Government Sponsored Jobs Program

An industry level council would be able to determine concerns about excess supply. We have to be careful though. Here, for example, construction workers have been hindered by the self-employment tag (really an excuse for the middle man to feed at the trough). There's then skewed compensation and a general failure in apprenticeship systems.

 

What is an internal labour market? Also, how does it destroy any simple wage subsidisation programme?

 

deflation would occur.

Not sure which one. I'll pick nominal though because you seem to want to criticize it.

Because businesses couldn't possibly predict deflation perfectly, like if you took 10% of the money out of the economy one day, businesses wouldn't instantly lower their workers wages to compensate and would receive less income, after they start losing losing sales they will then lower their workers wages, taking damage in the process.

Because if a worker gets paid more then the boss expects, it's overpayment.

Goods would be sold for more then they're worth. They would still have the same value when the currency deflates, and the price basically increases so it would be sold at a higher price then it was originally priced for.

 

(to Geofree)

Alright, I'll budge. Removing the initial cost of buying land would be a reasonable increase in efficiency to the economy. However, it won't revolutionize it or close our the remaining 9% unemployed.

 

Well I guess if the recruited workers had the right education, they could move to an area that has a high skill job open and work there.

Explain more.

 

Why do you think deflation would occur? (I am not saying you are wrong, I just need to know where you are coming from here).

Nominal GDP is a bad measure of economic growth. Say an economy has 100 products all sold for $1. The GDP would be $100. Now say that half the products are destroyed by some crisis, and as a result prices rise. There are 50 products, sold for $2. The GDP would still be $100, despite production being cut in half. Real GDP supposedly fixes this error.

Predicting deflation perfectly is not necessary. There are different types of deflation. Deflation via a change in the money supply would be harmful indeed. But deflation caused by increased supply of goods will cause no harm at all. If that were the case, increasing the supply of goods would be harmful. That would mean economic growth is harmful, which is contradictory.

That makes no sense because the boss sets the wage, and thus the worker can never get paid more than the boss expects.

How do you know that goods would be sold for more than they're worth? How does deflation of the currency cause the price to increase?

 

An internal labour market refers to the complete replacement of supply & demand with internal human resource management techniques. This reflects the difficulties involved in maximising productivity and minimising labour costs (including training costs and job turnover costs). Take the most simple policy that can be adopted: seniority pay. This discourages people from moving, generates a more stable relationship (such that any general training provided by the firm do provide gains via higher labour productivity) and also ensures greater worker compliance (i.e. a new worker will be severely underpaid, but will know that- if they're a good boy or girl- they won't be dismissed and they will progress up the job ladder such that they secure future gains).

Of course in reality things are more complex than the picture painted by seniority pay. For example, the firm can integrate their human resource management systems with other ''distasteful policies' such as discrimination. This changes our whole understanding of the impact of such 'inefficient practices'. A supply & demand approach to discrimination (such as Gary Becker's 'taste for discrimination') suggests that- as the firm is using labour inefficiently because of its preferences for 'white males'- there are profit losses. We don't necessarily get that with the 'internal labour market'. By ensuring 'white males' progress to the top of the job ladder (or, at least, have significantly higher probability of progressing up the ladder, discrimination can itself be a source of profit. The human resource management techniques can destroy solidarity and, through 'divide & conquer', ensure a labour force with a weak bargaining position

 

Another basic error. The wage, if you buy supply & demand, would be determined by the market. This is another example of how the right wing just do not understand how supply & demand is supposed to operate

 

And do what to correct it? Sharp declines in new home construction for example affected multiple sectors simultaneously. Jobs these workers might easily transition to are gone along with theirs.

I thought we celebrated entrepreneurship? Is this a knock at general contractors?

If they had the "right education" it's likely they wouldn't be out of work to begin with. Now for instance a huge number of jobs lost are in area where the skills don't translate very easily to the current job market.

Who wouldn't want free labor? I might even fire some of the folks working for me just to rehire them on the states dime.

Another problem I hadn't considered until now is that this employee has zero interest or concern for the company he's working for. He's unlikely to get a raise and whether the company does well or not is irrelevant, in other words the incentives of the worker and the employer aren't aligned

 

Excellent points, all!

 

You can't react according to cycles in overall activity. A training strategy requires long term planning.

Genuine entrepreneurship? Yes. Use of systems to glean economic rents at the expense of the worker? No.

 

These long term planners on the industry level councils are going to be able to determine what job skills are going to be valuable over the long term? Will they be using the diving rod or the crystal ball?

What rent is the GC able to extract? He's essentially an aggregator of job skills, providing a single point of contact for a customer who'd otherwise have to make several contractual agreements.

 

Because that worker would be taking money away from everyone else to fund his or her job, and increasing the supply of goods/services on the market which would then raise demand which is a recipe for less expensive products.

You got a point. If you find a way to manufacture cheaper goods you've already decreased the labor cost per good to compensate. However if you're a competitor and the business your competing with produces 2x more goods for the cost of 1x of goods, your business, along with your employees, are going down the drain. If both businesses improve their production at the same time however, no damage would be done due to the increase in demand for the products.

Think about it, if you get paid 10 dollars an hour and the currency deflates by 50%, you would be getting paid the equivalent of 15 dollars in pre-deflated dollars. Maybe not more money then the market predicts, but more value.

Price doesn't have to increase, dollars have to increase in value.

 

Don't criticize me on things that could be easily prevented, the agency could easily see where the workers were fired from and refuse to give that business a government sponsored job.

I already amended this in a later post (can't edit the first post on the thread to let you know, sorry), the worker would be paid based on how many more goods are being sold. If the worker does a terrible job, like making less goods, then he or she ends up being payed a smaller amount for it.

 

Thanks for taking the time to listen to my argument. If you have learned anything about geoism I will consider my time well spent.

There are other economic and social problems that contribute to unemployment, and I am fully aware of that fact. However, for me it is a matter of priority. Consider this snippet from a book written by Henry George:

What is described above … I have seen it first hand. My wife works for a large low-income apartment complex. Every time the economy improves and the tenants are able to work more hours and overtime hours, allowing those tenants a slightly greater income, my wife is directed to increase the rents. I have heard it many times from the complex owner, said in slightly different ways, but the general philosophy is thus: “keep them poor so they can’t afford to move out”. Thus, every advance that society may afford the poor, the landlord will confiscate that advance through increased rent demands. That is the power of land monopoly.

So while many here think that I know of nothing other than the land value tax, and that I think it a “cure all” for the economy, that simply isn’t true, but is rather a matter of priorities. Fixing other problems before fixing the land problem will simply add to the power of the land monopolists and further increase his war chest. That is why I find it most prudent to tackle the land problem first, and tackle the other problems only after that problem is solved.

 

No need to take it personal, but your plan creates a poor set of incentives. So now, not only do we need to dole out dollars for payroll, but also to monitor and enforce those who will try to game the system.

The incentives still aren't aligned, the worker wants to crank out as many items as possible regardless of quality, where the employer might prefer to sell fewer, higher quality items at a higher price. It's an improvement, but I'm still not fond of it.

 

There's no utopia. But let's not forget the success already achieved in wage policy (where inefficient wage differentials have been partially removed). So far you've been passive to the extreme. The idea that you can simply go for the bog standard "let's re-train" wasn't much cop!

We have self-employment 'by name only'. That allows a double whammy: control over underpayment levels whilst removing the need to provide non-pecuniary characteristics (provided in more traditional employment). Even the training is bobbins, with health & safety really just about a means to reduce the threat of the dribbling lawyer

 

Some folks like to point out the ever widening wage differentials. In fact that's a common argument I hear from left leaning economists.

The idea that we're going to socially engineer a workforce that's well equipped for a future we don't know anything about isn't much better. Scholarships and retraining are ad hoc solutions, but since being proactive isn't possible I'm opting for second best solution until I hear a better one.

How so? They own all the capital, they're bearing all the risk -- you've avoided being specific here, what are you talking about? The self employed mason/carpenter or the general contractor?

Traditional employment? Jobs that are manually intensive are as traditional as it gets and seldom have those jobs come with benefits outside of the wage. Workman's comp is new compared to the profession.

Often this is true, some of these jobs still require a level of artisanry and so it also becomes about protecting an asset.

 

Why not just cut out the middle man and give every unemployed person a check that is enough to cover him as if he had a salary?

 

Irrelevant to my point though. Wages councils didn't eliminate inefficiency. Its true though that they reduced inefficiency.

Socially engineer? An idiotic statement that goes back to your uneducated youth! This is simple realisation of the nature of market failure. You came out with a policy that we'd call "pants". It makes the Tories look educated in the economic stakes!

This is also idiotic. They are middle men, neither risk takers or owners of ability.

More traditional relationships, based on semi-permanent contracts, lead to all sorts of nasty costs for the f witted employer. Fake self-employment provides a means to avoid all non-pecuniary 'compensation' (typically enforced through legal means).

There is no permanent relationship and therefore no protection of 'asset'.

 

Why so desperate to avoid specifics and plain language?

What adjective would you prefer? How are these industry level councils going to sort out what skills will be useful in the future?

My original comment was in regards to those who no longer have marketable skills, such as jobs pertaining to home construction. You've ducked saying anything specific and opted to be condescending towards entrepreneurs and mocked the notion of retraining. So tell us, please, what do we do with folks who skills are dated and who's jobs have shifted to other sectors?

Different comment, same problem. Who are 'they'?

 

I haven't altered my approach. You've allowed your mask some slippage.

I've referred to the reality: they have been shown to reduce market failure, but not eliminate it. Widening the focus isn't a particularly aggressive act (except perhaps to someone that thinks "I'm a Tory, let's hope we convince the plebs" re-training is enough!)

Which was a nonsense comment. You have no means to refer to marketable skills. Let's be honest now, you've just added some Econ 101 and parroted me know and then. You are still making mistakes based on ignoring the complexities of actual markets.

I've but referred to the reality of our construction industry. To call middle men entrepreneurs is nonsense

 

Higher demand leads to higher prices, not lower prices. So if you think the additional working will raise demand, how is the a recipe for lower prices?

Businesses must fail in a healthy economy. Otherwise there would never be change, and the world would never progress anywhere. If a businessman finds a way to produce 2 x more goods without an extra cost, anyone using less efficient measures should and will go out of business if their goods are not of a better quality. The situation you propose is not a problem at all, it is a benefit of the market. Inefficient businesses fail, freeing up resources (including labor) to be used by more efficient businesses.

Correct. If the employer keeps the wage nominally the same, and there is deflation, real wages will rise. But the problems that this will create result only if the money supply is reduced, which simply does not happen today. Again, the key difference is why prices are falling. Deflation used to only refer to a decrease in the money supply. Falling prices resulting from an increased supply of goods was not considered deflation, it was considered healthy. Even though economists today use deflation for any price fall, if the deflation is caused by an expansion of production there is no harm done. The worker will have higher real wages, but so will the employer. There are more goods to be bought, more wealth to be had.

Correct. Each dollar will increase in value as the supply of dollars shrinks. But prices will also fall, so nothing is sold for "more than it is worth." For example, say a banana costs $1. The money supply is cut in half, but the banana will now sell for $0.50. Deflation caused by a contraction of the money supply is not good, for it will cause negative effects similar to inflation caused by an expansion of the money supply. Worth is subjective anyway, so such a claim regardless of inflation/deflation makes little sense.

 

Well actually the agency wouldn't even have to watch out for companies dropping workers in an effort to get them back as free labor, the chances of the agency picking that worker to work at that specific job are actually really small.

Well if we had a sponsored worker making ipads, and he or she constantly made broken ones, the boss would see that as wasting their resources (since the iPads cost materials), and punish or fire the worker even if it was a government funded worker.

 

I think you mean unemployment benefits. We could theoretically do that but it wouldn't increase the amount of products we produce, (not saying GDP to make Liberalis happy) which is important.