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(TPMCafe) The media coverage of the auto bailouts has focused on the need for union autoworkers to take big pay cuts, causing them to once again miss the real story. The Fiat-Chrysler deal shows that the pay problem is at the top, not the bottom. At the end of the day, the new Chrysler is still likely to be producing most of its cars in the United States. What the new company will be getting from abroad is technology and top management.
This big story was so easily missed because it runs against one of the main myths that our elites have cultivated about the US economy: that the country has a “comparative advantage” in highly skilled labor. In this story, the United States will continue to lose manufacturing and other “less-skilled” jobs as its economy becomes more concentrated in highly skilled sectors. This story was convenient for our elites because it meant that the decline of manufacturing was a necessary, if sometimes painful, part of a natural economic progression.
It also justified the growing inequality in US society that benefited not just Wall Street bankers and CEOs, but also millions of doctors, lawyers, economists, and other highly educated workers. These people took their six-figure salaries as a birthright, even as the pay of less educated workers stagnated or declined.
Not only is the current way of operating unfair but, lest we forget, “workers” are “consumers” and “consumers drive the economy.”
Go read the whole thing here. It’s not long.
And while you are at it, take a look at this brief paper by David E. Bloom and David Canning of the Harvard School of Public Health:
A great deal of the literature on economic growth has been devoted to studying the impact of education on aggregate economic performance and comparing the results with the rate
of return to education identified by the Mincer (1974) log wage equation. We believe that ours is the first study to compare the estimates of the macroeconomic effect of health on output with the
microeconomic estimates of the effect of health on wages now available.
We estimate that a one percentage point increase in adult survival rates increases labor productivity by about 2.8 percent, with a 95 percent confidence interval of 1.2 to 4.3 percent.
All emphasis mine.
(Cross-posted at Know Your Government)
brilliant thinkers morans over at The Corner have put on their thinking caps and come up with a brilliant moranic solution to the problem of piracy on the high seas:
Establishing private property rights where they don’t currently exist is the solution to about 90 percent of world’s economic problems. Piracy is no exception.
The “thinking” is that “if these waters were privately owned, the owner would have a strong incentive to maximize the waters’ value since he would profit by doing so. That would mean suppressing and preventing pirates.”
Corporate owned and operated warships?
It strikes me that they have not thought this proposal through very carefully.
But when you are desperate to appear as though you have any ideas, their quality is not an important consideration.
UPDATE (4/14/09): Poor Jason Desantis has changed his mind and will continue working at AIG after all. It can’t be cheap to
support importunate friends maintain that lifestyle. I guess his principles will just have to wait for a more convenient time.
(McClatchy) Experts say that the next piece of collateral damage from the recession could be a spike in crime, as rising unemployment and widespread law-enforcement budget cuts begin to take their toll.
I guess boning up on one’s lock-picking skills puts one right in there with the trend.
American businesses are certainly gearing up to supply those who might be so inclined.