In the comments of an earlier post we discussed the difficulty entry-level applicants are having in obtaining jobs. In this post I discuss 3 changes from the last 12 months making it difficult for workers with low- to no-skills find employment.
When an employer has a low-skill task that needs to be done – whether it be low level data entry or manual labour, she has a number of alternatives (or substitutes) to hiring a low-skilled worker. She could:
- Find a technological solution. Rather than hiring another worker, is there a piece of equipment or machinery that will do the job, or make existing workers more productive so another person is not needed? The automated checkouts in grocery stores might be a good example, though I've often wondered how much labour they truly save.
- Outsource/offshore/subcontract. Instead of doing the work in-house, can we pay someone else to do it? Off-shoring has become easier than ever for even the smallest of businesses thanks to services such as eLance and Mechanical Turk.
- Do without. Instead of having 8 cash-registers open, can we get away with having only 7?
Naturally not each substitute is applicable to each situation, but in many cases 1 or 2 would apply.
So what are three changes? I'll go through them from (arguably) least to most important:
1. Employer Side EI Premium Hike
Overall a small-hike for employers: 7 cents per $100 starting in January 1, 2011. Over time this usually ends up being paid by workers (through lower wages), though due to the presence of a price-floor (minimum wage) this more likely manifests itself in a reduction in jobs. For a low-income earner making $10,000 in a year an employer will pay $249.20 in additional EI premiums, up $7 from 2010's $242.20 amount. The employer will also pay $321.75 in CPP contributions, which is unchanged from 2010. The small increase in EI premiums should have a very slight, but negative, effect on jobs.
2. Rising Canadian Dollar
Consider the case of outsourcing. When a Canadian company outsources to India or Bulgaria or Indonesia, typically the contract is in U.S. dollars. A company has a data entry project, with the alternatives being hire someone or outsource. In early 2009 when the Canadian dollar was at 80 cents, a $2000 USD price quote for outsourcing equaled $2500 Canadian. Today at parity, that same quote now is $2000 (20% less), making the outsourcing option far more attractive.
3. Increases in the Minimum Wage
In Ontario, the (nominal) minimum wage has risen 50% since 2004, from $6.85/hr to $10.25/hr (source), including a 75 cent hike in 2010. Since it is possible on eLance and Mechanical Turk to hire workers in say, the Philippines or Bulgaria for $3-4/hr, domestic workers face a tough time competing for jobs which can be offshored. That's not to suggest that the minimum wage is necessarily bad for the low-skilled. I suspect most low-skilled workers would rather live in a world with a $10.25/hr minimum wage where it's harder to find worker than a $6.85/hr one where it is easier. But given the possible alternatives (technology, outsource, do without) a higher minimum wage does reduce low-skill employment.
Outlook for the Future
A strengthened domestic economy will certainly assist low-skilled labour. But they won't be helped by EI premiums that are set to rise again in 2012 and a Canadian dollar that continues to strengthen.
Worthwhile Canadian Initiative 
First, firms do not, in general, choose factors simultaneously.
Shareholders choose the current dividend and growth rate. That’s it.
They hire top management only (actually the top management hires itself, because it’s a small group of people sitting on each other’s boards of directors)
Top Management then determines high level wages and salaries, and their constraint is to maximize the wages and salaries they can pay themselves while still delivering the return demanded of shareholders — they seek to minimize all other factor payments but their own.
They hire another group and give them a similar budget constraint. That group’s constraint is to maximize their own surplus, etc.
So the situation is not:
“Firm”
— factor 1
— factor 2
..
The situation is hirearchical — it’s a tree:
shareholders
— coalition A
— coalition A.1
— coalition A.1.1
…
— coalition A.2
etc.
Each of these coalition’s is given a return constraint by the level above it, and each tries to maximize its own factor payments while minimizing the factor the payments of the coalitions underneath it.
The results of such an optimization is going to be heavily influenced by the structure of the firm as well as market power.
There is no single “firm” optimizing anything.
So a better model of a how a firm behaves is an outsourcing model, in which A imposes a budget constraint on B, which imposes one on C, etc.
Here, with outsourcing, there are well-known differences between horizontal and nested outsourcing, with the latter suffering from market failures and being less efficient. Corporate structure is an example of nested outsourcing, whereas your model is horizontal outsourcing — i.e. hire factor 1, factor 2, etc.
There is a material difference between the market outcome of one versus the other. Your separate optimization results requires a “no nesting” assumption.
You only get 10 first order conditions assuming the horizontal model.
This is actually similar to the point you were making about Walras’ law.
In many ways RSJ’s description of the firm seems like a reasonable approximation to me. At least in my experience as a wage slave working in some very large companies.
Large firms are more like Marxist dystopian nightmares of inefficiency than utility maximizing machines. Politics and power games dominate in upper management much the same way they did in the Politburo. In the C suite, wages = marginal product is for suckers.
“Large firms are more like Marxist dystopian nightmares of inefficiency…”
This I believe but it doesn’t save RSJ’s nonpoint. Are you saying, Patrick, that they don’t want to maximize profits/firm value/utility?
If they do want to increase profits, if they’re not averse to profits or averse to employing labour or someting, then RSJ’s blabbering doesn’t change the fact that they always want to employ more labour if they can pay it a wage less than its marginal product.
Even RSJ says this: “Top Management then determines high level wages and salaries, and their constraint is to maximize the wages and salaries they can pay themselves while still delivering the return demanded of shareholders…”
If that’s true then a direct implication is that they should always want to employ any and all labour that can be had for a wage less than it’s marginal product.
Now, if RSJ’s characterization of the typical firm is accurate they are probably organizing themselves in the way they do in attempt to circumvent some problems of monitoring and control of resources, yes similar problems to those the Soviets faced, in attempt to approximate the optimal solution.
But RSJ hasn’t told you what the problems are or why they’re intractable or even that they truly prevent the firm from reaching the optimal solution. Nor has he told why they prefer less money to more. Further, he seems blissfuly unaware of the fact even if they’re not actually reaching the optimal solution they’d still prefer to employ any and all labour that they can find that will work for less than its marginal product, such competition should still mean that wages get bid up to at least the marginal product.
Now, there are in fact models that have labour working for less than its marginal product but the reasons have nothing to do with RSJ’s blabbering. Further, RSJ hasn’t even explained clearly why his description of the firm leads to average wages persistently less than marginal product in the economy.
And as for how productivity growth has managed to stay ahead of wage growth, the answer is that most labour in the Western world gets paid more than its marginal product for a variety of good reasons.
Finally it needs to be asked, since RSJ is so unaware of what the standard body of economic theory says how can he be so confident in all of his repeated assertions that it’s wrong. Who does belong at the policy table?
Adam, putting aside RSJ, anecdotally I’d say there is a sliding scale. In large firms, the further up the org chart you go the more wages diverge from marginal product. And when you get to the top where people are setting their own and their friends compensation, it gets really out of control. I think the sense that the wage slaves are getting a raw deal stems from the inequity of the inefficiency.
Does management (non-owner management) want to max profits? Sure, but not because they want to give it to the owners. I think they act in ways that maximize the expected value of their compensation packages over whatever finite time frame they individually have in mind. There’s a certain overlap with profit max in that, but it also leads to all sorts of perverse incentives. One need look no further than the shenanigans around options to see what it leads to.
Why do shareholder’s put up with it? What choice do they have? They are a diverse group with little organization and little real power, whereas management is a small group, well organized, with lots of money.
OK, I’m going to say this one last time.
If the top earners decrease the factor payments of someone else, and then increase their own factor payments by the same amount, then total factor payments are the same, and total return is exactly the return demanded. Any additional hiring of factors of production will decrease the return to below the return demanded.
Let L_0 be the factor with bargaining power (e.g. CEOs), and let L_1 be the factor without power, and suppose that the original constraint for the firm satisfies:
Pf(K*, L_0, L_1) – (w_0L_0 + w_1L_1) = rK* for some (K*, L_0, L_1).
Suppose that you shift $X from L_0 to L_1, lowering the wage of L_0 to
v_0 = (w_0 – X/L_0)
.. and raising the wage of L_1 to
v_1 = (w_1 + X/L_1)
(Note, as an aside, that if the wage skimmers form a smaller group, then they benefit more, relatively).
Now you have:
Pf(K*, L_0, L_1) – (v_0L_0 + v_1L_1) = rK*
Except that v_0 is less than MPL_0, and v_1 is greater than MPL_1.
Now if the L_1 — the CEOs — tried to hire more of L_0, say increasing L_0 by x, then you would have:
MPK(K*, L_0+ x, L_1) < MPK(K*, L_0, L_1) = r — unless you have a really weird production function in which increasing one factor share does not result in a strict decline of all partial derivatives.
Therefore the firm is failing to meet the required return on capital — the CEOs are not able to hire more workers while also keeping their labor rents. Therefore the CEOs will not drive down MPL_0 to the lower wage obtained by bargaining because it is not in their interest to do so. But the shareholders don’t care — they are still getting the return that they demanded — rK — and are not bothered by (and most likely prefer) this shift in income distribution.
Now if the CEOs only bargained down the wages of the other workers, and did not shift the proceeds to themselves, then yes they could increase hiring up until MPL_0 fell to the lower wage and we would again have w_0 = MPL_0. But the whole point is to skim, not to be mean to other workers.
What we’ve seen in the U.S. is relatively constant factor payments yet a divergence in top versus median wages, showing that exactly this was going (unless you believe that top earners have become phenomenally more productive).
The only thing needed for this happen is the ability to skim — i.e. shareholders only care about getting rK, they don’t care about the distribution of factor shares other than rK, and then those in positions of power are able to bargain down other factor shares in order to pay themselves more. The ability to skim is a direct result of the outsource model, combined with inequalities in bargaining power, both of which are plausible, IMO.
Ugh. L_0 is the factor without power, but this should be understood from the math 🙂
Patrick, I agree with everything your saying. Nothing I’ve said above contradicts it.
What I’m debating with RSJ is whether or not the guys at the bottom get less than their marginal product. Nobody disputes that the guys at the top get more than their msrginal product.
In fact, as I’ve said repeatedly I think most labour gets a wage higher than its marginal product.
And some more comments:
First, this shows that while labor rents cause unemployment, the ones unemployed may not be the same ones who are earning labor rents. In this case, if every firm — or enough firms — allowed this type of skimming, then there would be less labor supply because of the lower wages, L_0. I guess you could call it “voluntary unemployment”, but I still think of it as unemployment, and I think this is the case made in Nick’s favorite Barro/Grossman paper.
Next, it need not be the case that top management skims all of the reduction in wages for themselves — they can take some, and then increase hiring some, and still MPL_0 will not (fully) decline to the lower level of v_0.
Finally, the reason why shareholders might actually prefer this arrangement is that the MPL is not known in a corporate context. If you have something very simple, like a brick-layer laying a hundred bricks per day, then you know exactly what their marginal product is, but in a large organization you don’t know. A large part of the effort is bureaucratic in nature. And you can argue that the value add of a manager is exactly the ability to squeeze the most output out of their employees with the lowest cost. The dividing line between having the manager increase “real” labor productivity versus bargaining someone down to their reservation wage is not clear cut, and frankly I’ve never seen “management” in a production function at all.
There is just an assumption that there are clearly identifiable marginal products for every worker, and my own experience tells me that this isn’t the case. Bargaining power is an important determinant of the real wage.
“What I’m debating with RSJ is whether or not the guys at the bottom get less than their marginal product… In fact, as I’ve said repeatedly I think most labour gets a wage higher than its marginal product.”
Yeah, FWIW I’m with you on that. It’s pretty hard to argue otherwise.
Patrick, I don’t see how you can argue that “most labour” gets a wage higher than its marginal product. Labor productivity has been rising with per capita GDP, but median wages have been declining over the last 30 years in real terms. Even for the bottom 99%, real wages have been growing much more slowly that labor productivity. But total factor shares have been constant. It’s non-sensical to argue that the top has been earning more than their marginal product, but that no one else has been earning less than their marginal product.
RSJ: If I’m following your argument …
You are assuming that the productivity increases are attributable across the board to labour. So when you add it all up, labour ought to be getting more and it clearly isn’t. But I don’t think the productivity increase are attributable across the board to labour. I think they are attributable to less human labour on average, and much more machine labour. Machines don’t need wages, the money borrowed to pay for them probably gets the firm a tax break, and once paid it’s all gravy (except for maintenance costs, which are usually peanuts these days). And the MPK of the machine flows right into the firm’s revenue stream, where management can dream-up all sorts of nifty ways to get their hands on it without the machine’s union kicking-up a fuss and demanding to have their turn to raid the owner’s cookie jar.
So I think you’re looking at this the wrong way. It’d be like looking at farm output from the turn of the century through the 1930’s and claiming that horses are clearly being exploited because their share of hay has decreased while overall agricultural output has increased, when in fact it’s the replacement of horses that is causing the jump in productivity.
“The irony of all of this discussion, of course, is that many of these so-called low-skill jobs are being done by university graduates, while high skill work, such as blogging or writing in the Globe and Mail’s economy lab, isn’t paid at all.”
Frances, I believe this comment deserves to be expanded on in a post of its own.
If you would be so kind as to write it…. 🙂
I second the motion put forward by Mr. Determinant. Would love to read such a post!
Also, has this post hit a record for most comments? Feels like it.
Patrick,
No, I’m not assuming any form of attribution. Labor productivity is output divided by hours worked.
It’s a measure of how efficiently the factor is employed by the production system.
It’s not an attribute of labor that is independent of capital — e.g. of how “productive” a person is apart from a production system.
The rationale for wages being the marginal productivity is not a fairness argument, it’s an arbitrage argument, in that if you add one more person you would get more output, so you will keep adding the factor until the productivity declines to the wage level. This assumes the firm is a price taker for both its output as well as inputs and simultaneously optimizes all quantities.
As soon as you relax any of these assumptions, then the arbitrage argument gives you a different answer. If the firm is not a price taker for its own output, then if wages were lower than MPL, and the firm tried to use more of the factor, then prices would decline as the firm sold more, so that wages would remain below MPL, there would be a price elasticity of demand term that you would subtract out from MPL to get the wage.
If you change the decision making process to be nested — e.g. shareholders first select K, and then managers are allowed to select whatever combinations of w_0, L_0 and w_1, L_1 that are both allowed by the market (as a result of bargaining) and that meet the return requirement of shareholders, then your optimization problem is constrained by:
rK = pf(K, L_0, L_1) – w_0L) – w_1L_1
where r, K, and f are fixed and all other variables are variable.
In that case, if it was possible to decrease w_1 and increase w_0 while keeping L_0 and L_1 fixed, then it will be in the interest of L_0 to do it, and they will do it. They will not increase their utilization of L_0 because this breaks their own budget constraint. They will simply take the wage gains for themselves and keep output at the same level.
So this original discussion was about the lack of credibility of economists when it came to giving policy advice — vis-a-vis the minimum wage in particular. And this is a perfect example. The result that wages are MPL is a theorem that only holds if the hypothesis are true — price taker, simultaneously optimize all quantities. As soon as you relax the hypothesis, the result no longer holds. Clearly these hypothesis do not hold in any economy, and there is a strong case to be made that the decision making problem of a “firm” is really a sequence of nested optimization problems in which some quantities are constrained by the level above the decision maker, and there is bargaining power — or price variability — that is available to the hiring manager or executive. This would lead you to predict wage skimming, which is what we observe: Some people are paid more than their marginal product while others are paid less — this is hard to dispute, given that wages for the bottom 99% have been growing much more slowly than labor productivity, and that wages for median incomes have been declining in real terms. Yet overall wage shares have remained the same.
If in the light of all of this, you still argue that it is impossible for wages to be below MPL, then you are sticking to your theorem even when the hypothesis do not hold. Anyone that makes a blanket statement such as “increasing the minimum wage will decrease employment” is doing exactly this. You need a more qualified statement such as “increasing the minimum wage will decrease employment if minimum wages are efficient, but it will increase employment if minimum wages are too low”. If economists made more of the latter statement and less of the former, then they would have more credibility.
RSJ: “This assumes the firm is a price taker for both its output as well as inputs”
Yet again wrong, that’s not true at all. Why do you keep making stuff up?
Adam,
If prices decline with quantity, then MPL will exceed wages.
To maximize d/dX(Pf(X) – w*X), you get a different result when P = P(X). In that case, 1/PED enters the solution.
You really seem to be hopelessly lost in terms of tying your conclusions to their hypothesis.
Each conclusion only holds in a given context. Whether or not the firm is selecting both prices and quantity makes a difference. Whether or not the selection process is nested makes a difference.
The above should say, “to maximize Pf(X) – wX” — the gradient will depend on which variables are functions of quantities and which are fixed.
“Labor productivity is output divided by hours worked.”
Right. So swap human labour for robots who produce more and are not paid wages. The humans go do some other work that robots can’t do (yet). Now imagine that the work the humans do instead of doing their old jobs tends to have lower marginal product. I don’t think that’s a stretch, since it’s a second best choice e.g. WallMart greeter vs. factory worker. So output (GDP) increases, hours worked stays the same, wages go down.
Patrick, I’m not sure what you’re trying to argue with the Robots. Are you saying that the reason that median wages have been declining is Robots? Or more generally, because capital (e.g. machines) has been replacing labor (those who design, operate, and service the machines)?
In that case, you would see labor’s share diminish.
But labor’s share has been the same over the last 100 years.
Capital’s share has not been growing.
The shift has occurred within labor itself, which is why I think it’s important to disaggregate and distinguish between labor that has bargaining power versus labor that does not. And looking at the methods by which firms set wages is also important. I don’t really see a “robot effect. Particularly if you compare the era from 1950-1980 versus 1980-2010. If anything, the earlier era was one with greater opportunities for gains from automation, and yet those gains were distributed relatively evenly across the board.
“Are you saying that the reason that median wages have been declining is Robots”
Defining ‘robots’ very broadly, I’m positing that, yeah.
“Capital’s share has not been growing”
Really? I confess I haven’t looked.
One thing I would point out is that some humans are often hooked-up to ‘robots’ and thus made more productive (e.g. accountant with computer, financial engineer with Matlab/R/Octave/Mathematica, etc …). Relative to the poor souls with no robot helpers, I imagine their wages would be much higher. In the early days of automation, my guess is that the benefits would be pretty evenly distributed. Not so much anymore. The low hanging fruit has been picked.
I’m not claiming any of this as truth. Just thinking out loud.
Patrick,
Yeah, take a look here:
http://www.econ.berkeley.edu/~saez/TabFig2008.xls
Specifically Figure 6 for factor shares in the corporate sector. Then look at figures 8, 9 and 10 for wage income shares.
IIRC, factor shares are not this constant in other nations, but this was one of Harrod’s “stylized facts”.
Now if you look at the occupations which have seen the highest wage growth — finance, legal, managerial, etc. I really don’t see a big connection with robots making the average worker obsolete. I do see a lot of bargaining power, barriers to entry, etc.
Is it really so implausible to believe that their excess labor rents come at the expense of wages for those with less bargaining power, rather than as a reduction in the number of lawyers, financial professionals, executives, that the economy employs?
That’s really what we are debating here. If you believe in the MPL adjustment theory + diminishing returns, than any group earning wages in excess of their MPL will be utilized less, so that MPL rises for that group until wages = MPL again. Any group earning wages less than MPL will be utilized more so that MPL falls for the underpaid group until wages = MPL.
According to that theory, if finance and legal professions were earning rents, then we should see a reduction in employment in those sectors. Doesn’t this strike you as implausible? Is it really too hard to imagine that not all factors are substitutable for each other, so that even an ice-cream maker will need both lawyers, an executive, and cleaning staff. And if the executive can bargain down the cleaning staff to their reservation wage, earning himself a nice bonus in the process, then doesn’t this result in a shift of wage income from the cleaning staff to the executive? Should such a shift occur, what would be the adjustment mechanism, other than an increase in the reservation wage, which will undo this shift and restore efficiency?
I don’t doubt that there is certainly rent extraction going on, with some ugly politics and structural power issues to boot. I’m just not convinced it’s the whole story. And since the explosion in IT, computers, and advanced automation since the 1980’s coincides pretty well with the marked increase in inequality, I’m loathe to dismiss it as playing no role when it seems easy to tell a story where it might play a role.
One last point: A shift in the distribution of wages won’t show-up in labour’s share. So if there’s a story about some people getting ‘robot helpers’ (i.e. computers) and becoming more productive, I don’t think it would show-up there.
Anyway we’ve beat this to death. I’m not disagreeing with you, I just don’t think it’s the whole story. I think I’ll leave here for now.
Well, Patrick, generally I agree — I don’t know “how much” of a story it is — that’s really the debate we should be having. And the answer to how much of a story it is will be specific to the occupation as well. It could well be an important factor at the minimum wage level of employment, but not so much of a factor in reasonably well-paid professional jobs. Looking at the clustering of jobs at the minimum wage level gives a clue, or even measuring by how much unemployment changes when the minimum wage changes gives you another clue.
Since we are closing up this discussion — I want to admit that I (again) screwed up marginal product with marginal revenue product (at the firm level), so yes, Adam is right in that even if the firm is not a price taker for its output, that won’t break the wages = marginal (revenue) product identity. Ugh. But what would break that identity is any bargaining power that one (non-capital) factor has over the other, provided that the factor with power is able to increase its own wages by the amount of wage reductions of the other factor. As long as the proceeds are not passed onto capital, then more investment wont occur, and more hiring of the less powerful factor wont occur, so that the MPL for that factor wont fall to the level of the reduced wages.
I do think that this effect is important. But “how” important is certainly up to debate.
At least, we should acknowledge the possibility for this type of wage skimming, and take it into consideration when discussing the effects of coalitions and bargaining power. It could be the we need strong unions in order to counteract some power differentials, but not so strong as to shift the bargaining power in the other direction. Perhaps it’s like “mutual assured destruction” — we need the bargaining power to be equal across all factors.
RSJ, yes the counter-example I had in mind was exactly that of a firm being a price taker in the market for its inputs but not a price taker in the market were they sold their output, for example as in a monopolistic competition market structure.
Right, Adam P, and I’m just pointing out that if you change the decision making structure by using a different model, you get a different result.
I.e. with a bricklayer, you can talk about his marginal product in terms of numbers of bricks, and the capital owner will hire more bricklayers if they are willing to take less than their marginal product.
But if the capital owner is hiring a bundle of a {brick-layer + cement mixer}, then the owner only cares about the aggregate wages and aggregate marginal productivity of adding another bundle.
In that case, if the cement mixer has more power than the brick-layer, he can reduce the wages of the brick-layer, increase his own wages, and the capital provider will not increase hiring because as far as he is concerned, the cost of hiring the bundle is equal to the marginal product of the bundle.
This requires a nested decision making process, rather than having the capital owner hire each factor of production themselves. But this is what we have with shareholders hiring C-level executives, who then distribute budgets to subordinate business units, each of which then perform their own hiring and wage bargaining.
I don’t have any hard data that this type of wage-skimming is important, but there is anecdotal data from looking at executive compensation, and I don’t see why these labor rents must all be realized as a loss in total output or a reduction in the factor payments to capital. In the U.S., factor payments to capital haven’t changed since 1970, total output has remained at trend, and yet median wages, and even wages for the bottom 90%, have been roughly constant in real terms while top wages have increased. That at least suggests that a transfer in wages has been occurring, with total income delivered to capital owners not changing.
I find this type of model appealing in terms of explaining the wage data, and I haven’t seen it discussed elsewhere, but perhaps its a well-known model and has been rejected for some other reason.
The horse is dead, but I’ll beat it at little more :
“with shareholders hiring C-level executives”
Shareholders are ‘victims’ here too. I’d say that shareholders and labour have much more in common than either likes to admit. Usually, the board hires the CEO, and the CEO hires the other C-levels perhaps with board involvement. If board members have been granted proxies to vote the shares of large institutional holders, often run by their friends, then the whole thing becomes terribly incestuous. The management can very easily siphon off money from the revenue stream and find all sorts of ways to justify it.
This REALLY bugs me because it precludes labour ‘fixing’ it’s wage inequality problem by buying shares and becoming capitalists! What options are left? A repeat of 1917?
Patrick, shareholders are not victims because if the labor rents were passed onto them, they would increase investment and MPK would fall together with MPL up until the labor rents went away.
Moreover, if a manager hires a worker for less than their marginal product, then the manager “earns” the firm a greater amount. The capital owners will increase the wages of the manager as a reward for improving the profitability of the firm. As a result, a portion (but not all) of the labor rents will be skimmed by the manager. Therefore not enough hiring will occur to bring MPL down to the wage level, although MPL will fall somewhat, up until it reaches wage level + labor rent of manager, or wage level + cost of paying manager to lower wages.
But in real terms — i.e. in terms of transforming real inputs into real outputs — the manager’s marginal productivity does not go up when he bargains down another factor of production.
But why should shareholders ignore the increased profitability just because it does not arise as a result of increased transformation efficiency?
And that isn’t even getting into the issues of specialization, so that measuring the marginal productivity of an accountant or lawyer working for an auto manufacturer is hard to do. MPL is vague and difficult to measure — I don’t see how you can seriously argue that customs, power relations, etc., are not going to be important determinants of employee compensation.
Watching cnbc for a weatherizing interview, Barti-hotchick said, last week, GOP and Dems don’t want to kill eachother. Whereas she herself was maybe unknowingly a powerful deathpanel meme-spreader. She meant she didn’t want chain-of-command assassinations (poor Americans fair game). Anyway, this is the kind of USA verbal crap we prevented by not electing an unBritish/French RW majority.
That got me thinking corruption like what our PM is trying to prevent in standing up to an African warlord…is equivalent to the dimininshing and eventually negative of Pareto rich people, the results of too low income/biz/GST tax rates. Eventually the right stops looking for inefficiencies in the left entirely and makes corporatism sole agenda. And you can measure this investment risk using Gini just like some nations and corrupt regions are charged higher ROIs.
EI in this context is like a union card in opposing new workers. 1/2 of my employers one year didn’t file my earnings to CCRA. Strangly, with increased capital (opposite of labour) intensive corporate profits (oil and mineral mining are capital intensive, coal is labour), higher corporate taxes would function to increase trickle-down. To me the first step is to remake enriching the top (k?, 10k?) as part of a RW portfolio, realizing all Canada’s rich do is unleash an AGW holocaust.