Timmy Elsewhere

At Pajamas Media.

Why raising the worker\’s wages isn\’t the panacea that some seem to think.

2 thoughts on “Timmy Elsewhere”

  1. Eh!?

    Isn’t it what companies want – staff to stay on where they have been trained?

    Pay peanuts get money’s and a personnel turnover that can cripple a company.

    “And the reason they’ll do that is that their competitors will also be vying with them for access to the same profit producing resource.”

    Snort! Not if they have no training – basic or other-wise.

  2. This reminds me of a heated and silly online debate I became embroiled in during the German general election of 1998 which brought the Social Democrats to power, led by Gerhard Schröder, who went on to become Chancellor after the election.

    During the election campaign, Oskar Lafontaine, the chairman of the SDP, had gone around claiming that a general hike in German wages would boost the economy and reduce unemployment at a time when the US Bureau of Labor Statistics was reporting that wages in German manufacturing industry, converted at then current market exchange rates, were already among the highest in western Europe. I suggested then that Oskar Lafontaine was talking nonsense but someone online claimed this policy was endorsed by his wife who had an economics PhD from an American university. And that was that.

    The silliness of Lafontaine’s claim had not escaped the attention of German economists who were already campaigning since early 1998 for a postponement of European monetary union to allow more Germany more time to resolve the challenging problems of its labour market without having to depend on socially painful unemployment:

    “More than 150 German economics professors have called for an ‘orderly postponement’ of economic and monetary union because economic conditions in Europe are ‘most unsuitable’ for the project to start.

    “The call to delay Emu ‘for a couple of years’ is made in a declaration signed by 155 university professors and sent to the Financial Times and the Frankfurter Allgemeine Zeitung newspaper in Germany. It signals intensified opposition to the government’s euro policy.

    “The declaration was organised by Manfred Neumann, professor of economic policy at Bonn university and chairman of the Bonn economics ministry’s council of expert advisers. It signals concern among professional economists about Bonn’s determination to begin the single currency on January 1 1999. . .”

    For all that, the Euro was nevertheless launched upon the world in January 1999 with Germany there in the Eurozone. In March 1999, with the Euro sinking almost daily in the foreign exchange markets, Gerhard Schröder sacked Lafontaine from his post as finance minister.

Leave a Reply

Your email address will not be published. Required fields are marked *