Saturday, February 10, 2007

Education of workers has not kept up with demand?:

Education of workers has not kept up with demand?: why then is it that when technology slows and productivity LAGS that most workers in America fall far behind average income growth -- but when technology races ahead and productivity soars most or our workers keep much better pace with average income growth?

Too simple answer: how human nature responds to boom and busts when there are no checks and balances in the labor market. During the boom, bargaining pressure is down, everyone is allowed to make money -- during the dip the pressure is on and those with small bargaining power will lose the share they had previously gained.

This works in CEO favor at all times: today's firms are flush with money either because of boom times or because unionless workers are being squeezed to keep profits up during the down cycle, leaving little pressure to keep CEOs from looting.
None of this exists in Europe -- not because of heavy market regulation there but because of fair labor market balance of power there: sufficient unionization.

Everybody seems to understand the need for a free market for efficiency and innovation. Nobody, even progressives -- at high academic levels -- seem to catch on to the unconditional need for checks and balances in the labor market to achieve fairness.

No comments: