Is it time for wage increases?

[TheBigShort]

If group A has higher wages than group B and you cut taxes for both then group A will still take home more money as they earn more, I get that. But if instead you just raise wages of group A only, are you not increasing the gap further?

No, because one of the bug bears of AAM is that so many do not pay any tax at all! Typically the lowest of income earners. If you cut taxes, only those who pay tax will benefit directly, leaving a tax gap to fill. The higher the earner, the less likely the need to spend additional money from tax cuts and instead the money is hoarded.
Lower earners, through wage increases, will tend to spend near 100% of additional money, inducing demand, creating jobs, less reliance on welfare.
Most public servants will fall into the category of spending most of their pay increase, inducing demand, creating jobs, less reliance on welfare.
We have an increasing wealth gap in this country. Forcing lower paid workers onto welfare reliance. Higher income earners feel they carry the tax burden. Solution? Close the gap.

 

[Firefly]

No, because one of the bug bears of AAM is that so many do not pay any tax at all! Typically the lowest of income earners. If you cut taxes, only those who pay tax will benefit directly, leaving a tax gap to fill. The higher the earner, the less likely the need to spend additional money from tax cuts and instead the money is hoarded.
Lower earners, through wage increases, will tend to spend near 100% of additional money, inducing demand, creating jobs, less reliance on welfare.
Most public servants will fall into the category of spending most of their pay increase, inducing demand, creating jobs, less reliance on welfare.
We have an increasing wealth gap in this country. Forcing lower paid workers onto welfare reliance. Higher income earners feel they carry the tax burden. Solution? Close the gap.

But you're saying you want to increase wages in the Public Sector rather than cut income taxes for all. As Public Sector wages are already higher than in the Private Sector, how will that not widen the gap further?

 

[TheBigShort]

But you're saying you want to increase wages in the Public Sector rather than cut income taxes for all. As Public Sector wages are already higher than in the Private Sector, how will that not widen the gap further?

I'm am saying that wages need to start increasing for the vast majority, not just public sector worker's.
The fact that public sector worker's have negotiated better terms with their employer is down to their collective bargaining power through trade unions. Something private sector worker's have given up on. Instead, they have been bought out through a system of perpetual debt.
The report in RTE today around house prices exemplifies it
https://www.rte.ie/news/business/2017/0703/887315-myhome-property-prices/

Houses prices aren't increasing because of increasing wealth, but because of increasing debt.

Private sector worker's need to mobilise. The LUAS workers showed how it can be done.

 

[Firefly]

I'm am saying that wages need to start increasing for the vast majority, not just public sector worker's.

Ah right, thanks for clarifying.

 

[Purple]

I'm am saying that wages need to start increasing for the vast majority, not just public sector worker's.
The fact that public sector worker's have negotiated better terms with their employer is down to their collective bargaining power through trade unions. Something private sector worker's have given up on.

Private sector worker's need to mobilise. The LUAS workers showed how it can be done.

So businesses are all making lots of money but just not passing it on to the wurkers? We just need to share more of the output of production with the wurker rather than the greedy capitalists who control the means of production... is that it?

Instead, they have been bought out through a system of perpetual debt.
The report in RTE today around house prices exemplifies it
https://www.rte.ie/news/business/2017/0703/887315-myhome-property-prices/

Houses prices aren't increasing because of increasing wealth, but because of increasing debt.

Sweet This post will be deleted if not edited immediately... if people have more money then they can afford to borrow more.

You cannot escape from the link between supply and demand, just as you cannot escape from the link between economic value/ labour market supply and demand, and wages.

 

[TheBigShort]

So businesses are all making lots of money but just not passing it on to the wurkers? We just need to share more of the output of production with the wurker rather than the greedy capitalists who control the means of production... is that it?

In the main, with positive economic growth figures, increasing employment figures, it would suggest that wealth is being created.
Wages are also showing signs of increasing, which is good thing, but more can done here.

Sweet This post will be deleted if not edited immediately... if people have more money then they can afford to borrow more.

I don't know if you read the RTE report or not, but it clearly points to increases in lending due to a relaxing of central bank lending rules. It clearly states that this lending is increased debt.

You cannot escape from the link between supply and demand, just as you cannot escape from the link between economic value/ labour market supply and demand, and wages.

Yeah, so what is your point? Are wages too high, or too low? Or just right?

 

[Purple]

In the main, with positive economic growth figures, increasing employment figures, it would suggest that wealth is being created.

Wages are also showing signs of increasing, which is good thing, but more can done here.

Right, so wages are going up as the economy is recovering. Let the market decide.

I don't know if you read the RTE report or not, but it clearly points to increases in lending due to a relaxing of central bank lending rules. It clearly states that this lending is increased debt.

That and the utterly stupid, utterly populist first time buyers grant. A twelve year old could have told the government that increasing money supply would result in an increase in prices. Populist left-wing politics which ignored economic realities.

Yeah, so what is your point? Are wages too high, or too low? Or just right?

My point is that your drive to increase wages ignores market forces and every time we do that we screw things up. Look at the relaxation of the Central Bank rules you just cited!

 

[TheBigShort]

Populist left-wing politics which ignored economic realities.

How do you figure that this is left-wing politics? Can you name one left-wing party that supported this?
This is a sop to the developers trying to wrangle their way out of NAMA.

The left-wing parties are arguing for the state to build social housing.

It seems your interpretation of what is left-wing or right-wing is based on whether you like a policy or not, rather than any understanding of its origins or motives.

 

[Firefly]

This is a sop to the developers trying to wrangle their way out of NAMA.

Would you mind expanding on this as I'm not sure of the point being made?

 

[Purple]

How do you figure that this is left-wing politics? Can you name one left-wing party that supported this?
This is a sop to the developers trying to wrangle their way out of NAMA.

The left-wing parties are arguing for the state to build social housing.

It seems your interpretation of what is left-wing or right-wing is based on whether you like a policy or not, rather than any understanding of its origins or motives.

State intervention in the market is a fundamental of left-wing politics.

 

[TheBigShort]

State intervention in the market is a fundamental of left-wing politics

You mean right-wingers cannot see any benefit to state intervention in terms of implementing h&s standards, licensing, regulation, business start ups, education policy, etc...all of which have immediate, short-term and long-term impacts on markets and pricing, profit and loss?
If right-wingers are opposed to state intervention in the market, then they are opposed to any tax on profits?

 

[TheBigShort]

Would you mind expanding on this as I'm not sure of the point being made?

The Help to Buy scheme was concocted to increase house prices, bring developers back into the game of house building to stand on their own two feet.
House prices went up, developers haven't started building (or at least at sufficient pace).
Scheme looks like being scrapped.

 

[Purple]

The Help to Buy scheme was concocted to increase house prices, bring developers back into the game of house building to stand on their own two feet.
House prices went up, developers haven't started building (or at least at sufficient pace).
Scheme looks like being scrapped.

When the State should have gone to the open market EU wide and looked for companies to tender for high volume factory built units to be placed all over the country thus removing Irish developers and highly priced Irish labour from the market. We would have got higher quality units to a higher spec than the rubbish Irish builders are capable of producing at a much lower unit cost. As that becomes the norm in the market and EU suppliers gain traction in the market lower volume developments will become economical and prices will drop throughout the market. Basically if local suppliers can't provide the product at a competitive price then buy it from someone who can. The State should not concern itself with propping up an inefficient and delinquent construction sector.

 

[Firefly]

The Help to Buy scheme was concocted to increase house prices, bring developers back into the game of house building to stand on their own two feet.

I am struggling to think of an example where interference in any market by the government has improved things. Can you?

 

[Purple]

You mean right-wingers cannot see any benefit to state intervention in terms of implementing h&s standards, licensing, regulation, business start ups, education policy, etc...all of which have immediate, short-term and long-term impacts on markets and pricing, profit and loss?
If right-wingers are opposed to state intervention in the market, then they are opposed to any tax on profits?

Are you seriously telling me you can't see the difference?

 

[TheBigShort]

I am struggling to think of an example where interference in any market by the government has improved things. Can you?

Lots of examples, h&s standards, licensing, product regulation, minimum wage, bank holidays, annual leave, taxation, consumer protection etc

 

[TheBigShort]

Are you seriously telling me you can't see the difference?

I can, but I don't think you can. State intervention is not the preserve of left-wing ideology.
It is the purpose and manner of any intervention that is reflective of whether it is left-wing or right-wing.
The Help to Buy scheme was the preserve of developer lobbying of government with the purpose to draw developers back into the market to meet the renewed demand.It hasn't worked.

 

[TheBigShort]

removing Irish developers and highly priced Irish labour from the market.

How much is Irish labour on construction sites these days?

 

[Purple]

I can, but I don't think you can. State intervention is not the preserve of left-wing ideology.
It is the purpose and manner of any intervention that is reflective of whether it is left-wing or right-wing.
The Help to Buy scheme was the preserve of developer lobbying of government with the purpose to draw developers back into the market to meet the renewed demand.It hasn't worked.

That's just cronyism and market intervention by a political lobby group, in this case the CIF, to increase the income of their members on the backs of normal people (just like Public Sector Unions do). Capitalism does not embrace such practices. Capitalism is based on accepting the reality of economics so accepts that in order to reduce prices we need to increase supply. The best way to do that is to open up the market to other players.

 

[Purple]

How much is Irish labour on construction sites these days?

The average hourly cost for a tradesman is €32-€35.
The issue is really how many hours of labour are required per square meter built.
A friend who works in construction in Boston said that they had less than half the labour hours per square meter over there due to more automated building methods; far more built in factories, so higher quality, and far more power tools and better material flows on site. In essence if labour costs are 25% of construction costs then if you buy a €400,000 house you are paying €50,000 for inefficient construction methods.
If you are interested in reducing debt levels how about changing things so people need to borrow less because the house costs less?