Irish Staff Difficult to Find Inspite of Job Crisis

At least, none that you can see.

ROTFL, "the market" is the reaction.

Your point?

It could be that you live in a much darker place than I do. This is why I don't want the US to go the way of Europe.

 

As usual you miss the point. The market will ensure that, for example, wages and productivity are related. It won't, however, eliminate basic market failures: underinvestment in training, underpayment, underemployment etc etc

That your understanding of the labour market is not up to scratch and its that shortfall in understanding that has encouraged you to adopt a position which ignores market failure

You forget that I've lived through a natural experiment into labour market flexibility; detailing the costs hasn't been a difficult proposition

 

What typically happens is that a business will offer minimum wage accompanied by training. The employee essentially "earns" the training by being willing to work for minimum wage.

Ideally, the business pays enough money to make it worthwhile to potential workers to obtain training at their own expense.

But the problem is that many businesses simply are not able, or willing, to pay enough wages to attract trained workers, and are unable, or unwilling, to provide the training themselves. It could be that the irish economy is such that there are not enough customers able to pay high prices, and so most of the businesses can only afford to offer low wages. But at such low wage levels being offered, workers are unwilling to make an investment of effort and money for training. I really feel that it is a mistake in many cases for the government to think it can end unemployment through training programs for the unemployed.

Businesses complain of a lack of qualified workers, but the real issue is money. There simply is not enough demand for wages to increase, so while it might seem like a "shortage of skilled labor" from a business perspective, it is actually an issue where there is not enough demand for labor because consumers do not have enough purchasing power.

 

When economic conditions are unsustainable, there will be a correction, up after a sustained recession, or down, after a sustained boom. Those economic conditions can be contained in an industry like in the 2000 tech crash.

Some used their existing training, or got training (on their own), to go into other industries. Some started their own companies. Some took lower paying position, so were underemployed. For a while.

Companies that stayed afloat, had to cut their prices sharply (underpayment).

You would call that a market failure. I call it a variation on "The Beer Game", instead of beer, it was high speed internet deployment.

How exactly would you have prevented that market failure?

Yet, "the market" succeeded enough to bear the weight of government intervention, social engineering, and entitlement, for a while. Government assured the over productive have supported a growing number of under and non-productive. That weight has taken it's toll.

And it has left you bitter and angry. A reaction I have see in those believing they were entitled to better.

I have lived through my fair share of economic ups and downs. Even saw the last two coming (before I got interested in economics). I haven't lost faith in my fellow man.

 

Efficiency is not a failure, it is a feature. It is up to the individual to fight his way through this world alone and suffer the slings and arrows of outrageous fortune, and it is not up to Government to redress the market's "failures", this is not "utopian" it is social darwinism, the proper way of humanity and the only way Capitalism can function at all.

It isn't a failure in the market. No one gives a (*)(*)(*)(*) if Bob the burger flipper ever crawls his way out of poverty, that is his cross the bear, not the owner of the establishment in which he flips burgers or society at large.

It is not the position of Government, the market, or anyone else to improve the condition of the individual, but the individual himself. If there is no opportunity at the time, then the individual must "make do" with what he has if he unwilling to engage in certain activities that will lift the value of his labor above that of the typical market value of his labor.

 

This isn't relevant to my point. Market failures, by definition, inform us that there isn't any natural correction. Indeed, given the profit motive in capitalism, they are typically encouraged.

The market, in capitalism at least, is reliant on government intervention. Your attempt at whinge at the minimum wage, however, also inadvertently advertised that intervention can enhance the market (as, given job search, we know that the minimum wage can enhance exchange and ensure a reduction in unemployment)

I've never been a fan of stupidity. The ideological imposition of inefficient practices that inflamed underpayment and harmed human capital investment deserves contempt

 

Market failure is obviously inconsistent with efficiency criteria. Stop boring the sub-forum with obvious non-economic folly. I know you want to fit in with your social group buddies, but come on!

 

?!? The natural correction in capitalism is robust competition.

You keep saying that as if it is fact. I disagree.

Corporatism requires government manipulation (defacto monopolies), where government and corporate executives share the spoils.

Capitalism requires government protection of property rights, monopoly prevention, and enforce contracts. Last I checked, that isn't intervention.

If minimum wage increases employment, then increasing would increase employment further. It could cure unemployment, the government is holding out on us!

True capitalism is agnostic to ideology, and exploits a competitors inefficiencies.

I don't know what you see as capitalism, but what you described doesn't look like anything I have been part of. I'm as Machiavellian as the next business person, and I have yet to find where being evil has any long term competitive edge.

 

This is meaningless

That reflects your innocence of economic history and also capitalism's natural tendency towards crisis

Actually that's market socialism

This is particularly ignorant. The minimum wage merely reduces market failure. You ignore it and therefore you support a coercive limitation on exchange opportunities

You haven't even pretended to answer the quote. I can understand why. Your original argument has been shown to be cobblers by the reality of labour market flexibility

 

Neither should it be the position of the government to impoverish the poor by denying them access to decent land and fresh water.

 

Who else has the bandwidth to monitor every company? The government! ROTFL

Government also has a tendency toward crisis. The difference is when a company goes into crisis (which they do all the time), the damage is localized. When government goes into crisis, not so pretty.

Not according to Harvard

I have no reason to believe minimum wages does anything more than reduce employment for the unskilled.

Quote? Can you point to it?

 

Your 'living in a bubble' position is based on ignoring the nature of capitalism, such as the tendency towards market concentration.

Nope. Government has a tendency to induce forms of inefficiency, such as influence costs on trade policy. That is quite different to macroeconomic crisis. You ignore that government is an integral economic agent for capitalism.

You're out of date. See, for example, post-Hayekian market socialism and its consistency with the Austrian school. Given asymmetric information and the opportunistic behaviour that creates, capitalism will assuredly attack property rights. Indeed, economic rents associated with underpayment is a basic assault on such rights.

We certainly can agree that your understanding of the labour market isn't up to much. That labour monopsony is the norm cannot be denied. We only need job search frictions for that.

"The ideological imposition of inefficient practices that inflamed underpayment and harmed human capital investment deserves contempt". Thatcherism, 'free market economics' used to excuse the creation of greater economic rents, harmed exchange and the skills base of the economy

 

Market concentration is only a problem when it behaves like a monopoly, using that concentration to raise prices.

Microsoft has a huge amount of market concentration, yet their software prices are falling, not increasing.

There are other "market" concentrations are the result of corporatism, government passes laws and regulations creating a barrier to entry. Prices go up (after all, you got to pay back the politicians).

The ROI for the corporation is huge - "underpayment" because the politicians are too stupid to set the right price. These are the people you want regulating more business - ROTFL.........

ROTFL - The US is $14T in debt, burning through twice the cash they are collecting. That is unsustainable. Future tax payers will be hit with both higher payroll tax for the entitled and higher income tax just to balance the budget.

I guess you don't see that as a crisis. How naive.

Because you have yet to provide a compelling argument.

Me, or Harvard, or do you misuse economic terms because they look good. This is the second term that didn't agree with your usage.

That is why the US Constitution stipulated property rights as a responsibility of the Federal Government.

Economic rents require a price disparity, which government allows, competitors do not.

Labor Monopsony in the norm? I don't think it means what you think it does.

Ah, yes - your horrible experience in living through UK attempt to reduce socialism / entitlement.

It is much easy for politicians to buy votes by adding entitlement programs (until the outgo exceeds the income and / or the tax payer rebels - of course the US resolved this by taxing future generations).

However, cutting entitlement programs create a huge uproar among those losing their benefits. Very hard for politicians, so they put it off. The result is Greece, going through far more turmoil than UK did under Thatcher.

 

Nope. All we need, for example, is cost-plus pricing. As long as firms have price making power there will be a tendency towards problems such as stagflation (and therefore a need for government interventionism)

Describing economic rents. By definition, inefficient but encouraged by market forces in capitalism

You of course forget that, without fiscal policy, capitalism would cop it. Keynesianism has been a godsend for the right wing and the orthodox.

The crisis has been engineered by neo-liberalism, with tax receipts suffering because of the folly of 'free market economics'

I bother to refer directly to the political economy. The market socialism associated with the attempt to use the visible hand to hypothetically replicate perfect competition is old hat. The analysis has evolved, ensuring consistency with the Austrian school and ensuring that we understand the gains to be had in terms of protecting property rights.

In capitalism we only require the labour market. By definition, economic rents will be created. The only issue is how we aggregate the various sources of those rents: from discrimination analysis to the analysis into wage norms.

Unlike you I've bothered to appreciate the nature of the labour market. For monopsony we need firms to have wage making power (i.e. they face an upward sloping labour supply curve and aren't forced to pay a 'market wage'). Traditional monopsony delivers that by arguing that the firm's labour supply curve is also the market labour supply curve (which, despite backward bending individual labour supply schedules reflecting the eventual dominance of income effects, will be upward sloping). However, its also delivered by relaxing other silly perfect competition assumptions. The most studied has been job search that certainly concludes that monopsony is the norm (given search frictions impact on all economic agents) and therefore the market is incapable of exhausting mutually beneficial exchange.

The horrible experience that shows your original argument over skills was complete cobblers. Something that you're incapable of responding to.

 

The only time I have run into cost-plus pricing is with government contracts. In the commercial / consumer world, prices are set by competition between companies. If I am 1% over a competitor, I may get a small allocation, if I am 1% lower, I will usually get a large allocation.

Where is the inefficiency? How is economic rent eliminated with socialism?

Without fiscal "policy" the markets would have had an accurate "cost of money", to help make correct decisions. Artifically low interest rates indicated pedal to the metal, right off the cliff. So much for government "help"....

Keynesianism has been a godsend for all politicians as it gives them justification to throw money at economic problems. Of course, politicians don't spend that money the way Keynes intended, but to pay back "campaign contributions" - the last stimulus for example.

Yet, with full control, the Democrats extend all the tax cuts. Why? IMHO, because they knew their "campaign contributions" from the special interests would suffer (actually, being this occurred after the election. did suffer).

It is the ROI of government regulation that created this mess.

You are saying, using your definition, "market socialism" can manage a countries economy as good as perfect competition? Wonder why the that hasn't been mentioned in the interviews of 100+ economists I've listened to?

There is economic software that provide the same level of accuracy as the Austrian school?

Cesar Hildago has put together a simplified analysis of the economy that is still pretty complex.
[ame="http://www.youtube.com/watch?v=GRp382ynu-Q"]TEDxBoston - César A. Hidalgo - Global Product Space - YouTube[/ame]

If one competitor can't out guess the others, when that is their only concern, how does software?

Refer to the definition of economic rents above. Most of the sources of those rents are determined by location. Are rents created, or incurred?

As far as "wage norms", as an employee, I can look at salary surveys, as an employer, HR organizations put out wage books by location, job title and background. I also know what people will pay me to join their company and what I have to pay to someone to join mine.

ROTFL

?!? Firms don't have wage making power, they must pay close to the market wage. If they pay too much (labor is often 50+% of product cost), their prices are too high. Pay too little, their good people accept jobs at better paying companies - they are left with crap employees, and crap products.

That makes no sense even if we limit the "market labor supply" to a particular niche market. A factory building cars would require significant re-tooling to build motorcycles.

But, the employees of each business can move readily, within their skill set. A software engineer would require extensive training to work on the assembly line.

This makes no sense what so ever, "single buyer" is the norm?

The company I work for limits it's customer base to several dozen, some of our competitors have thousands of customers, many through distribution, but many as direct accounts.

Even the US manufacturers of military equipment sell to more than just the US government.

What skills does someone need that is on the dole? If socialism pays an employee more that the free market, they would need an improved skill set when socialism is cut back. No mystery.

It is easy for politicians to buy votes by providing entitlements. Due to their motivation to stay in office, it is almost impossible for a politician to cut back entitlements.

When Thatcher tried to cut back socialism in UK, that disconnect between skill set and wage became painfully clear. That pain is minor compared to what Greece will go through, and what California's state workers will go through.

 

You best get out more. There's nothing new about the importance of cost-plus pricing (which isn't surprising as we only need market power); e.g. Govindarajan and Anthony (1983, How firms use cost data in price decisions, Management Accounting, pp 30-36). This finds that approximately three-quarters of companies surveyed use “full cost” as a basis for the mark-up when setting prices. Also try Guilding et al. (2005, An empirical investigation of the importance of cost-plus pricing, Vol 20, pp 125-137). This notes that the firms surveyed attach a relatively high degree of importance to cost-plus pricing techniques.

There's no underpayment. Not surprisingly the evidence shows that this is consistent with productivity gains.

We know that capitalism tends towards crisis. Begging for some unachievable laissez faire bobbins isn't going to achieve much (the last attempts led to the terrors of Thatcherism and the current neo-liberal inspired crisis)

Needs must!

Nope. The original market socialist analysis hypothesised that perfect competition could be aped. I wouldn't want such a result. I support a result that protect property rights, enabling a labour market free from theft.

I referred to Hayek's understanding of knowledge and how that impinges on the visible hand. I certainly wouldn't bother to refer to the rest. A school that has such a low powered understanding of the firm and the labour market isn't going to be up to much.

Bland prance, nothing more. There's no appreciation of the internal labour market or hierarchy in your comment, making it dull as dish water.

The law of one wage (i.e. the notion that a market wage exists) is not supported by labour market reality. Even when controlling for human capital and job characteristics, a wage distribution continues to exist.

Typically traditional monopsony refers to the 'company town'. Its therefore suggested that monopsony is highly unlikely. That of course ignores that wage making power is created through numerous other features (as demonstrated by, for example, job search)

The problem is that you cannot understand simple references to the labour market. Monopsony only requires that firms face a level of inelasticity in their labour supply (i.e. wage falls will only lead to a marginal reduction in workers willing to work for hem). There are numerous ways of delivering that (e.g. models that take into account travel costs), but the most frequent is the analysis into job search and therefore the construction of the 'reservation wage' (i.e. lowest wage a person is prepared to accept which- by definition- will be set below the worker's productivity). This reservation rate will take into account the difficulty of finding work, but also factor in the possibility of in-work search.

Maintaining a 'physically efficient' unemployed will be important for profit. It disciplines the workers and therefore provides a means to further accentuate economic rents

The low skilled equilibria is linked to the use of labour market flexibility. Nothing to do with socialism; merely a reference to your original naive argument that assumed flexibility and skills investment goes hand in hand. It doesn't, quite the contrary.

This is ignorant. We didn't have socialism. We had consensus politics. Thatcherism imposed an ideology that destroyed the industrial base and significantly increased child poverty (leading to numerous social problems). The shift away from liberal democracy was exceedingly damaging.