Forbes (and Data): Art Laffer is wrong... consistantly.

I also have an honest question here and it's probably outside the scope of even this discussion.

I've seen this chart on increasing worker productivity many times and I've always felt there was something wrong with it. Is it really true that workers themselves have become more productive? And just what does that mean in an increasingly tech-oriented and service-oriented economy? (Hey, I'm not getting my burgers and fries any faster at Wendy's, for instance)

Is the graph shown here an amalgamation of all productivity graphs (somehow)? If so, the details of how the numbers were arrived at would be interesting.

And here's the kicker. Isn't increased worker productivity in established manufacturing largely a measure of a company investing in better / faster / smarter robots and other equipment? And, if so, why should that be credited to the remaining employees when they really haven't done anything to deserve the kudos?

Now that's just not true.

I realize it was probably before your time, but Obama: Part I (otherwise known at the Carter administration) had already told us that idea was outmoded. He's the one who gave us "If you're cold, just put on another sweater and throw another log on the fire".

Because it's not just that left wheel lug nut turner #5 goes away. A good many do, but other jobs are created, namely the guys that design, produce, run and maintain the machines that replaced left wheel lug nut turner #5. As technology has advanced less skilled labor has been replaced by more skilled. Our workers have become more efficient, more skilled, better educated, etc.

They just aren't better paid.

I'm not saying there weren't recessions or even a depression. Just that those were short term leveling offs, followed by a return to growth. This 30 year stagnation is unprecedented.

I know the arguments for automation. I want to know the arguments supporting the graph. Simply automating a process doesn't mean the remaining workers are more productive through their own efforts, does it? Or is that what the graph is based on? I would think that increase in productivity is a result of capital investment and, unless the company is feeling generous, shouldn't be an argument to increase employee wages.

Reread my post. I answered that. It's not that just that the remaining workers become more efficient, but that new higher skilled and more productive positions are created. The guy that used to just have to turn a wrench now has to run and maintain the robot that replaced 3 of his buddies.

In other news, my brother says, statistically, Brett Favre was never any good as a quarterback.

I'm not talking about recessions or depressions. I'm pointing out that Carter made his famous "malaise speech" which directly contradicted your assertion that there was an assumption that each generation assumed a better economy would be passed down.

People have been arguing against that very point for a long time. Not saying that I agree with Carter, but it's interesting to note how the sides keep flipping on the issue over time.

It's one thing for workers in one plant, for instance, to be replaced by machines that are built by new workers at another company. That's just technological progress and it's a good thing for the economy overall. Even though average wages may be lower, costs also will be lower for the consumer and the net benefit to the economy should be a positive. I wouldn't call that a gain in productivity by workers, though, and it doesn't merit an increase in pay for the remaining workers of the plant that's had an upgrade of equipment.

And you still didn't answer the questions about what the chart actually represents. Is it for factory workers only? Does it somehow include service / knowledge workers? If so, how? Those are honest questions and really do matter to how pertinent your chart is to the point you're trying to make here.

edit - about to head out for a bit. I'm sure I'll check in a little later, though.

"better economy and standard of living" is NOT exactly the same thing is "constantly climbing median wages in real terms"

No, I'm asking what i'm asking, substituting other terms for what I'm asking is not an answer.

I assume (or assumed) there was a relatively obvious answer when i asked that I was just ignorant of. But if there was such an obvious answer, why has no one pointed it out?

well, that's something of an argument, in terms of wealth distribution, but i'm still not sure that in a worker can do X amount of work in an hour for X dollars, and technology makes it so that the same amount of work is twice as productive that automatically implies the work is entitled to X8@ compensation...or indeed an increase at all.

Mind you, I think it's ultimately good for the company to spread the wealth in that manner, but I'm not speaking of that sort of thing. I'm just saying objectively, as a question of the study of economics, why does should it be assumed that "stagnant" wages are automatically a bad thing?


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To be further clear, I'm all for the figure rising, I think it would be an excellent thing and i''m not trying to dismiss the idea that we should want them to, all other things being equal.

I'm just trying to ask a very limited question.

on another but similar note - saw this on Facebook and no idea if it's true or not.

some sharp cookie (presumably) did the math and came to the conclusion that if Wal Mart paid all their North American hourly workers $12 an hour they would only need to profit by 20 cents more per sale in order to maintain the same profit level.

No idea if that's true.

Neither was Dan Marino. He was just marginally better than Brett Favre.

another possibly related point:

http://www.washingtonpost.com/busin...constituents/2011/12/05/gIQAR7D6IP_story.html

My point being that you can find any half-bright monkey that can crunch the data to say whatever you want them to say. The fact remains that the economy was in the sewer before someone applied Laffer's theories and after they were used we saw an unprecedented era of prosperity. In 1991 Bush allowed taxes to be raised and the economy took a shit on him. Oh, I'm sure Reagan (and Laffer) just happened to be in the right place at the right time. If only Carter had gotten another four years, he would've been in office when the economy turned. Hell, look at the unprecedented level of success The Beast has had, applying Keynesian economics to our nation.

Apollo 13 was more successful. At least they made it home.

I was not alive during Carter, so you'll have to quote me where he says that while throughout our history the standard of living has been rising, that is now going to permanently come to a stop.

Jesus Fucking Christ! Look man, I've explained it twice already. One more time and that is it, either you are being intentionally obtuse or you just don't have what it takes to grasp it. I'll try using an example this time.

Okay.

Techmo Industries produces Widgets in their factory.

They employ 100 unskilled assembly line drones.

Techmo decides to automate their process, getting rid of 90 jobs.

NOW. PAY ATTENTION, HERE IS THE IMPORTANT PART THAT ARE YOU AREN'T SEEMING TO GET.

Those 10 positions left, are not the same positions from before the automation.

All 100 of those low skilled positions are now gone. Instead 10 new positions were created and are filled by higher skilled workers. These guys aren't assembly line drones, they have backgrounds in robotic and IT. They aren't just tightening the same lug nut every 7 seconds, but are doing complex operations, diagnostics, troubleshooting, maintenance, etc.

Get it?

So can we stop repeating 'Oh they just replaced 90 people with robots, why should the 10 people left get higher wages for that?' please? Hopefully I've broken it down enough.


Our economy is constantly doing this, not just in a factory at a time, but all across the spectrum, for example at Techmo's Front Office the PC allowed them to get rid of 20 low skill paper pusher positions, but they added a 3 member high skilled IT team.

However even as our workforce has become higher skilled and better educated, they haven't gotten higher paid.

The real kick in the pants is that those skills aren't free. So at the same time that the market is requiring more and more education just to keep the same pay, the state has been cutting back it's contributions to education. Instead of 3/4ths being covered by the state, now less than 1/3rd is. So not only are the people coming in not making any more money, but they are now saddled with more debt.

Yay!

No, it's the median income for all workers. So you take all the workers and find the point at which half make less than that an hour and half make more.

I guess I'm not understanding your question then. Or it's relevance.

:hh:

See my reply to Bock above.

See above where I explained the costs that went along with this. You can't just look at one segment without taking in the whole.

No wonder you don't get it.

Median Wages, and how that factors into Disposable Income and Standards of Living for the majority of the population aren't just random statics when it comes to the health of an economy. To use your football analogy they are like Winning v Losing.

Did I miss something? Are you both intentionally wrong here or just making things up?

Carter never used the word "malaise". The speech was also initially so well-received that he got an 11 point bump in his approval rating (which he pissed away a couple of days later by firing his cabinet). "If you actually go back to the speech and read it, Carter never said that Americans were corrupt, or that there was something fundamentally awful about the American people." LINK

Actually go back and read the speech? Now there's a guy who's dreaming. Everybody knows what he said...Rush reminds at least once a month...

It can go both ways you know.

and you are arguing that in the typical case, those 10 guys are paid bascially exactly what the former 100 were?

I find that almost impossible to believe.

Ah but IS the workforce as a whole actually getting higher skilled and better educated?

Take your example again - when the factory ditched the 100 and replaced them with the 10 - the 10 are first of all not likely to be from among the 100, and if they are (or some of them are) it does not logically follow that the 90 who are out of work have increased skill levels at all.

it's more likely that the 90-100 workers in question simply went, in most cases, and found other jobs appropriate to their existing skill level.


on the other hand, if some of them DID go back to school and learn to be welders, or electricians, or IT guys, or whatever - nothing in your example proves the (unlikely) point that when they took their new education into the field they got jobs making pretty much what they were making before.

There might be figures out there which affirm that the education and skill level of the whole workforce has indeed climbed in the last 30 years (given what's happened to higher education that seems likely) but that is mitigated by the fact that higher education isn't what it used to be in terms of actually raising marketable skill levels) and by the reality that the more people who have such skills, the more market saturation depresses the value of applying those skills.

A "higher skill" increases the value of labor in direct proportion to the marketability and scarcity of that skill.

for instance:

10 years ago all I heard on EVERY corner was "oh my god we're running out of teachers! We can't find teachers anywhere! the sky is falling!"

so I go out and get a degree and a license to teach.

THEN I find out "Oh? social studies? sorry mate, we've got one of those behind every tree, it's MATH and SCIENCE teachers we need! Can't find 'em!"

so - I was one of those "more skilled and better educated displaced workers, but I was skilled and educated in a market that was already saturated with available talent. the fact that i had acquired better training did NOT lead to higher income. all other things were not equal.

so ultimately, your factory wipes out 100 unskilled jobs, and lets say that they train 10 of those to do the skilled jobs (and more likely they go elsewhere and hire already skilled workers but we'll be generous)

first, those ten will almost certainly be noticeably better compensated than the 100 (albeit it's of course true that it won't be to the level that keeps the factory from netting a profit on the transaction)

Second, of the 90 who are left, some - let's call it 20 - will go and better their skill set and those 20 will get a better paying job, 30 will not find work at their previous level and will get worse paying jobs out of necessity, 40 will go and get similar positions (skills wise) to their old jobs and press on.

Net effect? The median wage for those 100 won't change much.

Now, i made those numbers up, as you did, but I hope that it serves to illustrate the counter-argument.

I don't know what your problem is here. I've already said that automation gets rid of people and other people get hired either to replace their obsolete positions in the same plant or to build / design the equipment that's going to replace them.

I don't repeat every single thing I've said in a thread in every single post. I do try to give credit to people for remembering some of the things we've talked about.

Then if it's the median income for all workers - which you've finally answered after several attempts by me to get from you (though you still haven't discussed how the figures are arrived at) - then it really isn't a meaningful statistic as it's not showing the variability that we've discussed here. It's not the same person or groups of people. It's not even the same job(s) being done.

My point is the same as it's been all along. Without an understanding of how the figures are derived, then no real comprehension of what they mean is possible. Since you can't provide the answers, I'm left thinking you don't really know - yet you keep throwing the numbers out and telling us what they mean like it's gospel.

This was one example that I made very simple for Bock. As I alluded to later, this is happening over and over throughout the economy. So while an individual may increase his or her compensation, that's an effect of low skilled labor decreasing in value. Remember this isn't just about year over year compensation, but comparing it over decades.

So does a guy who has a tech degree in robotics who starts working for Techmo make more than his buddy who didn't? Yes.

Does he make more in real wages now than the guy who started working at Techmo straight out of HS 20 years ago? No, he's not.

And he's entering the workforce 2-4 years later and weighed down with debt.

Most did. That's why the productivity line is not vertical. Most will find another low skilled job. However a good chunk will retrain, and another good chunk will exit the workforce.

Keep in mind that the workforce isn't some set thing. People are constantly retiring while new people are constantly being added. Over time our workforce has become much better educated and higher skilled. Just not any better paid.

Yes they themselves will make more money with more skills. HOWEVER their salary is not increasing at nearly the same rate as their skills. Think about how much a college degree could get you in higher wages 20 years ago compared to today. Our pay has not increased with our skills.

Remember, we aren't JUST talking about skills. If we were only comparing skill levels an argument could be made that these were not needed skills. However what we are ultimately talking about is PRODUCTIVITY. As the graph clearly shows as our workers have gotten higher skilled they've gotten much much MUCH more productive over time.

They just haven't gotten better compensated.

I imagine you missed something.

Depends on which statistics you look at.

If you look at career QB Rating, Favre is only #20 all-time, and Marino is only #18.

Kurt Warner, Daunte Culpepper, Joe Flacco, and Jeff Garcia are better that Favre and Marino, if you look at QB Rating.

OK. Finally getting around to wading through this bullshit. So many logical fallacies, so little time.

#1) Appeal to authority:

So douchebag #1 trots out Douchebag #2 and tells us how wonderful he is and that we should all listen to him because he is so much smarter than we are. Logical fallacy.

Then douchebag #2 sets up fallacy #2. Any time you read:

, you know someone is setting up a big ol' strawman to kick down.

I'll come back and address more of these as I find them, I expect the whole lousy op-ed piece is lousy with them, but this is as far as I've gotten. Still, really. You're a half-bright boy, I'd expect you to see these things, Anc, and not blindly parrot them. But I suppose too many years of relying on "Newsweek" and the "New York Times" to tell you what to think has destroyed your ability to reason.

Speaking of which:

Argumentum ad garamentum. If someone can't even manage to spell "damning", do you really trust any "research" they've done or conclusions they've come to? Or perhaps this commentator was referring to evidence that clogged things up and created a backlog.