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Date:         Tue, 17 Nov 1992 11:07:09 -0500
From:         Andrew Allen <E7L8ALL@TOWSONVX.BITNET>
Subject:      a response to kerry from et al.... B)
Comments: To: politics@ohstvma.bitnet

Some comments on Brett''s response (did you expect us to agree? B)):

k>First, in light of Brett's postings, where did Clinton get his "real wages
k>have fallen while taxes have risen" rhetoric?  Seriously -- did he massage
k>the data, did that really happen, or what?

Here are some figures:

Private industry weekly earnings in constant 1977 dollars:

        1970 - $187
        1975 - $184
        1980 - $173
        1985 - $170
        1988 - $169
        1989 - $166


>        Real wages have been falling for years (pre-Reagan) and will continue
>to do so until the US wage structure is on par with the rest of the world.

Real wages have fallen yes, but, the analysis is incorrect. Unless of course
Brett' identifies "the rest of the world" as Germany and Japan as opposed to
(insert the name of your favorite third world nation)?

>As
>I noted, we pretty much had the field to ourselves after WWII, and could charge
>what we wanted for our labor.  Now, however, the rest of the world has rebuilt
>and we must compete with a billion or two other workers.

Many of whose real wages are rising and their bennies are better, but, well
some Americans real wages have risen over the period that Brett' has noted...

In 1960 the average CEO made 12x what the average worker made, in 1990 the
average CEO made 93x what the average worker made. (I read this in US News
and World Report a while ago, if somebody is desperately interested, I will
try to find a cite.)

k>Second, I've been thinking about some statements made wrt workers, wages,
k>productivity, etc.  The gist of the comments seems to be that, in both
k>manufacturing and agriculture, we have more workers than we need to produce
k>the goods that can be consumed (here and/or abroad).

Funny how we have more food produced than we "need" and there are so many
hungry people...

Part of the reason that we produce more than we need is that we don't
pay people enough for their labor. That isn't the entire problem but it
is a significant part of it.

k>The question then
k>arises:  why should we pay an assembly-line worker $17/hr when someone else
k>will do the work for $7/hr

Ethics? B)

Why should I pay a CEO 20 million a year when I could hire a successful
Japanese executive with years of experience for 200k ?(considered a
high salary for an executive in Japan)

Is it because the American CEO is *worth* much more than the Japanese,
or are there other factors at work here?

Perhaps the bottom line is what you want to see in America, do you want
to see wages drop to third world levels as a progression of groups of
workers are replaced by increasingly more desperate unemployed?


k>(or why should we subsidize small farmers when
k>we don't need their food)?  *My* question is, what should be done about
k>this situation?

I have been trying for a while to come up with some sense of just who
gets all of these government subsidies; my suspicion is that aside
from dairy farmers, the bulk of these subsidies go to the large
industrial agribusinesses.

For a variety of reasons, most of them having little to do with economics,
I would like to see farming done by small farmers rather than by industrial
farmers. Small farmers are spread out geographically allowing, crop failures
in one region due to climate/environmental conditions not to cause havoc
with the food supply. Small farmers are more able to keep up the diversity
of plant species going than agribusiness, which can be tremendously important
in case there is some wide-spread plant disease. There are also some
environmental reasons as well as the idea common in a number of other
countries that farming is a good way of life to preserve, that the benefits
of having lots of small farms in society outweighs the benefit of efficiency
that agribusiness offers.


k>Should we allow workers to compete for jobs, allowing small farms to shut
k>down and jobs to "sell" for low wages?  If so, what do we do with
k>unemployed farmers and manufacturing workers whose wages don't provide much
k>economic security (like the ability to buy a house, send kids to college,
k>etc.)?

Workers already compete for jobs; the real question is - what do you
want to be the basis for competition - education and ability or desperation
to make enough money to scrape by?


k>Will standards of living decline as wages fall?  Or will there be

>        Maybe.  Is having one TV instead of two or three a decline?  Going 5-7
>years between new cars instead of 3-4?  We've got a lot of fluff that passes
>for necessity in our culture.  (Witness the outcry over cable rates.  People
>actually were arguing that they had a *right* to cheap cable.)

With over a third of the country's population at or below the poverty line
already this is hardly an adequate statement of what a decline in wages
means.

k>some kind of adjustment such that someone making $7/hr can get ahead, save
k>for retirement, educate kids, etc.?  I guess I'm asking whether there would
k>be a sort of long-term social cost to allowing free competition for jobs.

>        Certainly there will be deflation of some sort.  If the government
>doesn't panic and devalue the dollar, we should be ok.  Like inflation,
>everything should move at about the same level.  That is, a lot of people will
>be making $7/hour, but the cost of goods should decline also.

This deflation that Brett' is talking about (which I agree is a logical
outcome of a large scale reduction in wages) is the sort of thing that
will favor people who have cash or investments in things like bonds
and will hurt people who work for a living, own property (houses, etc.)
or have a business that depends on mass consumption.

Over all this decline will most affect the lower middle class, causing them
to lose income, but even moreso net worth.

k>Kerry
>Brett'

-other Andy