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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: ThirdEye who wrote (19562)	12/27/2004 1:11:55 AM
From: GraceZ	Respond to of 116555

Anyone who produces anything wants to charge whatever the market will bear and pay as little as they can get away with. That is a free market and while supply and demand fluctuate, so does price. I asked my husband how he negotiated piece work back in the days when that's all he did. He said, The foreman comes to me and tells me a certain chunk of work is a piece of cake, I say it's a pain in the ass and we go from there." Sometimes the foreman got the better deal and sometimes my husband did. So who defines what a "free market" can afford? The free market as described above. Why should labor law favor a seller over a buyer? In a voluntary agreement either party has the right to walk away if the price is not right for them. Labor law does not allow various employers to meet to agree on prices they will pay for labor or even what they will charge in the market place for various goods and services, why should labor be able to demand set prices across numerous companies? Has the standard of living here risen to its current level despite the existence of organized labor or because of it? The standard of living has risen steadily for all with productivity advances. How did the top 20% of this country accumulate 40% of the purchasing power? How did a small country (population-wise) like the US accumulate 80% of the world's purchasing power? Other poorer countries have much stronger unions. How is it that real wages haven't risen much for a long time? Increases in incomes are inflated away by the increase in prices that accompany increased money spent at the bottom income ranges. Said more simply, increases in wages tend to be inflated away by increases in prices of those things those who received the income buy. A good example would be the increase in buying power afforded by low mortgage rates which resulted in those gains being inflated away by rising home prices. Still the standard of both the rich and the poor has increased enormously over the past 100 years. How did the income gap between the top and the bottom of this economy get so large? The rich save and invest which allows them to benefit from the TVM, whereas a lot of the poor and middle class spend all they earn and then borrow, paying the interest that the rich and those moving from poor to rich receive on their savings and investments. A more important question is how mobile is the society? How many people move from poverty to the middle class, how easy is it to move from middle class to upper middle class? I'd say, it is easier than it has ever been to leave poverty and more leave poverty in the world today than at any other time in history especially in Asia with the collapse of Communism. How did we get to have 1 of 5 people not covered by health insurance? Because not everyone confuses health insurance with health care and they refuse to spend their incomes to obtain health insurance but don't mind having health insurance if they see it as paid for by someone other than themselves. Health insurance does not insure health, like all insurance, it protects your assets. It insures that you will not lose your assets paying for a medical catastrophe. Since the government demands that hospitals not refuse health care to those with no insurance and no assets, those without assets don't feel compelled to buy any insurance, they will get treatment regardless. Only when one has assets that can be attached does it make economic sense to pay put of pocket for health insurance. Back before the advent of health insurance even the poor could afford to pay for medical treatment and those who couldn't were usually treated by individual providers at a reduced cost or free, as a form of charity. Health insurance created an incentive trap, which arises from all forms of insurance and has raised the cost of medical treatment for everyone and priced it completely out of the range of what the poor and even the middle class can pay. That wouldn't seem to be a testament to the inordinate power of labor, would it? The unintended consequence brought about by collective bargaining including health insurance benefits as an integral part of compensation has been the lack of portability of health benefits and the resultant hiring discrimination against older (more expensive to cover) workers. This has enormously negative consequences which are only now being played out as the Boomer population ages and needs to retrain for jobs which were lost due to productivity, obsolescence and companies going out of business before their working lives were over. Most people born in the last twenty years will not work for one company and many will outlive several companies they work for. You have no idea how lucky I feel to not have my health insurance attached to my employment, but as a separate agreement between myself and the company that provides the insurance. Plus, the cost has been much lower over my working life. Employees with plans are overcharged for their health benefits even though few realize it. They are lulled into thinking that it is a "free" benefit. Only when they are separated from employment do they realize just how unfree it was. Govt "interference" exists throughout the economy. Yes. The S&L bailout, the airlines, farm subsidies, tobacco, milk, what else. You seem to be bemoaning a reality of our economy that is not going to go away easily or, I suspect, completely. Let's get rid of it all. It makes everyone poorer than they otherwise might be. The minimum wage is not going away. At this point, the market rate is above the minimum wage in all but the excluded industries (and there are a long list of excluded occupations in every single state) so it is a law which the market has rendered somewhat meaningless. I hired first year trainees at twice the minimum wage 10 years ago. My cleaning lady makes four times the minimum wage.