Genius economics here

We cannot continue with an economic system that is predicated on employing fewer and fewer people on lower and lower wages to increase productivity
1) We do rather want to increase productivity. For it’s exactly that which makes us all richer.
2) Increased productivity also leads to higher, not lower, wages.
Aren’t you glad there’s someone out there recommending that we shouldn’t increase productivity?

17 thoughts on “Genius economics here”

  1. this is moral hazard in action – the man’s paid by unions who want as many working members as possible, which means that he writes specious nonsense regarding employment itself as a benefit rather than labour as a cost, as it should be. Also it leads him to constantly recommend higher taxation and more government spending, partly so that people like him get to decide what gets funded and what doesn’t (in line with some highly spurious internal ethical system rather than any proper analysis) and partly because the only sector of the economy where unionisation is really still extant is in public sector (around 65% unionised vs 11% in private).

  2. Tim

    I appreciate you have a day job, so no doubt you have focused on the one canard in the extraordinary (even by Murphy’s dismal standards) post from which this excerpt is drawn.
    I think if you took a proper scalpel to it, you could come up with more posts than you managed on Ha Joon Chag’s book. It really did render me speechless with its fake sincerity, it’s special playing masquerading as concern for ordinary people, it’s arrogance and condescension – what an appalling man he really is.

  3. Tax Research hasn’t bothered employing fewer and fewer people on lower and lower wages to increase productivity.

    It simply increases productivity by employing nobody.

    The great man could go back to typewriters and shorthand, in which case he might need a PA and create a job. But with his i-pad, he can do it all himself.

    Productivity – kit replacing people since 1760. Just ask Richard Murphy.

  4. VP

    “I think if you took a proper scalpel to it”

    That’s quite some campaign he’s running there.

    Perhaps he’s eyeing up standing as a Green (isn’t he a big fan of Caroline’s nowadays?) in Norwich next year…;)

    btw, it’s the “fairness” thread if anyone is looking.

  5. “The rules of capitalism allow / encourage / have changed to allow companies / bosses / capitalists to force workers increase productivity, and the companies will take all the proceeds from that increased productivity and not increase the wages of employees” is one that one hears a lot. (I think it is more or less what Piketty is arguing in that dreadful book of his, too).

    The trouble is that this is never true. Finding a single example in all of economic history in which workers have got a lot more productive and not gained a significant portion of that increased productivity in higher wages is more or less impossible.

  6. If you have only learned “surplus value” then
    increased productivity = increased profits = poorer workers. We probably need a committee to work out the exact fair price for everything. ‘cos that’s never been tried snark

  7. “The trouble is that this is never true. Finding a single example in all of economic history in which workers have got a lot more productive and not gained a significant portion of that increased productivity in higher wages is more or less impossible.”

    Dockers? Coal-miners? Farmers? Yes, the ones who are left are paid a lot more than was the case when there were myriads of them, but the myriads-less-three-dozen who were moved from the aristocracy of labour to the dole are understandably not terribly happy.

    Switching from a hundred thousand taxi drivers at a tenner an hour to a thousand collision-avoidance-system designers at five hundred yuan the hour produces quite a lot of people who need to find something else to do and will not necessarily be paid a tenner an hour to do it.

  8. In general; the aggregate wage level never rises or falls, other than due to inflation or deflation (money supply changes). Wages can redistribute, with some getting more, and some getting less. That seems to be happening at the moment, with wages ratcheting from the bottom to the top of the economy due to State interference.

    Productivity increases the buying power of the wage (“real wages”) not the wage price level; workers who increase productivity should not get a pay rise, since the whole point of productivity (in money terms) is getting more stuff for the same price.

  9. So Much for Subtlety

    Michael Jennings – “The trouble is that this is never true. Finding a single example in all of economic history in which workers have got a lot more productive and not gained a significant portion of that increased productivity in higher wages is more or less impossible.”

    I am not sure that is true. People often say that middle and working class America has seen flat lining wages since the 1970s. I would think it is more likely to be true of working class America than middle America. Certainly their over all productivity is up a lot.

    All other things being equal, productivity increases should lead to wage increases. But things are not always equal. One of the things that will change that is a massive growth in the number of people competing for the same jobs. As America has seen massive immigration, the pressure on wages has been downward at the bottom end of the market – or to be fair, has not been as upward as it could have been. So those productivity gains have not flowed through to higher wages on the shop floor.

    I would also think Germany is a good example. As they have been competing with the newly freed Eastern Europe, their unions have agreed to hold down wages. But their productivity has been growing.

    However over all, we can all agree Murphy is a world class cock end,

  10. Does increased productivity in the private sector lead to increased wages in the public sector, along with an increase in the number of public sector workers?

    Certainly the public sector seems to be getting bigger and the money must come from somewhere.

  11. bloke (not) in spain

    @SMfS
    I think Tim might say working/middle class Americans have seen a great increases in social spending, since the 70s & that should be counted towards income. So the productivity increase .has been captured in taxes & redistributed back to them. So the net result’s similar.
    Whether Americans would agree….

  12. “Switching from a hundred thousand taxi drivers at a tenner an hour to a thousand collision-avoidance-system designers at five hundred yuan the hour produces quite a lot of people who need to find something else to do and will not necessarily be paid a tenner an hour to do it.”

    However a million taxi customers will have more money in their pockets as a result of the cheaper taxi services, which they will either spend elsewhere, thereby increasing employment in other areas, or on more taxi journeys, thereby increasing demand for auto-taxis, and auto-taxi repair, servicing, design and construction.

    After all the driver driven taxi cab replaced the horse drawn hansom cab – perhaps we should ban cars and return to horse drawn cabs instead. Think of the all employment required to keep hundreds of thousands of horses in the centre of big cities! Become an ostler my boy, its where the money is!

  13. “Switching … to a thousand collision-avoidance-system designers at five hundred yuan the hour produces quite a lot of people who need to find something else to do”

    And once that project is done, most of them will also need to find something else to do as well.

  14. Bloke in Costa Rica

    The day has already arrived when automation can produce a simulacrum of Murphy that is indistinguishable from the real thing. Therefore we can delegate his nonsense to a bot and put the meatspace version out to pasture. The salutary effects this would have are obvious after a moment’s thought. For one thing, MurphyBot can be switched off without making nasty smells a few days later and ruining the carpet.

  15. @Tom Womack

    Tom, you say that like it’s a revelation and an argument-winner.

    The rest of us have heard of Luddites.

    Nothing stopping you buying some land and starting your own farm, with everything done by hand. Or, indeed, going up north with a load of wool and getting women in Burnley to start hand-weaving jumpers.

    Good luck, do report back.

  16. I’m always amazed at the number of left wing commentators who suggest organising businessess in this way or that way which they say will be better for society, the workers, the universe etc and yet those left wing commentators never seem to set up such businesses themselves.

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