Can you give us some examples of nonadversarial unions?

Ken

It is hard to decide which is more responsible for the decline in the US manufacturing base, the unions or the management. I suspect that both were greedy and shortsighted. But I digress; We all know that advocate organizations live on and on for their own selfish reasons long after there is no need for their function. I wonder if the unions fall into that category

In my opinion the unions do fall into that category.

Would autoworkers have made it to the middle
class without the UAW ? Doesn't the UAW combine adverserial and nonadverserial features ? Isn't that what we need if we are going to combine economic growth with equity ?

The same can also be said of Management. Remember, it takes two to Tango. Adversarial Unions are the result of Adversarial Management and vice-versa.

I wonder how the Courts would work without the Adversarial System. Would it be "Mitigate, don't Litigate"?

What about unions in the public sector (police, fire, public works employees)? Most of these types of workplaces aren't engaged in active competition, though you briefly bring up education unions, which I would think would operate along the same lines. Why do you feel adversarial unions in this context are just as harmful?

On another note, if I understand it correctly, the card signing provision would apply not just to new unionization, but also to existing workplaces that want to change their representation to a different union. Maybe this provision would make it easier for workers to change unions when the union isn't working in their best interest, which seems like a net benefit.

Would it be crass to discuss one of the strongest unions this side of the AMA? That of the American Bar Assn? A private association that has somehow become a monopoly for representing a citizen in our own public court system.

The high barriers to entry, and with much of the work done by low paid clerical help and paralegals while the hourly fees seem, curiously similar? If we were going for efficiency surely routine divorces and civil matters could be competently handled by paralegals with a few years of experience. Shouldn't the consumer have the right to choose the level of service desired?

The Union Way Up
Monday 26 January 2009
by: Robert B. Reich, The Los Angeles Times

America and its faltering economy need unions to restore prosperity to the middle class.

Why is this recession so deep, and what can be done to reverse it?

Hint: Go back about 50 years, when America's middle class was expanding and the economy was soaring. Paychecks were big enough to allow us to buy all the goods and services we produced. It was a virtuous circle. Good pay meant more purchases, and more purchases meant more jobs.

At the center of this virtuous circle were unions. In 1955, more than a third of working Americans belonged to one. Unions gave them the bargaining leverage they needed to get the paychecks that kept the economy going. So many Americans were unionized that wage agreements spilled over to nonunionized workplaces as well. Employers knew they had to match union wages to compete for workers and to recruit the best ones.

Fast forward to a new century. Now, fewer than 8% of private-sector workers are unionized. Corporate opponents argue that Americans no longer want unions. But public opinion surveys, such as a comprehensive poll that Peter D. Hart Research Associates conducted in 2006, suggest that a majority of workers would like to have a union to bargain for better wages, benefits and working conditions. So there must be some other reason for this dramatic decline.

But put that question aside for a moment. One point is clear: Smaller numbers of unionized workers mean less bargaining power, and less bargaining power results in lower wages.

It's no wonder middle-class incomes were dropping even before the recession. As our economy grew between 2001 and the start of 2007, most Americans didn't share in the prosperity. By the time the recession began last year, according to an Economic Policy Institute study, the median income of households headed by those under age 65 was below what it was in 2000.

Typical families kept buying only by going into debt. This was possible as long as the housing bubble expanded. Home-equity loans and refinancing made up for declining paychecks. But that's over. American families no longer have the purchasing power to keep the economy going. Lower paychecks, or no paychecks at all, mean fewer purchases, and fewer purchases mean fewer jobs.

The way to get the economy back on track is to boost the purchasing power of the middle class. One major way to do this is to expand the percentage of working Americans in unions.

Tax rebates won't work because they don't permanently raise wages. Most families used the rebate last year to pay off debt - not a bad thing, but it doesn't keep the virtuous circle running.

Bank bailouts won't work either. Businesses won't borrow to expand without consumers to buy their goods and services. And Americans themselves can't borrow when they're losing their jobs and their incomes are dropping.

Tax cuts for working families, as President Obama intends, can do more to help because they extend over time. But only higher wages and benefits for the middle class will have a lasting effect.

Unions matter in this equation. According to the Department of Labor, workers in unions earn 30% higher wages - taking home $863 a week, compared with $663 for the typical nonunion worker - and are 59% more likely to have employer-provided health insurance than their nonunion counterparts.

Examples abound. In 2007, nearly 12,000 janitors in Providence, R.I., New Hampshire and Boston, represented by the Service Employees International Union, won a contract that raised their wages to $16 an hour, guaranteed more work hours and provided family health insurance. In an industry typically staffed by part-time workers with a high turnover rate, a union contract provided janitors with full-time, sustainable jobs that they could count on to raise their families' - and their communities' - standard of living.

In August, 65,000 Verizon workers, represented by the Communications Workers of America, won wage increases totaling nearly 11% and converted temporary jobs to full-time status. Not only did the settlement preserve fully paid healthcare premiums for all active and retired unionized employees, but Verizon also agreed to provide $2 million a year to fund a collaborative campaign with its unions to achieve meaningful national healthcare reform.

Although America and its economy need unions, it's become nearly impossible for employees to form one. The Hart poll I cited tells us that 57 million workers would want to be in a union if they could have one. But those who try to form a union, according to researchers at MIT, have only about a 1 in 5 chance of successfully doing so.

The reason? Most of the time, employees who want to form a union are threatened and intimidated by their employers. And all too often, if they don't heed the warnings, they're fired, even though that's illegal. I saw this when I was secretary of Labor over a decade ago. We tried to penalize employers that broke the law, but the fines are minuscule. Too many employers consider them a cost of doing business.

This isn't right. The most important feature of the Employee Free Choice Act, which will be considered by the just-seated 111th Congress, toughens penalties against companies that violate their workers' rights. The sooner it's enacted, the better - for U.S. workers and for the U.S. economy.

The American middle class isn't looking for a bailout or a handout. Most people just want a chance to share in the success of the companies they help to prosper. Making it easier for all Americans to form unions would give the middle class the bargaining power it needs for better wages and benefits. And a strong and prosperous middle class is necessary if our economy is to succeed.

--------

Robert B. Reich, former U.S. secretary of Labor, is professor of public policy at UC Berkeley and the author, most recently, of "Supercapitalism."

Unions are as much a "combination in restraint of trade" as any industrial cabal in history and work in all the same ways.

Our educational system is hugely expensive to the taxpayer, hugely inequitable in many respects, and going downhill by nearly any objective educational standard that can be brought to bear. Ask any common citizen who's tried to perform their civic duty by serving on a Board of Education in his/her locality what the number one reason is for the constantly escalating costs (not to mention the taxes to pay for them) and deteriorating results and they'll name the teacher unions.

A potent contributor to bankrupt state and local governments of all varieties is the never ending escalation of public union labor costs: wages, medical benefits, pensions, and implacable union feather bedding (just TRY to fire one unionized civil service clerk and you'll see what I mean). Garbage collectors (37.5 hrs/wk at most) some places on Long Island make $100K/yr, have full nearly dollar one medical coverage, and a guaranteed pension based on their highest yearly earnings regardless of market factors (based on as little as ten years service).

Unionism in this Country may no longer be viable economically or socially. It remains, however, a potent political force with it's large campaign contributions and captive organizations. It will, regardless of the "rational" arguments against it, as set forth so capably by both Judge Posner and Professor Becker above, get its quid pro quo.

And I just can't walk away from the woefully uninformed comment above about the ABA. Comparing the ABA to a union is apples to oranges. You can, anytime you'd like, represent your own legally untutored self in any legal proceeding you'd care to: divorce, civil, or criminal. And, if you're truly broke, you can often find free legal services in civil as well as criminal matters. Almost every local/state bar association (not, by the way, the ABA) maintains a pro bono service and legal clinics for a variety of issues are a dime a dozen.

The ABA is a far cry from a union. Lawyers don't have to be a member of the ABA to practice anywhere and many aren't. The primary function of that organization seems to be lobbying for the plaintiff's end of the trial lawyer fraternity while mostly ignoring other portions of the bar. To their credit, they do run some "impaired professional" programs for lawyer addicts of one sort or another and some other generally helpful programs. But the ABA has NOTHING to do with setting fee schedules or work schedules or anything else about lawyering, for that matter.

Pay? Outside of big metro areas DA's and especially ADA's make less than those LI garbagemen. Public defenders, make even less than that. Legal pay is a far cry from what most people think it is. Many GP's struggle. A lot of smaller market insurance defense guys make less per hour than your average plumber. And they don't have a pension and near full ride medical plans either.

Most lawyers come out of their 19th year of schooling with education debts running upwards of a quarter million dollars. They then enter a market that asks them to work (not just bill) multiples of the garbageman's hours per week, week after week, year after year. Vacations? Holidays? Most young lawyers only dream of such things. And weekends are just two more work days for most.

Yes, sometimes (but not always) they have paralegals and assistants to help, but theirs is the bottom line responsibility and stress. They pay for it in ulcers, rampant coronary artery disease rates, busted marriages, estranged kids, and disrespect from every jamoke that ever saw John Edward's house on TV or watched some fat pustulant toad play a lawyer on Boston Legal. The ABA a union? They're about as much union as Hamas is politcal party.

Ha! Counselor! I got a real chuckle out of the last part of your closing argument! But I did end up with a few questions:

Are you certain that some garbage collectors earn $100k? And does that go very far on Long Island? Are trash collection costs prohibitive to those living there?

Do you think teachers are paid too much? After all they have many years of school and school debts to pay as well.

Is it the truth that "most lawyers" come out of school "with education debts running upwards of a quarter million dollars."

But Ha! truth is I know many lawyers who work hard for moderate pay, but my point is that the ABA A. is a protective organization B is one of the top lobbyists who at times my be lobbying for good cause and at others for nest feathering.

Here's and interesting puzzle: Take a look at the divergence of wages, including college, and likely including lawyers and how the line diverges from productivity gains. How, sans unions and significant raises in min wages (say restoring it to its pre-1980 purchasing power?) would you get those lines to converge such that the working bloke might return to his traditional share of GDP? At the bottom of the article:

http://news.bbc.co.uk/2/hi/business/5303590.stm

Seems the lawyer screaming about teacher pay or both screaming about plumber pay might look upwards to see why there is not enough to go around?

gd, Wage scales much of the time, like comodities, are dependant on scarcity. As for some service workers, like Garbage Men, and Plumbers, the wage is based on their scarcity as workers. As for Lawyers, well, what scarcity?

Perhaps, too curb the high costs associated with workers, we ought to reinstitute the institution of slavery. That might very well bring back the "Corporatocracy" to America. That has long since fled to Indonesia, China, the Asia Rim, Africa, Central and South America for example.

As for Hamas, they're more politically astute than the Party, Fatah, that they replaced. Which in itself, makes it a Party. Although, with a rather Anarchic "Military" arm.

For some reason, Judge Posner cannot get his Keynesian/monetarist/classical paradigm in sync. These positions are not consistent with one another. For example, Judge Posner says: "A depression involves a severe reduction in output, resulting in a reduction in inputs, including labor inputs: hence increased unemployment. Adversarial unions increase unemployment, by obtaining wage increases that reduce employers' output by increasing labor costs." This is correct from a classical and Austrian perspective. This observation though makes little sense from a Keynesian perspective. In fact, the reason Keynesians favor re-inflation and fiscal stimulus is to raise nominal wages while lowering real wages in order to fool workers to work more for less in real terms.

Then incredibly we find Judge Posner saying in the very next sentence: "A similarly incoherent New Deal program of fighting depression combined sensible measures like going off the gold standard, expanding the money supply, and increasing employment by public-works programs with output-restricting programs like the National Industrial Recovery Act, which encouraged the formation of producer cartels, the Agricultural Adjustment Act, which curtailed agricultural output in order to raise farmers' incomes--and the National Labor Relations Act (the Wagner Act), which encouraged the formation of workers' cartels..." Judge Posner is absolutely correct to say that a public policy of enforcing cartel agreements and output restriction is counter-productive to economic recovery, but he himself is incoherent when he prefaces the remarks about the NRA and labor law reforms in the 1930's with going off the Gold Standard and increasing the money supply. An unconstrained, unpredictable monetary policy that allows and even encourages jacking up the money supply will only confuse the economic players in discovering the real factors in the economy and making proper adjustments to counter previous distortions created by inflation. These policies that Judge Posner recommends will only encourage workers to refuse lower nominal wages and producers to refuse to lower prices when they can sense re-inflation possibly emerging. Ending the Gold Standard removed the discipline imposed on monetary authorities in previous times. That set the stage for a discretionary monetary policy that created cycles of bubbles and corresponding collapses that lies at the heart of the present, as well as previous, crises.

Chris......... some of the problems of the Depression are one's we will be revisiting today.

"Judge Posner is absolutely correct to say that a public policy of enforcing cartel agreements and output restriction is counter-productive to economic recover..."

Here was the problem....... if you go chugging out the demand curve to the point where you find a willing buyer in a time of little demand and oversupply you drop down past the cost of production before you find any buyers.

Naturally this produced in farming what we see today in housing; there were no workable options for the farmer: A produce below cost of production. B. Produce even less or nothing at below the cost of production. Naturally in the short run that means a farm was a liability instead of an asset with bankers foreclosing but getting but pennies on the dollar.

Autos of all manufacture are in much the same fix, a year ago they sold 16 million, at break-even or thin profit margins. This year less than 10 with four million in inventory, obviously if prices were lowered enough that inventory would get mopped up but the auto company can not afford to sell that cheaply.

Housing? same problem in many areas. The lightly "used" homes built since 2001 will apply strong downward pressure on new home prices, but I know for a fact that the building industry is one that HOPES for a 10% margin, and cartel or not (the banks will be their "cartel") they can not produce homes in this market.

A shame and concern, as it's been autos and housing that led us out of most recessions.

Chris, "You shall not press down upon the brow of Labor this crown of thorns, You shall not crucify mankind upon a Cross of Gold"!

W.J. Bryan, 1896 Democratic National Convention, Chicago, Illinois.

And the Band still drones on ...

Jack, thanks for your reply to my comments above. Perhaps we see recessions in two different lights. I suspect that you take what is known as the stabilization view where public policy is geared toward preserving current businesses in their productive capacities as well as the positions of workers and consumers. Professor Becker in previous posts explicitly sees recessions as unnecessary for the most part and to be avoided. Judge Posner's position seems to be more mixed, but, in the end he takes this view since he sides with many of the Keynesian prescriptions for dealing with recessions. Keynes' theory is clearly assuming the stabilization strategy.

In contrast, I see a recession as a process of liquidating malinvestments. On the the Austrian view, which I am accepting, the malinvestments were undertaken by entrepreneurs due to false signals sent out by a monetary policy that created a bubble or bubbles. Bubbles occurred as a result of increasing the money supply faster than the productive capacities the economy could sustain over time. These bubbles will either have to be busted, so to speak, or the inflation will have to continue. If we did not bust the bubbles by moderating growth in the money supply, then more bubbles would emerge and, over time, inflation would turn into runaway inflation which would then turn into hyper-inflation if the inflation, in the sense of continuing disproportionate growth in the money supply, continued indefinitely.

So, as much as I hate to see people hurt in the short-run, we have to choose our poisons at this point. There will have to be some adjustment period where some businesses fail due to past mistakes in accelerating the growth in money past what could be sustained by real factors in the economy. These liquidations are part of the adjustment process to wring distortions out of the system. This adjustment process will bring the circular flow of income, production, and resources back into alignment. Otherwise, we would have to continue inflating to sustain the bubbles, thereby creating more malinvestments and distortions in the price system to the breaking point.

Hi Neilehat

While I agree with William Jennings Bryan on religion, evolution, and opposition to building an American Empire, I do not agree with his position on gold. What Bryan basically wanted to do was to create a mild inflation to artificially stimulate the economy. He was sort of a proto-Keynesian on his economic views.

The problem with following this sort of policy is that one has to keep increasing the rate of growth in the money supply as people catch on to what is happening to the purchasing power of their money and make adjustments that negate the effects of the inflation. As money continues to grow faster than the productive capacities in the economy, bubbles occur as overinvestment takes place in certain markets that cannot be sustained without this on-going process of accelerating inflation. At some point, the process will either have to stop, creating liquidation of unsustainable assets as credit dries up resulting in business failures, or the inflationary cycle will spiral into runaway and then hyper-inflation. Then you have the Weimar Republic or Zimbabwe.

Chris, Hyper-Deflation is today's problem. Which a "Gold Standard" would go far in developing and driving the World's Economies into Depression.
As for Hyper-Inflation, that's a problem for next year or years.

The problem, is the availability of currency for credit (part of todays problem is it's hoarding by the Banks to cover it's bad loans and investments). Not too mention, a livable wage around the Globe. Remember, the "Corporatocracy" exists to enrich itself at the expense of impoverishing everyone else, except for the select few.

Jack, whether rising public service costs paid for by taxes are ruinous on a macro scale versus micro evaluations of the individual worth of the service providers are perhaps two different issues that can be argued, but the ABA is nowhere near a union. Just concede the point and move on.

Neilhat, your theory is flawed. The present glut of J.D.'s developed directly in response to the demand for their specialized services, sad to say. We are ridiculously litigeous and everywhere afflicted with myriads of sometimes conflicting governmental regulations which have spawned interlocking bureauocracies so arcane that no one without special training can hope to negotiate them.

Numbers of publicly employed teachers, garbage men, and so forth are not a function of a shortage of candidates. There are always plenty of applicants whenever jobs of that type open up. Their numbers are not determined by open market supply and demand but, rather, limited by budgetary and taxing considerations which artificially deflate demand.

So let's see, the rest of your point is what? If you're not in a union, you're a slave? Interesting that so many workers have then made that choice voluntarilly.

And lastly, generally, on the "protective" nature of unions asserted or implied by both replies. They surely are protetive. A close friend of mine represented a guy recently who suffered head injuries, multiple fractures, and a ruptured disc in his back on the job. Industrial accident? Not hardly. In order to feed his family he posed as a union member (he wasn't one) on a construction job and was beaten near to death by several of its real members when they found him out. I'd say that's protective.

I would love to read Becker and Posners analysis of Rush Limbaugh's Stimulus plan he just announced

gd, A Scab eh? At least they didn't kill him (and he should be thankful for that). As some Managements have done by proxy through Goon Squads and I won't even mention lockouts and lockdowns. And you wonder why there can be such hostility? Remember, It takes two to Tango.

As you yourself have said, "the glut" and what's its opposite?

Someone once said, "As I would not be a slave, so I would not be a Master ..." From the tone of your response, it sounds as if you would welcome the return of such a relationship. Ah yes ..., the well developed sense of entitlement and arrogance. The mark of an Ivy League Education? Only I know differently.

Thanks for your reply, Neilehat. Except for the initial adjustment period, deflation should not be a long-lasting problem if prices and wages are allowed to fall. Holding prices and wages up while the money supply contracts is what causes lasting problems. That is what happened in the 1930's.

If we re-inflate the money supply to head off deflation, then we shall be right back where we are now or worse in the next few years.

I would have to agree with Neilehat's comments on lawyers. The ABA does function as a union.

gdgeiss Ha! the counselor opens with an unsupported motion to dismiss! Would it help it I included the AMA and CPA's in my list of professional unions......... err crafts guilds?

But, if it please the court, I'd not want to typify hard working union members by a cherry-picked exhibit just as I don't look down upon Ford for the clubbings it administered to union guys back then, or some of Henry's social views.

I am sure that were I to try to practice law w/o passing the ABA exam, the violence would take place in a court with and ABA member or ex-member presiding!

Chris, I liked the "malinvestments" and "false signals" where I, or perhaps Twain, would have been tempted to talk about river boat gamblers, cutpurses, pirates in silk suits and the like.

But, I do get your point, it was the zero interest policy of Japan that created $1,000 per sf real estate and unproductive investments that bogged them down for a decade.

But I don't know if a recession is needed or even helpful to prune under productive endeavors. I've thought (known!) we were over retailed for decades, but why is it that we have so many in retail or selling lattes to each other?

I'd argue that as in Mexico there are so many blanket sellers that we too have not been generating enough "real" jobs for decades and the falling min wages have propped up millions of marginal operations............ plus Walmart!

Recession to be sure is purging them, but I would have much rather seen them pruned gradually by a shortage of workers willing to stand in them for long hours and short pay because they had more productive and higher paying options available to them.

(I'm coming to a conclusion that "our problem" is that a combo of productivity increases, outsourcing and importing more than we sell is resulting in an economy in which we'll never have full employment again. Or one that has to find ways to make the care for our elders and other service jobs a paying proposition.)

As for deflation not being much of a problem, were we a largely cash society I'd agree but none of our debt instruments are set up to adjust.

As with falling home prices each percent they fall makes a larger base on the triangle of debt to asset value with the result that with the best of intent, a job loss means the house will be foreclose instead of sold, or even should a better job open up elsewhere the owner can't get out from under the debt load, nor, honorably, buy the the newly discounted home down the block. The banker is not going to enjoy the results.

It is interesting to reflect on who are the winners and losers in either an inflationary or deflationary time. Were the lenders lucky enough to have the deflation occur when buyers had enough equity that they wouldn't default, they'd be happily collection dollars that would buy more in the future at interests rates not justified by a deflationary world. ie The opposite of the drubbing they take when inflation rises after they've loaned at fixed rates that are too low to cover inflation.

These are indeed interesting times.

I don't get it. Some folks write on these blogs as if policy has a life of it's own and and lives independenly of the people who staff the political and financial waste treatment plant in which we reside currently. It is essential that we realize that not all intelligent people are necessarily rational and that some may even be sociopaths who are difficult to detect and may even be spellbinders. I need only to point to Madoff and the recently ousted govenor of Illinois. Some reputable writers estimate that 4% of the population are born without conciences and that some of those will end up in political or commercial leadership positions. It is my opinion that regardless of the economy or laws passed, there is such a lack of character in our culture right now that those laws will have to be enforced coercively and that in itself will lead to further dinintegration of the culture. As I have said before, societies rot from the bottom up and never seem to learn from history. And just as an aside, I recently asked the retired prsident of a prominent university who is teaching history there what the state of undergraduate understanding of history was. Her answer; abominable.

The practice of law is organized more like a guild than anything else. Lawyers determine who gets to be a lawyer, you must pay dues to practice law, lawyers determine the standards that lawyers must meet in performing their duties, non-lawyers are specifically prohibited from practicing law, and lawyers even rank each other (Martindale's rating system) much as guilds marked their members as journeymen or master craftsmen.

The ABA aspires to be a kind of super-council within the guild to promote the interests of all lawyers as a whole. I think they aspire to be more of a "members assembly" within the guild format rather than a union, per se. However, the ABA's ideological alignment may have it acting like a union might.

У меня ничего не выходит. Целыми днями за компом, и время уходит как в пропасть, но результата нет, может быть пора начать новую жизнь, отдохнуть, приготовить что-нибудь вкусненькое, заняться собой, подарить что-то хорошее близким, а все остальное приложится.

This time around, the "management" class ("unions") may be worse than the more traditional worker unions (ie, Hummer acquisition at GM -- did the workers make the execs buy Hummer?)

It is remotely possible that this economic downturn may be worse due to corporate empire building, throwing more money into bad businesses through borrowing or selling good businesses, and general poor decisions by people in power who are often insulated by parachutes, endowed instutions, and other means.

Let's see now. The treasury secretary can't figure out Turbo Tax and doesn't know how or when to pay his taxes. The HHS nominee doesn't know how or when to pay his taxes. Maybe we should start over for these guys and go very slowly. How about, "This is a nickel, this is a dime, etc." I may have to run for office to replace some of these idiots.

Chris, "Deflation should not be a long lasting problem if wages and prices are allowed to fall"?
If wages fall, what does the consumer buy with, especially when they're saddled with debt? This sounds like the same kind of logic, "in order to save it, it must be destroyed". At least that was the idea when "they" almost shipped me off to some scenic little "pit" in Indochina. And look how that ended up.

Take the time to study in detail Corporatocracy and "The Secret History of the American Empire". It looks an awful lot like the Corporatocracy has run out of countries to plunder and has flown back home to roost and plunder the nest.

Nathan: "It is remotely possible that this economic downturn may be worse due to corporate empire building, throwing more money into bad businesses through borrowing or selling good businesses, and general poor decisions by people in power who are often insulated by parachutes, endowed instutions, and other means."

......... Ha! exactly! We can see how capitalism is supposed to work with millions of small owner operators whose std of living is directly connected to the wisdom of their decisions and hard work of executing. We (I think!) used to be able to see management watched closely by stockholders........ but what we've seen recently is even worse they you describe, that of rigging large bonuses for putting the company at risk (to say the least) while enriching themselves with bonuses for doing so. Add in those "maxxing profits" via offshoring, and finding tax havens from which to run abusive tax shelter schemes and there you have it... utterly counter-productive incentives and NO consideration of the wealth of the company that came from long years of team effort.

Selling off the 100 year reputations of the bond raters AM Best, S&P and Moody's are good examples. What took a century to build taken down in single digit years with GOBS made in "performance bonuses" by the current caretakers of the companies. Deep disgust!

very interest. thank you

Neilehat,

What offsets the fall in wages in a deflation is the corresponding fall in prices, so that as nominal wages fall, real wages remain the same or may even rise.

Chris, Yes (with cet. paribus in effect), but, the current debt load being carried by the indvidual doesn't change or the interest on that debt. So in reality, there is actually less for expenditures and purchases at lower prices because of the fundamental requirement to service that debt load. That is, if the prices fall at all, much of the time they don't. Production costs remain the same. Usually in the raw materials bracket. Without customers, the producers are forced to close down because they can no longer carry their own debt load and the spiral down becomes even sharper and faster.

Now carry this to the Trans-national level. This is the fundamental technique used by the Corporatocracy, to gain control of Nations, Governments, Labor and resources. Not a very pretty sight, when all is said and done.

Neilehat, you are correct about lenders gaining from deflation and borrowers losing. People with current loans out must repay in more valuable dollars. As Jack pointed out above, there are distinctive winners and losers in inflationary and deflationary times.

In deflation, prices must fall for the economy to equilibrate at full employment at a lower price level. The key to this adjustment process is to make sure that prices and wages are flexible.

What is the alternative to allowing the markets to correct themselves? If we re-inflate, as we are presently trying to do, we shall create similar problems with bubbles and malinvestment that we are trying to recover from now. Later, we will be back where we are now or we will have to keep inflating to stave off a correction, which will lead to higher and higher levels of inflation. If we do not re-inflate the money supply as we attempt to hold up prices and wages, then we will have long-lasting unemployment and depressed output.

I agree that the choices are not swell. But the present problems were brought about by Alan Greenspan re-inflating the economy when previous corrections started. I do not see continual re-inflation as the answer.

路过路过

دردشة صوتية

Chris, you seem convinced that there is a bottom at which a rebound will occur. Is there? And how much wreakage and wholesale destruction will be left behind? Will there even be Bread Lines in this wonderful new order? The late great United States.

I am an economist who grew up in a heavily pro-union coal mining area. This is a little misleading because my hometown was one where people lived who did not want their children to grow up near the mines. My father was a physician and the family did not like unions.
The pro union people thought is was okay to kill people who did not participate or want to participate in a strike. When in college, one of my room-mates worked as a bagboy at a unionized grocery store. He got paid minimum wage and the union never negogiated on behalf of bagboys. he was told, however, to join to union because a stack of boxes might fall on him otherwise. He got the message. Unless you live where unions are strong, you do not know they are strong because of coercion the threat of the use of force. Without a secret ballot unions will threaten people and make them sign the cards. Ask Joseph Yablonski. No you cannot ask him, his union had him murdered.

Von Raivo Pommer

Die Länder wollen sich ihre Zustimmung zum zweiten Konjunkturpaket der Bundesregierung und zur Reform der Kfz-Steuer mit weiteren 200 Millionen Euro bezahlen lassen.

Die Finanzminister der Länder halten bei einer Übertragung der ihnen zustehenden Kfz-Steuer auf den Bund die bisher verabredeten Ausgleichszahlungen in Höhe von 8,84 Milliarden Euro für zu gering. Der Finanzausschuss des Bundesrates empfahl daher am Donnerstag, eine Entscheidung über eine entsprechende Grundgesetzänderung zu vertagen und wegen der Kfz-Steuerreform den Vermittlungsausschuss von Bundestag und Bundesrat anzurufen. Für das eigentliche Konjunkturpaket II zeichnete sich aber eine Mehrheit ab.

Depression im Jahre 1930

von Raivo Pommer-raimo1@hot.ee raimo.pommer@wippies.fi www.google.ee

Die Weltwirtschaft wird vom stärksten Einbruch der Produktion und Handelsströme seit der großen Depression der 1930er-Jahre erschüttert. Für die Notenbanken ist damit der Auftrag klar: Sie müssen die Zinsen senken und die Märkte mit frischem Geld fluten. Nur so kann eine drohende Deflationsspirale durchbrochen werden. Die weltweite Rezession, die allgemeine Unsicherheit und die verschlechterten Beschäftigungschancen führen nämlich zu rückläufigen Absatzzahlen und als Folge davon zu steigenden Lagerbeständen. Das nährt bei den Verbrauchern die Erwartung, dass die Preise für Konsumgüter fallen. Also schieben sie ihre Einkäufe auf. Sie wollen nicht heute kaufen, was morgen noch billiger werden könnte. "Cash is King" lautet das Motto in deflationären Zeiten.

Was für den Einzelnen eine kluge Vorgehensweise ist, wird in der Summe des Verhaltens aller zum gesamtwirtschaftlichen Problem. Wenn alle mit Kaufen warten, gehen die Umsätze weiter zurück. Deshalb muss die Produktion noch einmal gedrosselt werden. Es entstehen zusätzliche Überkapazitäten. Sie lassen sich nur durch weitere Preisnachlässe und Rabatte abbauen. Es kommt zu einer sich eigendynamisch verstärkenden Deflationsspirale.

Deflationäre Prozesse zu überwinden ist schwierig. Als der heutige amerikanische Zentralbankchef Bernanke noch Universitätsprofessor war, prägte er als Lösung das Bild der Helikopter-Ökonomie.

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Raivo Pommer
raimo1@hot.ee

Geld

Auf Druck der amerikanischen Steuerzahler, die AIG bereits mit etwa 180 Milliarden Dollar gestützt haben, musste der einst weltweit größte Versicherungskonzern offenlegen, wohin das Geld geflossen ist. Rund 100 Milliarden Dollar gingen an Kunden im In- und Ausland. Auch andere Banken, von denen es bisher hieß, sie seien gut durch die Krise gekommen, wie Goldman Sachs und Société Générale, sind wie die Deutsche Bank in den Genuss von mehr als elf Milliarden Dollar an AIG-Hilfen gekommen.

Ist das ein Skandal? Nein. Die Zahlen zeigen aber zweierlei: Erstens gibt es wohl auf der ganzen Welt keine größere Bank mehr, die nicht direkt oder indirekt von Staatshilfen profitiert. Ja, vermutlich würde es das ganze Bankensystem so nicht mehr geben, hätten die Regierungen nicht massiv eingegriffen. Dies ist aber - zweitens - gerade der Grund, weshalb Finanzkonzerne wie AIG und hierzulande die Hypo Real Estate gerettet werden.

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