Labor Unions Good for Economies and Equity, Says World Bank

[Lawrence of Arabia]

Unions want more wages because their 'standard of living is going down' and then their increased wages means more inflation and then they are back to square one.

[Bosh]

if you believe everything he says just because you don't understand it you're naive

No, I believe what he says because we've both been on these forums for a couple years and I've found him reliably sane and accurate. Not being left-wing doesn't mean that you're wrong, just that you have misplaced priorities

[DuncanK]

Originally posted by Boshko

No, I believe what he says because we've both been on these forums for a couple years and I've found him reliably sane and accurate. Not being left-wing doesn't mean that you're wrong, just that you have misplaced priorities

That's fine Boshko, but when somebody claims that such and such is a fact because of such and such economic study it's my duty to speak up about it.

[Lawrence of Arabia]

When in doubt, go back to the basic demand and supply diagrams.

[Zkribbler]

Originally posted by Lawrence of Arabia
Unions want more wages because their 'standard of living is going down' and then their increased wages means more inflation and then they are back to square one.

Hmmm...let's extend that reasoning: Businesses should not seek to increase profits because increased profits lead to inflation, and so we're back to square one.

[Lawrence of Arabia]

Zkribbler - not necessairly. More profits can result from either more products being sold or a price increase. If the company increase quantity, then the price will drop (a shift of the supply curve to the right)

[DuncanK]

Don't forget breaking unions

[Urban Ranger]

Originally posted by Lawrence of Arabia
Zkribbler - not necessairly. More profits can result from either more products being sold or a price increase. If the company increase quantity, then the price will drop (a shift of the supply curve to the right)

You are not refuting him. He was speaking of the results of gaining more profits, you are speaking how to make more profits. Doesn't fit.

[Lawrence of Arabia]

UR - yes it does, because inflation is measured by the prices of a basket of goods. ZKribbler was saying that when corporations make more profits, inflation increases. THis is not true. They can make more profits, and still have prices which go down. This shift in the supply curve can be due to an increase in productivity. THis is why during the 90s, inflation did not increase as dramatically as it should have because companies were increasing their productivity at a very fast rate.

[DuncanK]

Originally posted by Lawrence of Arabia
UR - yes it does, because inflation is measured by the prices of a basket of goods. ZKribbler was saying that when corporations make more profits, inflation increases. THis is not true. They can make more profits, and still have prices which go down. This shift in the supply curve can be due to an increase in productivity. THis is why during the 90s, inflation did not increase as dramatically as it should have because companies were increasing their productivity at a very fast rate.

There are atleast two ways that at firm may raise its price while it's costs may remain the same.

1)increased demand

2)more market power

[Zkribbler]

Actually, I was just extending LoA's argument to the other side of the business/employee dicodomy to try and point out the LoA's argument was faulty.

An increase in the standard of living of a company's employees does not necessarily lead to inflation. For example, look at what happened to the standard of living of the U.S. working class (those non-college-educated persons employed in skilled blue collar jobs or in lower-level white collar jobs).

For twenty years, starting in 1972, their standard of liviing remained stagnant, even during periods of inflation. Starting in the early 90's, their standard of living began to increase, but there was no inflation.

[DuncanK]

Ah, well in this case one or both of the following two things would have to happen.

1) firms profit would decrease

2) increase in productivity (this would probably happen if there is tech to so it.)

[DuncanK]

Zkribbler,

Unfortunately union memebership declined during that whole period.

[Lawrence of Arabia]

Zkribbler - what is your definition of standard of living. Is it more GDP per capita, higher wages, mroe benefits (insurance, healthcare etc)

I am not saying that 'dont increase wages because then inflation will increase' What Im saying is that Unions who demand more wages are not fixing their predicament - in a couple of years, their wages will again lose real value. The act of demanding higher wages means that these companies will either leave the country and there will be an unward pressure on inflation.

When these companies leave america for other countries, the union are the first ones to complain. However, it was them in part who made the companies costs too high. So the Union faces a choice, between higher wages now, and unemployment later, or lower wages now but employment for a while

I find nothing wrong with unions demanding more wages, or with companies leaving. Unions quicken the specialization of economics and also increase the comparative advantage which developing countries have in labor. When these companies leave, we can get our products cheaper.

[DuncanK]

Originally posted by Lawrence of Arabia
When these companies leave america for other countries, the union are the first ones to complain. However, it was them in part who made the companies costs too high. So the Union faces a choice, between higher wages now, and unemployment later, or lower wages now but employment for a while

I find nothing wrong with unions demanding more wages, or with companies leaving. Unions quicken the specialization of economics and also increase the comparative advantage which developing countries have in labor. When these companies leave, we can get our products cheaper.

Workers can not be at fault for demanding a higher wage when their wage is too low. How do you expect them to get what's fair if they don't. We should look at the companies closing the factories down when workers do so. That's where the problem is. Now you saw that other countries have a comparative advantage in labor. I say you can't have a comparative advantage in labor. This is a bastardization of the concept. There can be no comparative advantage in labor. Labor is the same everywhere. If anything the labor in the United States is better. It's simply a matter of the firm being able to exploit the foreign workers more. And that is a bastardization of the term.