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How to End the Great Recession

Discussion in 'Political Discussion' started by reflexblue, Sep 5, 2010.

  1. reflexblue

    reflexblue PatsFans.com Supporter PatsFans.com Supporter

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    #91 Jersey

    I've thought this for years that corporations need to increase they're wages, it would solve a myriad of problems. But i've never been able to articulate it as well. Wages flattened out decades ago, the average worker is taking home less now than thirty years ago, to cope back then women went to work to make up for the lower wages, people put in much longer hours to make up, that worked for a couple of decades. In the last two people have been using credit to keep up with inflation, and we have seen how that has worked out. Now if wages were increased way back when women/mothers could have stayed home and raised the kids, maybe moral values wouldn't have reached the lows that they have with more guidance at home. (Just a thought)

    http://www.nytimes.com/2010/09/03/opinion/03reich.html?_r=2&ref=opinion

    THIS promises to be the worst Labor Day in the memory of most Americans. Organized labor is down to about 7 percent of the private work force. Members of non-organized labor — most of the rest of us — are unemployed, underemployed or underwater.

    his crisis began decades ago when a new wave of technology — things like satellite communications, container ships, computers and eventually the Internet — made it cheaper for American employers to use low-wage labor abroad or labor-replacing software here at home than to continue paying the typical worker a middle-class wage. Even though the American economy kept growing, hourly wages flattened. The median male worker earns less today, adjusted for inflation, than he did 30 years ago.

    But for years American families kept spending as if their incomes were keeping pace with overall economic growth. And their spending fueled continued growth. How did families manage this trick? First, women streamed into the paid work force. By the late 1990s, more than 60 percent of mothers with young children worked outside the home (in 1966, only 24 percent did).

    Second, everyone put in more hours. What families didn’t receive in wage increases they made up for in work increases. By the mid-2000s, the typical male worker was putting in roughly 100 hours more each year than two decades before, and the typical female worker about 200 hours more.
     
    Last edited: Sep 5, 2010
  2. apple strudel

    apple strudel Banned

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    Break up the mega corporations and open their markets up to smaller businesses. But try to do it without getting assassinated.
     
  3. DarrylS

    DarrylS PatsFans.com Supporter PatsFans.com Supporter

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    I do not disagree.. .

    But how about a tax credit of 5K for every new hire of a year for small businesses of 1-25 people.. 10K for every two hires for a year for small businesses between 25-50 people.. on and on.

    People love to believe that they are saving money when they get a tax break..
     
  4. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    Last edited: Sep 5, 2010
  5. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    This I agree with...but the only way it can be done is on a world-wide level. Otherwise, economies of scale would place all the broken pieces of a huge anti-monopoly strategy at a competitive disadvantage and drive US corp's out of business.

    nothing is as easy as it used to be.

    Regarding Flex's proposal, I actually think the opposite would be more helpful. Drive both wages AND prices down and allow our companies to compete on a more even playing field. The higher US wages are compared to the rest of the world, the less well be able to export.

    In a depressed economy, both wages and prices are supposed to go down. But sadly, wages have declined (in real terms) much more than prices. If we could get home prices and other essential prices to go down, we'd all be better off. After all, it's not how much we make, but how much we can buy & save that matters.
     
    Last edited: Sep 5, 2010
  6. patsfan13

    patsfan13 Hall of Fame Poster PatsFans.com Supporter

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    So how has government spending changed as a % of GDP over the period when people's spending power has stagnated? And the cost of regulation for things like housing?


    .....
    ;)


    BTW HErbert Hoover was a big advocate of government 'urging' companies to raise wages (see links at Patter's thread) that didn't work out very well.


    Obamanomics is failing as many expected because these policies never succeed. Government workers do tend to be divorced from reality however.
     
  7. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    "President Roosevelt believed that excessive competition was responsible for the Depression by reducing prices and wages, and by extension reducing employment and demand for goods and services," said Cole, also a UCLA professor of economics. "So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies.

    High wages and high prices in an economic slump run contrary to everything we know about market forces in economic downturns," Ohanian said. "As we've seen in the past several years, salaries and prices fall when unemployment is high. By artificially inflating both, the New Deal policies short-circuited the market's self-correcting forces."


    FDR's policies prolonged Depression by 7 years, UCLA economists calculate / UCLA Newsroom
     
  8. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    Yes, Hoover invited business leaders to the White House and urged them not to lower wages because the depression, he believed, would not last very long. That's the basis of these claims by conservative revisionists as they try to turn Hoover into a liberal. The fact is despite Hoover's urgings, average wages fell steadily during the first few years of the depression, something that it appears the conservative "think" tanks seem to have overlooked.

    Hoover was a conservative's dream up until the Depression had gone on two years and he was forced to change course. He tried a tiny stimulus and tax hikes, but they did not work.
     
  9. Patters

    Patters Moderator Staff Member PatsFans.com Supporter

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    This link has a lot of info that's relevant to your post, the main one being that the crisis got worse while Hoover was still in office and before Roosevelt got serious about implementing New Deal reforms.

    Economist's View: Hoover's "Pro-Labor Stance" Did Not Help to Cause the Great Depression
     
  10. chicowalker

    chicowalker Pro Bowl Player

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    I think people saying companies should simply increase wages have never run a business...

    Regardless, raising wages not only increases prices to some extent, but also will decrease earnings, which will cause stock market declines and inevitably more concerns about the health of the economy.

    Bottom line, there's no silver bullet here.

    I will tell you anecdotally, though, in the case of the company I'm helping run now, there is one thing keeping us from hiring -- town government bureaucracy. We have been trying to get into a new facility offering plenty of room for expansion, but a single bureaucrat has caused us more than a month in delays, which means more than a month of delays in hiring new people.
     
  11. reflexblue

    reflexblue PatsFans.com Supporter PatsFans.com Supporter

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    #91 Jersey

    Modern capitalism isn't that old, it only goes back a couple of hundred years. I'm pointing that out because its relatively new and i don't think all the kinks have been worked out. But one of the founding principles has to be that the consumer has be be able to afford a companies product. If the consumer can't then how can the business survive? IMO its short sighted on the part of companies not to pay its employees a living wage. BTW this does have some history behind it. During the Great Depression as each round of lay offs took place there were less and less consumers able to purchase goods and services which lead to more lay-off. Unlike now, there was no un-employment insurance to help compensate for lost wages.

    I'm pretty sure using Nash's theory of equilibrium we could find the right balance between profits and wages.
     
    Last edited: Sep 5, 2010
  12. chicowalker

    chicowalker Pro Bowl Player

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    Well, of course consumers (some of them, anyway) need to be able to buy products -- that is inherently part of capitalism.

    But that doesn't mean the problem now is that wages are "too low".

    btw, what is a "living wage"?
     
  13. reflexblue

    reflexblue PatsFans.com Supporter PatsFans.com Supporter

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    #91 Jersey

    Of course consumers have to be able to afford to buy products other wise capitalism wouldn't work. I think that is what Reich is saying, that the consumers are having a harder and harder time trying to buy goods and services because wages have not kept up with inflation, they flattened out in the seventies. When i was a kid in the early Sixties my father made about 6K a year, the average cost of a new house was about about 10-12K. Nowadays the average cost of a new house is 216K, the average house hold income is about 50K.
    I maybe have been in the last generation to have just one parent being payed enough so the other could stay home and raise a family.

    What i meant by living wage is what my father was paid or close to percentage wise.

    Now one thing that i haven't taken into account consumers buying beyond their means because of the avalibility of credit.
     
  14. Harry Boy

    Harry Boy Look Up, It's Amazing PatsFans.com Supporter

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    Find somebody like Ronald Reagan to put in the White House.
     
  15. chicowalker

    chicowalker Pro Bowl Player

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    Houses are a different story than most products, and imo they demonstrate part if the problem with the govt getting involved with "the market." The govt shouldn't subsidize home ownership. That market has been propped up for decades, and it's still artificially high.
     

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