Saturday, August 2, 2014

Labor Should 'Ratchet Down Wage Expectations?' BULLSHIT! Instead, Bond Holders & Rentiers Should Ratchet Down Their "Asset Appreciation" Expectations.

   (Commentary posted by Roger Erickson.)

And we the people should get back to pursuing the greatest return of all, the return-on-coordination.




There are multiple claims in the press that Obama's new Econ Advisor, Alan Krueger, says that workers need to 'Ratchet Down Wage Expectations.'

That exact phrase isn't easily found attributed to Alan Krueger, so perhaps the talking heads are referring to Krueger's long time research thesis, that the long term unemployed don't exert much wage inflation pressure on labor markets. Ergo, the commonly suggested corollary that they should take whatever work they can get, at any pay they can.

The problem with this level of discussion is that it misses enough other options that the whole, polarizing debate is irrelevant. As smarter people have argued off & on, for hundreds of years, a much smarter & faster option is to use coordinated Public Initiative as a buffer, to shore up any and all swings in the sum of individual outcomes. Any combination of increased Public Investment & lower taxes can do the trick, especially if swiftly executed.

Benjamin Franklin and the Birth of a Paper Money Economy

Civil War Era "Greenback" Dollars

How Marriner Eccles saved America

Every rudimentary analysis of model aggregates, systems or networks known to man - including empirical business evidence - indicate that building aggregate resiliency through right-sized & right-distributed income, wealth, static assets & dynamic assets ... beats disparity-laden aggregates every time.

A fleet of broken-down trucks doesn't perform very well, no matter how wealthy the owner, or how big his fleet. Similarly, a depleted, bankrupt Middle Class coupled with record wealth by the 0.1%, provides about as much cultural resiliency as an army where the Generals hoard all the weapons, training and education.

Clearly, success and survival depends upon adequately provisioning all parts of an aggregate. Few, if any, dispute that when clearly stated. Yet entire electorates are tied up with the same question stated in cleverly confusing words.



4 comments:

Anonymous said...

Where did Krueger talk about labor expectations? Where did the talking heads talk about it?

circuit said...
This comment has been removed by the author.
circuit said...

Roger, this is an upsetting post. Read the paper! The policy implications of Krueger's paper suggest the exact opposite. In a nutshell, he's saying the unemployed will find work when demand picks up (and that there is no point in accepting a wage cut since the jobs aren't there in the first place)...

Roger Erickson said...

Read the opening lines? I couldn't find Krueger saying what Zerohedge & others claimed, AND SAID SO ...

and so shifted to refuting the phrase, not Krueger.

ps: Krueger doesn't come across as a genius. In one Bloomberg interview he's asked what his biggest lesson from the 2008 meltdown was.
Krueger's response?
"We learned that when the finance sector crashes, it affects main street." Doh!

Really? Was this guy born & raised in a textbook?

ps: ps: Personally, I still think Krueger misses the context. It's up to the aggregate to pick itself up, with aggregate stimulus.
No aggregate successfully adapts by waiting for some member to save it. We're called a "social" species for a reason. If humans were a NeoLiberal species, biologists would have classified them as such. :)