Wage Increases = Economic Growth

Found this on the web and thought I would share it with ya' all. While Capitalist governments around the world attempt to reduce workers wages with austerity measures, union busting, and government reductions in public sector employment, lets remember who keeps capitalism functioning, the workers who produce the goods and buy them. And as Marx pointed out the declining rate of profit, which is key to the continuing cyclical crisis nature of capitalism results from overcapacity. Take the auto industry as an example.

Development Through Wage-Led Growth

By
Henry C.K. Liu



Part I: Stagnant Worker Wage Income Leads to Overcapacity

This article appeared in AToL on November 24, 2010


In the economics of development, there is an iron-clad rule that “income is all”. The rule states that the effectiveness of developmental policies, programs and measures should be evaluated by their effect on raising the wage income of workers; and that a low-wage economy is an underdeveloped economy because it keeps aggregate consumer demand below its optimum level, thus causing overcapacity in the economy that needs to be absorbed by export.

Workers income is the key factor in generating national wealth in a country. Export through low-wage production is merely shipping under-priced national wealth outside the national border without adequate compensation, by under-pricing labor within the nation. During the age of industrial imperialism, export of manufactured goods was promoted by high-wage economies to the low-wage colonies in return for gold-back money, so that more investment could be made to provide more jobs for high-wage workers at home. In post-industrial finance economies, cross-border wage arbitrage in unregulated global trade exploits workers in low-wage economies to produce for consumers in higher wage economies to earn fiat crrency in the form of the dollar that cannot be spent in the exporting economy.

Globalization of Trade Preempts Domestic Development in All Countries

This “income is all” rule has been mostly obscured in recent decades during which globalized foreign trade promoted by neoliberals has pre-empted domestic development as the engine of economic growth in all market economies around the world. In today’s game of globalized international trade, the new operative rule is that “profit is all” and that high profit in competitive export trade requires low domestic wages, even if low local wages retard domestic economic development by reducing aggregate purchasing power in the domestic market to cause overcapacity that rely on export. As workers wages are not sufficient to buy the goods they produce, domestic markets fall into underdevelopment and export to high-wage economies is needed to produce profit for companies.

Excessive Corporate Profit From Low Wages Leads to Overcapacity

This new rule of globalized trade is designed to produce short-term maximization of corporate profit for an export sector. But in the post industrial finance economy, the export sectors in low-wage economies are largely owned or financed by cross-border international capital. This type of international trade incurs inevitable long-term stagnation in the domestic economies of all trading nations because the low wages paid by international capital lead to insufficient aggregate domestic consumer demand. Stagnant wages everywhere in turn reduce aggregate global purchasing power needed for the expansion of international trade. It is a clear case of imbalanced economic sub-optimization.

Foreign Capital Invested in International Trade Has No Incentive to Raise Local Wages

The export sector of foreign trade in any economy naturally does not consider the purchasing power of local workers as being of any consequence because the goods produced and services provided by local workers in the export sector are sold in higher-wage foreign markets for profit denominated in the reserve currency generally accepted in international trade, which since the end of World War II has been the US dollar.

As a result, the import sector in foreign trade in all economies also underperforms because of insufficient domestic purchasing power for both domestic products and needed imports. This is true in varying degrees for all economies that participate in international trade. The only exception is the US economy whose gold-backed currency had been generally accepted as the reserve currency for international trade since the end of World War II. But the dollar has been a fiat currency since 1971 when it was detached from gold.

In the advanced financial economies, consumer debt is used to overcome stagnant consumer purchasing power caused by low wages. Low wages have been the fundamental cause of recurring debt bubbles in advanced economies. Even for the US, cross-border wage arbitrage has also kept US wages stagnant, which US policy makers compensated with a policy of high consumer debt that was unsustainable by stagnant wages. The biggest item in consumer debt is home mortgage. This excessive debt in relation to wage income has been the real cause behind the current global financial crisis.

The Rich Get Richer

While the rest of us are told we must suffer roll backs, wage freezes, and other austerity measures the result of the capitalist state bailing out Wall Street and Big Business......

Executive compensation

The $1,700,000,000 golden handshake

Inside the best deal Frank Stronach ever made.

Bank of Montreal CEO pay jumps 28 percent to C$9.5 million

Average annual pay of a top Canadian CEO: $7 million

The total average compensation for Canada’s 100 best-paid CEOs was $6.64 million in 2009, compared to the average Canadian income of $42,988 and the average minimum wage worker’s income of $19,877.

The biggest pay package went to Aaron Regent at Barrick Gold Corp., who made $24.2 million in 2009, according to Mackenzie’s calculations. In second place was Hunter Harrison at Canadian National Railway Co., at $17.3 million, followed by Gerald Schwartz at Onex Corp., at $16.7 million.

A Globe and Mail review of pay for CEOs at Canada’s 100 largest public companies in 2009 shows top executives across Canada received, The cash portion of pay packages – salary and cash bonuses – did show substantial growth, with a combined median increase of 7.6 per cent. (Medians reflect the experience of the middle-of-the-pack CEO, while averages can be skewed by CEOs with particularly large or small compensation amounts.)

A list of the Top 50 Canadian CEOs and their astronomical take-home pay increases

In the past 12 years, there’s been a 444 per cent salary increase for Canada’s top CEOs. The top 10 earners collected a total of $60.7 million in 1995—by 2007, that number had jumped to $330.3 million. For example, Paul Desmarais, CEO of Power Corp, made more than $5 million in 1995; in 2007, his take-home was more than $29 million.

Canada’s richest CEOs pocket the average Canadian wage of $40,237 by 9:04 a.m. January 2nd – before most Canadians have booted up their computer for another year of work,” says Canadian Centre for Policy Alternatives (CCPA) Research Associate Hugh Mackenzie.

The CCPA released a report on January 2, 2009 showing that the 100 highest paid CEO's at publicly traded corporations in Canada earned an average of $10.4 million in total compensation in 2007, which was an average increase of 22%, from its $8.5 million average in 2006.

This compared with an average pay hike of only 3.2% to $40,237 for the average Canadian worker during 2007.
"Compared with ordinary Canadians, whose wages have been stagnant for 30 years, Canada's economic downturn promises to hit the masses far harder than the best paid 100 CEOs," Mackenzie said. "They have enjoyed a decade of record pay hikes and will land on a softer cushion if they stumble from their lofty heights in the New Year."

The wage gap between the average Canadian worker and CEOs has been growing steadily over the past decade. In 2007, Canada's top 50 CEOs earned 398 times more than the average worker, compared with 85 times in 1995.

MacKenzie said that between 1998 and 2007 the average compensation of top CEOs increased by 147%, adjusted for inflation. This compared with a 3% decline in inflation-adjusted weekly wages for average Canadians and a 6% rise for those on the minimum wage.

Wage Controls

Here we go again the recession of the 1970's brought in wage controls under Trudeau. Then again in the ninties with the deficit and debt hysteria public and private sector workers faced assualts on their wages and benefits by provincial NDP and Conservative, and Federal Liberal governments. Now the Harpocrites are suggesting another attack on workers wages. While bailing out the bankers.



Flaherty also said the government is looking at controlling the rate of growth in the salaries of public servants, and is continuing with a strategic review of expenditures at all government departments.



We should not be surprised that Mike Harris's Finance Minister should talk about cutting wages for public sector workers. This was the neo-con aganeda during the ninties, carried out by Harris, Klein and Paul Martin. This is not new thinking, this is reactionary thinking. Attacking workers wages during a crisis of consumer capitalism will further entrench a recession which will then whipsaw into the private sector.



Flaherty says the equalization program itself isn’t threatened but spending growth needs to be controlled. "It’s a federal program, we will limit the growth of the program … it’s not sustainable otherwise," he said, I thought rather gravely.
The problem is, if transfers grow more slowly than inflation, provinces will face shortfalls. So less risky, politically at least, is cutting the civil service.
The Conservatives know there’s a standing constituency for strict control of public spending. And cuts can be doled out in ways that minimize the pain to particular constituencies.
That said, the last round of deep cuts was in the early 1990s, when Paul Martin and Jean Chretien put the brakes on federal transfers to the provinces and hacked away at programs. They cut the civil service and conditioned people to expect public spending cuts as the tactic of choice when times are tough.



While capitalist apologists bemoan any claw back of tax cuts to big business the Harpocrites now are suggesting attacks on workers wages.The reduction in transfer payments and discussions amongst the Premiers with Harper recently shows that the message has also been sent to these levels of government; prepare to roll back wages and benefits to your public sector workers. Anything to avoid a deficit. Class war has been declared by the Harpocrites.

SEE:

Pinocchio Conservatives

Deja Vu

Business Unionism Offers No Solution To Capitalist Crisis

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Perks

One of the perks of being a one party state is that you can give yourself pay raises without fear of opposition in the legislature.

EDMONTON — One of the wealthiest provinces in Canada has dramatically boosted the pay packets of its premier and cabinet ministers.

The Alberta government has approved a pay hike, which will see each of the province's 23 cabinet ministers get a pay hike worth about $42,000, bringing their annual compensation to around $184,000 per year.

Premier Ed Stelmach will become among the nation's best paid premiers after approval of a 34 per cent pay hike.

That brings his total compensation package to over $213,000 per year.

Stelmach is defending the hefty hikes, saying they're needed to help recruit more people into politics.

Scott Hennig, a spokesman for the Canadian Taxpayers Federation, is critical of the move, saying it's not fair that the premier and cabinet were able to get such big pay raises without first putting the matter before the legislature. (CTV)

Oh that's rich Scott the legislature is dominated by the PC's. And they very rarely meet. In fact this pay increase goes to the politicians that work the least in Canada since Alberta has the shortest legislative sittings of any government in Canada. And in fact like most things done by the Alberta Government, (tm)(c) of the PC Association of Alberta, this increase was passed by Cabinet fiat.The issue never will come up in the legislature. That would mean it would be subject to public debate.

When Alberta’s freshly re-elected premier Ed Stelmach decided to hand his caucus a massive pay increase this week, he avoided such complications: there was no panel, no polling. Just a quiet notice buried in the daily compendium of passed Orders in Council, of something called the “MLA Remuneration Order.” In actuality, it was an eye-popping 30% pay raise for cabinet ministers, who now will make $184,000 a year, instead of $142,000 — more than federal MPs and most provincial premiers. Premier Stelmach gets an even bigger boost to the paycheque: He’ll now make $213,450 a year, up from $159,450. Mr. Stelmach now makes more than his Ontario counterpart, Dalton McGuinty, who manages a province nearly four times as large, making Alberta’s CEO the highest paid premier in the land (Quebec’s premier makes $194,900 and everywhere else the rate is $165,000 or lower). Not bad for a government that famously chooses to sit in the legislature for less than five months out of the year. MLAs will also get bonuses for attending committee and cabinet meetings, which had previously been considered part of their full-time job.

Ok folks the Premier has set the rate for collective bargaining increases in Alberta for this year. After all he claims his 34% increase is needed for purposes of attraction and retention, a current problem faced by all employers in the province.

Then Stelmach tried to explain the inexplicable.

"If we are going to attract younger people for government we've got to pay them appropriately," the premier said. "I remain committed," he said without much conviction.

And the Alberta Weekly Average Wage increase was 4.53% as announced by the Government in April. Ed gets a whopping 30% increase over that. Far greater than the incease most Albertans got this year. And a salary increase that is larger than the annual Canadian salary.

Albertans have every right to be furious at Premier Ed Stelmach and his 23 cabinet ministers for topping up their salaries by 30 to 34 per cent.

That's an extra $41,950 to $54,000 a year for work that's always been included in their base salary -- attending meetings for cabinet, Treasury Board and policy committees.

Not a bad promotion, considering the average weekly earnings in Canada last year were just $751, or $39,052 per year.

And certainly larger than any minimum wage increase in Alberta.

In June 2007, government announced minimum wage increases would be adjusted based on the average weekly wage and come into effect April 1. If Alberta's average weekly wage increases from one year to the next, the minimum wage will increase by the same percentage.

And its not like they don't get raises, the Government members get an annual increase based on this same index, so its not like they weren't going to get a raise anyways.

Edmonton Journal

Published: Monday, April 03 2006

Members of the Alberta legislature received pay raises of 5.23 per cent effective Saturday, an increase more than twice the rate of inflation.

That brings their yearly salary to $71,244, up from $67,698 last year.

Salary levels for Alberta MLAs are set every April 1 based on the annual increase in average weekly earnings in the province as calculated by Statistics Canada.

Meanwhile former Tory Energy Minister Greg Melchin gets to become a paid lobbyist to the government that used to employ him. This is the same guy who screwed Albertans out of our fair share of royalties from his pals in Big Oil. This is the ultimate kick back for his doing his masters bidding.

Word of the cabinet pay hike broke the same day we learned former energy minister Greg Melchin was hired on to the board of a Calgary oil company -- just three months after leaving politics.

Turns out Melchin is exempt from the government's six-month cooling-off period because he hadn't been energy minister since 2006. (He's also not bound by the new 12-month cooling-off period because he left politics before April 1.) He was most recently minister of seniors. So, there's no problem with him taking the oil company job, says the province's ethic's commissioner.

Rules are made to be broken or gotten around, or well you see how it works. It's all very transparent and above board. The rules don't apply to clever Tory Cabinet Ministers never have, never will. After all those who write the rules know how to get around them, they wrote them.

The Democratic Deficit continues in Alberta, it is the Alberta Advantage for the Tired Old Tories.


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No Brainer

Minimum Wage Increase Is Good for Business









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Minimum wage


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