"Higher salary means more purchasing power, leading to increased demand, more production, & more profits.
Compare the economic power of the U.S., Canada & Western Europe (which have unions) to the Third World (which have no effective unions)."
Right, and high salaries are good. But, if it gets to be too much you will have more unemployed people, and those people are not working and thus not spending money, and thus less profits. If there is also a large reserve labor force of the unemployed, that will push salaries down as laborers become less valubale to employees when they know they can be replcaed easily. And as orange pointed out, if the cost of labor gets driven too high it will encourage more mechanizatoin. It can also encourage firms to **** their production overseas which we have seen alot of recently.
Compare the economic power of the U.S., Canada & Western Europe (which have unions) to the Third World (which have no effective unions)."
Right, and high salaries are good. But, if it gets to be too much you will have more unemployed people, and those people are not working and thus not spending money, and thus less profits. If there is also a large reserve labor force of the unemployed, that will push salaries down as laborers become less valubale to employees when they know they can be replcaed easily. And as orange pointed out, if the cost of labor gets driven too high it will encourage more mechanizatoin. It can also encourage firms to **** their production overseas which we have seen alot of recently.
Comment