Tuesday, February 22, 2011

Why economies tank -- American labors only practical road back

MY COMMENT AT http://www.prospect.org/csnc/blogs/tapped_archive?month=02&year=2011&base_name=organizing_is_a_right_not_a_pr

Did someone say the word "insolvency"?

That is what happens to states when the economy tanks. Why do economies tank? 9 times out of 10 in history and around the world it is because TOO MUCH money gets into the hands of bankers (no left-winger here -- this is about free markets) who then lend it to people who cannot pay back (bankers go for a bubble like a moth to a flame for some reason ???).

This becomes double-jeopardy when the too much lending goes into real-estate. When house prices finally drop in half nobody will come down enough to sell -- until inflation painlessly makes real real estate prices come down over a very, very long time -- nobody sells, nobody buys -- ergo, a long, long recession.

This becomes triple jeopardy when banks are deregulated (crazier moths) at the same time.

The Republican Party managed to accomplish all three -- sent the bankers TOO MUCH money to lend via $4 trillion (!) dollars of tax-cuts for the rich -- which fueled the real estate bubble all the while deregulating (moth to a flame) banks. Ergo, an potential repeat of the Great Depression.
If labor were running the country for the average person -- instead of two elites trying to tear up different parts of the country for play -- the endless recession never would have happened.

The only way to unionize in the modern world (if unheard of in America) is called sector-wide labor agreements -- legally mandated -- all worker who perform the same type of job in the same geographic locale work under one common contract with all firms. This ends the race to the bottom. Wal-Mart closed 88 big boxes in Germany because it could not compete (when legally forced) to pay the same wages and benefits.

Sector-wide agreements were originally instituted in post-war Germany by very conservative, very anti-communist, very Roman Catholic (think Konrad Adenauer) politicians to keep labor costs DOWN so their just post fascist industrialist could rebuild -- by allowing labor to make concessions without worrying whether others would make the same concessions. This is not "socialism." (English labor did not do this at first and thus fell behind rebuilding.)

What avoids the race-to-the-top by labor just as beautifully avoids the race-to-the-bottom by ownership -- as each owner claims he must cut labor costs to match the competition. Sector-wide bargaining creates a fair and balanced labor market for both sides.

And can be instituted by one law -- easy.

Sector-wide is the practice throughout the better compensated OECD first-world and even used in the second-world (Argentina) and third-world (Indonesia) -- also Canada. It is about how free markets actually work -- nothing to do with "socialism."

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