Unions

So what? What are you going to do with an ounce of gold? Eat it?

If you're planning to buy Euros or Yen with it, you're no better off. The relationship of those currencies to gold has gone the same way as the dollar. In fact, the only meaningful measures of the value of a dollar are in terms of what it will buy, and what it will exchange for, in terms of other currencies.

Harold, there is no country on the gold standard today. Gold is just another commodity. If you invest in a commodity, you should expect a return of some kind. Five percent is pretty cheesy, but that's what you'd get from gold over the last 74 years (5.06%). And that's in straight dollars, before inflation. Be glad you didn't tie your money up in gold when it was $20.67. You would have done a lot better with stocks or real estate.

Inflation, but in recent years that's been inflation in house prices more than general dollar inflation. Houses are confusing, though, because what really counts is how much you have to pay per month, and the relationship between your payments and your equity. I'm not going there. d8-)

I'm not following who is whom in that example. Who is the person who is going to lose his job? Who is the person on the street? Who is it that's making the high wages? I can't tell who the players are from what you've written.

You and most other people. But if you're going to let lack of fairness concern you, you're going to have a really big, big problem with the conservative economics that runs the US today, and that is gradually starting to run the rest of the developed world -- even France, if you've been keeping up with the news. It's all dollars and cents, GDP growth at all costs, and the devil take the hindmost. Some key phrases to help you get along with it are "Nobody said it's supposed to be fair." "Taxing the wealthy at higher rates is bad for investment." "Free trade strengthens the economy." "Wealthy investors create the new jobs." "Workers who find themselves displaced have only themselves to blame." "Low-priced foreign competition is a great stimulus to work harder." Those ideas are all truthy, in one way or another, and they're good mantras to keep your mind occupied and clear of doubts. Regardless, unless you plan to be a hermit or you're counting on winning the lottery, that's the pony you have to ride.

Read the mantras above; they'll make you feel better. This economy is not being run to make your retirement a happy one. It's being run for short-term growth. Its answer to you is that you should have anticipated how it was going to go. After all, inflation has been going on at similar rates for decades; it's actually been lower in recent years.

Here's what the economic theorists in the White House would tell you. Read this and weep:

See? You should have known it all along. So here's another mantra you can add to the list: "People who don't prepare for their retirement deserve what they get. There was no reason not to expect inflation to continue as it has for the last four decades." There. Feel better? Good. That's how the economy works these days. That's how the "Washington Consensus," or "Neoliberal Economics," or "Neoclassical Economics," (choose your favorite name) answers people who find themselves unhappy with no-holds-barred economics. It's Ronald Reagan's personal gift to you. And it's just fine unless you're one of those on the short end.

You're better off without the burger. d8-)

Harold, I don't want to sound heartless, but we all got what we asked for. Many people, however, especially those on fixed incomes, didn't get the

*result* they asked for, only the method. We wanted lower taxes (supply-side stimulus) and we got it, along with the fiercest deficit spending (Keynesian stimulus) in modern history. First Reagan, now Bush. That combination is like throwing nitromethane into the tank of your family sedan. The GDP numbers look great; the car goes like hell; pretty soon, though, we'll be paying the repair bills. It's already starting. Meantime, people like you got blown out the exhaust pipe.

I say this over and over, but it's the fact: It isn't the wages. Overall, middle-class wages are just hanging in with inflation, and that's been true for a couple of decades. What's eating you up is a superheated economy in which some things actually are cheaper, especially imported consumer goods; and the slack has been made up in other areas, such as housing and oil, which we're better able to pay for because of the other cheap goods. There's a lot of money sloshing around the investment world and it's having uneven consequences to workers and other consumers. What keeps the Neoliberal economists happy is the GDP numbers, which have never been better. The problem is all of the "displacements." The current crop of White House economists would explain this by saying, "things change."

Right. They change. Hanging in on a fixed income isn't easy, I know from helping my mother and aunt, both in their '80s.

So I'm sympathetic. I'm 59 and plan on working for at least another 10 years. I have no desire whatever to retire; I watched retirement destroy my dad, and it's in the genes. I'll go out in harness, most likely. That's also how I'll be dealing with all of the economic uncertainties that appear to lie ahead.

Good luck and enjoy what you can. Burgers bad. Fresh-caught fish good. d8-)

Makes sense.

Isn't that what a union is? Well, what it's supposed to be, until it gets taken over by leaders rather than administrators...

Lower wages means less spending money. Less spending money means less spending, which means fewer people buying widgets. Lower widget sales results in layoffs or salary cuts, which continues the cycle. The best thing for the company is for the greatest possible number of people to have enough spare cash without paying so much in worker compensation that they can't make a healthy profit.

Managers who are inept and want to maximize profits may cut salaries as low as possible, resulting in low morale and low worker motivation, but those things may not offset the savings the company makes. They can be more competitive that way--cut prices and increase sales, then their competitors either have to do the same or get buried. It's the natural thing to do when you're focused on your corporate goals.

In theory, the employees could all leave for better-paying jobs--however, it's not uncommon for heads of competing corporations in a given industry to agree to all keep their wages low, so the employees won't have any better-paying jobs to go to. It makes good business sense in the short term.

How does the press get wages up and eliminate sweat shops? And isn't the press a business as well? From what I've seen, the press is concerned with one of two things: making a profit, and promoting a viewpoint. Actually reporting of the unbiased facts is one of those lofty goals that doesn't put you into a bigger house and a cooler car.

That's the worst part about agreeing--it generally means the discussion is over. :-(

That has nothing to do with the point at hand. What I do with it matters not----what matters is the ounce hasn't changed, but it now takes a disproportionate number of my dollars to purchase one.

Depends on the stocks and real estate. Many people have taken a bath buying each of them, although I'm inclined to agree with you.

Answer me this: What would you prefer to have owned in the last year. A piece of land in any given state, say, an acre, or the equivalent value in gold at the beginning of the previous year? While you were paying taxes on your land, year after year, resulting in a respectable offset in real growth, your gold would have more than doubled in value. No taxes unless you sell, unlike land.

You simply can't make blanket statements like you've made and be right all the time. The trend is as you say, but there are intervals of time when it's just not true. Right now, anyone sitting on gold has enjoyed a tremendous shot in the arm, especially if they got theirs by recovering from scrap materials, and have little invested. I hope you enjoyed more than

100% growth in your holdings last year. I know I did with mine.

The guy that's being paid beyond his worth because he has no special skills or talents.

The other guy that has no skills or talents------and can take any job from any person his equal (how sad is that?). In both cases, neither guy should be "earning" pay that is unreasonable, certainly not pay that might be appropriate for others that have worked years in perfecting their appreciable skills and have some schooling that allowed for them to achieve their goals. My point is, if a guy off the street can take your job from you, it's not much of a job, and shouldn't command high pay. You want an increase in income? How about earning it by gaining skills and experience not common to everyone you encounter? How about getting an education in a desirable field? Do something that makes you valuable instead of holding a company hostage.

Well, my comments were in general. They need not be high wages----just unreasonable wages for the task at hand. When money changes hands at a loss (unearned pay), the loss will be made up by increased prices. If you honor the picket line at the local grocery store, and the picketers gain their often unreasonable demands, don't you expect that the price of groceries will increase proportionately? Those that are demanding an increase in their pay and are asking me (or you) to honor their pickets are asking you, very clearly, to sacrifice your comfort so theirs might be improved. Rarely, if ever, is there any consideration to producing more, or otherwise contributing more to warrant the increase in pay. Make the boss pay more, who, in turn, will pass it on to the customer. Sorry-----I don't think so. I owe nothing to a person that wants to climb the ladder by using me as one of the steps.

In other words, the "authorities" that run the money world aren't getting it right-----we're all falling victim to the modern "bottom line" theory----and screw us?

That's next, especially when they price them out of reach for folks on fixed incomes, through minimum wages. It's happening very fast here in Washington.

Yes, I've read your comments-----but that you say so doesn't make it true. For all I know, you're as much a victim of these people as the balance of us are, and you agree with their convoluted thinking, as if you're not effected. We all are. It's just a matter of degree, and the opportunities, or lack thereof, to get in on the unearned cash flow.

I'm of the opinion that inflation is driven by the unreasonable demands, not the other way around. People demanding unearned pay----resulting in ever increasing prices as an offset. I see no real evidence that would contradict my concept. It's a chicken or egg kind of thing. They both exist, it's a matter of placing blame.

I'm not placing this in the laps of the working man----I'm placing it in the laps of mankind in general. CEO's have greater opportunities to steal more money----they're every bit as guilty as all others. Virtually everyone I've encountered thinks they can get ahead by charging more than their worth-----and they go through life accordingly, waving it as a flag of honor. Most of them don't even have a union to do battle for them----but they manage on their own. I think it stinks. Many of my peers that ran shops bragged about the huge incomes they were able to generate-----totally unreasonable considering their investment, both in time and revenue. Net result? Higher prices for everything, due in part to unearned pay. Do I think that that is the sole cause of inflation? No, I do not, but it certainly isn't helping. Just because most people lack ethics doesn't make being unethical acceptable.

What's eating me up is greedy people that think they can get ahead by demanding unearned pay. They seem to forget that there's no free lunch, that every dime that crosses palms must come from someone that expects a dime's worth of effort in return. It's that strange streak of fairness that I don't seem to be able to overcome.

As long as that's your goal, I see nothing wrong with it.

I worked for a living, I did not live to work. Others need not share those thoughts.

I didn't get an education, and worked damned hard to make my way in life, which I did by applying myself for long periods of time. Unlike the guy that has an 8-5 job, my normal work week consisted of seven reasonably long days, no less than 10 hours. I'm not complaining----just stating facts. I could steal money, or I could work longer hours and earn more. I had to be able to live with myself, so I chose to earn the money. A time to retire came, and I have more than enough projects to keep my occupied, even if I was to live to be 100, so I retired. We're comfortable, but hardly wealthy, especially in the eyes of the current world.

And you as well. I wish you well with your continued career. Just be sure to take enough time to play on the machines------and holler if this uneducated old fool can give you a few tips concerning machining. Or gold! :-)

Harold

Nope. Send em via email

gunner

Political Correctness is a doctrine fostered by a delusional, illogical liberal minority, and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end.

Odd...Im Skilled on Principle- Not Union by choice

And the feather bed.

Gunner

Political Correctness is a doctrine fostered by a delusional, illogical liberal minority, and rabidly promoted by an unscrupulous mainstream media, which holds forth the proposition that it is entirely possible to pick up a turd by the clean end.

Any time you look at something like that post hoc, you can make the case you want by selecting the slice of time to make a point. First you were talking about a 74-year span, now a one-year span...how does a 5-year span work out, say, from '95 to 2000? (I'll save you some time: it sucks in a very big way.)

That's nice. How did you pull that off? Gold was $627 last November. Its Nov. '07 average is $817. That's 30% growth.

And how about people who sat on it, say, in 1979 and had to sell in 1981? Or those who bought in '96 and sold a year later? They lost their shirts.

Gold can be a useful hedge if you're on a fixed income and want to smooth out your income. But it's not of much use if you're trying to beat inflation with it, or if you're making a short-term play. In the longer run, it's not much of an investment and it does take some big nosedives. Witness the long-term investment value of gold: 5.06%/year since it was last fixed at $20.67, not counting inflation (a whopping 1.3%/year if you consider inflation),with some big ups and downs along the way. For example, here's the gold fix for 1975 - 2007 (Click on Multi Year Gold near the bottom,

1975 - 2007):

Good advice. So, if salaries are $3/hour, you could get an education and maybe earn $5/hour. I think that's the key point here, Harold. No one is going to disagree that people who invest more in themselves should earn more than those who don't. The question is, *why* are you earning one wage, when history says you should be earning a *lot* less? What is it that raised your income into the middle class, in other words?

If that's all that happened, increasing wages would have no consequence at all, except that everything would keep inflating at a high rate. Wage relationships and prices would be the same, only the values would be higher across the board. That's a description of high rates of inflation -- and I'm not talking about 3 or 4%, but maybe 12% or 20%, like they often have in Latin America.

But that isn't what happened in the US. Working-class wages suddenly climbed to middle-class wages, and everyone started making more in real terms. Factory workers were able to buy cars; you and I were able to buy houses. And so on.

What you may be missing here is that history shows that capital and a market economy can function over a very wide range of income levels. In other words, the system works whether labor is getting 5% of the pie or 25% of the pie. The equilibrium shift is between what capital needs to return in order for the system work, and what labor can get without breaking the system. Unless something happens to tip the balance (like free trade with low-wage countries, accompanied by great speed and ease in moving capital and transferring technology -- remember those Chevy engines made in Shanghai), the system keeps working. Supply-siders will argue that it works better when more is returned to capital. Demand-siders would counter that it works better when more is returned to labor, because the real engine at work is consumption. Nobody invests unless they think they can sell something.

We have lots of experience since the 1930s with demand-side stimulus. It works, sometimes too well. We have no significant experience with supply-side stimulus. Whenever we've had it, it's been accompanied by extraordinary demand-side stimulus brought about by deficit spending (the same was true in 1964 as in the early '80s and right now, as I recently checked).

So policies that boost demand -- raising wages or deficit spending -- are proven to stimulate the economy. We don't know what would happen if we held demand constant and caused some lowering of prices by supply-side policies. The theory of the supply-siders is that the lower prices would then increase demand. Perhaps. There is no real-world evidence of it, however.

All of this is explanation for this point: Those strikers may increase your cost of groceries, but they may also stimulate the economy so you make more at a result. This is not idle speculation. There's a lot of evidence to support it.

There are some economists who would put it just that way. Others would say that they don't care: rising GDP is its own reward, and eventually, probably, it will help you, too. Unless you're on fixed income, of course.

I'd want to see McDonald's financials before I'd buy that. My guess is that the increased costs they're facing are almost unmoved by rises in minimum wages. The cost of oil and transportation, alone, probably are swamping direct wages as an issue.

We could run a thumbnail exercise. Direct labor runs around 22% of costs in fast-food enterprise. Percentage of workers in fast food who are paid minimum wage ranges from 25% to 70%; let's say it's 50%. The minimum wage hike this year was around 12%. McDonald's works on a gross margin of 80%, so every penny increase in cost results in a 5-cent increase in retail price. A medium soft drink at McDonald's in 2007 is $1.15.

Put all of that into the hopper and here's what you get: The minimum wage increase this year added 6.6 cents to your cost -- from $1.08 to $1.15. If it's more than that, then increases in minimum wage cost of those workers isn't the cause of anything more than the 6.6 cents.

But the fast food industry has been complaining loudly that they have to cut back employment because of the minimum wage hike, so chances are the net effect actually was close to zero, if they were telling the truth about that. All of this is pretty rough but the net effect is probably close to accurate. I think you've identified the wrong culprit, Harold.

I'm not much interested in their thinking. I'm interested in the numbers and other demonstrable facts. I have to be. That's what I do for a living. The results often don't agree with the conventional wisdom, which gives me something to do. d8-)

You'll find that inflation tends to be more a result of credit demand and money supply. Wages have an effect at the margins, but they aren't the meat and potatoes of it.

I recognize your ethical approach to these questions and I don't disparage it. I just think it's wrong, in economic terms.

Machining tips are always welcome. I have no interest in gold, unless it falls on me from heaven, or I find that pirates buried some in my back yard. d8-)

snip.....snip.....snip.....snip

So you don't think the trillion Bush just spent has any effect? That's a trillion (or near enough) that's been printed to support the war. You don't see the inflation/cost of living increasing because of the inspired bookkeeping (which has been changed to "Bush's way") which now subtracts all the money going overseas to purchase goods from the trillion just printed. But you DO notice the price of everything, including food, going through the roof, right? And the fact our dollar has fallen in relation to all other currencies?

But you would say this is because of lazy greedy people?

Before Bush we had nearly the same people working as we do now. The same amount of greed, the same amount of lazy people, this hasn't changed so I doubt this should be a consideration.

This leaves politicians and BIG money organizations (can you say: OIL?).

This is where the problem lies; believe it or not.

dennis in nca

And no taxes at all IF you sell it properly. This was one of the most important issues to move gold from the standard to the commodities - to be able to tax gold transactions.

C.

Harold is refering to the hike in minimum wage here in Washington State. It goes to $8.07 in Jan. But here in the metropolitan area of Seattle, it will have no effect. A friend tried to get some high school kids to help with some yard work and got no takers at $12.00/ hr. House work, vacuuming , etc, is $20.00/ hr around here. In rural Washington where Harold lives, it will be a different story.

Dan

And what is your point, why do you refer to the minimum wages here?

8 bucks by 2000 hours - is something, 12 bucks by 2 hours - is nothing. It's clear that at this level of American prices it would be hard to find the guy willing to work any reasonable time for 24 bucks - what the hell could you do with this kind of wealth?

C.

The effect of it is going to be hard to track, except for minimum-wage employment. But that won't stop the pundits from drawing conclusions almost immediately.

Define "reasonable time". I'd be quite happy to collect 24 bucks for 15 or 20 minutes work. For two or three hours, probably not so happy.

As for "what the hell could you do with it" -- 24 bucks easily covers dinner for two plus tip at the Mexican restaurant five minutes up the road from our house, or two large pizzas delivered to the door.

I cannot say exactly what time OP meant (for some yard work). And again - what does it mean - $24 for 15-20 minutes work?

12 bucks per hour for 15-20 minutes would be 3-4 bucks. 24 bucks for 20 minutes would be $72/h. What I meant was probably 2-3 hours plus possible travel time (my son trying to work few hours required his mom to drive him 20 miles).

And would you count it as well spent money? but I agree that it would cover some 2 weeks of gym :)

That's what we've got going at the shop I'm at now- a new guy in the driver's seat, and nobody's pay is going up anytime soon because he wants to put more $$$ in his and the owners' pockets to show that he's a capable manager (which, in my opinion, he is not) I suppose that's their perrogotive, and I can't blame them for wanting money, but money can't be made without keeping skilled workers in the shop to make the parts.

On the bright side, it only takes one or two employers in an area to pay a better wage to start things swinging the right way. When I started at my current job about 15 months ago, the average pay for a machinist in the area was about $12-13/hour. The wages have been artificially low around here since the last of the Union jobs got pushed out about ten years ago, and there haven't been many people who are willing to go into trade work- considering that you could make more driving a forklift at Walmart than you could running a mill.

Two employers in the area started paying $18 a few months ago, and now that's the prevailing wage in the area- still pretty bad compared to a lot of areas, but it's a whole lot better than it was. The down side, for those who won't pay it, is that there's nobody willing to work for the old pay rates that isn't useless. The people that they've hired at our shop lately have been drug addicts and ex-cons with no experience almost to a man, as those are the only folks who will still take the low pay, and the good folks are bleeding off one at a time. Time for me to move on- and not a minute too soon. I hate to leave the guys I like there to pick up the slack, but nobody said I had to be a sacrificial lamb to make sure the shop's owner can keep upgrading his planes and helicopters.

Not sure how a local union would have changed things in the area, but in this particular case, the continued decrease in vocational training coupled with a booming manufacturing environment in Wisconsin is making even the most stingy employers bow to labor market pressure, with no union involvement- which I feel is the best of all possible changes.

I'm not rich by any means, and I like money as much as the next guy- but when you start looking at the union shops, you find that for every skilled and talented employee, there are at least two or three that are just wasting good air. Even worse, they try to pressure the ones who do work hard to slow down. If it were a matter of the union negotiating higher wages and better benefits, while putting pressure on the union workers to work harder and faster, it's be a beautiful thing- but that's not how it is. In practice, it's raw communism, and ends up punishing the ones who want to work by attaching the albatross of those who do not to their necks.

All that being said, I guess I'm sort of a hypocrite about it. I'd hate actually working in a union shop- but that doesn't mean I wouldn't like to have about four of them surrounding any place I work at. Nothing like a little wage pressure to make life easier for someone who is actually willing and able to do the work.

Thanks. I had alluded to unions being communistic and was informed that they hate the communists. That could be, but their principles appear, at least to me, to be much the same. Apparently you and I think the same way. I totally understand your position.

Don't lose site of the fact that our educational system is doing everything in it's power to steer people away from the industrial crafts these days. As far as I know, very few high schools even offer any classes related to machining these days. After all, we're a "service society" now!

Harold

Yep! What Dan said. Things here in Lewis County are very different from conditions in the three counties north of us that tend to dictate how the state runs. Things are tough here, although in the past few years there's been a lot of development. It's slowly moving towards us, although I'm not convinced Bill (Gates) is going to send much of his money south. High paying jobs are not to be found here.

Harold

The next traditional step for this employer is to hire illegal immigrants and claim "They're doing work that no one else is willing to do." Bastards.

Hypocrite is one word some use. "Blood-sucking leech who rides on the backs of those willing to make the necessary sacrifices and then bad-mouths them" is another, less deceptive, way of saying the same thing.

dennis in nca

I think he wanted someone for a couple of 8 hour days.

Dan

I wasn't trying to BS you Ed (I know better), just talking without checking facts. Time flies when you're having fun, and I'm having way too much of it of late . I was shocked when I checked the charts to find gold has been gaining for a lot longer time than I realized. It's not something I follow closely since closing the doors on my refining business.

I didn't enjoy 100% growth in the time allotted-----but I've doubled my money since June 1 of '05. I'd say that's not bad. You?

Harold