# Return to Labour Missing



## sags (May 15, 2010)

There was a discussion late last night on Bloomberg World, about the present economic status in the world.

The observation was made that successful capitalism depends on both.........a return to capital and a return to labour.

They said the return to labor was missing and the result would be lower consumer spending and therefore lower corporate profits.

Low interest rates have enabled corporations to refinance their debt and use the savings to buy back shares or increase dividends.

Labor hasn't benefited from the saving.

I think that is a pretty accurate assessment, if you consider that people are not receiving wage increases or increases are less than the cost of living increases. 

Eventually consumer (workers) spending will be affected and companies will have to adjust their prices lower to compete.

Corporate share values will fall to reflect lower sales, margins and profits, and it becomes a downward spiral.

They said the disappearance of unions and high unemployment due to companies not expanding, means there is no pressure to raise wages.

So the problem now is how to get out of the cycle.


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## RBull (Jan 20, 2013)

In general I agree with the synopsis you wrote.


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## OptsyEagle (Nov 29, 2009)

sags said:


> So the problem now is how to get out of the cycle.


Reduce the taxes on the rich and corporations. I'm sure that was what you were going to suggest next, but I thought I would jump ahead of you. lol.

Anyway, if you create a good environment for the rich to get richer, they will invest more, create more jobs and a larger supply of goods and services. If there are more jobs then people to work them, then wages will consequently increase. If there are more products produced, this increased supply should help reduce inflation and allow the workers to buy more and ultimately improve their lives.

Or we could increase taxes on the wealthy and increase the minimum wage, both stifling economic growth, with the majority of the pain felt by the poorest within the economy. Oh, that's right, that's what we have been doing. It does always seem to garner more votes.


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## peterk (May 16, 2010)

^ In general I agree with the synopsis you wrote :biggrin:


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## andrewf (Mar 1, 2010)

The Scandinavian model of low corp taxes, moderately high income taxes and high consumption taxes seems to work very well for them in achieving reasonable income inequality.


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## peterk (May 16, 2010)

Interesting article:

http://www.economist.com/news/leaders/21594298-effect-todays-technology-tomorrows-jobs-will-be-immenseand-no-country-ready



> It is partly just a matter of history repeating itself. In the early part of the Industrial Revolution the rewards of increasing productivity went disproportionately to capital; later on, labour reaped most of the benefits. The pattern today is similar.


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## andrewf (Mar 1, 2010)

Keep in mind that a lot of 1% earn most of their income from wages, not returns on capital. CEOs, pro athletes, highly paid specialists. Bill Gates and Mark Zuckerberg are the exception, not the rule.


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## RBull (Jan 20, 2013)

peterk said:


> ^ In general I agree with the synopsis you wrote :biggrin:



There's a charge for using my line. :biggrin:


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## sags (May 15, 2010)

Maybe it is one of those things that is fine..........until it isn't.

Some people believe we have reached that point, and the downside effects will become stronger and more evident.

It is human nature not to address problems, before they are at a crisis mode.


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## Rusty O'Toole (Feb 1, 2012)

Did you just figure this out? The rest of us saw this coming when the unions priced themselves out of the market, people turned against manufacturing and jobs began going overseas in the seventies. The astonishing part is how the economy kept going on borrowed money all these years.

The US economy is now 70% consumer driven. Manufacturing, farming etc. a shadow of their former selves.

Reducing taxes on the rich won't help. We already tried that. The result is a bloated 1% of plutocrats making millions every year while the working class and middle class slide into poverty.


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## sags (May 15, 2010)

Maybe.........but apparently the corporations were a little slow on figuring it out as well, ........as they wonder where their customers are.

A union rep and an auto executive were walking through a plant that had nothing but robots doing the work.

"I would like to see you get union dues from them", said the auto executive.

"I would like to see you sell your cars to the robots", replied the union rep.

That is close to where they are today...........with the auto makers contracting out a lot of work to minimum wage employers.


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## newtothegame (Jan 2, 2014)

We have to understand that many industries only exist, or existed, in Canada due to trade pacts.

Now, tariffs and trade pacts are the opposite of free trade. I will not comment on the effectiveness of either method, since that is pure opinion.

However, know that "Auto-Pact" ensured that for every US automobile sold here, one had to be built here. This was a condition then. It is no longer now...


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## sags (May 15, 2010)

GM is making record amounts of money in North America and losing it's shirt in Europe and the rest of the world.

The other countries don't want North American products. They just want to sell their products here.

http://hosted.ap.org/dynamic/storie...ME&TEMPLATE=DEFAULT&CTIME=2014-02-06-07-32-38


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## PerfectElement (May 22, 2013)

Capitalism is set to fail and I think we will be forced to move to a new system soon. What's left to see is what will happen first, the virtual extinction of the consumer class due to massive technological unemployment, or serious environmental destabilization due to the infinite growth/cyclical consumption paradigm that capitalism relies on.


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## Longwinston (Oct 20, 2013)

You watch this on the cbc sags? Corporate profits are at record levels. Btw. The doom mongering must get old after a while? 

If we want a better world wide economy, we hope the next president of the US is an adherent to the Chicago school of economics (in the Friedman sense not on the Chicago politics sense). The resurgence of Keynesian economics and stifling regulation is why this "recovery" must still be referred to in quotation marks.


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## Rusty O'Toole (Feb 1, 2012)

Some time in the sixties we as a society decided work was for suckers and it was time to shut down the factories and throw the working class overboard.

Now the middle class is following them.

We no longer have an economy based on work or productivity. We have an economy based on the slick trick, the quick fix and the gimmick.


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## sags (May 15, 2010)

Longwinston said:


> You watch this on the cbc sags? Corporate profits are at record levels. Btw. The doom mongering must get old after a while?
> 
> If we want a better world wide economy, we hope the next president of the US is an adherent to the Chicago school of economics (in the Friedman sense not on the Chicago politics sense). The resurgence of Keynesian economics and stifling regulation is why this "recovery" must still be referred to in quotation marks.


Did the record corporate profits come from expansion and growth...........or from refinancing at lower interest rates (central bank policy) and reducing their workforce (at the expense of growth and customer service)?

Were the corporate profits permanent...........or temporary?

As companies announce their profits............we will see, but if the major retailers are any indication.........profits are falling.


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## Taraz (Nov 24, 2013)

I think we'll see a long period of very low inflation. We'll also see increasing productivity due to efficiency increases caused by technology (despite stable or decreasing prices). 

Yes, there will continue to be unemployment even though there are lots of jobs, because the people don't have the right skills or experience to fill the jobs. I also think we'll see a growing social safety net (maybe even a mincome), and increased taxes on the upper classes to pay for it. 

Fortunately, Canada embraces socialism (as well as capitalism), so the people who can't adapt won't be starving (or rioting) in the streets, for the most part.

If you think unemployment is bad now, wait a decade - the self-driving car will destroy more jobs than the internet did.


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## Feruk (Aug 15, 2012)

Today's economy is no longer driven by capitalism. The second the Fed stepped into the picture in 2008, capitalism was no longer running the show. So for all of you blaming capitalism, stop it. Market manipulation held back recession and has since helped re-inflate a massive stock/housing/government debt bubble. The USA doesn't make things any more, but are buying things at record pace on money loaned from places like China. Canada makes... oil. 

These "record corporate profits" you speak of are merely a result of lower interest rates. The same is true for housing prices and the ability of the government to continue borrowing money. The only way out is to SPEND less, pay off some of the debt, and stop letting people borrow at these obsurdly low rates. The issue isn't that we pay too little or too much in taxes, it's that we allow our governments to spend obsurd amounts of money on services they should not be in.


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## Nemo2 (Mar 1, 2012)

^ +1


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## sags (May 15, 2010)

First they take your DB pension.........and then they diddle around with your DC plan.

http://www.washingtonpost.com/busin...012-11e3-b227-12a45d109e03_story.html?hpid=z1

Is this how much corporations value their employees..........the "poor distressed babies" ?

Also on CBC news this week...........Some contractors for oil companies in Alberta got caught terminating Canadian employees and replacing them with cheaper foreign workers.

http://www.cbc.ca/news/canada/edmon...es-after-foreign-worker-controversy-1.2528059

The government promised to "look into it"............but watch the 2014 budget to see if there is money allocated to "help" foreign workers adjust to life in Canada.


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