From: mkohlhaa@silver.ucs.indiana.edu (mike)
Subject: Re: GM Plant Closures Again? Won't Solve the Economic Problems
Organization: Indiana University
Date: Thu, 17 Dec 1992 17:42:42 GMT

In article <BzEqMA.D9z@apollo.hp.com> nelson_p@apollo.hp.com (Peter Nelson) writes:
>In article <Mf=sbt30BwwbI4Vvts@transarc.com> Lyle_Seaman@transarc.com writes:
>>mkohlhaa@silver.ucs.indiana.edu (mike) writes:
>>>   nelson_p@apollo.hp.com (Peter Nelson) writes:
>>>   >The correct solution to having good working conditions and good
>>>   >worker treatment is to have an economy that's strong enough
>>>   >so it generates so many jobs that workers are always in demand.  
>>> 
>>>   Isn't that what causes increased labor prices which leads to run-away
>>> inflation?
>>
>>Yes.  It has happened in various parts of the US, from time to time.
>>In NH in 1984, unemployment was about 2% (maybe 3% -- at any rate,
>>this is effectively zero). People loaded their families into, and 
>>strapped their belongings to the rooves of, their '68 Buicks and left 
>>places like Indiana, Oklahama or Michigan to move to Massachusetts.
>>Some of them made it, some of them broke down in Pennsylvania.
>>People came from Laos, Cambodia, Vietnam, and Mexico, NY.
>>
>>I almost dropped out of college to take a job programming computers 
>>(but I had a girlfriend at college -- wotta reason for a decision!).
>>
>>Burger King franchises in Southern NH were paying $7.50 / hr for
>>burger-flippers.  High-school students were working 3 jobs in order to
>>pay for multiple automobiles.
>
>  Okay.   And what happened?   Was there massive inflation?  Were
>  Whoppers (the Burger King hamburg) suddenly twice as expensive
>  to cover their huge increase in labor costs?   

Yes.

>  And what happened in the long run?   During the 1980's when there
>  was a boom here (Massachusetts, souther new Hampshire) house 
>  prices shot way up.   And not they've shot way back down again
>  -- my house is worth about $40K less than we paid for it, and
>  the unemployment rate in this region is 8.5%.    
>
>  So the point is that the stuff you're talking about is self
>  correcting; it's not sustainable.
>

I agree with you entirely.  This has been my point the entire time: There
will be inflation so long as there exists a high demand for workers (if you
will recall your original proposal).  Once that high demand for workers is
gone, the inflation will self correct.  As you very correctly pointed out
in the above paragraphs, as soon as unemployment in New England began to
increase that extinguished the problems with inflation.

If I can refer you to your original hypothesis (that the answer is to have
happy, content, workers who are in high demand).  My point is that happy
content workers in high demand is inflationary.  You pointed out that your
house droped 40K in value and then say that this somehow disproves my point;
it does quite the opposite.  That 40K drop in value happened once workers
were no longer happy, content, and in high demand (see your own 8.5% 
unemployment figure that you mentioned in same breath).


> [Bunch of stuff about "ownership" of company that you work for that I
-- 
					-- Mike
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