Holes in my bucket! Feudalism and Child Labor?

benway

Permabear wrote: »

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SupaNova wrote:

UNICEF:
The absence of the work opportunities provided by sweatshops can quickly lead to malnourishment or starvation. After the Child Labor Deterrence Act was introduced in the US, an estimated 50,000 children were dismissed from their garment industry jobs in Asia, leaving many to resort to jobs such as "stone-crushing, street hustling, and prostitution." UNICEF's 1997 State of the World's Children study found these alternative jobs "more hazardous and exploitative than garment production."

Emotive, maybe? One might almost say Dickensian. And we have seen that it's grossly simplistic. It's odd that you purport to want to talk about the reality for Asian sweatshop workers ... when I dug into the backstory on that a little, all you were interested in was:

Permabear wrote:

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Seems to me that you've got the most Marxist argument out of anyone, an inevitable phase of economic development in the evolution of every society, driven by low wage, low working standards employment is pure historicism. Any comment?

Duggys Housemate wrote: »

I think most people are in vague agreement with the Krugman analysis, which is non-libertarian - in some cases child labour is better than the alternative.

Not me. Child labour, where it acts as a barrier to education, is never acceptable. If there was no prospect of education, maybe, but that isn't the case anywhere in the world today - marvels of technology. Education is always a better investment than child labour, always - whether you look at it from an economic, a humane or a moral standpoint - presented evidence here:

benway wrote: »

Many economists recognise the pareto inefficiency of child labour, also Baland and Robinson at Harvard show that increased lifetime earnings through education will more than compensate "greedy parents" sending their children off to work, and even if this does not occur, the labour market effects of removing children from the workforce will be to their benefit. There are many positions, premised on multiple equlibria where parents send their children to work, poverty, failures of the capital markets, social norms, etc - good summary here - Child Labor: Theory, Evidence, and Policy
The findings all favour intervention of some kind, summarised by Brown et al:

The central policy lesson of the Ranjan and Basu models is that government intervention is required for only one generation of children. For, once an educated child’s future income is raised above a threshold level, the newly created parent will be able to choose education rather than child labor for the next generation.

Duggys Housemate

benway wrote: »

Seems to me that you've got the most Marxist argument out of anyone, a phase of economic development in the evolution every society, driven by low wage, low working standards employment is pure historicism. Any comment?

Yes, the two simple narratives presented as universal Truths, and with pseduo-complex language, in the largely unscientific parts of the Academy.

The State should control everything, or nothing. There is no in-between.

Channel Zero

Permabear wrote: »

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Ahaha.

Certainly. I just need to read between the lines of the OP. You don't need an Ivy League education to understand what's going on here..

Channel Zero

SupaNova wrote: »

Well we are talking about minimum wage laws in particular, I have looked at studies before this thread and one in this thread, they came to a conclusion of causation based on a correlation, excluding a myriad of factors and other explanations, poor to say the least. Maybe you can point me to a better one or defend the one I'm criticizing. At least part with some of your educated view on the subject. Is your view based on studies? Can you at least provide a link. If its based on logical reasoning, why cant we just increase minimum wage and mandate better working conditions tomorrow to massively alleviate grinding poverty?

My view is based on established history. And just because you asked, Ian Hislop gives a fairly decent overview of how the welfare state came into existence and why 19th century 'charity' was a failure.
http://www.youtube.com/watch?v=cl1QQ-jX7nI

Your proposition (to paraphrase) "so why don't we increase the the minimum wage to ten times what it is because that is the only device that increases wages and living standards", is preposterous.

Enjoy the vid.

KyussBishop

Permabear wrote:

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Ah I'm a Marxist now; okey so (I suppose 'dirty commie' will be up next)
My views can't be neatly tied to a particular label or ideology, and you're tending towards another "Us vs Them" dichotomy, which is going to lead to the usual misrepresentation of my and other peoples posts that kills these threads.

Returning back to what was said:

KyussBishop wrote:

Permabear wrote:

You're basing this on the neoclassical presumption that labor can be treated as one factor of production (or "input") among many, and essentially handled analogously to capital. In such a case, a company will never pay more than a market-clearing wage because it gains no market advantage from doing so, just as it won't pay a hefty price for rent or machinery when it can get the same factory or tools for less. However, recent research on the psychology of labor shows that workers earning a market-clearing wage generally put in only the minimum effort required. When employees are paid above market-clearing level, productivity frequently increases to the point where higher wages can actually increase profits.

Well, I'm not necessarily making that presumption (it seems a bit too absolute).

I agree with the general thrust of what you're saying though, that better paid workers tend to do better work; I don't think that applies to all types of work though.

For instance, a worker on a factory line in charge of putting the same component into the same circuit board template, thousands of times a day, and in a country with lots of cheap labour available, is going to have to work his/her ass off if the employer demands, and the quality of work would not vary with wage because the worker will have a quota to meet and would be responsible for slowing down the whole factory line.

The research you point out is true in a lot of cases, but can't be applied generally as it's not true in all cases; on a factory line certainly, and with lots of willing cheap labour, it doesn't seem like the employer will have any inherent motive to increase wages.

In cases like this, workers can become analogous to capital and mechanical resources, and can get treated as such.

You said:
"recent research on the psychology of labor shows that workers earning a market-clearing wage generally put in only the minimum effort required. When employees are paid above market-clearing level, productivity frequently increases to the point where higher wages can actually increase profits.".

I outlined a situation where what you posit is not true (even though I agree with it for the most part), explained why that means it can't be applied generally (primarily for developing economies), and provided a pretty detailed argument as to the wider problems involved.

In response, you attack me, not my arguments.

Permabear wrote:

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Yet again, you've skipped over the fact that there is not an "abundance of cheap labour" in many emerging economies. As noted above, many Asian economies, including China and India, are currently experiencing labour shortages.[/quote]
Wait now stop a second there; the bit you quote, was not applied to any country, it was part of my response to the research you quoted (which I don't inherently disagree with by the way, just was pointing out a situation it did not apply).

Even though this was not a part of my argument, I've taken the time to search out more detailed stats. China's general job satisfaction does seem generally good, which I find pretty interesting in contrast to information I can find about opinions of standards of living, which in the areas of cost and living and the economy, seem to be big complaints (this seems to be puzzling economists).

So yes, I agree that China is suffering a labour shortage (despite, I think, roughly 30 million able workers unemployed), that wages are increasing, and most workers seem satisfied. I'm a bit puzzled by the apparently static evaluation of quality of living though.

A (rather good) article on that:
http://articles.businessinsider.com/2011-08-10/strategy/30101473_1_life-ratings-china-s-gdp-average-life

Permabear wrote:

As I said before, it's very easy to misrepresent reality to suit the requirements of a Marxist agenda. Once one looks past the standard Dickensian arguments about exploitation and examines the reality of the Asian labor market, a completely different picture emerges — one that is not so conducive to the kinds of simplistic, emotive arguments being presented on this thread.

(ah seems benway beat me to the punch)

SupaNova

benway wrote: »

Again, no-one is saying that growth isn't necessary, it's the accepted "sine qua non of poverty reduction". But if the growth is all going into the pockets of a small sector of society, it's not going to be effective. And it's never been demonstrated, to my knowledge, that an exclusively market-based schema will be capable of addressing this.

Well this is what I have been arguing. How did people go from huts and grueling work in agriculture to their relatively better conditions, some going as far as having air conditioned apartments. So when pondering the question:
Is it increased production, of factories, of houses, of air conditioning units, or union agitation? And me coming to an answer that is the "sine qua non of poverty reduction" as you put it I am accused of confirmation bias.:pac:

Especially since trickle-down has been effectively dismissed in recent years, not that anyone ever really believed in it, I don't think, (a source for SupaNova on the rich getting richer and the poor and middle classes getting poorer in the US in the past 30 years also) as have canonical models of "globalized" development.

There is nothing in that source that shows the poor and middle classes have gotten poorer while the rich have gotten richer in the US as claimed.

SupaNova

Channel Zero wrote: »

My view is based on established history. And just because you asked, Ian Hislop gives a fairly decent overview of how the welfare state came into existence and why 19th century 'charity' was a failure.
http://www.youtube.com/watch?v=cl1QQ-jX7nI

Most of the examples of 19th century charity in the video were presented as successes. The video makes some conclusions based on some observed correlations, hardly convincing. Really where's the beef? If you are claiming the welfare state was such a vast improvement based on historical fact, where are the facts? Some numbers before welfare state, and after?

Here is some attempt at doing so regarding the US:
http://www.economicsjunkie.com/us-poverty-rate-how-the-great-society-programs-reversed-its-decline/

Your proposition (to paraphrase) "so why don't we increase the the minimum wage to ten times what it is because that is the only device that increases wages and living standards", is preposterous.

If you believe minimum wage laws are responsible for raising wages and living standards, why not raise them? It doesn't have to be 10 times, maybe just 10%? But I would like to hear some logic as to why raising them 10% would be fine and not something larger?

benway

SupaNova wrote: »

Is it increased production, of factories, of houses, of air conditioning units, or union agitation? And me coming to an answer that is the "sine qua non of poverty reduction" as you put it I am accused of confirmation bias.:pac:

What possibly makes you think that it's an either/or between growth and legislation/agitation? Ideology, maybe? It's been demonstrated over and over and over again on this thread that growth in itself isn't sufficient.

Further, I took that quote from one of the UNDP papers - you'd be surprised at how conservative these development types can be, I'm not sure that growth even is the "sine qua non" it's held to be, I would say that quite a lot of poverty reduction could be achieved by way of redistribution without any growth.

But just in case there was any doubt, getting back to the Bangladeshi example:

benway wrote:

Labour relations in Bangladesh are still fraught, with mass strikes and repression following the manufacturers' refusal to pay their workers the newly introduced minimum wage - the princely sum of $43 per month - and the torture and murder, last week, of a leading trade unionist. Doesn't look like it's the case that employers happily raise wages according to growth - GDP growth has been at around 5% or more since 2000, inflation over 8% in 3 years out of 4 from 2007-2010.

Obviously, this is inexact, but going by the figures in those articles, $43 per month for 3.2m workers is $1.65bn going directly in to the local economy for an industry worth $16bn per year? They were getting half that, if even - wages below the poverty line - and still the manufacturers held out. Kinda puts some perspective on the "sweatshops lifting people out of poverty" argument, doesn't it? In fact, that looks an awful lot like exploitation to me. I thought people were entitled to enjoy the "fruits of their labours" in the libertarian worldview?

According to our friends at the World Bank (old figures, though):

While fewer people lived in extreme poverty, inequality within and across regions gradually increased

No sh!t. Extreme poverty, as opposed to only abject poverty, these days ... only 58% of children are "severely deprived" according to UNICEF.

SupaNova wrote: »

There is nothing in that source that shows the poor and middle classes have gotten poorer while the rich have gotten richer in the US as claimed.

The very first paragraph:

It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.

SupaNova

Labour relations in Bangladesh are still fraught, with mass strikes and repression following the manufacturers' refusal to pay their workers the newly introduced minimum wage - the princely sum of $43 per month - and the torture and murder, last week, of a leading trade unionist. Doesn't look like it's the case that employers happily raise wages according to growth - GDP growth has been at around 5% or more since 2000, inflation over 8% in 3 years out of 4 from 2007-2010.

I never made the claim that employers happily raise wages according to growth or GDP. Some employers will if they believe the returns are worth it, others will raise wages because of competition from other employers. Equating GDP, an aggregate statistic to economic growth is very crude, but then measuring growth is going to be that way. And given GDP is an aggregate statistic, it has nothing to do with individual manufacturers growth. And it would be nice to see wages for that period also, rather than GDP from 2000, and inflation from 2007-2010, at least a consistent set of statistics.

It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.

All that is really shown here is inequality has increased, which is a lot different to saying the poor have gotten poorer. When he says those in the middle have seen their incomes fall he is very loose, does he main their share of total income, or their actual income? There is a world of difference, and every claim I have seen that the poor have gotten poorer and the rich richer is based on not their actual income but their share of total income.

Then there is other issues with this type of analysis, and treating the 1% as a permanent class of greedy takers. Thomas Sowell:
http://www.youtube.com/watch?v=Qi8clPrg7kc
http://www.youtube.com/watch?v=U7uA7mFj_zk

Permabear

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Duggys Housemate

Permabear wrote: »

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I think we - in fact, you - established the arguments on wages were neo-classical. In fact most economists believe that labour's price is related to supply. So your attack is standard McCarthyism. ( And I have reported it).

Of course you believe it too. Libertarians oppose minimum wages as they claim it reduces employment, this is an argument that when capital is scarce, in a recession, and the supply of labour is high, the price should fall to generate full employment. I won't call you a Marxist.

Fair enough. You acknowledge that China is experiencing a labor shortage and that wages are rapidly increasing due to upward market pressures. The Wall Street Journalrecently reported that there are currently 1.08 job opportunities for every Chinese jobseeker, up from 1.04 at the end of 2011, so that should not come as a surprise.

As I pointed out that is because of Government intervention, and control of internal migration, there are restrictions on internal visas in China, so if wages are rising it is not because of libertarianism but the opposite . Please read all posts rather than cherry pick the ones you want to engage with.

Dr Galen

There are lots of things we could say here, but I'll be brief

1) Calling someone a Marxist is not a slur in itself, it's all about tone and context. Both sides to the discussion need to take this into account. Again - tone and context

2) Robust debate is the name of the game here, so really, if you can't take the heat, then I wouldn't come in this kitchen. That doesn't mean its a free for all, but if posters are determined to have a slug fest, then so be it, just stick to the charter, and be prepared for consequences if we judge you are overstepping the boundaries.

3) This is not a thread discussing the general merits of Libertarianism or Marxism. It's dealing with quite a specific issue, and as always there will be crossover, just bear in mind this point please and thanks. Lets not get bogged down in an idealogical quagmire.

Cheers

DrG

KyussBishop

Permabear wrote:

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Ah so I don't have a "Marxist agenda" as your post implies, and am not trying to "misrepresent reality to suit the requirements of a Marxist agenda"? Okey so.

Judging by what you quoted, you seemed to not notice that my argument applied to a very specific example (complete with disclaimerizers):

KyussBishop wrote:

In cases like this, workers can become analogous to capital and mechanical resources, and can get treated as such.

Can you explain how my wider argument was Marxist, or how even that specific example is?

Permabear wrote:

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What was abstracted away that I did not want to see?

In a developing economy before unemployment (particularly of skilled workers, and those in urban areas) is reduced, with a high export economy and factory jobs of low-skill high-throughput, how does my outlined situation not apply?

Permabear wrote:

As outlined above, the reality of the situation is exactly the opposite of what you are trying to claim.

What, exactly, am I trying to claim? I didn't apply my hypothesis to any country, it was in reply to this research you quoted:

Permabear wrote:

recent research on the psychology of labor shows that workers earning a market-clearing wage generally put in only the minimum effort required. When employees are paid above market-clearing level, productivity frequently increases to the point where higher wages can actually increase profits.

I outlined a situation where that is not true, solely as an argument as to why that research can't be applied generally (because it is not true for some sectors of developing countries, where the start of transition away from cheap labour is yet to come); note that I still otherwise agree with that research.

You keep applying my hypothesis to China, as an attempt to refute it, when that was not a part of the argument I was replying to. I was even in general agreement with your original statement, my argument was only limiting the bounds of it.

Permabear wrote:

If you feel that I'm attacking you personally, please feel free to report my posts and let the mods deal with them.

Will do; in general, for a few posters, it's been a frequent and subtle part of dishonest arguments, and while either that or restrictions on directly criticizing that (and the subsequent imbalance that causes) remain an issue, I'm not about to let go of it.

Permabear wrote:

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While I agree with the general stats preceding this, it's important to note that 4.1% for China, is roughly around 30 million people.

benway

Permabear wrote: »

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Awwwwwww, are you ignoring me now? It's a pity, I think the historicism point is an interesting one, in fact I nearly think that there's easily a whole thread in it. Man sees what he wants to see, disregards the rest, or so it seems.

Interesting that China is now a case in point:

Permabear wrote:

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There's an implied chain of causation here - free-market capitalism = growth = jobs = better wages and an end to child labour. Q.E.D.

I think it should be plain by this point that there are severe difficulties at each step of the chain, for one small example, you surely don't regard China to be a paradigm of free-market capitalism, do you?

SupaNova wrote:

I never made the claim that employers happily raise wages according to growth or GDP. Some employers will if they believe it will be the returns are worth it, others will raise wages because of competition from other employers. Equating GDP, an aggregate statistic to economic growth is very crude, but then measuring growth is going to be that way.

In a country where there's a mass of people living below the poverty line, raising wages for unskilled or semi-skilled workers is never going to bring a return - what are they going to do? Go to another sweatshop under pretty much identical conditions, and be grateful? Or go hustling, breaking rocks or get into prostitution? That's the choice, according to the OP, remember?

It's a gross power imbalance between employer and employee, and will create a self-perpetuating poverty trap unless an outside actor - usually government, intervenes. Further, with subsistence or below subsistence wages, there's not enough going in to the local economies to nurture meaningful growth outside the export sector. If there's a market-based solution to this problem, I'm all ears, but I've never heard of one other than "rising tide" type platitudes.

I agree with the crudeness of these measures, though, I made this point around 8 pages ago, when people were still trying to push growth for growth's sake as a development panacea.

SupaNova wrote:

Then there is other issues with this type of analysis, and treating the 1% as a permanent class of greedy takers

You need to stop viewing this so personally. It's not a criticism of the privileged classes per se, it's a criticism of any system that allows such a gross imbalance in outcomes.

The Ian Hislop video that Channel Zero posted is interesting, apparently Quaker 1%ers were more than generous with their earnings ... but a generation raised on the Virtues of Selfishness? Point is that culture matters, yet another important factor that market based logic is completely blind to.

SupaNova

benway wrote: »

In a country where there's a mass of people living below the poverty line, raising wages for unskilled or semi-skilled workers is never going to bring a return - what are they going to do? Go to another sweatshop under pretty much identical conditions, and be grateful? Or go hustling, breaking rocks or get into prostitution? That's the choice, according to the OP, remember?

This is Jeffrey Sachs point that there needs to be more "sweatshops", more factories competing for labor, which is what I said is the more likely scenario for wage rises in these countries rather than employer benevolence.

It's a gross power imbalance between employer and employee, and will create a self-perpetuating poverty trap unless an outside actor - usually government, intervenes.

Is there any evidence of these factories entering a 3rd world country creating a self perpetuating poverty trap? The evidence seems to be the opposite, as people leave rural areas for relatively better conditions in urban areas and cities.

You need to stop viewing this so personally. It's not a criticism of the privileged classes per se, it's a criticism of any system that allows such a gross imbalance in outcomes.

I'm not taking it personally. I'm pointing out that it doesn't make sense to single out the 1% as a class. As Sowell points out the 1% today will not be the same 1% tomorrow or a year from now. If we picture two bars, one representing the lowest earners one the top, if both bars are rising, and people are constantly moving from close to the bottom bar to close to the top and back again, it doesn't make sense to treat the top 1% as some permanent class of people to vilify.

The Ian Hislop video that Channel Zero posted is interesting, apparently Quaker 1%ers were more than generous with their earnings ... but a generation raised on the Virtues of Selfishness? Point is that culture matters, yet another important factor that market based logic is completely blind to.

I'm sure there were many tight-fisted scrooges at the time just as there are many generous billionaires today. Taking the video's coverage of three or so generous people at the time and concluding there was a wonderful culture of generosity among the rich then, and using bankers as your bar for the rich now is not going to be an accurate representation of anything.

Duggys Housemate

SupaNova wrote: »

I'm not taking it personally. I'm pointing out that it doesn't make sense to single out the 1% as a class. As Sowell points out the 1% today will not be the same 1% tomorrow or a year from now. If we picture two bars, one representing the lowest earners one the top, if both bars are rising, and people are constantly moving from close to the bottom bar to close to the top and back again, it doesn't make sense to treat the top 1% as some permanent class of people to vilify.

The movement, in or out, of the top 1% says nothing about the statistical fact that the top 1% are getting richer. The idea that people are getting into the top 1% from the bottom 10% is ludicrous. The difference is huge and getting larger, I doubt that outside of winning the lottery normal workers can get into the top 1%. Even winning a small lottery may not do it. The people who won the multiple hundreds of million lottery ( $650M) were not in the highest rank, not in the top 500. Income, and wealth are distributed by power relationships, not Guassian. That is the top 20% has 80% of the income. Within that group the top 20% has 80% of that income. And so on. It's heading towards a distribution similar to feudalism. What pulled this back int he 20th century was socialism, government and trade union agitation, creating a middle income group which was, in the end, good for capitalists too.

I'm sure there were many tight-fisted scrooges at the time just as there are many generous billionaires today. Taking the video's coverage of three or so generous people at the time and concluding there was a wonderful culture of generosity among the rich then, and using bankers as your bar for the rich now is not going to be an accurate representation of anything.

Actually Christianity tempered the thing somewhat. Which is the problem with the new feudalism, since the top 1% are more interested in owning football teams than charity. The US is a bit different, but the top 1% elsewhere is getting greedier.

SupaNova

Duggys Housemate wrote: »

The movement, in or out, of the top 1% says nothing about the statistical fact that the top 1% are getting richer. The idea that people are getting into the top 1% from the bottom 10% is ludicrous. The difference is huge and getting larger, I doubt that outside of winning the lottery normal workers can get into the top 1%. Even winning a small lottery may not do it. The people who won the multiple hundreds of million lottery ( $650M) were not in the highest rank, not in the top 500. Income, and wealth are distributed by power relationships, not Guassian. That is the top 20% has 80% of the income. Within that group the top 20% has 80% of that income. And so on. It's heading towards a distribution similar to feudalism. What pulled this back int he 20th century was socialism, government and trade union agitation, creating a middle income group which was, in the end, good for capitalists too.

For one you have completely missed the point Sowell is making, and then this is suddenly going into "From each according to his ability, to each according to his need" territory. So what if the rich are getting richer, wealth is not a zero sum game for ffs. We want everyone to get richer do we not? Yes going from bottom to top is not something easily achieved, the reverse might be more frequent, but looking at statistics there will always be a bottom 20%, a top 1%, it is meaningless. What we care about is real life flesh and blood human beings, and the improvement of those human beings conditions. I don't care or want equal wealth distribution but as much wealth creation as possible. Trade union agitation does not create wealth.

Duggys Housemate

SupaNova wrote: »

For one you have completely missed the point Sowell is making,

No I haven't. I disagreed with the point he was making. You quoted Sowell as saying that:

As Sowell points out the 1% today will not be the same 1% tomorrow or a year from now.

I said that they mostly will be.

and then this is suddenly going into "From each according to his ability, to each according to his need" territory.

More accusations of Marxism. I am not a Marxist.

But I believe that the holding by the top 1% of more and more wealth is a bad thing. The reason is not wealth, per say, but power.

So what if the rich are getting richer, wealth is not a zero sum game for ffs.

Who said it was? Is every response going to be you attacking straw men?

We want everyone to get richer do we not?

Yes we do.

What we care about is real life flesh and blood human beings, and the improvement of those human beings conditions. I don't care or want equal wealth distribution but as much wealth creation as possible. Trade union agitation does not create wealth.

And for the third time this thread, let me point out that the actual real income of the bottom quintile of US workers has fallen in a generation. This is because of less union recognition and rights, and globalisation. Your claim is that no intervention is needed because capitalism makes everybody richer anyway, the counter claim is that without intervention relative wages fall, and often real wages fall. The latter claim is empirically the case.

This graph shows the bottom quintile getting richer from the 1940s-1970 and stagnating until the Clinton boom. Since it ends in 2004 ( and starts to fall) we can be assured they are more than likely where they were in 1970, more or less, as recessions target the poor more than the rich.

And then lets throw a counter factual in, what made wages grow in the 1940s-1970s? ( Unions?) What made that trend stop ( it wasn't slowness in the US GDP, or productivity, growth). What would the bottom quintile be earning now had those historical 1940-1990 trends prevailed?

The economy is not a zero sum game, but it is not infinite either, a growing GDP can be shared amongst capital and labour in different percentages, that is what is in question.

SupaNova

Duggys Housemate wrote: »

No I haven't. I disagreed with the point he was making. You quoted Sowell as saying that:

As Sowell points out the 1% today will not be the same 1% tomorrow or a year from now.

I said that they mostly will be.

That wasn't a direct quote and I can only presume you haven't watched the videos linked, here is a direct quote from Sowell from the video linked to:
"more than half the people that were in the top 1% in 1996 were no longer there in 2005, among the top 1/100th of 1% 3/4's of them were no longer there at the end of the decade"

So your claim that "they mostly will be" doesn't stand up in reality. Your claim was most likely based on faith though. Or, perhaps you were aware of such figures and these figures don't cut it for you, maybe you want people falling harder and faster from top to bottom.

Duggys Housemate

SupaNova wrote: »

That wasn't a direct quote and I can only presume you haven't watched the videos linked, here is a direct quote from Sowell from the video linked to:
"more than half the people that were in the top 1% in 1996 were no longer there in 2005, among the top 1/100th of 1% 3/4's of them were there at the end of the decade"

So your claim that "they mostly will be" doesn't stand up in reality. Your claim was most likely based on faith though. Or, perhaps you were aware of such figures and these figures don't cut it for you, maybe you want people falling harder and faster from top to bottom.

Ok, lets cede that ( although you said a year, not a decade) - not that it matters who the 1% are if they are getting extraordinarily richer. Now about the bottom quintile of US workers, how does that square with the faith held belief that capitalism makes everybody richer?

SupaNova

Duggys Housemate wrote: »

This graph shows the bottom quintile getting richer from the 1940s-1970 and stagnating until the Clinton boom. Since it ends in 2004 ( and starts to fall) we can be assured they are more than likely where they were in 1970, more or less, as recessions target the poor more than the rich.

And then lets throw a counter factual in, what made wages grow in the 1940s-1970s? ( Unions?) What made that trend stop ( it wasn't slowness in the US GDP, or productivity, growth). What would the bottom quintile be earning now had those historical 1940-1990 trends prevailed?

1940's-1970's the US were still on a Gold Standard, it ended in 1971. Perhaps it was the end of the gold standard???

All you have is a supposed correlation, you need to back up a correlation with explained causation for it to be worth anything at all, otherwise I can pick out all sorts of correlations. Who knows maybe the number of bald men dramatically increased from 1970, and baldness affected their motivation and productivity, and at least I have given some sort of cause in effect in my hypothetical of an increase in baldness being the factor. And there are many factors and how do you weigh them?

Do you see the problem with your analysis and that your belief is little more than confirmation bias unless you can at least give the theory behind how more union agitation, and more union prominence increases productivity?

Channel Zero

SupaNova wrote: »

This is Jeffrey Sachs point that there needs to be more "sweatshops", more factories competing for labor, which is what I said is the more likely scenario for wage rises in these countries rather than employer benevolence.

First of all, Sachs was being facetious in that quote. It was clearly taken out of context to misrepresent his views to back up yours.

Secondly, if i recall correctly, you have not been saying that more sweatshops is "the more likely scenario for wage rises in these countries".
Your fundamentalist position was signalled in the OP:

"It is increased production (ie more sweatshops) that increases wages and phases out child labor, not government legislation. All it takes is the most basic of critical thinking to understand this."

This faulty premise has been shown to be incorrect. As you put it so well yourself, all it takes is the most basic of critical thinking to understand this.

Is there any evidence of these factories entering a 3rd world country creating a self perpetuating poverty trap?

Yes there is. Plenty. I'll just leave this here:
http://www.gatt.org/trastat_e.html

Taking the video's coverage of three or so generous people at the time and concluding there was a wonderful culture of generosity among the rich then, and using bankers as your bar for the rich now is not going to be an accurate representation of anything.

No, the theme of the video was not to portray the fact that there was a wonderful culture of generosity among the rich then as opposed to now. There wasn't. (barring notable religious-minded exceptions like Wilberforce).
The theme of the video and it's conclusions were that, in spite of the wonderful generosity of a pitifully small few of the wealthy, there still existed huge levels of grinding poverty. Poverty that no amount of unfettered free market fundamentalism would ever have addressed.

SupaNova wrote: »

Trade union agitation does not create wealth.

Correct. It just aims to distribute it with a measure of fairness. A move away from the Iron law of wages which is in evidence throughout the world under current globalisation.

SupaNova

Channel Zero wrote: »

"It is increased production (ie more sweatshops)that increases wages and phases out child labor, not government legislation. All it takes is the most basic of critical thinking to understand this."

This faulty premise has been shown to be incorrect. As you put it so well yourself, all it takes is the most basic of critical thinking to understand this.

Where?

Yes there is. Plenty. I'll just leave this here:
http://www.gatt.org/trastat_e.html

This is tiresome, did you read or understand the point I made in my previous post to start? Can you pick out a particular statistic or study from that list that is supposed to show that the premise is faulty? A study that contains causal theory and doesn't ignore other causal factors, i.e. If the number of "sweatshops" in a country increases and there is no growth, if study concludes therefore "sweatshops" don't lead to growth whilst ignoring bad monetary and fiscal policy it isn't worth diddly squat. But I guess that would require you to do some reading rather continue down the same confirmation biased road as previous posters.:rolleyes:

The theme of the video and it's conclusions were that, in spite of the wonderful generosity of a pitifully small few of the wealthy, there still existed huge levels of grinding poverty. Poverty that no amount of unfettered free market fundamentalism would ever have addressed.

Yeah the conclusion was the welfare state came to the rescue, and in my last reply to you I asked for some evidence of this, some statistics would be a start, some theory, and how you controlled for other causal factors, I'm still waiting.

benway

SupaNova wrote: »

This is Jeffrey Sachs point that there needs to be more "sweatshops", more factories competing for labor, which is what I said is the more likely scenario for wage rises in these countries rather than employer benevolence.

Sweatshops implies subsistence wages and poor conditions. If you mean factories, with decent wages and protections for their workers, then say that.

These are not the same things, and I fail to see why the sweatshop model should be excused, when the margin between providing for a decent living for workers and subsistence is so thin. I read somewhere, can't remember the paper right at the moment, that labour costs amount to roughly 1.6% of the price of garments sourced from sweatshops. A very simple way of doubling or trebling the minimum wage suggests itself: either accept reduced profit margins, or pass on the labour costs to consumers in the West. There's no excuse not to do so where, as in the Bangladeshi case, wages are below, or not much above, the poverty line.

Further, are you saying that Western corporations are going to drive wage competition? I would say that it would be better for indigenous industry and economic activity to take that role, but given the subsistence level wages paid by these employers, where is the investment going to come from to drive this growth?

SupaNova wrote: »

The evidence seems to be the opposite, as people leave rural areas for relatively better conditions in urban areas and cities.

Which evidence? Kuznets? Anecdotally, it's generally "surplus population", younger sons and unmarried daughters who go to work in the cities, but I'm kinda caught up on the inequality point right at the moment, will get back to this.

SupaNova wrote: »

it doesn't make sense to treat the top 1% as some permanent class of people to vilify.

Yet again, I'm not vilifying, and I don't see that anyone here is. But 1% of the population holding 40% of the wealth, and rising, is a palpably absurd outcome. It's a system that would facilitate this that I have the issue with, rather than the individuals ... hate da game, not da playa. Word.

SupaNova wrote: »

I don't care or want equal wealth distribution but as much wealth creation as possible.

Now we're getting down to brass tacks. Distributive justice is important to me on principle, but what I am finding interesting is the evidence on inequality's detrimental effects on growth. Seems that the idea that inequality creates an incentive to growth has been discredited, for one, by way of regressions from GDP data against Gini coefficients showing that inequality in fact does reduce growth:

The magnitude of this effect is consistent across most studies: a one standard-deviation decrease in inequality raises the annual growth rate of GDP per capita by 0.5 to 0.8 percentage points.

Similarly, sustained redistribution is growth enhancing and increased market sizes, owing to greater equality, drive innovation, but free trade, in its current form, drives inequality in both developed and developing countries, consistent with a paper cited above.

All of this is pretty intuitive, common-sense stuff - you'll get less economic activity and development out out of €2m by giving €1m to one person and €10k to 100 people than you'll get from giving a little under €20k each to 101 people. It allows for much more creativity, problem solving and "real" development than putting it all in the hands of one person. Always amazes me, in a similar vein, that people are so set against social welfare, when it's money that 's almost immediately put back in to circulation, in the local economy. I think it's about time for the limits of monetarism to be accepted, and for a serious reappraisal of demand side approaches.

Anyway, point is, for me there's no moral imperative to value equality, or to scorn selfishness, that's a matter of personal conscience, but there are strong practical reasons as to why a more equal society is a healthier place.

SupaNova wrote: »

I'm sure there were many tight-fisted scrooges at the time just as there are many generous billionaires today.

Not the point I'm making - it was the behaviour of adherents to the Quaker religion that I found interesting. Culture drives behaviour in profound ways, beyond the scope of mainstream economic analysis - check the paper I linked with that.

Culture matters. History matters. Social organisation matters. Power relations matter. All things that the simplistic "growth is the answer" or "markets are the answer" type thinking is incapable of dealing with - correct me if I'm wrong.

In fact, there's a serious question mark in my mind as to the applicability of the findings of any behavioural research outside the particular cultural context - double that for neoclassical economic modeling taking a palpably false assumption about human nature as their initial premise. For example, Permabear's "happy workers" research is kinda WEIRD - the very obvious point that research conducted on Western Educated Industrialised Rich Democratic subjects is of limited applicability outside these sectors, that's just most of the world. Doesn't seem to me that there's any one-size-fits-all solution, as you seem to be suggesting.

SupaNova

benway wrote: »

Sweatshops implies subsistence wages and poor conditions. If you mean factories, with decent wages and protections for their workers, then say that.

Yes factories, I would have thought that would be obvious.

Further, are you saying that Western corporations are going to drive wage competition? I would say that it would be better for indigenous industry and economic activity to take that role, but given the subsistence level wages paid by these employers, where is the investment going to come from to drive this growth?

Western corporations and indigenous industry.

Yet again, I'm not vilifying, and I don't see that anyone here is. But 1% of the population holding 40% of the wealth, and rising, is a palpably absurd outcome. It's a system that would facilitate this that I have the issue, rather than the individuals ... hate da game, not da playa. Word.

This worldwide aggregate statistical outlook really is misleading and it is all seems to be mixed up with a simplistic and incorrect view that if 1% hold 40% of the wealth, this wealth is hoarded or doesn't benefit the 99%. Then you are essentially comparing the owners of premiership football clubs to agricultural workers in rural Bangladesh and banging on about redistribution and fairness, but there are some intricacies that are missed when looking at statistics. We can't move football clubs to Bangladesh, not that anyone is saying we should, but this kind of wealth is encapsulated in these aggregate statistics.

Duggys Housemate

SupaNova wrote: »

Yes factories, I would have thought that would be obvious.



Western corporations and indigenous industry.



This worldwide aggregate statistical outlook really is misleading and it is all seems to be mixed up with a simplistic and incorrect view that if 1% hold 40% of the wealth, this wealth is hoarded or doesn't benefit the 99%. Then you are essentially comparing the owners of premiership football clubs to agricultural workers in rural Bangladesh and banging on about redistribution and fairness, but there are some intricacies that are missed when looking at statistics. We can't move football clubs to Bangladesh, not that anyone is saying we should, but this kind of wealth is encapsulated in these aggregate statistics.

No the 1% owning 40% of wealth is within the US.

Channel Zero

Where?

benways posts have debunked your statement beautifully.

Increased production in this context did not (historically) and does not (presently), magically increase wages to anything over subsistence level. Nor did it historically or is it presently phasing out child labour. It is government legislation and worker agitation that has been historically proven to largely increase wages and phase out child labour.
It was not handed out on a plate by the 'invisible hand'. It was fought for.

This is tiresome, did you read or understand the point I made in my previous post to start? Can you pick out a particular statistic or study from that list that is supposed to show that the premise is faulty? A study that contains causal theory and doesn't ignore other causal factors, i.e. If the number of "sweatshops" in a country increases and there is no growth, if study concludes therefore "sweatshops" don't lead to growth whilst ignoring bad monetary and fiscal policy it isn't worth diddly squat. But I guess that would require you to do some reading rather continue down the same confirmation biased road as previous posters.

Yeah rolleyes. I can't actually understand what you're on about here to be honest. All i'm seeing from you is ignoring of facts and obfuscation.

This actually reminds me a bit of the "trickle-down" theory argument. No matter what links or stats are presented to completely torpedo it, it's still propounded by those whose interests it serves.

Yeah the conclusion was the welfare state came to the rescue, and in my last reply to you I asked for some evidence of this, some statistics would be a start, some theory, and how you controlled for other causal factors, I'm still waiting.

Ok, well i'm still waiting for Sachs' quote in context, so at this stage i can only presume that you didn't take the quote for your OP from his speech, but rather took it from somewhere else that had also misrepresented and misconstrued it in an attempt to glorify regulation-free globalisation. Not to worry.

Here's some stats you requested regarding how the welfare state alleviated poverty.

http://en.wikipedia.org/wiki/Welfare_state#Effects_on_poverty

More here: http://www.lisdatacenter.org/wps/liswps/188.pdf

benway

SupaNova wrote: »

Is there any evidence of these factories entering a 3rd world country creating a self perpetuating poverty trap?

This paper has shown that the overall harmful effects of child labor extend well beyond the childhood years. The same child laborer as an adult does worse than a person who was not a child laborer, and that child laborer is much more likely to have to resort to sending his of her own child to work. Thus the cycle continues. It is important then to break this cycle within each household in order to achieve a lasting, long run reduction in child labor in a society. Policies that are able to break this cycle, family by family are potentially the most effective instrument to reduce the incidence of child labor. This type of policy might, for example, involve a one-time transfer of a critical level of resources to a family rather than continual general support of children’s education.

Patrick M. Emerson and André Portela Souza - Is There a Child Labor Trap? Inter-generational Persistence of Child Labor in Brazil

Households that are very poor are much more likely to send their children to work, and child labor contributes to poverty in the next generation by reducing schooling attainment. This circular pattern of positive feedback between poverty and child labor may lead to a vicious cycle of poverty, in which the descendants of the poor remain poor because they were poorly educated. This cycle can be the foundation of a classical ‘poverty trap’. However, if the cycle can be broken the same positive circular causation can contribute to a take-off into sustained growth. If schooling attainments can beimproved, then the next generation’s income is higher and their children can in turn become yet better educated. It is essential, therefore, to understand the specific mechanisms that can trap people in the awful equilibrium of persistent poverty, excessive child labor and low education over generations.

Christopher Udry - Child Labor

Etc.

For clarity, there are two distinct phenomena, as defined by the ILO: "child labour", which displaces schooling, and "child work", which doesn't. The latter is relatively unproblematic, so long as conditions are reasonable.

SupaNova wrote: »

Western corporations and indigenous industry.

Clearly, Western corporations aren't going to establish in sufficient numbers to drive up wages by reason of competition all around the developing world, especially in low-skilled labour. So, where's the funding going to come from to build up the indigenous economy?

Opening capital markets is problematic - even the IMF admit, reluctantly, that financial globalisation has limited development value, and tend to produce volatility in local markets.

What's your solution?

SupaNova

Duggys Housemate wrote: »

No the 1% owning 40% of wealth is within the US.

Surely you guys can muster up the brain cells to apply the point made to the US???

SupaNova

Channel Zero wrote: »

Where?

benways posts have debunked your statement beautifully.
Increased production in this context did not (historically) and does not (presently), magically increase wages to anything over subsistence level. Nor did it historically or is it presently phasing out child labour. It is government legislation and worker agitation that has been historically proven to largely increase wages and phase out child labour.
It was not handed out on a plate by the 'invisible hand'. It was fought for.

Your case that it was unions and minimum wage laws is no stronger than the claim it was the ending of the gold standard that ushered in a slower era of growth since 1970.

Yeah rolleyes. I can't actually understand what you're on about here to be honest. All i'm seeing from you is ignoring of facts and obfuscation.

You can't understand, well that's obvious.

Here's some stats you requested regarding how the welfare state alleviated poverty.

http://en.wikipedia.org/wiki/Welfare_state#Effects_on_poverty

More here: http://www.lisdatacenter.org/wps/liswps/188.pdf

Have you read anything yet? Do you understand the stats? Have you read the source material? If so are conclusions of the following kind:
Study finds an increase in number of "sweatshops" in a country and there is no growth, so study concludes therefore "sweatshops" don't lead to growth.

Do you understand why such a conclusion is bad if other causal factors are ignored? This is an extremely basic point. Do they contain theory as to why it was the welfare state and why it was not something else?

Unfortunately, I'm worried that the answers are I don't understand and I haven't been reading the materials I have been linking to.