Ramanan — Labour Day!

Nicholas Kaldor on how neoliberalism weakened labour power.

Happy Labor Day to all those that don't have a passive income from portfolio investment. You are the people that get it done.

The Case for Concerted Action
Labour Day!
V. Ramanan

Bill Mitchell — British employers exhibit on-going greed but lie about it

One of the abiding and recurring trends, accentuated in the neo-liberal era, is the apparent ‘concern’ for the low-paid by the captains of industry. They continually warn against allowing pay increases for this cohort because they are – so the story goes – deeply concerned about the damage it will do to the employment prospects. What they really mean is that they know pay rises at the bottom end of the pay structure don’t alter employment levels significantly but have some impact on profitability. That is, they reduce profits a little. And that is the concern they are really expressing. The British Chambers of Commerce have called for a freeze on real wages for the lowest paid workers in Britain despite profitability soaring and the share of business profits in national income rising. The expression ‘where do these characters get off’ comes to mind. Although it is hardly surprising. British entrepreneurs tend to be lazy and take the easy way out when they can to further their own ends.

Bill Mitchell – billy blog
British employers exhibit on-going greed but lie about it

Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Bill Mitchell — Rising inequality and underconsumptionRising inequality and underconsumption

John Atkinson Hobson was an English economist in the second-half of the C19th and worked well into the C20th, dying at the age of 81 in 1940. I have been reflecting on his work in the context of wage and other labour market developments in recent years. Hobson, individually and with co-authors, provided some excellent insights into how rising income inequality, mass unemployment and increased poverty destabilises the economic system through its impacts on consumption spending. He argued that government should engender what he called a ‘high-wage economy’ which would provide the best basis for prosperity. He was writing as an antagonist to the trends of the day, which considered wage suppression to be good for business and society. In this blog, we consider some of those issues. This is a further instalment to the manuscript I am currently finalising with co-author, Italian journalist Thomas Fazi. The book, which will hopefully be out soon, traces the way the Left fell prey to what we call the globalisation myth and formed the view that the state has become powerless (or severely constrained) in the face of the transnational movements of goods and services and capital flows. This segment fits into Part 3 which focuses on ‘what is to be done’.

Bill Mitchell – billy blog
Rising inequality and underconsumption
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

William K. Black — Hillary: The “Good News” is That China is “Forcing Down Wages”

Champion of the people, or slave driver? Sheriff Bill is on Hillary's case.

The general media has been treating the WikiLeaks disclosures of the Clinton campaign documents, particularly the transcripts of her lucrative talks with Goldman Sachs as much ado about nothing. I have not found any article about the disclosures, however, that reported on the extraordinary statements she made in her talk with Goldman Sachs on June 4, 2013.

Hillary told the Vampire Squid that the “good news” was that China was removing workers’ (meager) legal protections so that their employers could “forc[e] down wages” in order to increase corporate profits. She used China’s (pathetically weak) legal protections for workers as her exemplar of China’s “structural economic problems.”

Thirdly, they seem to — and you all are the experts on this. They seem to be coming to grips with some of the structural economic problems that they are now facing. And look, they have them. There are limits to what enterprises can do, limits to forcing down wages to be competitive, all of which is coming to the forefront…

Clinton’s support for “forcing down wages” by removing China’s meager protections for workers reveals that her (leaked) admission that she is increasingly “far removed from the struggles of” the working and middle-class is a grave understatement. She is not simply “far removed” from their “struggles” – she continues when speaking secretly to Wall Street to attack workers’ interests.

New Economic Perspectives
Hillary: The “Good News” is That China is “Forcing Down Wages”William K. Black | Associate Professor of Economics and Law, UMKC

Dean Baker — The Question Is Not "Free Trade" and Globalization, It Is Free Trade and Globalization Designed to Screw Workers

Will the media ever stop the ridiculous charade of pretending that the path of globalization that we are on is somehow and natural and that it is the outcome of a "free" market?

The bulk of the post is kind of weak, but the title and above quote get it right.

Beat the Press

The Question Is Not "Free Trade" and Globalization, It Is Free Trade and Globalization Designed to Screw Workers
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

Mike Whitney — Is This Class Warfare?

Is there a conspiracy to keep wages from rising or is it just plain-old class warfare? 

Check out these charts from a recent report by Deutsche Bank and see what you think….

Do you really think that this relentless upward waterfall of money to uber-rich tycoons (“95% of income gains from 2009 to 2012 went to the top 1% of the earning population”) is a mistake, that it’s merely the unintended consequence of well-meaning monetary policies that were designed to spur lending and strengthen growth but, by pure happenstance, backfired and triggered the biggest redistribution of wealth to voracious, do-nothing plutocrats in history?

Is that what you think?

Not meritocracy and just deserts based on marginal productivity?

You don’t need to be Leon Trotsky to figure out what’s really going on here. Heck, even Warren Buffett nailed it when he said, “There’s class warfare, all right, but it’s my class, the rich class, that’s…winning.”
Counterpunch
Is This Class Warfare?

Mike Whitney

Yves Smith — Google, Apple, and Other Tech Titans’ Wage-Suppression Conspiracy Estimated to Cover One Million Workers

And don’t labor under any illusions about who was responsible for the pay-suppression deals. Just like the ADM case, this scheme was conducted at the highest level of the participating firms. As we wrote in January:

The government’s case, as summarized by Mark Ames at Pando, is chock full of damning e-mails among top executives, which reveal Steve Jobs to have been the lead actor and main enforcer of the pay-containment pact, which dates to 2005. But its real mastermind was George Lucas, who had a similar scheme in place in the 1980s and enlisted Jobs when he sold the computer animation division of Lucasfilm to Pixar.

Idols with feet of clay.

Naked Capitalism

Google, Apple, and Other Tech Titans’ Wage-Suppression Conspiracy Estimated to Cover One Million Workers
Yves Smith

CJ Polychroniou — Actually Existing Capitalism: Wrecking Societies for the Benefit of Big Capital and the Super-Rich

The evidence suggests that capitalism has become wholly predatory and has given up all pretense of being "socially responsible."

Truthout | Op-Ed
Actually Existing Capitalism: Wrecking Societies for the Benefit of Big Capital and the Super-Rich
CJ Polychroniou

George Osborne promises a surplus

Here’s our serious plan for a grown-up country. First, sound money. The bedrock of any sustained recovery and improved living standards is economic stability.

That is what the hard work and sacrifice of the last three years has all been about.
In that time we have brought the deficit down by a third. And the British public know that whoever is elected will face some very hard choices.

Let me tell you the principles I bring to that task. Our country’s problem is not that it taxes too little.

It is that its government spends too much. So while no responsible Chancellor ever rules out tax changes, I think it can be done by reducing spending and capping welfare, not by raising taxes.

That’s my plan. And surely the lesson of the last decade is that it’s not enough to clean up the mess after it’s happened?

You’ve got to take action before it happens. It should be obvious to anyone that in the years running up to the crash this country should have been running a budget surplus.

That’s what we mean when we say they didn’t fix the roof when the sun was shining. Let us never make that same mistake again.

Never again should anyone doing my job be so foolish, so deluded, as to believe that they have abolished the age-old cycle of boom and bust.

So I can tell you today that when we’ve dealt with Labour’s deficit, we will have a surplus in good times as insurance against difficult times ahead.

Provided the recovery is sustained, our goal is to achieve that surplus in the next Parliament. 

That will bear down on our debts and prepare us for the next rainy day. That is going to require discipline and spending control.

For if we want to protect those things we care about, like generous pensions and decent healthcare, and buy the best equipment for the brave men and women who fight in our armed forces, all of us are going to have confront the costs of modern government – and cap working age welfare bills.

And only if we properly control public expenditure will we be able to keep lowering taxes for hardworking people in a way that lasts.

I’ve never been for tax cuts that are borrowed. I want low taxes that are paid for.
We also want to go on investing in the essential infrastructure of our country - the roads and railways and science and communications that are the backbone of the future economy.

So we should commit, alongside running a surplus and capping welfare, to grow our capital spending at least in line with our national income.

 He doesn't see that this is contradictory.

These principles will form the foundation of our public finance policy and I will set out the details next year.

And for those who ask: Is this necessary?I say: What is the alternative? To run a deficit for ever? To leave our children with our debts? To leave Britain perilously exposed to the next storm that comes?

This crisis took us to the brink. If we don’t reduce our debts, the next could push us over.
Let us learn from the mistakes that got Britain into this mess. Let us vow: never again
This time we’re going to run a surplus. This time we’re going to fix the roof when the sun is shining.

Much more nonsense. Read the whole speech.

This plan is based on wage suppression and increasing exports to run a fiscal surplus by offsetting domestic consumption by growing the export industry in an attempt to emulate Germany, Japan, and China as surplus countries.  It's the same old mercantilist "beggar-thy-neighbor" stance that made Britain of old a colonial, imperialist power.

politics.co.uk
George Osborne's conference speech in full
(h/t Ralph Musgrave via email)

Mary Bottari And Rebekah Wilce — The Force Behind Bills To Lower Wages and Suppress Workers’ Rights? You Guessed It: ALEC

The right-wing American Legislative Exchange Council has modeled legislation to strip workers of their rights nationwide.

According to a new analysis by the Center for Media and Democracy (CMD), publishers of ALECexposed.org, at least 117 bills introduced in 2013 fuel a “race to the bottom” in wages, benefits and worker rights—and resemble “model” bills from the American Legislative Exchange Council (ALEC).

As working Americans speak out for higher wages, better benefits and respect in the workplace, a coordinated, nationwide campaign to silence them is mounting—and ALEC is at the heart of it. ALEC corporations, right-wing tink tanks, and monied interests like the Koch brothers are pushing legislation throughout the country designed to drive down wages; limit health care, pensions, and other benefits; and cripple working families' participation in the political and legislative process....

While ALEC and its supporters frame their actions as fiscally responsible and pro-worker, it is clear that this is a deeply political agenda. An analysis by the Economic Policy Institute (EPI) shows that, on the whole, these types of bills don't create new rights for employees but “significantly tilt the political playing field by enabling unlimited corporate political spending while restricting political spending of organized workers.” Fox News reporter Shepard Smith put it even more bluntly. He noted that of the top 10 political donors in the United States, only three donated to Democrats—all unions. “Bust the unions, and it's over” for the Democrats, he said.... 

Harold Schaitberger, General President of the International Association of Fire Fighters, put it best when he told CMD, “The sole purpose of ALEC has been to develop the most anti-middle class, pro-corporation policies, legislation, and agenda in history. They've been waiting for just the right moment to reverse the progress of the American middle class and drive everyone to the bottom, to the lowest wages, the weakest benefits, no job security, and no retirement to speak of. We may not have the billions of dollars of the Koch brothers. But we have each other and we must stick together and fight ALEC's cynical and un-American agenda.” 

In These Times
The Force Behind Bills To Lower Wages and Suppress Workers’ Rights? You Guessed It: ALEC
Mary Bottari And Rebekah Wilce

Mark Gongloff — U.S. Suffers Biggest Pay Drop On Record, As Workers Squeezed Tighter

The economic "recovery" just keeps getting worse for the average worker: U.S. employers squeezed their employees even harder than usual in the first quarter, leading to the biggest drop in hourly pay on record

Hourly pay for nonfarm workers fell at a 3.8 percent annualized rate in the first quarter, the Bureau of Labor Statistics reported on Wednesday. This was the biggest quarterly decline since the BLS started keeping track in 1947. Some of the drop was payback for a 9.9 percent surge in hourly pay in the fourth quarter of 2012, as employers shoveled money out the door to avoid tax changes they expected to take place in 2013.

But there have been plenty of such quarterly pay increases in the past. Many were even bigger. Some went on for several quarters at a time. And never has there been such a steep pay drop in response as there was in the first quarter of this year.
Smoothing out the quarterly ups and downs doesn't make the picture look any better....

The Huffington Post
U.S. Suffers Biggest Pay Drop On Record, As Workers Squeezed Tighter
Mark Gongloff

Interesting article on Costco in this regard. They are bucking the trend. Why? For one thing, the CEO is willing to tell Wall Street to take a hike.

Bloomberg Businessweek
Costco CEO Craig Jelinek Leads the Cheapest, Happiest Company in the World
Brad Stone

Philip Pilkington — Labour's forgotten jobs guarantee

The noises Labour now makes are at odds with a promising proposal early this year to find work for the long-term unemployed

The Guardian (UK)
Labour's forgotten jobs guarantee
Philip Pilkington
(h/t andy Blatchford via FB)

Way to go, Phil!

Michael Perelman — The Power of Economics vs. The Economics of Power

Most of the other papers at the conference were of a similar bent, showing how markets evolve naturally and work efficiently. Nowhere was there any consideration of power. The participants clearly understood the discipline of economics very well, but that was their problem. Part of the training of economists is the development of an instinct to avoid any consideration of power, other than presumptive abuses of government, which interfere with the functioning of markets. In conventional economics, power is reduced to a metaphor. We have the power of the market or the power of competition, but corporate power is nowhere to be found. 2

This exclusion of power from economics has a long history. In researching The Invention of Capitalism, a study of classical political economists' attitude regarding primitive accumulation, I was struck by their cavalier treatment of this abusive exercise of raw power....

Although the political economists were too much concerned with showing the justice of markets to address such obvious exercises of power, in their more private writings -- diaries and letters -- they applauded the forces that pushed workers off the land and into wage labor. Contemporary economists generally follow this tradition describing the evolution of markets as a purely voluntary phenomenon, virtually universally understood as beneficial to all.

As a partial corrective to this problem, I recently published a book, The Invisible Handcuffs of Capitalism: How Market Tyranny Stifles the Economy by Stunting Workers. As the title suggests, an important part of the book is to show how both business and economic theory have destructive consequences. The other main thread of the book describes how economists have gone out of their way to create a theory that excludes all considerations of work, workers, and working conditions.

The main benefit of this exclusion is that it conveniently eliminates all considerations of power from the discipline of economics. In this sense, the participants at the conference were blameless. They did exactly what "good" economists are supposed to do. The problem is that "good" economists do not make good economics, except to the extent that their work provides useful ideological cover.

This cover, however, is incapable of covering up all of the intractable problems of capitalism. Once the damage becomes obvious, power may briefly enter into the picture. After the crisis passes, power quickly becomes invisible again. What is most remarkable is that a clear consideration of mainstream economic theory should be enough to alert economists to the inherent contradictions of the capitalist economy. Such a perspective, might, at least, be capable of moderating some of the more destructive results of untrammeled capitalism.

The Power of Economics vs. The Economics of Power
Michael Perelman
(h/t Chris Dillow at Stumbling and Mumbling)

This is good. Brief and to the point. The subtitle might be, "What's reallly going on with the myth of the market." 

My first mentor used to say the understanding power is key.

Bonnie Kavoussi — Google, Apple Allegedly Conspired To Keep Wages Low: Lawsuit

Despite a heated rivalry, there's one thing Google and Apple allegedly worked together on: underpaying their workers.

Former employees of the companies filed a new complaint on Monday in an attempt to expand a lawsuit they filed last year into a class action case representing up to 100,000 technology workers. Much of the complaint was redacted for privacy reasons.

The lawsuit claims that Apple, Google, Intel, Intuit, Adobe, Lucasfilm and Pixar made "gentleman's agreements" to not recruit each other's employees between 2005 and 2009. By doing so, the lawsuit claims, these companies "artificially suppressed" wages in a rigid pay structure.

In addition, the suit alleges that former Apple CEO Steve Jobs, former Google CEO Eric Schmidt, and Intuit chairman Bill Campbell helped enforce recruiting bans. The lawsuit cites "CEO-to-CEO emails," do-not-call lists, and an analysis by UCLA economist Edward Leamer finding that the alleged poaching bans kept wages low.

The Huffington Post
Google, Apple Allegedly Conspired To Keep Wages Low: Lawsuit
Bonnie Kavoussi

David Edwards — World’s richest woman suggests $2 a day wages for Australian miners

The world’s most wealthy woman is warning that firms are in danger of having to abandon iron-ore mining in Australia if wages are not cut, pointing out that African miners are “willing to work for less than $2 per day.”

In a video recently posted on the Sydney Mining Club website, 58-year-old Gina Rinehart — who has amassed a $18 billion fortune through iron-ore prospecting — said that Australia could be more competitive by emulating Africa.

“We must be realistic, not just promote class warfare,” the billionaire explained. “Indeed, if we competed at the Olympic games as sluggishly as we compete economically, there would be an outcry.”

“The evidence is unarguable that Australia is indeed becoming too expensive and too uncompetitive to do export- orientated business,” she insisted, adding that “Africans want to work. Its workers are willing to work for less than $2 per day.”Under current exchange rates, $2 a day in Australia is worth about $2.04 in U.S. dollars.

You can't make this stuff up.

The Raw Story
World’s richest woman suggests $2 a day wages for Australian miners
David Edwards

Woj — ECB's Means (Lost Decade With High Unemployment) To An End (Structural Reform)

By working to prevent an all out collapse of the EMU, Draghi is merely taking the necessary actions to maintain his position. If Spain or other European countries must “suffer from a decade of recessions with unemployment over 20%” in order to implement the desired structural reforms than so be it. Whether or not that outcome is politically feasible remains an open question, but I have my doubts. Draghi was not the first to claim “it will be enough" and won’t be the last to make that claim either.

Read it at Bubbles and Busts
ECB's Means (Lost Decade With High Unemployment) To An End (Structural Reform)
Woj

The not so hidden agenda. The race in the West — Europe, the UK, and the US — the work force of the developed world to compete at the same level of wages and benefits as the emerging world is on. The belief is that wages and benefits in developed countries will fall as they rise in the emerging world, splitting the difference. The good news — outsourcing no longer a threat to employment in the developed world. The bad news — falling standard of living and rising inequality as the global economy heads toward a world of have's and have-not's in a neoliberal "paradise."

They actually think that this is workable politically. I suspect they realize it is not possible without political repression. So get ready for soft fascism.

Just as policy direction leads to totalitarian communism as the extreme on the left, so too does it lead to institutional fascism as the extreme on the right.