Michigan voting on "right to work", what is the controversy here?

[spence]

Originally Posted by detbuch

The contractors you speak of are in China and are under the Chinese Communist Party's model of manufacturing, not under the control of Apple.

Apple is free to contract with whomever they choose and under what terms they agree to. Foxconn employees are certainly contractors of Apple.

A telling sentence in the Forbes article: "Today, we see the social detachment, alienation and despair that are the result of an efficient--but ultimately unsustainable--system." Beware America.

Well, perhaps they're just a century or so behind.

Many white collar jobs, especially in the public sector, are unionized.

Any why I qualified Manufacturing jobs.

The positive impact needs to be weighed against the negative. The big concessions had to be made because of previous negative union influence. In large manufacturing situations most of the jobs are routine rather than skilled trades. How this all would have come about if unions did not exist is debatable. Unions have historically had an affect on working conditions and pay, but, historically, it was unions in large corporations, such as the auto industry which was already paying far more for its labor before the unions entered. Rather than unions being the catalyst for success, they were beneficiaries of success.

And haven't shareholders also been beneficiaries of success? Many unionized companies have done quite well...

You may not see the evidence, others do. More jobs is a key. If the pay is somewhat lower, which is debatable that it would be, the spending power may be comparable if not better. Most right to work states have lower living costs. Lower wages, in a market system, lead to lower prices.

I've never seen any real evidence that right to work promotes jobs. Granted, it would be a hard metric to measure considering all the other variables that impact a state economy.

The idea that lower wages lead to lower prices sure doesn't make a lot of sense to me. I could see lower prices via lower quality perhaps, but not because of reduced spending power prompting sellers to charge less for items that have many fixed costs.

A broader lower income base would spend more as a % on living expenses which are lower margin commodity items.

Yes, investors invest, whether in unionized corporations or non-unionized. And foreign investment is not a bad thing, is it? Don't Americans also invest in foreign business. Does your portfolio include any foreign investment?

Foreign investment may not be a good thing when the result is wealth being transferred abroad.

I have some money in emerging markets, but not a huge % overall.

-spence

[detbuch]

Originally Posted by spence

Apple is free to contract with whomever they choose and under what terms they agree to. Foxconn employees are certainly contractors of Apple.

Apple contracted with Foxconn not with the individual employees. Foxconn and the Chinese government have control over working conditions not Apple. Apple is not the sole company to contract with Foxconn. Apple cannot dictate on its own how Foxconn or the Chinese government create working conditions.

Well, perhaps they're just a century or so behind.

I thought China was supposed to be a model for becoming the new economical powerhouse. You seemed to speak glowingly of it in a past thread or two. Wasn't China supposed to become the greatest economic power in the next 10 years or so? China has been a stagnant, backward economic force for a lot longer than the U.S. which is why it recently has been experimenting with "capitalism." It is we who are behind them in "detachment, alienation, and despair," and in being an efficient but ultimately unsustainable system as described in the Forbes article. But we are starting to catch up to it in that regard. Which is why I said Americans beware.

And haven't shareholders also been beneficiaries of success? Many unionized companies have done quite well...

Yes both the shareholder and the union members have been beneficiaries of success. That is why folks invest in companies they hope will be successful and why successful companies can hire workers to share in that success. But neither the shareholders (who take a risk) nor the workers have to belong to a union to create that success.

I've never seen any real evidence that right to work promotes jobs. Granted, it would be a hard metric to measure considering all the other variables that impact a state economy.

There are studies that show that RTW states have on net added 1.5 million jobs between 1999 and 2009 for a gain of 3.7% in employment while non-RTW states over the same time period have lost 1.8 million jobs for a 2.3% decline. You can find contradictory conclusions by different researchers depending on their political persuasion, but it is your particular persuasion that will determine whether the evidence is "real."

But there are other metrics that are favorable to right to work states. A 2008 study by National Institute for Labor Relations Research shows that in states with 10% or more of private sector workers subject to unionization laws the cost-of-living-adjusted mean weekly wages were lower than in right to work states.

But, if that institute is not to your liking, how about the good old reliable Wikipedia? It shows that wages in RTW states are 3.2% lower than in non-RTW states, BUT it also shows that the cost of living in collective bargaining states is much higher on average then in RTW states, which results in higher real buying power in most right to work states. ALSO, in collective bargaining states unemployment rate is higher than in right to work states..

The idea that lower wages lead to lower prices sure doesn't make a lot of sense to me. I could see lower prices via lower quality perhaps, but not because of reduced spending power prompting sellers to charge less for items that have many fixed costs.

A broader lower income base would spend more as a % on living expenses which are lower margin commodity items.

That's why I specified "in a market system." Many fixed costs are due to government regulation and interference as well as government inforced rules on unionization, etc. A freer market would have a less encumbered relation to wages and prices.

The market does have a direct relation between wages and prices as well as a complex relationship.

Simplistically, an Aaronson, Grench and Mcdonald 2009 study on minimum wage found that prices rise following a wage hike.

Traditional Keynesian models say that changes in wages typically precede changes in prices. Milton Friedman, on the other hand, would say the opposite--that the price changes precede wage changes. Either way, both wages and prices progress together up or down. When productivity goes up, however, wages can go up without raising prices due to the larger volume of sales equalling a larger net income that MIMICS a rise in prices. But if wages rise above productivity, price will go up to compensate for greater labor costs.

I go by the axiom "price what the market will bear", but with the proviso that you have to include competitive factors as well as the value of your product. Competitive pricing will make products available to lower wage earners and create profit by volume (the Walmart model). Products of special value for which there is little to no competition in production and sales can charge more to a more select or limited clientele so average wage is no deterrent to pricing.

On the other hand, if your target pool of consumers is a major part of the locale, you must price, if possible, toward what spendable income the consumers have after buying all other necessary and leisure items which depends on their average wages. That is why, I suppose, more "upscale" items can be sold in more affluent communities, and why lower wages command lower prices if you wish to sell to such consumers. That's why manufacturers produce different priced models of a product--all of which are of good, reliable, quality, but which have different features. And why you will see different prices for the same product in different communities. If the national wage average was lowered, would that necessarily mean that prices would remain the same or go up? Or could prices be lowered due to the reduced cost of labor, and would sellers lower prices to maintain ample demand for their goods?

Foreign investment may not be a good thing when the result is wealth being transferred abroad.

I have some money in emerging markets, but not a huge % overall.

-spence

The "wealth" portion that is transferred abroad is that portion that Americans chose not to invest in either because they couldn't afford it or they chose not to. But Americans reap the wealth from the jobs created here, and without having to take the risk of investing in the creation of those jobs.

And finally, and most importantly, beyond the eye-glazing, mind boggling, contradictory back and forth "economic" arguments, there is a most fundamental and most important American principle to consider, as Jim in CT and others have mentioned:

The Constitutional individual guarantee of FREEDOM OF ASSOCIATION!