Americans are OVERPAID! What Conservatives/Libertarians REALLY Think.

[Krashkopf]

Americans are overpaid

For the global economy to rebalance, the pay gap between Americans and the rest of the world must shrink.

By Martin Hutchinson and Edward Hadas
November 11, 2009: 3:17 PM ET

-- U.S. workers are overpaid, relative to equally productive foreigners doing the same work. If the global economy is ever to get back into balance, that gap needs to be closed.

Of course, U.S. workers should earn more than their peers in China, Moldova, or Vietnam. The Americans take advantage of the higher productivity that makes their country rich: better education and infrastructure, abundant capital and a more developed work ethic. But how much higher should U.S. wages be?

The answer depends in large part on two measures: the difference in productivity in making goods that can be traded across borders, and the quantity of such tradable goods. Both measures point to a narrowing wage gap.

There are so many factors working to push up productivity in poor countries. Fast development, cheap capital, and more efficient shipping all help make foreign factories more competitive. Cheap global communication through the Internet reduces all sorts of costs and makes it easy to trade many more goods and especially services.

The global wage gap has been narrowing, but recent U.S. labor market statistics suggest the adjustment has not gone far enough.

One indicator is unemployment, which has risen unexpectedly rapidly in this downturn. The 7.3 million jobs lost are more than treble the 2 million of the next worst post-war recession, in 1980-82. Some of that huge increase reflects the turbulence of an unusually sharp decline in GDP, but there could be another factor: the recession has revealed many workers are paid more than they are worth.

Another possible sign is the huge surge in reported productivity, which has begun while output was still declining. That suggests that some production is being outsourced altogether, often to lower-paid foreign workers.

The big U.S. trade deficit -- cut in half but still at alarmingly high levels -- is another sign of excessive pay for Americans. One explanation for the attractive prices of imported goods is that U.S. workers are paid too much, relative to their foreign peers.

Global wage convergence is great for the poor but tough on the overpaid rich. It's possible to run the numbers to show that U.S. manufacturing workers should take average real wage cuts of as much as 20% to get into global balance.

The required cut may be smaller. But if U.S. wages get stuck above global market-clearing levels, as in the 1930s, the result could well be something approaching 1930s levels of unemployment.

Pretty well anything would be better than that. A combination of moderate inflation to reduce real wages and a further drop in the dollar's real trade-weighted value might be an acceptable combination.

[MrModerate]

1. Workers are overpaid, sure . . .

But not CEOs, of course.

[Deja Q]

17. Note what Bill Gates says:

http://www.huffingtonpost.com/2009/11/12/bill-gates-wall-street-pa_n_355620.html

"Wall Street Pay Is "Often Too High"


("often", because he wants to be an exemption from his own rule.)

[MrModerate]

28. To be fair, he never paid himself that much of a salary or stock-option type bennies . . .

Hardly necessary given his huge holdings in the company. Which he and a small group of (now stunningly wealthy) colleagues built with their own hands.

He is a special case.

[no_hypocrisy]

2. I honestly believe "the rich" believe we stole their money and they're just taking it back.

[Krashkopf]

3. If Conservative/Libertarians had their way we'd ALL be earning $5/hour!

Here is the link: http://money.cnn.com/2009/11/11/news/international/global_american_wages.breakingviews/index.htm

[tyne]

4. Why is this

labeled as being a conservative/libertarian article?

[phasma ex machina]

26. +1 Good question. nt

[blindpig]

It's a capitalist article

Libertarians, Republicans and Democrats all love them some capitalism but a lot of Democrats don't seem to want to admit it.

There is no 'corporate capitalism', there is no reforming capitalism, with capitalism the bottom line is the bottom line, there is no getting away from that. That article strips away the bullshit, it is a display of naked capitalism.

[blindpig]

37. It's a capitalist article

Libertarians, Republicans and Democrats all love them some capitalism but a lot of Democrats don't seem to want to admit it.

There is no 'corporate capitalism', there is no reforming capitalism, with capitalism the bottom line is the bottom line, there is no getting away from that. That article strips away the bullshit, it is a display of naked capitalism.

[Krashkopf]

38. Because it is one.

This is exactly where Laissez faire capitalism leads . . . a race to the bottom.

Why do you think it is NOT a conservative/libertarian article?

[laughingliberal]

5. It was a big mistake not to fight for improved labor standards in other countries as a basis for our

trade agreements. Instead of raising the bar for workers elsewhere, the bar for us got lowered. Sad.

[Hippo_Tron]

10. We tried, they're not enforceable

[AdHocSolver]

29. Nonsense! The corporations profit by having trade go one way.

If the U.S. wanted to include trade restrictions on goods made with slave labor, they merely have to renegotiate trade agreements.

The corporate cartels want an excuse to ensure foreign wages are kept low and that is why the trade agreements were written the way they are.

The U.S. economy is headed for a deep recession caused by unemployment. It won't recover until trade laws are changed to bring jobs back to the U.S., and most of the goods purchased by Americans are manufactured by Americans.

Bank bailouts and stimulus packages will have no useful effect, so long as Americans are unemployed in large numbers, and all the stimulus money goes sailing off to China.

[juno jones]

6. We must compete with child labor!

We must lower our standards to those countries that allow workers to be crammed into company owned dormatories, fed filth and kept as virtual human prisoners!

We must lower our standards to accept a capitalist dream in which the social reforms of the early 20th century never happened!

All because a few rich people would lose out if all of us got our real due from the labor we perform. They owe US, not the other way 'round.

[Deja Q]

16. Well said. They do owe us, especially the bailouts, government subsidy, et cetera.

They owe us many times over.

And the rest of the world too. We value humane conditions and they don't, nor do the people who aid them.

[juno jones]

40. Thanks Deja!

PS: 'Q' is one of our favorite star trek characters around here, I love the sig. :hi:

[Democrats_win]

7. Funny, That's the last words of the King....just before he was beheaded.

They should be thankful for what they have rather than complaining that the working people have too much. Don't forget these conservatives and libertarians are the ones who made this mess. We are not only doing our normal work, but we're suffering for the poor leadership that they have provided for the past 8 years. I don't understand why Americans put up with it. Not only should these crooks be in jail, but they should all be looking at the death penalty.

[endless october]

8. we should be tariffing the shit out of slave labor made goods.

or not letting them be imported at all.

if slave labor countries want to sell their shit here, let them enact OSHA and US pollution control measures.

[Deja Q]

20. Maybe that will get them to actually change...

Which would be nice, if even 1/10th all the chatter about "going green" is even remotely true.

But that costs money and corporations don't want to spend it, or spend as little upfront, forgetting real quality costs more and "good enough" really isn't good enough. There's enough labor to make products and services rock-solid. Yet companies put their reputations on their line - mostly because they can; they're so large everyone can hate them and nothing will change. Except for when they come to us to bail them out, despite lowering wages when not firing their own countrymen -- there is a real problem here...

[Duer 157099]

9. Sure, after property values fall about 90%

And the government takes care of all social services including health care etc.

If those idiots think that the "pay gap" exists in a vacuum, it just proves that the vacuum is actually in their skulls.

[Deja Q]

14. Quite. Wages have been dropping for DECADES as has the transfer of wealth increased...

to them because, unlike keeping our own from rotting, they need to be richer. 800x the average working pay isn't wide enough, it seems.

[Xithras]

39. Exactly, we could all live on $1 a day if the rest of the markets prices were pushed down too

We make what we make because the cost of living in the US demands it. Slash the cost of living, and you can slash pay as well. Of course, I think they'd find far fewer buyers for their $300 Blue Ray players if they did that.

[mrcheerful]

11. Since when is it news that republicons and libertarians think american workers are over paid?

Hasn't anyone been paying attention since 1969? When the auto workers union got a cost of living added to their wages in the 60's both groups started screaming wages were to high for those auto workers and how it would be the destruction of the automotive industry. I have heard more then a few of both groups that said min wage should be out lawed or set at $2.30 an hour like back in the good old days. They insist that workers are over paid and it hurts business.

[lifesbeautifulmagic]

12. I would add free marketers to that list.

Don't ask for a link, because i can't give it to you, but i distinctly remember, back in the nafta pre internet days, that free marketers were saying that American wages had to come down, so everyone else's in the world could come up. Americans had a much too high standard of living, and in order to promote peace and compete in the world, Americans had too sacrifice. I remember thinking, hey. no one asked me.

[Deja Q]

15. Hmmm

http://money.cnn.com/2009/09/21/news/international/g20.reut/index.htm

Plenty of Americans are sacrificing.

Plenty of Americans built up this country that its corporate leaders are demolishing and it's due solely to their greed and having taxpayers pay for their screw-ups. How DARE they tell us to pull ourselves up by our own bootstraps and the other gibber when they won't even play by the same rules they want to hand out?

Despicable. Period.

[Deja Q]

13. Make the cost of living match or else it's a lie that other countries are making up the difference.

[dusmcj]

18. Pops Reagan made us believe we were entitled to join the upper class

and be "upscale", when the rest of the developed (-ed, not -ing) world has always chosen more modest and more sustainable standards of living. Of course once you're in debt up to your eyeballs, you need that high cash flow. Furthermore, by participating, you're supporting the consumer economy, which is the only thing our putative leaders could come up with in the way of industrial policy once mass-employment heavy industry became a thing of the past. Can't find their ass with both hands and a flashlight under a full moon comes to mind. And of course then there's self-interest; oh, I mispronounced greed. Euphemized by the fig leaf of trying to insist that in a world of finite resources, infinite increases in productivity and also standard of living are possible. Essentially a lower-class dream, with no adult supervision left to mind the store. Good shit.

[Kievan Rus]

19. The true colors of the monopolist class are showing

[Peter1x9]

21. This is what tariffs are for!

We will never able to compete with slave labor. Unless we tariff everything made overseas the jobs will continue to go away and we will all be in the poor house (except for a few super rich). I see the wages and jobs keep going down, but the cost of living keeps going up.

The super rich would like us to all be slaves though. Since they run the government, they will get what they want. Our standard of living will just keep going downhill until we all bring out the torches, pitchforks, and GUNS.

[ellie]

22. The goal of capitalism is

to incur no costs, so that means people working for free. That is what our corporate masters want.

[Hannah Bell]

23. lol" "Global wage convergence is great for the poor but tough on the overpaid rich."

let's talk about the *real* "overpaid rich," shall we?

these fucks are threatening the public:

"if U.S. wages get stuck above global market-clearing levels, as in the 1930s, the result could well be something approaching 1930s levels of unemployment."

bring it on, assholes.

[daleo]

24. Savage capitalism led to WW2

Via the rise of Hitlerism and Stalinism. Things like that are never far off, when populations are driven to penury and hopelessness.

[Kansas Wyatt]

25. Well if that's they way they want it, then the CEO should be scaled down...

To the same rate that other countries put their CEO earnings at. What is their pay again in other countries, only 20 times the lowest paid employee of the company?

Maybe it's the fuckers at the top of the ladder that are pushing the wage average too high. Did they ever consider that little nugget of information, or are they just blaming it on those damn workers that expect a paycheck for working?

Oh, and did they take into account the difference in currency value, when comparing U.S. wages in third world countries. That's another shell game that they implemented with outsourcing to make it seem like price of goods (now imported) weren't going up that much in this country.

[AdHocSolver]

27. What a crock of manure. It is hard to know where to begin.

(snip)
**********
"For the global economy to rebalance, the pay gap between Americans and the rest of the world must shrink."
**********

True. Foreign wages need to rise to the level of U.S. wages.

(snip)
**********
"There are so many factors working to push up productivity in poor countries. Fast development, cheap capital, and more efficient shipping all help make foreign factories more competitive."
**********

The primary reason for higher "productivity" in poor countries is LOW WAGES.

To understand this statement, one has to understand how the capitalist defines "productivity.

The term "productivity" is supposed to be correlated in the listener's mind with the term "efficiency", which is considered a good thing. Efficiency for a car would mean, for example, getting the most miles per gallon of gasoline. A high efficiency light bulb would imply getting the most light output (lumens) for the least amount of power input (wattage). A fluorescent bulb or an LED light source is more efficient than an incandescent bulb because it provides the same or greater light output at a lower power input.

However, the real meaning of the word "productivity" to the capitalist refers to getting the most output for the least possible cost in order to maximize profit. So a corporation increases productivity by laying off half its employees, and makes the remaining employees do twice the work while taking a 15 percent pay cut, as the executives give themselves hefty bonuses for "increasing productivity".

By this definition, the most productive business entities were the slave labor camps of Nazi Germany and the Soviet Union.

(snip)
**********
"the recession has revealed many workers are paid more than they are worth."
**********
No. The recession reveals that we import too many goods on credit. A recession implies a reduction in economic activity, and it occurs when a lot of people are out of work and can't afford to buy things. Unemployment drives a recession.

(snip)
**********
"The big U.S. trade deficit -- cut in half but still at alarmingly high levels -- is another sign of excessive pay for Americans. One explanation for the attractive prices of imported goods is that U.S. workers are paid too much, relative to their foreign peers."
**********
No. The real reason for the huge U.S. trade deficits are the corporate cartel agreements such as NAFTA, MFN status for China and other low-wage countries, the WTO, the IMF, the World Bank, and such ilk which makes it impossible for smaller American companies who want to employ Americans to be able to compete with the large corporations. The U.S. needs to set import quotas and tariffs on goods manufactured by slave labor to protect American labor and industries. The predators and profiteers from this slave labor are the corporate cartels that control U.S. trade.

(snip)
**********
"But if U.S. wages get stuck above global market-clearing levels, as in the 1930s, the result could well be something approaching 1930s levels of unemployment."
**********

What is meant by "global market-clearing levels" is that supply was greater than demand. That wasn't because wages were too high. That occurred because people lost their jobs and lost their savings when the banks collapsed so that they had no money to buy things with. ("Demand" just means there are buyers with money to spend.)

Moreover, if the corporations continue their scorched earth policy of firing people, we will quickly approach 1930's levels of unemployment. It has nothing to do with American wages.

(snip)
**********
" A combination of moderate inflation to reduce real wages and a further drop in the dollar's real trade-weighted value might be an acceptable combination."
**********

A devaluation of the dollar is equivalent to inflation. Wanting higher inflation at a time of rising unemployment and reduced demand is what Germany experienced after WWI, when a loaf of bread cost a wheelbarrow full of Marks.

These guys are idiots.

[Xicano]

30. Fucking dumbass trickle down theorist clueless about wealth concentration

These people make me sick. Ceo's making more in one day than their labor make all year.

[gaspee]

31. I would be perfectly happy making 5.00 an hour

IF the cost of living was lower. What these guys seems to miss is that American workers are paid more becauase it costs so much more to live here. DUH!

If I could own a home, live comfortably - take a vacation now and then, then I wouldn't mind a lower wage. DUH.

[Deja Q]

33. Exactly! The IT jobs paying $10/hr in India help them. It hurts us because of the cost of living! Oh

http://money.cnn.com/2009/09/21/news/economy/detroit_fixers_pasky
(what doofus in this article can't fathom is that $12/hr is a good wage -- for 1979 standards. When bread was barely over 50 cents and the minimum wage was $2.90.)

[pampango]

32. Kind of overlooks the fact that Europeans make as much as we do and their quality of life

is better. Within the EU they have free trade among the 27 countries (500 million people) and belong to the same international trading organizations that set tariffs and other rules, but they make their societies work.

Europeans don't seem to fixate on the wage levels in "China, Moldova, or Vietnam" the way we do, perhaps due to the fact that their societies are much more progressive than ours and don't hang people out to dry when things go wrong. National health care, an effective social safety net, progressive taxation and strong market regulation can make a society much more attractive and help justify why people in those societies make more than someone who lives in a country without them, like "China, Moldova, or Vietnam".

"U.S. workers should earn more than their peers in China, Moldova, or Vietnam. The Americans take advantage of the higher productivity that makes their country rich: better education and infrastructure, abundant capital and a more developed work ethic." If the authors think that Americans "should earn more" due to their societal "advantages", just imagine how much higher European wages could justifiably be with the even greater "advantages" that their societies provide for their people. More time spent making the US a more progressive society and less time worrying about "China, Moldova, or Vietnam", might be a good strategy. We could end up "European". :)

Part of the big US trade deficit, like that in the EU, is that people with more money can buy (import) more than people with less money. (My boss buys more stuff than I do, because she has more money.) A small trade deficit with poorer countries would be sustainable and understandable , but not anywhere near the levels we have been at for years now.

[blindpig]

34. Refreshing honesty

Naked capitalism on parade.

This is the thinking of those who really call the shots.

What's not to hate? Why do we put up with this?

k&r

[dembotoz]

35. everyone else is overpaid-except me-I am underpaid.

[DailyGrind51]

36. Maybe on mahogany row, but not on the shop floor!