I think it is well-known that most investors underperform the market.

Many people, therefore, only invest because their bank gives a negative real interest rate after inflation. And inflation exists mostly because it is seen as an effective way to encourage full employment; before the Great Depression, currencies would alternate between inflation and deflation (and were based on precious metals), while since then the USD and most other currencies have been in a state of continuous low inflation.

The above should not really be new. What should be new is that it is possible to cause full employment without government spending, and therefore without the inflation that results when tax revenues are less than spending which inevitably happens.

Of course, just because the possibility exists doesn't mean it will necessarily happen. Here is a petition on the White House website on endorsing that solution: https://petitions.whitehouse.gov/petitio....

If it gains support, which is difficult to predict will happen, it seems logical that the markets will crash. (Based on this description of the financial markets: http://smirkingchimp.com/thread/mark-ame....)

Quote:

Endorse a Drama-Free Solution to High Unemployment
The United States has no skills problem, and does not lack wealth. All we need to fix unemployment is an innovative and sustainable way for people to choose to work less time.

The U.S. has plenty of scientists, many of whom have been forced to go into finance to find jobs.

The rich are spending all they can:

http://www.nytimes.com/2011/08/04/busine....

In order to fix high unemployment, wasteful government spending and inflation, we should encourage people in high-income occupations to work fewer hours while still retaining most of their responsibilities and earning a reasonable income. This will allow companies to hire more workers using the resulting payroll savings to do the remaining work.

jobcreationplan.blogspot.com

You realize this is insane, right?

Insane is now normal and normal is considered insane.

prepare to be governed with a cat of nine tails.

And exactly how would one encourage hi paid employees to work less hours, with the same responsibilities, for less pay?

ANd how would one encourage employers to hire unqualified workers and face the additional costs and risks?

It is insane and It totally fits with O's "You didnt build that. Someone else made it happen." comment and illuminates the "equality" mindset, ie it is wrong for one person to make 180,000/year, it is right for 4 people to make $45,000 each. Who is John Galt?

.

Wakeupcall wrote..

And exactly how would one encourage hi paid employees to work less hours, with the same responsibilities, for less pay?

Pay them a higher rate. This system already exists, in a way, with Flextime which is used in the UK, "in which employees can choose when they work, subject to achieving total daily, weekly or monthly hours in the region of what the employer expects, and subject to the necessary work being done... For employers, flexitime can aid the recruitment and retention of staff. It has been a particularly popular option in 2009 for employers trying to reduce staff costs without having to make redundancies during the recession."

With a salary-based system, someone gets a higher "wage rate" by getting paid the exact same amount when leaving early; the only problem with this is there is no reward for working more, so as a hybrid between wage and salaries people would just be paid at a lower marginal rate.

For example:

The first 20 hours are paid at 1.2 times the normal hourly rate for full-time work.

Work beyond 20 hours in a single week is paid at 0.8 times the normal hourly rate.

For jobs where it's already possible to precisely measure how much work someone does, such as if they have complete responsibility for contracts with clients in investment banking and get bonuses based on performance, this wouldn't be necessary but people in that situation might be encouraged to choose to work less when otherwise they wouldn't have due to cultural assumptions about the value of looking busy (http://opinionator.blogs.nytimes.com/201....).

Germany also has something somewhat similar to this, where the government makes up for some of the lost wages for people who work less than full-time, and at least one economist has suggested the US use the same system: http://www.guardian.co.uk/commentisfree/....

The US actually DOES have the same system, and it was expanded early this year, but very few people use it probably because it sounds like a form of welfare and being on welfare is bad. And just as people with $100k+ incomes shouldn't be getting any welfare they probably feel it isn't fair to use government funds to make up lost wages from working less, so that system is seen to be only for low-income workers.

This petition should be attractive to anyone who wants low taxes, since by far the main reason for government spending is as a job program, such as the number of military bases despite the lack of an enemy that can match the US's conventional forces not to mention nuclear weapons.

It's hard to speculate on any particular person's goals, but would this person who worked in the financial industry still have left if the hours weren't so intense? http://www.guardian.co.uk/commentisfree/....

Wakeupcall wrote..

ANd how would one encourage employers to hire unqualified workers and face the additional costs and risks?

To save money. Example: http://www.nypost.com/p/news/local/pa_po....

"Rivera — a 16-year veteran who’s consistently among the PA’s top OT earners — last year raked in a total of $273,946 thanks to $166,035 in overtime on top of his base pay of $107,911."

Awesome. Lol

There must be a breach in the time-warp continuum of which I'm not aware.

Wow...well, let us know how that works out for you guys across the ocean.

The solution in the second post is, indeed, insane.

Misaki's OP is noteworthy.

The Chinese Elites crank up inflation and the banks pay a low rate (4%, 3%), getting savers to choose to pump their money into RRE that sits bare walls for decades.

The SOE's and Elites then take this cheaper money, arbitrage it against inflation, invest in whatever, and make trillions.

It's the exact same thing that is happening in the USA.

The wives of bankers got 'loans' from TARP, dropped it into a CD or treasuries, and pocketed the free difference.

Someone's brain pan is clearly leaking.

Mythical man-month, lump of labor fallacy.

http://old.nationalreview.com/nrof_bartl....

bad linky, Etz.

"earning a reasonable income"

This probably doesn't deserve a second thread since its relevance to these forums (capital markets) is the same:

Quote:

Ethical Standard Guaranteed to Fix the Economy

Two options for job creation:

1) Higher government spending and taxes: https://petitions.whitehouse.gov/petitio....

2) Working less so companies can hire more: https://petitions.whitehouse.gov/petitio....

If you do not take a minute to sign either one, or both, of these petitions, you are unethical, immoral, or colloquially, "evil". This is completely legal of course.

Anyone who benefits by association with someone who has not signed either of these petitions is also "evil".

A brief description of how to encourage people to work less for those unfamiliar with the concept:

The first 20 hours are paid at 1.2 times the normal hourly rate for full-time work.

Work beyond 20 hours in a single week is paid at 0.8 times the normal hourly rate.

In the event neither petition receives enough signatures to earn a response, we can conclude that everyone else in the United States is "evil" and people should be made aware of this so the unemployed and poor do not keep hoping for a peaceful resolution to their problems and intelligent people do not feel they need to look for one.


A thank you to Yoko Ono for allowing comments to be published on her site.

Now then.

Ben wrote..

It's the exact same thing that is happening in the USA.

That's exactly what I thought when I read this article on what is happening in China, which you might have gotten your info from: http://brontecapital.blogspot.com/2012/0....

Etz wrote..

Mythical man-month, lump of labor fallacy.

You are correct. The amount of labor required by society is not fixed; the suggestion in the first petition (working less) would lead to a LOWER amount of work being done because things like lawyers for patent litigation, financial sector workers, economists, etc. would see less demand.

Not to mention less need for pointless paperwork as a way of looking busy, which applies to both government and corporations. (See: Office Space)

Oh, and the reason the 35-hour work week was unsuccessful in France is because more people just worked overtime... because it pays more. You would see significantly fewer people choosing to work long hours if work beyond a certain point (like 20 hours per week) paid less, especially since it leads to more labor flexibility. With a 35-hour work week, since everyone wants overtime there's no point in hiring and training more workers for seasonal demand.

From Etz's link:

"Nor is the demand for labor fixed. Most important, it is a function of the price."

Completely wrong for many companies. Apple only pays about $15 in assembly labor costs for an iPhone or iPad, but makes about $300 gross profit. Retail workers are only paid about $12/hour according to the NYTime's investigations, but many of them can sell over $250k of products in a month. Very cheap labor; very little reason to hire more people because the only way to sell more products would be to lower the price and therefore profits.

Misaki is your enemy. Know him well.

We should also go around breaking random windows so we can repair them. Yes, this is indeed the path to economic prosperity.

soon, we will get to the point where you can't steal work from someone.

We used to talk about stomping around on people's roofs with golf shoes on, so we could fix 'em. Never did it, though.

Antone wrote..

We should also go around breaking random windows so we can repair them. Yes, this is indeed the path to economic prosperity.

The goal is to accomplish more by doing less work. Your proposal would involve doing more work, which is the exact opposite of what we want.

Thystra wrote..

soon, we will get to the point where you can't steal work from someone.

I assume you are referring to inflation?

Rjazz117: same as for Antone. Less work, not more.

Work is what has gotten us to where we are today. You are such a ****ing fool.

Quote:

In order to fix high unemployment, wasteful government spending and inflation, we should encourage people in high-income occupations to work fewer hours while still retaining most of their responsibilities and earning a reasonable income. This will allow companies to hire more workers using the resulting payroll savings to do the remaining work.

Are you insane? When dealing with a pie, slicing smaller pieces does not make the pie bigger. Jesus Christ.

You ****ing people have absolutely no concept of capital.

So much vitriol aimed towards what is a very practical solution. Never mind the fact that society tends to evolve toward this state on its own anyway. There are many many professionals who make good money but only work 10-20 hours a week. We would be much better off with twice as many professionals each working half as much. It is an equitable and just means of redistributing wealth. I do not even understand how someone can argue against that. But whatever. There are many reasons this country is collapsing; lack of imagination and critical thought are obviously two of them.

Quote:

It is an equitable and just means of redistributing wealth.

No such thing.

What are you trying to suggest? That people earn half as much, or that they are paid the same for doing half the work? Neither of those options is going to "fix" anything. All you'll do is reduce GDP and company earnings. That doesn't create capital, which is the only thing that's going to get us out of the mess we're in.

Misaki: I needed the work, back then...and still do.

Jb350: The vitriol comes from suggesting that the productive people work less, so those that are currently sitting their asses can work at all. It's just a different form of welfare.