Labor reform...not going well

Politics Taiwan Politics
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Sarcarsm did not do it, so let me say it: this is not US, with checkered wealth and racial lines, and a free market ideology that is actually law of the jungle in disguise, that benefits a few, not the many. haven’t seen an overburned in dept sick person in te States benefiting from free market choices in insurance coverage, for instance. Here, you have a basic coverage for practical purposes, and free market for your choice of treatment, many options for middle class that has options, emergency patches for those who don’t. That is one example.

Low wages and economic morasss is actually a consequence of wanting to trying to keep a defunct business model -trickle economics- in place. Corruption is responsible for low wages, no welath created here but rather copying an economic systema that benefits more from losses and stock manipulation than actual wealth creation. In summary, rapacious so called capitalism rather than anything social at all.

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Occupational injuries are covered by both the Labor Standards Act and the Labor Insurance Act. Basically, the employer is liable (which may require a lengthy and difficult lawsuit), but with insurance, the government pays at least part of it. I don’t know how far the NHI goes for this kind of thing.

(As stated before, an employee in a small business does not necessarily have labor insurance, even though a government appointed committee already determined this to be a violation of human rights, and it’s at least a violation of ILO recommendations if not also of human rights that a minor is allowed to work the night shift, when this kind of incident is more likely to occur.)

Take your pick, dignified wages for working citizens with which they can take care of themselves with dignity or dignified government services for citizens whose wages are barely enough to pay for life’s essentials.

A moment ago you were saying Taiwan needs undignified wages because that’s the nature of capitalism, universal economic law and so on. Are you abandoning that line?

And if you’re not abandoning it, I still want to know, how many more centuries of undignified wages are needed?

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All Taiwanese are equal, but some are more equal than others.

Under capitalism, man exploits man. Under communism, it’s the other way around.

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My sarcasm was wasted, ayioo. My Englishee is no good.

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Ha, you’re twisting my words a bit. I think what I said or meant was that raising the minimum wage or labor reform isn’t the answer when lack of accumulated capital is the problem. Then you will create unemployment. What happens is that poverty (lack of capital) thinly spread becomes poverty unevenly spread as some people get more while the others get none. Poverty is poverty whether you grace it with wage raising or labor reform, just as a rose is a rose under any other name.

And if you’re not abandoning it, I still want to know, how many more centuries of undignified wages are needed?

Economics isn’t science, it’s a little bit like predicting the weather, there are so many vagaries, you can never be 100% right. Right now being in a bubble of low interest rates, everything is a bit murky as to which factors are playing a greater role as you have macro- and microeconomic forces combining and colliding with each other, it could well be that what ails Taiwan is the same as what ails the world now, (if it wasn’t for the fact that Taiwan was suffering the same when the world was more-or-less normal interest rates 20 years ago). Whatever be the cause, the short answer to your question is if Taiwan keeps creating wealth and accumulating capital per head at the same rate, then there will always be either low wages or unemployment; you got to work with what you got. Money doesn’t grow on trees, except by capital accumulation.

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You’re confusing capitalism with bubbles, which capitalism always gets blamed for, but is nothing less than government intervention in the economy, (such as manipulating interest rates instead of letting markets decide), which causes stock market fluctuations, greater cronyism as government chooses winners and losers on different standards than the market, which rewards those who serve customers best, rapacious, crazy consumption, and misallocation of resources. This is what hampers capital creation from reaching its apex.

I hadn’t been keeping track of Taiwan economy these days, but I see now that the new president is wanting to tackle overegulation, lack of free trade agreements, and unbalanced government budgets, as confirmed by Wall Street Journal. I say if she succeeds at this, economy should see a significant uptick.

But then again, I have the same issue as with Trump, what will he (and she) do on macroeconomics? When will interest rates rise to normal again? In my mind, without redressing this most important issue of macroeconomics, microeconomics will only be slight upticks, bumps in the road.

As I’ve said before Bush was right on microeconomics, (and Trump may be even more right on microeconomics), but because Bush was totally wrong on macroeconomics, our economy went south, despite the prosperity created by microeconomics. But I’m waiting to see with Trump.

Does anyone know when was the last time Taiwan had normal interest rates?

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jotham: good answers, but I think you’re hugely mistaken about “accumulated capital”. Humans can do one and only one thing with capital, and that’s deplete it. I suspect this is related to the iron laws of thermodynamics: entropy rules us, which logically means it rules economic activity too.

Poverty is not lack of capital. It’s misuse of capital. Capital and wealth are a bit like mass and energy; you can destroy a bit of the former and create a lot of the latter. You can also work the same trick in reverse, of course, but people mostly don’t bother. People think cutting down a rainforest creates wealth. They’re right: it does. But you’ve still lost the rainforest: the capital, which could have produced a less dramatic, but far more long-lasting result if used properly. To put the rainforest back requires an equally dramatic input of wealth.

Of course, capital can just sit there doing nothing if people don’t have the will, the skill, or the brains to do something with it.

So poverty arises from one of two things: destroying what capital you have, or not using your capital. Wealth, conversely, arises from leveraging your capital to the maximum advantage (which implies preserving it).

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Am I? Humblest apologies, Master of Objectivity. :oops:

[quote=“jotham”]Yes, low wages and long hours are necessary, because compared to Western nations, Taiwan company’s ROE (return on equity) is really terrible.
[/quote]

[quote=“jotham worshipfully quoting von Mises”]They must go through all the stages through which the evolution of Western industrialism had to pass. They must start with comparatively low wage rates and long hours of work. But, deluded by the doctrines prevailing in present-day Western Europe and North America, their statesmen think that they can proceed in a different way. They encourage labor-union pressure and alleged prolabor legislation. Their interventionist radicalism nips in the bud all attempts to create domestic industries. Their stubborn dogmatism spells the doom of the Indian and Chinese coolies, the Mexican peons, and millions of other peoples, desperately struggling on the verge of starvation.
[/quote]

Ah, so much for objectivity! :doh:

So, wealth creation is your thing, not wage control. But the topic is labor reform, and though the major controversy right now is the pension question, wage control is also controversial, and you’re against it because you’re against minimum wages period, because you believe they cause unemployment and retard economic growth. Right?

If you were the government you would focus on wealth creation, okay, wonderful. But meanwhile people need to eat, and a kid with one hand also needs to eat and somehow get through school and apparently also support his family, and he obviously has no resources to create wealth when he can’t even put food on the table (unless he starts selling his organs or something), and if you remove the minimum wage he won’t even have any recourse against an employer who pays less than NT $133/h.

So, in your wonderful mastery of micro- and macro-economic planning, roughly how many more centuries does Taiwan need before it can reasonably legislate a minimum wage (in 2017 dollars) of even $133/h, let alone a dignified wage (whatever that is)? Or will it never be a reasonable proposal, because Germany and all the other advanced economies went down the wrong path by having any kind of wage control (whether by government or by union)?

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You’re right. As I said a long time ago, bubbles squander capital. You have to save first to accumulate capital, which is the wherewithal entrepreneurs can make profit by best serving customers.

Bubbles however punish saving, and causes wreckless spending because people mistakenly think they are wealthier than they are. It’s misallocation of resources. It’s like a restaurant, when the circus comes into town, suddenly there’s more business, and the restaurant begins thinking this is normal and starts building a new dining room to accommodate all these new customers and hire new waiter, which is misplaced investment. Then when the bubble pops and the circus leaves town, everyone gains their vision again, their compass reads right, reality hits everyone, you suddenly realize you don’t have enough money to accomplish all your foolish plans (and really never did), and the dining hall you’re building has to be stopped not only because funds are cut short, but you also realize it’s all unnecessary anyhow, you were deluded before, and then you have to fire all your waiters you hired in the “good times,” and they have to find work that is proper for the needs of society. All that is wasted capital that in normal times would have been used wisely to make real profit. This is where the world is right now, just like in the 70s. Worldwide central banks have made this process more common and acceptable than it used to be.

I really have nothing I disagree with in your post, just needed to put it all in perspective. But I love progress, and it irks me to no end that a good part of my life is spend watching the world throw away its good capital, which ought to be used for making better products for us and employing us intelligently.

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What’s wrong with your post is…what must government do. It’s government doing that is the problem in the first place, that makes countries backwards. If government would understand the market and cooperate with it instead of fighting it, there wouldn’t be these problems, (or would be very short-lived), because people want to prosper and progress.

You think these problems are caused out of the blue, but no, they happen for a reason, because government always thinks it has a duty to micromanage everything, because they fancy themselves smart. But they don’t realize or they forget that government doesn’t create wealth. People do. They can only redistribute it but they must first siphon it off from the real producers. To the extent that government tries to manipulate the economy, they are manipulating people, because we are the economy. It is authoritarianism to control markets, make them do what you want, because it’s us.

If markets were running smoothly, you don’t need wage controls. because capital accumulates normally, and wages rise pari passu.

Everything is also on a scale, vast tracts of rural land in China still need industrialization, which is just barely begun in some places. Taiwan is much further along that China, and their wages more dignified. Such words as dignified, high, low are subjective, but we’re kidding ourselves thinking that Taiwanese wages can somehow be commensurate or otherwise comparable to American wages (when we aren’t in a bubble). When people complain about low wages, they’re looking at America, at what could be, which is good because it can be, but raising Taiwanese wages or other labor reforms to American standards alone won’t magically raise the American capital needed to accommodate such standards in Taiwan.

Moreover, in a global bubble, it’s really hard to know how to analyze anything; it’s just really mixed up, and I’m anxious for interest rates to rise so reality can hit, people jumping out of windows or whatever, so we can start doing the right things again.

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So in other words, you’re not interested in the subject of this thread at all, because you think the Ministry of Labor shouldn’t even exist. Is that a fair summary? Just raise interest rates, and all will be well. :rainbow:

Doctors, pilots, bus drivers, underage convenience store clerks, they will all become prosperous… in a few centuries. :grinning:

I’d love to visit the Anarcho-Capitalist Republic of Jothamia. I hear it’s similar to Rowlandia. Will Jothamia also need a few centuries before it can join the industrialized world, or will your high interest rates save you from having to reinvent the wheel? :ponder:

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Industrialization is icky, don’cha know. Do like Ireland and go straight to an information economy. Pat yourself on the back for being good for the environment. And never ask where your computers come from.

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You needn’t go so far as Jothamia, all you need is to look at the roaring 20s. Nominal wage rates rose very comfortably and yes all those people, doctors, bus drivers, store clerks became prosperous not in a few centuries, but just a year really.

1919 post-war, huge inflation bubble. Republican Harding led a deflation on purpose.

Here are the quotes:
Says Harding:

I would be blind to the responsibilities that mark this fateful hour if I did not caution the wage-earners of America that mounting wages and decreased production can lead only to industrial and economic ruin.”

“Gross expansion of currency and credit have depreciated the dollar… We inflated in haste, we must deflate in deliberation. We debased the dollar in reckless finance, we must restore in honesty.”

We will attempt intelligent and courageous deflation

All the penalties will not be light, nor evenly distributed. There is no way of making them so. There is no instant step from disorder to order. We must face a condition of grim reality, charge off our losses and start afresh. It is the oldest lesson of civilization’

Here are the facts:

Interest rates:
Fed rediscount rates rose from 4% to 4¾%, and then to 6% in January, 1920. The 1¼% interest rate increase in January, 1920 is still the Fed’s single most violent policy stroke. Rose to record high of 7% in June.

Prices:
From its peak in June 1920 the Consumer Price Index fell 15.8 percent over the next 12 months.

The Dow - then of 20 leading stocks - peaked at almost 120 in November of 1919. It fell about 46.6% to almost 63 in August, 1921. The speed of the decline in economic prices was faster than during the Great Depression. During a 12 month period, wholesale prices fell almost 36.8%, consumer prices fell 10.8%, and farm prices fell 41.3%.

Unemployment:
The unemployment rate peaked at 11.7 percent in 1921. But it had dropped to 6.7 percent by the following year, and was down to 2.4 percent by 1923.

Wages dropped 13% and never dropped as fast as prices. In the end, “real wages for urban workers increased by about 20% during the 1920s. Their wage gains were stretched even farther due to the falling cost of wonderful new mass-production goods.”

It was a bitter one year, but the country rallied as soon as the Fed lowered rates back to normal, 4% again in 1923, and that’s how we got the roaring 20s.

…that is until the Fed started another bubble in 1927 (for trying to help Britain maintain a strong pound), which caused our crash in 1929.

Hoover, however, kept labor rates firm, said to let other segments of economy suffer decline, but not labor, and we suffered stagnation, depression, and actually labor rates suffered worse in the end than 1920.

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Earlier, you were basically saying Taiwanese society is too primitive to understand how advanced economies work (even though they’re not allowed to have an advanced economy anyway, until they’ve spent a few more centuries letting the West get further ahead).

Now you give us this century-old American wisdom:

I would be blind to the responsibilities that mark this fateful hour if I did not caution the wage-earners of America that mounting wages and decreased production can lead only to industrial and economic ruin.”

“Long hours = high productivity.”

If that’s what you mean by outdated thinking, you’re spot on. :thumbsup: Unfortunately, it also shows how your argument doesn’t make sense overall. As a general rule, people who are against karoshi actually want high productivity, just not at the cost of human life.

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You’re a pro at changing the rhetoric to suit your needs. I was responding to your sarcastic post that all that was needed was to raise interest rates and all would be well. I gave you an American example.

If you’re tying it back to Taiwan again. Yes, these macroeconomic factors come first.

Aside from that, Taiwan is in much better shape than China and has come through lot of industrialization in the 60s or 70s. Still, there is a feudal-aristocratic mindset that is not entirely conducive to pragmatic, individualist, democratic profit-driven economics, for example where factors of guanxi-guanxi concerns and cronyism is more paramount than supply and demand or customer concerns or even profit concerns. To what degree that is true and is operational, productivity is inhibited, which naturally affects labor rates.

But current low rates could definitely be improved by raising interest rates, letting markets adjust a year or two or chaos while economic factors rearrange themselves for better efficiency.

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I’m sorry, I thought this thread was

Polictics
Taiwan Politics
Labor reform…not going well

And I thought you wanted to fire everyone at the MOL and reallocate their budget to the MOF or, better yet, give it straight to the banks since they’re not government and actually do the work that interest rates depend on.

What’s wrong with your post is…what must government do. It’s government doing that is the problem in the first place, that makes countries backwards.

Aside from that, Taiwan […] has come through lot of industrialization in the 60s or 70s. Still, there is a feudal-aristocratic mindset that is not entirely conducive to pragmatic, individualist, democratic profit-driven economics, for example where factors of guanxi-guanxi concerns and cronyism is more paramount than supply and demand or customer concerns or even profit concerns. To what degree that is true and is operational, productivity is inhibited, which naturally affects labor rates.

We basically agree about this part. What I don’t agree with is your belief that because Taiwan does have this problem, therefore it should and must have this problem. “The West had this problem and took centuries to get to where it is now. Therefore, Taiwan has no business trying to evolve any faster, and any attempt to encourage evolution through state regulation of labor must fail.”

Unlike Jothamia – and also unlike the US a century ago – Taiwan is a member of the WTO and can’t simply do away with state regulation of labor, unless those interest rate adjustments are going to make up for the consequences.

It would also be grossly inconsistent with the ICESCR, though without UN membership that doesn’t really have any consequences, other than people not taking Taiwan very seriously. :idunno:

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I’m not against progress at all. But whatever their contribution may be, (as I said, I’m not sure when we are in a bubble), mindsets are a stubborn thing to change, and industrialization, free markets do impress populations, democratize the individual. Many of the elite, “aristocrats” in government or non-entrepreneurial businesses (especially government-owned monopolies) will resent and actively resist the empowerment of the lower classes because it threatens their status, and that may be a problem here. I’m not sure. But what I’m against is the belief that simply raising labor wages will grow money on trees, it ain’t so. I want progress and better conditions, but I understand that that don’t do it.

I didn’t quote most of the context of Warren Harding, and I think this may address some of your questions.

There is no progress except in the stimulus of competition.

When competition—natural, fair, impelling competition—is suppressed, whether by law, compact or conspiracy, we halt the march of progress, silence the voice of inspiration, and paralyze the will for achievement. These are but common sense truths of human development.

The chief trouble today is that the world war wrought the destruction of healthful competition, left our storehouses empty, and there is a minimum production when our need is maximum. Maximums, not minimums, is the call of America. It isn’t a new story, because war never fails to leave depleted storehouses and always impairs the efficiency of production. War also establishes its higher standards for wages, and they abide. I wish the higher wage to abide, on one explicit condition—that the wage-earner will give full return for the wage received. It is the best assurance we can have for a reduced cost of living. Mark you, I am ready to acclaim the highest standard of pay, but I would be blind to the responsibilities that mark this fateful hour if I did not caution the wage-earners of America that mounting wages and decreased production can lead only to industrial and economic ruin.

I want, somehow, to appeal to the sons and daughters of the Republic, to every producer, to join hand and brain in production, more production, honest production, patriotic production, because patriotic production is no less a defense of our best civilization than that of armed force. Profiteering is a crime of commission, underproduction is a crime of omission.

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Jotham: I suspect minimum-wage laws are one of those things that can be beneficial if done correctly and detrimental if done badly, so it’s a pity the people in charge of implementation are people with no experience in anything except grandstanding.

For example, if you set a minimum wage that prices out shitty manual jobs - say, scrubbing industrial vats - the job still needs doing, but other methods start to look more attractive. Possibly there are vat-scrubbing machines that can be installed for less money than the equivalent of paying a prole NT$50/hour for doing it. I’m thinking here of people in the Philippines who are paid P250 a day (NT$160) to stand by a shop door and open it when a customer comes in. They’re all a bit retarded; I’m not being mean, but they are. Fact is, though, even a retarded kid shouldn’t be doing a job that can be done by a photocell and a motor. Or the customer’s hand. It just ain’t right.

Of course, if you price out menial jobs, that’s where you need social systems in place to make sure people who would otherwise take those jobs can train for something a bit more dignified (and less dangerous) than vat-scrubbing. So even if aforementioned prole is a complete dolt, he’s probably capable of doing something more productive that waggling a scrubbing brush.

The prole’s son might think, crap, maybe I’d better not fuck around at school, because they’re aren’t so many shitty jobs to go around. Or … I suppose it’s equally likely that he’ll decide that it’s not worth bothering at all, and a life of crime will be more interesting. Depends entirely on the social values that he’s immersed in.

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Minimum wages can reinforce supply and demand, in which case they are redundant, or go against it. Wages are low when there is less demand for workers, (which is the case when there isn’t enough capital to start businesses and innovations that would more fully employ them.

Interesting analogy of vat-scrubbing versus more dignified lines or work. This partially has to do with my earlier reference to industrialization, which started empowering the lower classes with these “vat-scrubbing” kind of jobs. As these lower classes became wealthier, conditions improved, education increased, society more sophisticated (like the aristocrats) so that the move towards occupations that use the brain instead of hands were possible for average citizens, thus lifting the welfare of the whole nation. Thus lower ranks could move up the ranks on their own abilities, and not because of who you know, guanxi-guanxi, etc.

The danger is when government thinks they are more rational, moral, or humane than the laws of suppy and demand. Shutting out these vat-cleaning jobs on purpose often may mean that it will be more difficult to find entry-level work, such as 17yo teenagers. This is where they get experience to step up to better jobs. Without experience, it may be more difficult for them to land these better jobs at higher pay.

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It looks like interest rates will be raised now that Obama is out. Started raising two times, in December and January, for the first time since 2007-2009. It apparently was never raised during Obama, things were so bad.

I love this quote from Yellen:

“Waiting too long to begin moving toward the neutral rate could risk a nasty surprise down the road - either too much inflation, financial instability, or both,” Yellen told the Commonwealth Club of California in San Francisco.

“In that scenario, we could be forced to raise interest rates rapidly, which in turn could push the economy into a new recession.”

Why didn’t it make sense, where was all this concern during Obama years? Why couldn’t they have been forced to raise interest rates “rapidly” and push recession with Obama in office? Why wait until he’s all done? Some say she’s doing this because she wants to, she thinks she’s sticking it to Trump (and was unwilling to do so to Obama), but this could be poetic justice indeed.

Of course it would bring a recession and make people think economy is going south, and point fingers at Trump, but if she keeps “sticking it” to him for a year or two (like all the deep state all seem to be doing everywhere), it could lift us out of the bubble, and could see the roaring 20’s again (or roaring 80s), even though she clearly doesn’t believe this. I hope she does it, raise those interest rates rapidly, let’s get the crisis over with, so we can enjoy the next 10 or 20 years of life.

Ha, ha, so now Yellen’s a hawk; now I’ve seen everything.

http://www.reuters.com/article/us-usa-fed-yellen-idUSKBN1522VH