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Date:         Wed, 18 Nov 1992 15:39:55 -0500
From:         Andrew Allen <E7L8ALL@TOWSONVX.BITNET>
Subject:      yet some more economics stuff for Jason Z (and anybody else)
Comments: To: politics@ohstvma.bitnet

>>As to your statement that additions to capital stock cause wages to
>>increase, some figures please?

>I have none.  In fact, I doubt that any exist.  The relationship is real,
>however, and can be demonstrated theoretically.

>Increases in the capital stock give labor more capital with which to work,
>which makes labor more productive, meaning that its marginal product has risen.

Labor being more productive currently has led to a decline in real wages.
This has been especially true in the textile industry, where rapid gains
in worker productivity, rather than foreign competition have led to a
decline in employment/wages.


>>all of the government
>>figures indicate that productivity is up and real wages continue to fall.

>As I said before, productivity growth is only one factor that affects wages, so
>wages could hypothetically fall even with productivity rising.  Holding all
>these other factors constant, though, an increase in productivity will = an
>increase in real wages.

Perhaps you would care to describe why  real wages are declining in
our current competitive market?


>You never answered my question.  How can you blame Reagan for breaking unions
>when the person you hold directly responsible was someone other than Reagan
>(Volcker) who was appointed by someone else?

Ok, I didn't really (and still don't want this thread to devolve into an
argument about unions) want to get into the union thing, but here is a
short answer.

I identified Volcker, because Open Market policy (tight money) was what
really delivered the goods for the Reagan Administration which was openly
hostile to unions. Had these policies reached the height of their
destructiveness during the Carter Administration the effects would
not have been as devastating to unions.

The Reagan administration upon taking office *packed* the National
Labor Relations Board and other regulatory agencies with appointees that
worked assiduously to extract or file down any teeth that the unions
had, particularly as relates to collective bargaining.

The deregulatory initiatives of the Reagan administration, particularly
in the airline and trucking industries (which lost 400,000 union jobs
between 1980 and 1985) cut deeply into unions by encouraging the
growth of non-union competition.

Among the key things that Reagan's appointed NLRB did to diminish
Union leverage in collective bargaining was to issue rulings that
allowed employers to hire non-union temps during lockouts as well
as facilitated the relocation of unionized plants to non-union
facilities while union contracts remained in effect.

The flame under the feet of the unions though that caused them to
lose position more than any other single factor though was Volcker's
policies which liquidated 2.2 million union jobs from 1980-1985.

That in a nutshell was why I blamed Reagan and Volcker whose policies
were complementary.


>>The Fed's tight money policy was maintained by the Open Market Committee
>>in late 1981 despite the fact that money growth was well below the
>>already constrictive targets that the Fed had set up. Given the sort
>>of rhetoric that Volcker was spouting at the time about "wage deceleration,"
>>a connection can be reasonably drawn.

>A connection between what?  I agree that the 81-82 recession was pretty much
>deliberate.  Are you seriously claiming, though, that the real reason for the
>recession was to break unions?

I am seriously claiming that it was *a* real reason for the recession, there
were others. The main intent in causing the recession was to dramatically
lower inflation, part of an agenda of the wealthy. (Note who paid the greatest
price, or in the parlance of the Reaganistas "felt the most pain,"
you guessed it, the little guy.)

>JasonZ

-other Andy
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