently just under 30m people in employment in the UK. Let's assume that 1m extra jobs are created in the next 2 years (an extremely optimistic scenario). That would equate to an increase in gross demand of 1.65% per year (31m/30m as % divided between 2 years) Here are the official ONS stats showing that real wages fell 8.5% between 2009 and 2012 (i.e. -2.83% per year): http://www.ons.gov.uk/ons/rel/regional-trends/regional-economic-analysis/changes-in-real-earnings-in-the-uk-and-london--2002-to-2012/sum-real-wages-down-by-8-5--since-2009.html Here is an Indie article describing how real wages are at their lowest since 2001 and still falling: http://www.independent.co.uk/news/business/news/downturn-sees-average-real-wages-collapse-to-a-record-low-8885044.html Average pay settlements are still well below inflation (i.e. real incomes are still declining). It is reasonable to assume that certain major expenses (e.g. housing, food, travel) will continue to drag prices up. It is also reasonable to assume that interest rates will start rising within a couple of years, making mortgages, overdrafts and credit card debt more expensive. Increased employment is very helpful, but unless pay rates also start rising, I can't see it being enough to sustain the growth currently being generated by borrowing and improved confidence. Something may turn up (an export boom? some sneaky public spending? pre-election tax cuts?!); if not, sustained growth requires a reversal of declining incomes, I reckon.... that's how inflation works. wages will never rise in line with inflation and any wage and price control measure from the government is just going to hide the effects rather than solve the problem, not to mention cause more damage in the long term. the only way to solve the problem with inflation is to stop devaluing our currency with quantitative easing, which will mean heavily reducing government spending.
Alf Bentley Posted 3 December 2013 Posted 3 December 2013 I'm quite aware that wages have been rising slower than inflation but we are slowly coming out a huge recession so that's to be expected. It might be that we have to accept being a little worse off if we are to pay our way in the world.It's not ideal but real life rarely is. You haven't explained where the money will come from for these higher wages that will fuel growth. I was actually more interested in the economics of the situation than the politics. The truth is that i don't know whether businesses can or will allow pay to rise (and you probably don't either)...but if they can't/won't, I struggle to see how the recovery can be maintained. Not really in the mood for a pointless left-right political ding-dong, after tonight's events in Sheffield, but if you insist, here is somewhere that some higher wages could come from: - Royal Mail profits up to £1.5bn: http://www.bbc.co.uk/news/business-25106394 - Energy firms enjoy five-fold rise in profits: http://www.telegraph.co.uk/news/politics/10472758/Profits-at-Big-Six-energy-companies-have-rocketed-since-the-financial-crisis-began.html - Easyjet distributes £175m in special shareholder dividend, while holding down pay: http://www.telegraph.co.uk/finance/newsbysector/transport/10470350/EasyJet-profits-triggers-pilots-strike-in-France.html
Webbo Posted 3 December 2013 Posted 3 December 2013 I was actually more interested in the economics of the situation than the politics. The truth is that i don't know whether businesses can or will allow pay to rise (and you probably don't either)...but if they can't/won't, I struggle to see how the recovery can be maintained. Not really in the mood for a pointless left-right political ding-dong, after tonight's events in Sheffield, but if you insist, here is somewhere that some higher wages could come from: - Royal Mail profits up to £1.5bn: http://www.bbc.co.uk/news/business-25106394 - Energy firms enjoy five-fold rise in profits: http://www.telegraph.co.uk/news/politics/10472758/Profits-at-Big-Six-energy-companies-have-rocketed-since-the-financial-crisis-began.html - Easyjet distributes £175m in special shareholder dividend, while holding down pay: http://www.telegraph.co.uk/finance/newsbysector/transport/10470350/EasyJet-profits-triggers-pilots-strike-in-France.html Apart from an off the cuff remark about communism about a week ago I haven't mentioned politics or any political party in this thread at all. Some firm's profits are picking up, that's good, hopefully the workers will get a payrise, as long as it's affordable I don't have a problem with that. You seem to have quoted firms where the jobs (apart from back office) can't be outsourced to India or China. If you're a small manufacturing company in this country you don't have that luxury.
Alf Bentley Posted 4 December 2013 Posted 4 December 2013 I'm quite aware that wages have been rising slower than inflation but we are slowly coming out a huge recession so that's to be expected. It might be that we have to accept being a little worse off if we are to pay our way in the world.It's not ideal but real life rarely is. You haven't explained where the money will come from for these higher wages that will fuel growth. Apart from an off the cuff remark about communism about a week ago I haven't mentioned politics or any political party in this thread at all. Some firm's profits are picking up, that's good, hopefully the workers will get a payrise, as long as it's affordable I don't have a problem with that. You seem to have quoted firms where the jobs (apart from back office) can't be outsourced to India or China. If you're a small manufacturing company in this country you don't have that luxury. I appreciate that you didn't get into party politics. Not a problem, anyway, it's just that I was more interested in looking at the potential economic impact of falling real incomes / falling demand (whether avoidable or not) than the political issue of whether employers should raise wages....where we know that we'll disagree, anyway. I also appreciate that it's hard - often impossible - for businesses with international competitors in low-wage economies to remain in business, never mind to raise pay rates. That's unavoidable as a structural/historical development, unless you opt for isolationism and trade barriers or something. Maybe, though, there are other businesses (like those cited, rooted in the domestic economy) that could easily choose to pay workers more, but choose to distribute their profits almost entirely to shareholders in dividends and to senior managers in megabucks salaries. No doubt, you'd argue that they need to do this to maximise shareholder value and to compete for the best managerial talent. Even if that were true, if real incomes / demand continues to fall, we have a major structural problem....inadequate demand for the goods and services produced by those businesses, potentially leading to economic collapse. You'd correctly point out that, in the 60s/70s, one factor of production (labour, in the form of the unions) became too powerful and destabilised the British model of capitalism (I'd argue that this wasn't the only factor, but it certainly was a major one). I'd argue that another factor of production (capital) may now have become too powerful and/or too deregulated internationally, and may be in the process of destabilising British capitalism. Going back to my Marx quote: in the 19th century, Marx got it wrong in thinking that intense competition between capitalists would drive down pay/conditions, eventually leading to a socialist/communist utopia. Instead, capital allowed labour a share of the goodies, through increasing living standards. Whatever the causes, maybe we are now heading back to the sort of 19th century conditions (intense competition, falling living standards, potential social unrest) that Marx envisaged? I hope not!
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