Thread: The American Worker should be Protected!

Originally Posted by Reiver

It has to start by reducing labour market flexibility. Resources should be shifted away from reliance on abundant low skill labour. We can't just focus on education as we'll just get a high number of underemployed graduates!

huh? do you mean reducing employer's ability to shift place of operation? I would have thought that everything being equal a flexible labour market is a good thing. Though i'd agree that labours being unable to quickly adapt to changing times is a very big part of the issue, but the solution of not letting the times change that fast doesn't seem like the most logical.

Originally Posted by RollingWave

do you mean reducing employer's ability to shift place of operation?

No, I mean the use of either collective bargaining or a minimum wage to reduce the profit from production reliant on low skilled labour. The profit motive, here celebrating the short term, generated market failure for human capital delivery

Originally Posted by Anders Hoveland

The American worker cannot and should not have to compete with impoverished third world laborers willing to work for survival level wages!

I have no problem with free trade with another country, but only when it has similar living standards and environmental protection laws.

I know Reaver is going to jump into this thread and complain that protectionism prevents the economy from expanding and would start trade wars. What will really prevent the economy from expanding is if the wages of the American worker decline even more. Yes, trade with China is lowering prices of many consumer goods, but it is driving down wages much more.

If American wages decline China will have to lower its prices on goods, because, when the scenario of American worker's wages constantly lowering is extrapolated out, the cost of imported goods would naturally be higher than goods manufactured right here in the US because there would be a premium of transport for imported goods attached to the price of an item.

American exports to China are insignificant when compared to imports. The USA would have far more to gain than to lose in a trade war with China. Trade with Mexico is somewhat different. I do not like it, for several good reasons, but it is far better than more unemployed Mexicans illegally entering the USA to work, so one cannot begin to argue against trade with Mexico until the problem of illegal immigration into the USA has been delt with.

Actually the most significant American 'export' to China US dollars, as consumers in the US buy the cheaper Chinese products. As I said above, if our economy gets worse China could all but lose its biggest 'customer.'

The USA is a huge country with enough natural resources and a huge, specialized, labor force, and diversified industries. It could get along completely fine without any trade with outside world, with the possible exception of its insatiable addiction to petroleum. Lack of free trade certainly is not, and would not be, a real cause of lower living standards.

Yes it could however, we (US) are not in that position at this time in history because of many things, not the least of which has been a more 'protectionist' approach to both human and environmental resources in our own country.

Originally Posted by Reiver

No, I mean the use of either collective bargaining or a minimum wage to reduce the profit from production reliant on low skilled labour. The profit motive, here celebrating the short term, generated market failure for human capital delivery

But again, we roll back to the same problem, if you do this, then there is a strong motive for the operators to simply pick up and seek greener pastures. which means they're also taking away capital, not to meantion that you can stimulate the demand for higher skilled labor but if the supply does not actually match it then it's still for naught. From what I've read there is actually a strong demand for skilled labor in the US RIGHT NOW, but most of the unemployed folks simply do not qualify for them. which seem to suggest that there is a very strong mismatch between demand and supply.

And we go back to similar basic problems, from the supply side, most folks can not sufficiently change / improve their skill set / orientations during their career, at least in a relatively quick fashion, if the demand side is in a strong mismatch situation from the supply, then we're pretty much stuck. the only solution seem to be that you either try really hard to force / help those folks change their skill set or you change the demand set to fit with the supply.


Also, isn't many industry need an entire chain of workers? aka everything from low waged / low skilled folks to those in higher end? wouldn' the effect of reducing the demand for the former also play a part in reducing the demand for the later as well?

Originally Posted by Reiver

It has to start by reducing labour market flexibility. Resources should be shifted away from reliance on abundant low skill labour. We can't just focus on education as we'll just get a high number of underemployed graduates!

What US employers rely on abundant low skilled labor?

Originally Posted by RollingWave

But again, we roll back to the same problem, if you do this, then there is a strong motive for the operators to simply pick up and seek greener pastures.

And the loss from that is what? Production based on low skilled labour should naturally shift in favour of the labour abundant country. In contrast, without that shift, there will be over-reliance on product with low income elasticity of demand. That is heading for disaster as decoupling, due to worldwide wealth gains, occur.

From what I've read there is actually a strong demand for skilled labor in the US RIGHT NOW, but most of the unemployed folks simply do not qualify for them.

All countries can claim skills shortages. That includes those with a low skilled equilibrium. We can't ignore supply-side constraints, but to suggest that they can be used to explain the low wage abundance is inappropriate.

And we go back to similar basic problems, from the supply side, most folks can not sufficiently change / improve their skill set / orientations during their career, at least in a relatively quick fashion, if the demand side is in a strong mismatch situation from the supply, then we're pretty much stuck.

This doesn't account for the lack of skills, particularly the lack of upskilling. It only accounts for structural flaws in the 'primary sector'. However, those flaws are actually encouraged by internal labour markets (as there is a deliberate shift away from basic supply and demand criteria)

Also, isn't many industry need an entire chain of workers?

A skills distribution will always exist. The issue is the over-reliance on low paid labour and the lack of skills investment by employers

wouldn' the effect of reducing the demand for the former also play a part in reducing the demand for the later as well?

No. We'd have production shifting to a more consistent high utilisation of more skilled labour. In simple buzzword terms, a shift to product with higher income elasticity of demand

I must disagree: you cant protect the simple from the simple.

Originally Posted by Reiver

And the loss from that is what? Production based on low skilled labour should naturally shift in favour of the labour abundant country. In contrast, without that shift, there will be over-reliance on product with low income elasticity of demand. That is heading for disaster as decoupling, due to worldwide wealth gains, occur.


All countries can claim skills shortages. That includes those with a low skilled equilibrium. We can't ignore supply-side constraints, but to suggest that they can be used to explain the low wage abundance is inappropriate.


This doesn't account for the lack of skills, particularly the lack of upskilling. It only accounts for structural flaws in the 'primary sector'. However, those flaws are actually encouraged by internal labour markets (as there is a deliberate shift away from basic supply and demand criteria)


A skills distribution will always exist. The issue is the over-reliance on low paid labour and the lack of skills investment by employers


No. We'd have production shifting to a more consistent high utilisation of more skilled labour. In simple buzzword terms, a shift to product with higher income elasticity of demand

Reiver, my general view is that in the short term (like a couple years) upskilling is neglectable and your labor supply is essentially what you have on hand at the moment, thus the supply side of labor in any short term analysis is basically fixed. and even in the medium term the capacity for supply to adjust tend to be signficiantly weaker than that of the demand. since training anyone takes months at best and often years (not even accounting for their formal education which plays a significant role and take over a decade at least.) where as demand can move about as fast as capital can.

Thus your going to get in trouble by simply adjusting demand and the labor simply don't match the level . sure, the guys still employed might be better off as a whole, but you'd likely get a lot of folks unemployed, this seems like what is happening in the US anyway. where education havn't changed signficiantly over the last decade but the employment structure have, while the 06-08 run was generally using a bubble to mask the problem where as the current situation more closely reflect the reality of the disparity between a relatively fixed supply of labor versus a demand curve that is simply above the optimal level of said supply curve.

Unless you manage to change the structure of the supply considerablly, your stuck, what's worse is that the folks most in need of upskilling tend to be the same folks that are least capable of doing it espeiclly on their own.

I'd think we'd agree that no matter what the total number is, if a society is signfiicantly struck by unemployement or even underemployment it's going to be in huge trouble, and we'll potentially see destablizing factors which throws all stats out the window (aka revolutions or major riots etc..)

Originally Posted by RollingWave

I'd think we'd agree that no matter what the total number is, if a society is signfiicantly struck by unemployement or even underemployment it's going to be in huge trouble, and we'll potentially see destablizing factors which throws all stats out the window (aka revolutions or major riots etc..)

As a communist (or "market socialist") I would think that would be Reiver's desired outcome. I read here there seems to be some new consensus that R&D can't be kept separate from manufacturing since that's inefficient for the individual company. It's based on some Harvard business school study.
http://prospect.org/article/back-china

Originally Posted by RollingWave

Reiver, my general view is that in the short term (like a couple years) upskilling is neglectable and your labor supply is essentially what you have on hand at the moment, thus the supply side of labor in any short term analysis is basically fixed.

Once we have upskilling we can forget the standard neoclassical tales into the short term and the long term. The problem is that, within Anglo-Saxon labour market flexibility, there is no motivation to provide such upskilling. Consider, for example, British training data. First impressions would suggest that its relatively healthy. In reality, much of it is low powered (such as health & safety 'training' to control for potential liability problems). Its only by restricting that labour market flexibility that resources can be shifted away from product with a low income elasticity.

Would that create some structural issues? Certainly. However, we're referring to economies that already exhibit structural deficiencies. The low skill equilibrium is effectively a demand-led market failure created by labour exploitation.