- Feb 22, 2017
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1. Rising wages are good for the economy as long as they are associated with higher productivity. Having to hire less productive workers at higher wages is bad as I mentioned above. The key to achieving a better society is better education. American needs to be the world leader in education. We were in the mid 20th century which was a key component in our economic growth. However, other nations caught up with with us and some surpassed us.Higher wages when there is shortage of workers means the employer must hire marginal workers, those he would not normally consider as they are generally less productive. When an employer must spend more on wages and without a corresponding increases in productivity then prices rise. Once the shortage of labor is resolved these employees will find themselves out of a job again.
As long as the number of open jobs are just a few million, employers will be able to find productive employees but when that figures goes to 20 or 30 million, then employers will be hiring low productivity workers and paying higher wages and will still have many millions of unfilled jobs. The result will be higher prices and lower quality and American will be unable to compete in foreign markets.
1. You did not at all address the positives of rising wages I listed above, nor offer any hint of your alternative to achieving a better society.
2. We are in and have been in for decades an artificial glut of labor, due to massive immigration, legal and illegal, and outsourcing. What we now consider a "shortage" could easily be a new normal of an American labor market dominated by AMERICAN LABOR.
3. We are not allowed to compete effectively now, for whatever reason as shown by our massive and ever growing trade deficits.
We have approximately four times the population of Germany, yet they produce twice as many cars as us, while their car manufacturing workers make twice as much.
German car workers are not twice as educated as ours, nor twice as productive.
I don't believe the evidence supports your claim that education is the answer.
And my list of the positives of higher wages, stands. It would be good for American society overall.
2. Over the last 4 years we have gone from a surplus in the labor market to a shortage of now over 6 million. With 19 million workers a day reaching 65 and the economy adding over 200,000 jobs a month, economists are projecting a 34 million employee shortage by 2024. Those new jobs are going to be filled by immigrants or they will go out the country. There is no other option.
Then let them go. America is more than just an economy. I would rather have a smaller nation, that is still America, than some bloated powerhouse that doesn't feel like home.
And I still want higher wages. We've accepted wage stagnation for far too long.
3. Our trade deficit is not do to our inability to compete. Our trade deficit is due to our high rate of spending (consumption). Our exports are increasing rapidly. Since 2008 our exports have increase 75%. However, for the same period our imports have matched those exports so our yearly trade deficit today is little different than it was 10 years ago.
The only way we are going to significant reduce our trade deficit is by spending less and saving more. That will decrease domestic consumption and will make more capital available for expansion of industry to produce more exports. However, we don't need to do that and we shouldn't because it will bring on a recession or an economic slow down. There is nothing wrong with a trade deficit as long as it is not growing rapidly the way it was between 1990 and 2010.
Your point about increased exports is interesting.
But it does not seem to explain the results we see in the real world.
If exports are up, why are wages flat?
How can German car workers make so much? Is it just a coincidence that they have a large trade surplus? I don't think so.
In 2017 the US produced over 11 million cars, Germany only produced 5.6 million. Where did you get the incorrect idea they make twice as many as us?
How can Chinese car workers make so little? Is it just a coincidence they have a large trade surplus?
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How Germany Builds Twice As Many Cars As The U.S. While Paying Its Workers Twice As Much
"In 2010, Germany produced more than 5.5 million automobiles; the U.S produced 2.7 million. "
Forbes seemed like a good source. If I was wrong, thank you for correctly me. LInk?
I dont' get your chinese car workers comment. Obviously low wages would be a factor to ENCOURAGE exports.
Yet, much higher wages don't seem to be a problem for Germany. Why do you think that is?
Your source does not include “commercial vehicles”, which is stupid as the same companies are making both.
6 Countries That Produce the Most Cars
You used Germany as evidence that a trade surplus leads to higher wages. I used China as evidence that a trade surplus leads to lower wages.
Since there is evidence for both, seems maybe something other than trade surplus is in play
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