A Forced Collapse to lower wages

I had a though concerning the economic events while watching the Republican Debate.

One of the major factors concerning the manufacturing sector, is the export of the jobs to countries where it costs less to make the products.

The main reason is the wages are lower in those areas making it less expensive to hire them.

If the larger economies, who have higher wages wanted to regain some of their jobs, it would be economically sensible to lower the wages of the workers to cause the price of production to lower.



How would you do that.


Well first off, it is important to understand how globalisation has effected the market place.
IMF on globalization
*note*When this was written the derivative market was not yet created.



So how do we get from growing our global economy to the situation we are in now.


Well I think some of you watched the debate this evening, and this is quite relevant.
Texas has created jobs, but how exactly.
Robert Reich explains how the jobs were created

So if you take the couple of minutes to read that you will see how that has been acheived.



Now think of it, now only in the present, but as an economist planning for the future.
You would look at the global economy and see that the countries with the lower wages and proper infrastructure are doing much better.

Anyone could see the problems arising with the Chinese market for the last two decades.
How would it be possible to compete in the industrial sector.
You would have to lower the wages that are paid to the average worker.




Problem: How to create an controlled artificial collapse of the economy

With the creation of a new market system. The derivative market. By creating a debt trading system that could insured to guarentee the security of the marketplace. When the debt trading exceeds the market, the bubble that has been created can be burste to cause a controlled collapse.




Problem: How would you get the people to accept it.

Well with an artificially created collapse, you could force the economy to downturn to the point that unemployment would rise to high levels. At this point, the average person would take a job at a lower wage, out of necessity.




Now because there would be such a large sector of the population unemployed, you could rebuild a more competitive industrial sector.

The real bonus comes with the apperance of a miraculous job recovery, where the population would appreciate all the jobs, even at a lower standard of living.




Although this is theory, I think that it will be the future. Lower wages will be accepted by most out of necessity.

We just saw a huge two-year gain in productivity – the amount of goods and services produced per worker. In 2009, it rose by 3.5 percent, and last year we saw a 3.6 percent increase, the largest in eight years.

At the same time, labor costs – the value of wages and benefits – have seen their steepest decline since 1962-'63.

source

I haven't read all the links you provided yet, but I've read your thread entirely and couldn't agree with you more re: the agenda to lower the wages.

We've thought the same thing, though not as near indepth as you have presented it.

Its funny I was just reminder of something

It can really be explain with the classical economic system vs. the keynesian economic system
Here

PRICE AND WAGE FLEXIBILITY
The classical theory proposes that all markets reequilibrate because of adjustments in prices and wages which are flexible. For instance, if an excess in the labor force or products exist, the wage or price of these will adjust to absorb the excess.

If prices and wages are flexible, markets reequilibrate. If, for instance, many people are unemployed, firms can hire workers at lower wages; but, hiring more workers precisely reduces unemployment.


INVOLUNTARY UNEMPLOYMENT
The classical theory proposes that no involuntary unemployment will exist because an adjustment in the wage rate will assure that the unemployed will be hired again. In addition, the need of workers to buy goods will encourage them to accept work at even the lower wage rates.

If wages are flexible as the classical economists argue, then a decrease in wages does allow firms to hire more workers. Only those who are reluctant to work for lower wages would then remain unemployed.


CLASSICAL-KEYNESIAN CONTROVERSY
Keynesian employment theory is built on a critique of the classical theory. In this critique, Keynes argued that savers and investors have incompatible plans which may not assure that an equilibrium exists in the money market, that prices and wages tend to be rigid and equilibrium may not exist in the product and labor markets, and that periods of severe unemployment have occurred (which the classical theory denied).

The Keynesian theory was developed in the wake of the great depression. It was very hard to argue then that only voluntary unemployment can exist as millions of workers were out of work.

source

reply to post by KingAtlas


That is interesting...

At this point, I wouldn't put it past them that they would plan and do something like this.

You've also forgot about immigration. Industry backed governments have allowed Western nations to be flooded with immigrants for decades in what many would argue is a purposeful and targeted effort to undermine workers and unions.

Labor has no value

It is non-leveraged and is expendable

That being said everyone performs labor, even highly skilled traders, politicians and corporate lobbiests. Therefore wall street traders, politicians and corporate lobbiests are expendable commodities.

elite 1% (or less)

and 99%+ slaves?

sure makes perfect sense, as it stands even before the collapse, middle-class Americans are already an endangered species..

you either live in a tent/cardboard box, or in lavish luxury these days, only in America (too)

dupe

post

sorry

Originally posted by ignant

... middle-class Americans are already an endangered species..

you either live in a tent/cardboard box, or in lavish luxury these days ...

Lot's of folks walking around with thier heads down these days.

America has seen enough disillusionment and suffering, it's time to build it back up.

Failing that let's blow it up and start over.

CA by Lee

Okay I got a good laugh out of this.
This was written in 1999 by Dwight R. Lee
Before our current situation.


He is arguing for the fact fact that comparative advantage states that wages would be increased by free trade in theory. Although, in theory it makes sense, there is some problem with it.

I could list them all here but the commentors did such a good job.
*edit to add:sorry had to add this, made me laugh haha (from one of the commentors on the Lee argument)
*You have to read the article or else this quote seems out of context

It is actually cheaper to produce both cars and computers in Brazil. As they have the cheaper labor, cheaper resources and cheaper production facilities. You like most economists who do not follow Marshallian theory do not properly place all variables into the equation and go on some mixed equation of false idea that Smithian without Marshallian theories actually works when dealing with countries of high Marxists theories. Let me explain:
Your idea of comparative advantage does not take away high paying jobs or create unemployment is easily rebutted by a Smithian Marshallian Economic Reality principle non professional economists. As such, enough theory rebuttal on to the good stuff.

What is CA, its not easy to completly understand, but simple enough to grasp.
Introduction to CA
Defenition of CA

Here is some more facts to look at

Yale home value history
Because of the value decline and the wage decline, it is almost impossible to pay off the mortgages.

This was a situation created by the derivative market. When the debts that could be traded would be more valuable than the reimbursment of the mortages, it caused a large increase in loans.

Some say it was because people just took mortgages they couldn't afford, but at the time 2006-2007 average people thought there would be jobs to sustain them so they could repay over time.


This is from NY times 2010
NYTIMES new jobs mean lower wages

Here is some more information

This is a good breakdown of how goldman sachs made their money by imploding the market.

How Goldman Sachs made Money on the collapse


It's really funny, because even though some economist tried to yell out that this was happening it was kept quiet.
You could go as far back as you want to I guess and look at everything in hindsight, it is always easier.

I think that the economy should hold out until next year, then there will be some problems because of the stimulus being completly dried up, unemployment rising and an election in the US, and the european financial collapse that will probably come in early-mid 2012.

Its a perfect storm.

reply to post by KingAtlas


Cheaper to produce in Brazil, yes. Wise, no. Only a moron would put up manufacturing in happy-go-lucky, siesta-loving Latin countries.

Well it does seem that there are many factors at play.
Economic forcasting seems to have failed.

As for Brazil, they do not practice siesta's...
I think you have been misinformed..

there can not be jobs (even lower paying jobs) in a nation with little industrial/manufacturing infrastructure

that segment of labor & industry has been offshored to Asia/China with all their steel plants and fabric weaving industries..

the USA must either rebuild the infrastructure ...
or else keep changing the definition of 'Manufacturing' = an excellent example is ~
building a burger is officially categorized as a 'manufacturing process'....... yeah right !


yes we are likely headed for a deflationary depression...but conversely the money is getting devalued and wages will increase ...but the net result is more but less valuable wages... its an academic defuddlement...


meanwhile the elites (the new Aristocrats of the USA) will be rolling in bonuses and extreme compensation to remain aloof from the common mans plights, of rationed living & a very decreased Standard-of-Living


thanks