I find some of your rhetoric, well, typically offensive. Aside from that, I won't go back over dueling opinions that we've already covered. I'll just address some of your factual inaccuracies:

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It was the new technologies that benefitted everyone, not any political stunt by a President [FDR] or other demagogue trying to win votes by pandering to the rabble-masses.

Why didn't it work in the 1920's when businesses for the first time in history paid workers more than they were worth in the marketplace? All that led to was the worst Depression in history.

You're going to have to prove that one. My understanding is that it was a lack of liquidity in the financial markets coupled with a grossly overpriced stock average and a meager consumer base that led to the Great Depression.

It was not new technologies that created the benefits of the post-war economy, but visa-versa. It was the redirecting of the flow of money caused by such things as the GI bill, which put enough money in the hands of poor people to enable them to take out large bank loans to buy houses and help grow the economy in a way that benefitted the vast mojority of the population. (The reason that this worked is because there is only one place in our economy where new money is created and that is when somebody takes out a bank loan.)

Examples of wage enhancement in the 20's were few and far between, most notably Henry Ford's "pay the workers enough so they can afford the products they make", hinting at the age of prosperity that was to come. Ford may have been a Nazi sympathizer and a tyrant employer, but he understood basic economic principles.

The new technologies of the industrial revolution benefitted only those people in the middle class and higher who could afford to pay for these new products. Oops! My bad! There WAS no middle class between 1800 and 1945. Prior to 1945, you were either one of the "robber barons", or a member of the small merchant class or you were a poor farmer or a somewhat higher paid factory worker.

Your example of automation 200 years ago was a rather unfortunate choice. Machines did not replace workers. Machines created industries that required MORE workers. This is where that large group of "somewhat higher paid factory workers" came from.

(BTW, we never settled whether we are talking about "outsourcing" or "off-shoring".)

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Companies could be prevented from replacing workers with machines. 200 years ago they were prevented from doing this by laws that prohibited it.

Huh? I must have missed this part of history. Please elaborate.

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There are plenty examples of how high labor costs have made companies less competitive, whether it's competition with other domestic companies or with foreign companies. The decline of the U.S. auto industry is an obvious example. You have to be an ignorant fool not to know how exorbitantly high labor cost has greatly damaged the U.S. auto industry.

Let's put this one to rest right now. The decline of the U.S. auto industry is not because of it's high cost of production. It is caused because the public has preferred to actually pay MORE for superior cars made outside the U.S., most notably in Japan.

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I believe that the the disconnect between our two philosophies can be encapsulated in the question, "Who is the 'American Worker'?" Your dream appears to be to systematically replace the middle class wages of all "American Workers" with the lower wages of foreign workers (assuming that we are actually talking about off-shoring). You appear to believe that the only people harmed are those few overpaid workers who don't really matter and are easily dimissed.

Who is the "American Workers"? Quite simply, he is everybody who is not an "American Manager". He is a carpenter, a nurse, a teacher - he is even an HMO doctor. My favorite example is one that I mentioned earlier in this thread. "During the 90's, there was so much money available to computer entrepreneurs that people with 2 yr. Associate's degrees were treated like royalty. They believed that they were members of the professional class. (We called them "dot-snots"). They didn't need no stinkin' unions." The employment landscape in the software industry looks a little different now. Ultimately, off-shoring will get to pretty much everybody who is not an "American Manager".

Artlo's misstatement:

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Examples of wage enhancement in the 20's were few and far between, most notably Henry Ford's "pay the workers enough so they can afford the products they make", hinting at the age of prosperity that was to come.

No, there is no evidence or reasoning to show that artificially shifting money from non-wage-earners to wage-earners causes more prosperity for all. Obviously if you shift wealth to any favored class, that class might experience a general increase if it is a small class. But if it's a large class, such as all wage-earners, the shift would probably be counterproductive, such as shifting wealth from left-handers to right-handers. Even though right-handers are the much larger class, such a shift of wealth would likely produce some inefficiencies and distortions which would end up making everyone worse off, even the right-handers.


The truth:

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Workers shared in the prosperity of the 1920's, although labor lagged behind business in reaping the benefits of technology. Business supported higher wages as a way to increase workers' buying power.

This is taken from America's History, Henretta, Brownleee, Brody, Ware, Johnson; Worth Publishers, 1977; p. 745.
This quote shows clearly that big business in the 1920's believed in the dogma that higher wages generate prosperity by goosing the economy. It wasn't only Keynes who promoted this demagoguery -- in fact, he inherited this idea from others who were already pandering to the growing influential labor class. Herbert Hoover also believed in this doctrine and persuaded the large companies not to lay off workers or reduce wages immediately following the crash of '29.


Artlo's misstatement:

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Your example of automation 200 years ago was a rather unfortunate choice. Machines did not replace workers. Machines created industries that required MORE workers.

The truth:

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Now, with the coming of industrialization, the machines themselves competed with workers as a means of production, throwing them out of work and creating an industrial reserve army wherever they were introduced.

from Wolfgang Abendroth, History of the European Working Class; Monthly Review Press. (Abendroth was a professor of Political Economy at the University of Marburg/Lahn.)

There is only one way you can argue that replacing workers with machines created more industries and more demand for workers, and that is if you mean the new efficiencies and lower cost made it possible for more and cheaper production to take place, which in turn opened up new industries which were not possible before.

But if that's what you mean, you are only proving the point that cost savings always makes everyone better off because of the progress it represents through improved production and lower prices as more products and services are made available to more people. Which is also what cheap labor does by reducing costs and making more products and services available to more people at lower prices.

So again you have not shown any difference in the results of replacing workers with machines and replacing them with cheap labor. The same economic benefits result in either case. But also, in either case there are laid-off workers who are made worse off, or who appear to be worse off, because their income went down.

Still no one has shown that the benefits of replacing human workers with machines do not also occur when they are replaced by cheap labor. Or that the perceived harm to workers is not the same in either case.

Freetrader, if a country produces 100 widgets and pays wages to purchase 2 widgets, just who is going to buy the remaining 98?

If you want to ignore Say's Law of Value, do so. You'll get the same economic collapse that always follows when this is done. It's Economic "Law", not theory.

We've attempted to modify this distruption in the economic law by utilizing credit to make up for differences in production costs/wages/value in our own national economy. The bubble is bursting. Have fun on the way down.

Retired Monk
"Ideology is a disease"

The history revisionism is just stunning. I'm outa here.

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If a country produces 100 widgets and pays wages to purchase 2 widgets, just who is going to buy the remaining 98?

If a country (or rather, a company) produced more widgets than there was a market for, then it should take the financial loss for that mistake and either go out of business or curtail its production in the future. Perhaps it should not even produce widgets if there is essentially no market for them.

There is no need to try to provide consumers for products, or to provide incomes to people so they can buy the products. If those products cannot be sold, they should not have been produced, and the producer of them should be penalized for its mistake.

Name a real situation where companies produced too much and should not have been penalized for doing so. Name a real situation where the need was to provide higher incomes to someone so they could buy the excess products. The whole concept of providing higher incomes to people so they can buy products is cockeyed nonsense. You pay them to do needed work, and you pay them only as much as is required to get someone to do the work. NEVER should any worker or producer be paid any more than this amount.

They are NOT paid in order to enable them to buy stuff that has to be sold. No, they are paid in order to get them to do the work.

If the reason to pay them is in order to get them to buy stuff, then you could grab any bum off the street and give him the money so he could go out and buy the stuff. Why make him work if the purpose of paying him is to enable him to buy stuff? Just give him the money and let him have all his time free to go shopping, if shopping is his real contribution. What rubbish! What idiotic pablum-puking Marxist-Keynesian trash!

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If you want to ignore Say's Law of Value, do so.

By that theory, or your interpretation of it, you could double the wages paid to steel workers and BINGO! the demand for steel would double and twice as much steel could be sold.

No, stop that nonsense. The purpose for raising someone's wage is not to create a demand for the product he makes. It is to enable the capitalist to produce more of something that there is already plenty of demand for, and there's no other way to meet this demand except to pay more to workers so more of the stuff can be produced.

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You'll get the same economic collapse that always follows when this is done.

No, there was never a time when a bad result was produced by requiring producers to EARN their income by competing instead of being protected from competition. And no good result was ever produced by paying someone an income, or increasing their income, in order to get them to spend it on stuff. It's only their work that contributes to making the economy stronger, not their spending the money. In the 20's, workers were paid more than was required to get them to do the work, i.e., they were paid more in order to give them more spending power. It led to no good result because it was not accompanied by a corresponding increase in their performance. It's better performance that improves the economy, not higher reward for the same low level of performance.

Artlo:

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My understanding is that it was a lack of liquidity in the financial markets coupled with a grossly overpriced stock average and a meager consumer base that led to the Great Depression.

Are you insisting dogmatically that the Depression must have had only one cause and no others? Why couldn't there be multiple causes?

Overpriced stocks, yes almost certainly that was also a cause of the Depression. But the term "meager consumer base" doesn't make any sense. There is no such thing as a need for more consumers, or a need for people to consume more. It's OK for people to consume, but to say we need to consume more than we do or that we need more consumers makes no sense. What purpose is served by people artificially increasing their consumption?

Consumption per se, just for the sake of consumption, makes no sense.

But stocks being overpriced was a real problem, because of the overspeculation. And another real problem was the overpricing of labor. Wage-earners were paid more than they were worth in the marketplace, and this too led to distortions in the economy. And there were probably many other distortions caused by many factors. There is no reason to assume there was one and only one Cause leading up to the Great Depression.

quote:

It was not new technologies that created the benefits of the post-war economy, but visa-versa. It was the redirecting of the flow of money caused by such things as the GI bill, which put enough money in the hands of poor people to enable them to take out large bank loans to buy houses and help grow the economy in a way that benefitted the vast mojority of the population.

Some additional money-lending might have led to benefits to society. However, simply putting "money in the hands of poor people" does not produce a benefit. What needs to happen to poor people is putting them to work so they earn their own way. Simply putting "money in the hands of" anyone, rich or poor, produces no benefit but only harm.

The only way for money to get into anyone's hands and for that to benefit society is if they had to earn it and if the amount of it was based totally upon the value of the work performed by them. If any more than this amount is put into their hands, then they are leeching off others and are doing a net injury to society, not a net benefit.

The Left-wing dogma, preached by Hartmann and others, that society is made richer by spreading more money around to the middle class or the lower class or any other class is demagoguery and Marxist rubbish that is doing damage to our society and is rewarding a parasitic element, many of them unneeded factory workers, who are throwing a tantrum over the fact that the market is doing its job of reducing their standard of living because of their decreased value in the economy.

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(The reason that this worked is because there is only one place in our economy where new money is created and that is when somebody takes out a bank loan.)

No, creating more money is not what leads to prosperity. Prosperity comes as a result of more production of wealth, and some money-lending plays a role, but only if the money is invested efficiently. Just throwing around lots of debt money to poor people will only lead to more poverty.

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Examples of wage enhancement in the 20's were few and far between, . . .

Factually wrong, as I proved in my previous post. Overpayment to workers was the general practice in the 1920's.

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most notably Henry Ford's "pay the workers enough so they can afford the products they make", hinting at the age of prosperity that was to come.

What "age of prosperity"? What followed the 1920's was the Great Depression.

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Ford may have been a Nazi sympathizer and a tyrant employer, but he understood basic economic principles.

No, what he understood was basic public relations. Ford made millions off his publicity stunt of raising the wages to $5.00 per day. That was a good PR move -- look how it is still celebrated by labor unions and Leftists today. Ford ran numerous advertisements to publicize this, and some of those ads were a crass appeal for pity toward the workers, asking consumers to buy one of his cars in order to support the workers and their families. Thousands of Americans went out and bought a Ford partly out of pity toward the workers, like an act of charity. You have to hand it to Ford -- that was a classic PR coup he pulled, resulting in skyrocketing sales.

But don't credit him with understanding anything about economics. His specialty was making cars and pulling off good publicity stunts. A few years later, when reality set in and the industry was declining, he had to finally reduce the wages, thus contradicting the very principle he preached, i.e., that higher wages lead to economic recovery.

That's a popular theory. It will win you a popularity contest and lots of praise from labor unions and left-wing propagandists like Hartmann. Saying what is true and saying what is popular are two completely different animals.

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The new technologies of the industrial revolution benefitted only those people in the middle class and higher who could afford to pay for these new products.

More leftist lies. The poor have always benefitted from new technologies. Many (most?) of the new technologies are directed into production of food and clothing. New agricultural technology has probably eliminated more total jobs than any other kind of technology. As a result, the total population has greatly increased, as millions of people who otherwise would have starved were able to survive and reproduce.

And the poor today also have greatly benefitted from the new communications technologies. And so what if the rich sometimes benefit at a higher rate than the poor from some of the new advancements. The point is that ALL are benefitting, which is good, even if some benefit more than others. What a crybaby attitude it is to whine that some groups might be benefitting more than others, and that therefore there is something wrong with all the new technologies and the progress happening. If all progress had to be evenly spread out to everyone, so that no one could ever benefit more than another, then all progress would have to grind to a halt and we would have to return to the Stone Age.

quote:

quote:

Companies could be prevented from replacing workers with machines. 200 years ago they were prevented from doing this by laws that prohibited it.

Huh? I must have missed this part of history. Please elaborate.

The Abendroth book which I quoted earlier made a reference to this, implying that it was prohibited in some countries to replace workers with machines. Unfortunately I have misplaced that book and cannot give you the exact quote right now. I'll give it later.

The point is that there have been times and places where this was prevented by government policy. And we could prevent such replacement of workers today. But we do not choose to make it illegal, because we know this would do more harm to the economy than good.

The original question, back at the beginning of this series, was: If it is bad to replace workers with cheap labor, why isn't it also bad to replace them with machines, such as robots, etc., considering that the economic consequences are the same.

In one of your responses you suggested that the reason is that we are unable to stop the replacement of workers by machines. We can stop them being replaced by cheap labor somehow, but not their being replaced by machines.

And that clearly is false. We could prevent the replacement of workers by machines if we wanted to. But we don't prevent it because we know that would be harmful to our economy. Most of us benefit from the replacement of workers by machines, even if a few workers are harmed by it. And likewise we benefit from workers being replaced by cheap labor, for the same reasons. Such replacement of unneeded workers reduces the cost of production in either case and thus benefits consumers.